<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
(FILE NO. 33-98182)
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 1 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
(FILE NO. 811-06317)
AMENDMENT NO. 9 /X/
(CHECK APPROPRIATE BOX OR BOXES.)
------------------------
THE JUNDT GROWTH FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1550 UTICA AVENUE SOUTH, SUITE 950
MINNEAPOLIS, MINNESOTA 55416
(Address of Principal Executive Offices) (Zip Code)
(612) 541-0677
(Registrant's Telephone Number, including Area Code)
JAMES R. JUNDT
JUNDT ASSOCIATES, INC.
1550 UTICA AVENUE SOUTH, SUITE 950
MINNEAPOLIS, MINNESOTA 55416
(Name and Address of Agent for Service)
COPY TO:
JAMES E. NICHOLSON
FAEGRE & BENSON LLP
2200 NORWEST CENTER
90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
It is proposed that this filing will become effective (check appropriate
box):
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on April 30, 1996 pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/ / on (date) pursuant to paragraph (a)(1) of Rule 485
/ / 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/ / 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.
The Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Registrant's most recent Rule 24f-2 Notice (relating to
the Registrant's fiscal year ended December 31, 1995) was filed on Form 24F-2
with the Commission on February 21, 1996.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE JUNDT GROWTH FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET FOR ITEMS REQUIRED BY FORM N-1A
<TABLE>
<CAPTION>
ITEM NO. CAPTION IN PROSPECTUS
- ------------- --------------------------------------------------------------------------------------------------------
<C> <S>
1 Cover page
2 Fees and Expenses
3 Financial Highlights
4 The Fund; Investment Objective and Policies; Purchase Information
5 Management of the Fund
5A Not applicable
6 The Fund; Purchase Information; How to Buy Fund Shares; Dividends, Distributions and Taxes; General
Information
7 Purchase Information; How to Buy Fund Shares; Determination of Net Asset Value
8 How to Redeem Fund Shares; Determination of Net Asset Value
9 Not applicable
CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------------------------------------------
10 Cover page
11 Table of Contents
12 Not applicable
13 Investment Objective, Policies and Restrictions
14 Directors and Officers
15 General Information
16 Advisory, Administrative and Distribution Agreements
17 Advisory, Administrative and Distribution Agreements
18 General Information; Financial and Other Information
19 Special Purchase Plans; Monthly Cash Withdrawal Plan; Determination of Net Asset Value
20 Taxes
21 Advisory, Administrative and Distribution Agreements
22 Calculation of Performance Data
23 Financial and Other Information
</TABLE>
i
<PAGE>
THE JUNDT GROWTH FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART A
PROSPECTUS
<PAGE>
THE JUNDT GROWTH FUND, INC.
1550 UTICA AVENUE SOUTH, SUITE 950
MINNEAPOLIS, MINNESOTA 55416
(800) 370-0612
------------------
The Jundt Growth Fund, Inc. (the "Fund") is a professionally managed,
diversified, open-end management investment company, commonly known as a "mutual
fund." The Fund currently offers its shares of common stock in four classes
(Class A, Class B, Class C and Class D), each sold pursuant to different sales
arrangements and bearing different expenses (each, a "Class" and, collectively,
the "Classes.") Class A shares are offered for sale exclusively to certain
specified investors and are not offered for sale to the public generally. See
"Purchase Information."
The Fund's investment objective is to provide long-term capital appreciation
by investing primarily in a diversified portfolio of equity securities of
companies that are believed by the Fund's investment adviser, Jundt Associates,
Inc. (the "Investment Adviser"), to have significant potential for growth in
revenue and earnings. Income is not a consideration in the selection of
investments and is not an investment objective of the Fund. Like all mutual
funds, attainment of the Fund's investment objective cannot be assured. See
"Investment Objective and Policies."
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Please read this Prospectus
carefully before investing and retain it for future reference. A Statement of
Additional Information, dated April 30, 1996, containing more information about
the Fund (which is incorporated herein by reference), has been filed with the
Securities and Exchange Commission (the "SEC") and is available upon request and
without charge by calling the Fund at the telephone number listed above.
AN INVESTMENT IN THE FUND INVOLVES CERTAIN RISKS, AS DESCRIBED UNDER "RISK
FACTORS" AND "INVESTMENT OBJECTIVE AND POLICIES." FUND SHARES ARE NOT
OBLIGATIONS, DEPOSITS OR ACCOUNTS OF, OR ENDORSED OR GUARANTEED BY, ANY BANKING
INSTITUTION, ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC") OR ANY OTHER FEDERAL AGENCY AND INVOLVE INVESTMENT RISK
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
AS WITH ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PROSPECTUS DATED APRIL 30, 1996
<PAGE>
THE FUND
The Fund is a professionally managed, diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Fund was incorporated under the laws
of the State of Minnesota on May 20, 1991 and originally commenced operations on
September 3, 1991 as a closed-end investment company. The Fund converted to an
open-end investment company immediately following the close of business on the
New York Stock Exchange on December 28, 1995 (the "Open-End Conversion"). The
Fund's principal business address is 1550 Utica Avenue South, Suite 950,
Minneapolis, Minnesota 55416.
RISK FACTORS
An investment in the Fund is subject to certain risks, as detailed under
"Investment Objective and Policies." As with other mutual funds, there can be no
assurance that the Fund will achieve its investment objective, and an investment
in the Fund will fluctuate in value (corresponding to the value of the Fund's
underlying investments).
In normal market conditions, the Fund may invest up to 35% of its total
assets in short-term, fixed-income securities, and may temporarily invest
greater than 35% of its assets in such securities when the Investment Adviser
believes that market conditions warrant a defensive investment posture. The
value of fixed-income securities typically varies inversely with changes in
market interest rates. See "Investment Objective and Policies -- Investment
Policies."
The Fund may invest up to 20% of its total assets in securities of foreign
issuers. Such investments involve risks not typically associated with
investments in securities of domestic companies, including the risk of decline
in the value of the applicable foreign currency against the U.S. dollar,
potential political and economic instability in such countries, limited
liquidity and price volatility. See "Investment Objective and Policies --
Investment Policies."
The Fund may engage to a limited extent in certain other investments and
investment techniques, including entering into repurchase agreements, lending
portfolio securities, and purchasing and selling stock index futures contracts,
options on stock indices, stock options and options on stock index futures
contracts. The use of each of these financial techniques involves certain
additional risk and may increase the volatility of an investment in the Fund.
Certain of these techniques are referred to generically as "derivatives" -- a
term that has been used to identify a variety of financial instruments whose
values are based upon, or "derived" from, certain underlying indices, reference
rates, securities, commodities, or other assets. See "Investment Objective and
Policies -- Repurchase Agreements," " -- Lending of Portfolio Securities" and "
- -- Futures and Options Transactions" and Appendix A to this Prospectus.
PURCHASE INFORMATION
The Fund offers investors the choice among three Classes of shares (Class B,
Class C and Class D), which offer different sales charges and bear different
expenses. See "Fees and Expenses" below. These alternatives permit an investor
to choose the method of purchasing shares that is most beneficial, given the
amount of the purchase, the length of time the investor expects to hold the
shares and other circumstances. AS MORE FULLY DISCUSSED BELOW, CLASS A SHARES
ARE OFFERED FOR SALE EXCLUSIVELY TO CERTAIN SPECIFIED INVESTORS AND ARE NOT
OFFERED FOR SALE TO THE GENERAL PUBLIC.
Investors making investments that, based upon the amount of the investment,
would qualify for reduced Class D sales charges may wish to consider Class D
shares, as opposed to Class B or Class C
2
<PAGE>
shares, which bear higher Rule 12b-1 charges. Other investors may wish to
consider Class B or Class C shares because all of the purchase price is invested
immediately. Orders for Class B shares for $250,000 or more will be treated as
orders for Class D shares (or Class A shares, if the investor is eligible to
purchase Class A shares) or declined. Sales personnel may receive different
compensation depending on which Class of shares they sell.
Effective upon the Open-End Conversion, each issued and outstanding Fund
share was converted into a Class A share of the reorganized open-end fund. Class
A shares are available for additional investments only by: (a) Fund shareholders
at the time of the Open-End Conversion, but only so long as such shareholders
remain Fund shareholders and/or shareholders of the related Jundt U.S. Emerging
Growth Fund (a liquidation of the investor's account in both funds will
terminate his or her privilege to invest in Class A shares); (b) directors,
officers, employees and consultants of the Fund (including partners and
employees of outside legal counsel to the Fund), the Investment Adviser and the
Fund's principal distributor, U.S. Growth Investments, Inc. (the "Distributor"),
members of their immediate families, and their lineal ancestors and descendants;
and (c) accounts for the benefit of any of the foregoing. Class A shares will
also be issued in connection with the reinvestment of dividends and
distributions on outstanding Class A shares.
FEES AND EXPENSES
The following fee and expense summary format was developed for use by all
mutual funds to assist investors in making investment decisions. Of course,
investors contemplating an investment in Fund shares should also consider other
relevant factors, including the Fund's investment objective and historical
performance.
<TABLE>
<CAPTION>
CLASS A CLASS B(A) CLASS C CLASS D
-------- ---------- -------- --------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases....... 5.25% NONE(b) NONE(b) 5.25%
Sales Charge Imposed on Dividend
Reinvestments.................................. NONE NONE NONE NONE
Maximum Deferred Sales Load (as a percentage of
original purchase price or redemption proceeds,
whichever is lower) (c)........................ 1.00%(d) 4.00% 1.00% 1.00%(d)
Annual Fund Operating Expenses (as a percentage of
average net assets) (e):
Investment Advisory Fees (f).................... 1.00% 1.00% 1.00% 1.00%
12b-1 Fees:
Account Maintenance Fees...................... NONE 0.25% 0.25% 0.25%
Distribution Fees............................. NONE 0.75%(b) 0.75%(b) NONE
Other Expenses:
Administrative Fees........................... 0.20% 0.20% 0.20% 0.20%
Shareholder Servicing Costs................... 0.21% 0.24% 0.24% 0.21%
Other......................................... 0.44% 0.44% 0.44% 0.44%
-------- ---------- -------- --------
Total Fund Operating Expenses..................... 1.85% 2.88% 2.88% 2.10%
-------- ---------- -------- --------
-------- ---------- -------- --------
</TABLE>
- ------------------------
(a) Class B shares will convert automatically into Class D shares on their
designated conversion date (the 15th day of each month or the next business
day if the 15th is not a business day) immediately following the eighth
anniversary of their sale. See "How to Buy Fund Shares."
3
<PAGE>
(b) Class B and Class C shares are sold without a front-end sales charge;
however, their higher 12b-1 fees may cause long-term Class B and Class C
shareholders to pay more than the economic equivalent of the maximum
permitted front-end sales charges.
(c) In addition to any applicable deferred sales loads, service agents may
charge a nominal fee for effecting redemptions of Fund shares.
(d) A contingent deferred sales charge of 1% is imposed on certain redemptions
of Class A or Class D shares that were purchased without an initial sales
charge as part of an investment of $1 million or more. See "How to Buy Fund
Shares -- Class A Shares" and "-- Class D Shares."
(e) Annual Fund Operating Expenses set forth in the above table are based upon
the Fund's average net assets during the first quarter following the
Open-End Conversion. However, Fund asset levels can be expected to
fluctuate, and certain Fund expenses (as a percentage of average net assets)
will vary inversely with Fund asset levels.
(f) The fee paid by the Fund to the Investment Adviser is higher than the
advisory fee paid by most other investment companies.
EXAMPLE:
Investors would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each time period:
<TABLE>
<CAPTION>
CLASS A (1) CLASS B CLASS C CLASS D (1)
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
One year......................................... $ 70 $ 69 $ 39 $ 73
Three years...................................... 108 119 89 115
Five years....................................... 147 172 152 159
Ten years........................................ 258 320 320 283
</TABLE>
- ------------------------
(1) Numbers do not reflect the 1% contingent deferred sales charge that may be
imposed on certain redemptions of Class A and Class D shares.
Investors in Class B and Class C shares would pay the following expenses on
the same investment, assuming no redemption at the end of each time period:
<TABLE>
<CAPTION>
CLASS B CLASS C
----------- -----------
<S> <C> <C>
One year................................................................... $ 29 $ 29
Three years................................................................ 89 89
Five years................................................................. 152 152
Ten years.................................................................. 320 320
</TABLE>
The purpose of the fee and expense information set forth above is to assist
investors in understanding the various costs and expenses that investors will
bear directly or indirectly in each Class of the Fund's shares. More detailed
information regarding these expenses is set forth under "Management of the
Fund." THE FOREGOING INFORMATION IS NOT BASED ON HISTORICAL FINANCIAL EXPERIENCE
OF THE FUND BUT REPRESENTS MANAGEMENT'S GOOD FAITH ESTIMATE OF FUND EXPENSES TO
BE INCURRED DURING THE CURRENT FISCAL YEAR. THE FOREGOING EXAMPLES SHOULD NOT BE
CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The information presented in this section has been derived from financial
statements of the Fund that are incorporated by reference in the Statement of
Additional Information and should be read in conjunction with such financial
statements. Such financial statements have been audited by KPMG Peat Marwick
LLP, the Fund's independent auditors, whose report thereon also is included in
the Statement of Additional Information. Substantially all of the following
information relates to the Fund's operations as a closed-end investment company.
See "The Fund."
Per share data for a share of capital stock outstanding throughout each
period and selected supplemental and ratio information for each period indicated
are as follows:
<TABLE>
<CAPTION>
YEAR PERIOD FROM PERIOD FROM
ENDED 7/01/94 YEAR ENDED YEAR ENDED 9/3/91*
12/31/95 TO 12/31/94 6/30/94 6/30/93 TO 6/30/92
----------- ----------- ----------- ----------- -----------
PER SHARE DATA
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 14.95 $ 13.53 $ 15.10 $ 13.78 $ 14.07
----------- ----------- ----------- ----------- -----------
Operations:
Investment income (loss) -- net................. (0.12) (0.07) (0.11) (0.05) 0.13
Net realized and unrealized gain (loss) on
investments.................................... 2.71 1.83 (0.57) 1.38 (0.30)
----------- ----------- ----------- ----------- -----------
Total from operations............................. 2.59 1.76 (0.68) 1.33 (0.17)
Distributions to shareholders:
From investment income -- net................... -- -- -- (0.01) (0.12)
From realized capital gains -- net.............. (5.59) -- (0.52) -- --
Return of capital............................... -- (0.34) (0.37) -- --
----------- ----------- ----------- ----------- -----------
Net asset value, end of period.................... $ 11.95 $ 14.95 $ 13.53 $ 15.10 $ 13.78
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total investment return (1)....................... 17.81% 13.06% (4.53)% 9.64% (1.30)%
Net assets at end of period (000's omitted)....... $140,642 $223,317 $202,192 $473,768 $465,055
Ratio of expenses to average net assets........... 1.60% 1.58%+ 1.55% 1.40% 1.37%+
Ratio of net investment income (loss) to average
net assets....................................... (0.72)% (0.98)%+ (0.63)% (0.36)% 1.05%+
Portfolio turnover rate (excluding short-term
securities)...................................... 155% %19 %70 %66 %20
</TABLE>
- --------------------------
* Commencement of operations.
(1) Total investment return is based on the net asset value of a share during
the period, assumes reinvestment of distributions and excludes the effects
of sales loads. Total investment returns prior to December 29, 1995 reflect
performance of the Fund as a closed-end fund (assuming dividend reinvestment
pursuant to the Fund's Dividend Reinvestment Plan as then in effect); as an
open-end fund, the Fund incurs certain additional expenses as a result of
the continuous offering and redemption of its shares.
+ Adjusted to an annual basis.
5
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective and certain other specifically designated
investment policies and restrictions are deemed to be "fundamental" and, as
such, may not be changed except by a vote of a "majority" (as defined in the
Investment Company Act) of the Fund's outstanding shares. Except for the Fund's
investment objective and the policies and restrictions that are specifically
designated as "fundamental," each of the Fund's investment policies and
restrictions are "non-fundamental" and, as such, may be changed or eliminated by
the Fund's Board of Directors without any vote by Fund shareholders. If a
percentage limitation set forth in any of the following investment policies and
restrictions is adhered to at the time a transaction is effected, later changes
in the percentage resulting from changes in value or in the number of
outstanding securities of the issuer will not be considered a violation.
INVESTMENT OBJECTIVE
The Fund's investment objective is to provide long-term capital appreciation
by investing primarily in a diversified portfolio of equity securities of
companies that are believed by the Investment Adviser to have significant
potential for growth in revenue and earnings. Income is not a consideration in
the selection of investments and is not an investment objective of the Fund.
Like all mutual funds, attainment of the Fund's investment objective cannot be
assured.
INVESTMENT POLICIES
The Fund invests primarily in equity securities of companies that are
believed by the Investment Adviser to have significant potential for growth in
revenues and earnings. In normal market conditions, the Investment Adviser
endeavors to invest substantially all (and no less than 65%) of the Fund's
assets in equity securities. The Investment Adviser emphasizes larger
capitalization companies, with at least half of the Fund's equity securities
consisting of companies with annual revenues over $750 million, and attempts to
maintain equity positions in 30 to 50 of what it believes are among the fastest
growing American corporations (with some investments in comparable foreign
companies).
The Fund may invest up to 20% of the value of its total assets in securities
of foreign issuers. The Fund may only purchase foreign securities that are
represented by American Depository Receipts listed on a domestic securities
exchange or included in the NASDAQ National Market System, or foreign securities
listed directly on a domestic securities exchange or included in the NASDAQ
National Market System. Interest or dividend payments on such securities may be
subject to foreign withholding taxes. The Fund's investments in foreign
securities involve considerations and risks not typically associated with
investments in securities of domestic companies, including unfavorable changes
in currency rates and exchange control regulations, reduced and less reliable
information about issuers and markets, different accounting standards,
illiquidity of securities and markets, local economic or political instability
and greater market risk in general.
Pending the investment or reinvestment of proceeds from the issuance of Fund
shares or the sale of Fund portfolio investments, the Fund may invest in
short-term money market securities and bank deposits in domestic branches of
U.S. banks having total assets in excess of $1 billion that are members of the
FDIC. In normal market conditions, short-term money market securities and bank
deposits may comprise up to 35% of the Fund's total assets; however, when the
Investment Adviser believes that economic conditions warrant a defensive
investment posture, the Fund may temporarily invest greater than 35% of its
total assets in such investments. The short-term money market securities in
which the Fund may invest include obligations of the United States Government,
its
6
<PAGE>
agencies or instrumentalities ("U.S. Government Securities"); commercial paper
rated A-1 or higher by Standard & Poor's Corporation and/or Prime-1 or higher by
Moody's Investor Services, Inc.; repurchase agreements; and certificates of
deposit and banker's acceptances issued by domestic branches of U.S. banks
having total assets in excess of $1 billion that are members of the FDIC.
Additionally, to the extent permitted by applicable law, the Fund may invest to
a limited extent in money market mutual funds (which, to the extent of any such
investment, would subject the Fund and its shareholders to duplicate expenses).
The U.S. Government Securities in which the Fund may invest include
securities issued or guaranteed as to payment of principal and interest by the
U.S. Government or its agencies or instrumentalities. The Fund may invest in
direct obligations of the U.S. Treasury, such as U.S. Treasury bills, and in
obligations of U.S. Government agencies or instrumentalities, including, but not
limited to, the Federal National Mortgage Association and the Student Loan
Mortgage Association. Obligations of U.S. Government agencies or
instrumentalities, such as the Federal National Mortgage Association and the
Student Loan Mortgage Association, may be merely backed by the credit of the
agency or instrumentality issuing the obligations and not by the full faith and
credit of the U.S. Treasury.
The Fund's major emphasis is to purchase and hold securities for long-term
capital appreciation; however the Fund may on occasion trade for short-term
gain. Accordingly, it is anticipated that the annual portfolio turnover rate
normally will not exceed 100%. However, the occurrence of the Open-End
Conversion on December 28, 1995 and subsequent redemption activity may cause
portfolio turnover during the year ended December 31, 1996 to exceed 100%.
Higher portfolio turnover may result in higher transaction charges. The
portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by the average monthly value of the Fund's
portfolio securities. For purposes of this calculation, portfolio securities
exclude all options, futures and securities having a maturity when purchased of
one year or less. The turnover rate has a direct effect on the transaction costs
(including brokerage costs) to be borne by the Fund.
The net asset value of the Fund itself will fluctuate with changes in the
value of its portfolio securities. The Fund is intended for investors seeking
long-term capital appreciation and is not intended to provide a trading vehicle
for those who wish to profit from short-term swings in the stock market.
OTHER INVESTMENT POLICIES
REPURCHASE AGREEMENTS. Except as limited by the Fund's policy regarding
illiquid securities (see "Illiquid Securities" below), the Fund may invest
without limitation in repurchase agreements with securities dealers and member
banks of the Federal Reserve System. Repurchase agreements involve the purchase
by the Fund of an underlying debt instrument, subject to an obligation of the
seller to repurchase, and the Fund to resell, the instrument at a fixed price,
usually not more than one week after its purchase. Certain costs may be incurred
by the Fund in connection with the sale of the securities if the seller does not
repurchase them in accordance with the repurchase agreement. In addition, if
bankruptcy proceedings are commenced with respect to the seller of the
securities, realization on the securities by the Fund may be delayed or limited.
The Fund's Board of Directors has established procedures, which it periodically
reviews, pursuant to which the Investment Adviser will monitor the
creditworthiness of the dealers and banks with which the Fund enters into
repurchase agreements.
7
<PAGE>
LENDING OF PORTFOLIO SECURITIES. To enhance the return on its portfolio,
the Fund may lend securities in its portfolio representing up to 25% of its
total assets, taken at market value, to securities firms and financial
institutions, provided that each loan is secured continuously by collateral in
the form of cash, high quality money market instruments or short-term U.S.
Government Securities adjusted daily to have a market value at least equal to
the current market value of the securities loaned. These loans are terminable at
any time, and the Fund will receive any interest or dividends paid on the loaned
securities. In addition, it is anticipated that the Fund may share with the
borrower some of the income received on the collateral for the loan or the Fund
will be paid a premium for the loan. The risk in lending portfolio securities,
as with other extensions of credit, consists of possible delay in recovery of
the securities or possible loss of rights in the collateral should the borrower
fail financially. In determining whether the Fund will lend securities, the
Investment Adviser will consider all relevant factors and circumstances. The
Fund will only enter into loan arrangements with broker-dealers, banks or other
institutions which the Investment Adviser has determined are creditworthy under
guidelines established by the Board of Directors.
FUTURES AND OPTIONS TRANSACTIONS. Through the purchase and sale of stock
index futures contracts, options on stock indices, stock options and options on
stock index futures contracts, the Fund at times may seek to hedge against
either a decline in the value of securities owned by it or an increase in the
price of securities which it plans to purchase. The Fund is not a "commodity
pool;" therefore, consistent with the rules and regulations of the Commodity
Futures Trading Commission, the Fund will not purchase or sell futures contracts
or related options if, as a result, the sum of the initial margin deposit on the
Fund's existing futures and related options positions and premiums paid for
options on futures contracts entered into for other than bona fide hedging
purposes would exceed 5% of the Fund's assets.
Options purchased and written by the Fund may be exchange traded or may be
options entered into by the Fund in negotiated transactions with investment
dealers and other financial institutions ("OTC Options"), such as commercial
banks or savings and loan associations, deemed creditworthy by the Investment
Adviser. OTC Options are not as liquid as exchange traded options, and it may
not be possible for the Fund to dispose of an OTC Option it has purchased or
terminate its obligations under an OTC Option it has written at a time when the
Investment Adviser believes it would be advantageous to do so.
The use of futures and options involves the risk of imperfect correlation
between movements in futures and options prices and movements in the price of
securities which are the subject of the hedge. Expenses and losses incurred as a
result of the above hedging strategies would reduce the Fund's performance. For
a further discussion of futures and options transactions, including certain
additional risks associated therewith, see Appendix A.
ILLIQUID SECURITIES. The Fund may invest up to 10% of the value of its
assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with the Fund's investment objective.
Such securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, repurchase agreements providing for settlement in more than seven days
after notice, and certain options traded in the over-the-counter market and
securities used to cover such options. As to these securities, the Fund is
subject to the risk of unavailability of a buyer for a favorable price if the
Fund desires to sell these securities. Such lack of liquidity could adversely
affect the value of the Fund's net assets.
8
<PAGE>
INVESTMENT RESTRICTIONS
In addition to the investment policies set forth above, the Fund has adopted
certain fundamental investment restrictions (set forth in their entirety in the
Statement of Additional Information), which may not be amended without the vote
of a "majority" (as defined in the Investment Company Act) of the Fund's
outstanding voting securities. These restrictions prohibit the Fund, among other
matters, from (a) investing more than 25% of its total assets in any one
industry (disregarding investments in securities of the U.S. Government, its
agencies and instrumentalities); or (b) borrowing money or issuing senior
securities (as defined in the Investment Company Act), except that the Fund may
borrow in amounts not exceeding 15% of its total assets from banks for temporary
or emergency purposes, including the meeting of redemption requests which might
require the untimely disposition of securities. Additionally, the Fund has
adopted certain non-fundamental investment restrictions (also set forth in their
entirety in the Statement of Additional Information), which may be changed by
the Fund's Board of Directors without the approval of the Fund's shareholders.
According to these restrictions, the Fund, among other matters, may not: (a)
invest more than 10% of its assets (taken at market value at the time of
purchase) in the outstanding securities of any single issuer; (b) invest more
than 10% of its total assets in securities of issuers which together with any
predecessors have a record of less than three years of continuous operations; or
(c) own more than 10% of the outstanding voting securities of any one issuer.
BROKERAGE AND PORTFOLIO TRANSACTIONS
Subject to policies established by the Board of Directors of the Fund, the
Investment Adviser is responsible for investment decisions and for the execution
of the Fund's portfolio transactions. The Fund has no obligation to deal with
any particular broker or dealer in the execution of transactions in portfolio
securities. In executing such transactions, the Investment Adviser seeks to
obtain the best price and execution for its transactions. While the Investment
Adviser generally seeks reasonably competitive commission rates, the Fund does
not necessarily pay the lowest commission.
Where best price and execution may be obtained from more than one broker or
dealer, the Investment Adviser may, in its discretion, purchase and sell
securities through brokers or dealers who provide research, statistical and
other information to the Investment Adviser. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Investment Adviser under its investment advisory agreement with the Fund and the
expenses of the Investment Adviser will not necessarily be reduced as a result
of the receipt of such supplemental information. Such information may be useful
to the Investment Adviser in providing services to clients other than the Fund.
Conversely, such information provided to the Investment Adviser by brokers and
dealers through whom other clients of the Investment Adviser effect securities
transactions may be useful to the Investment Adviser in providing services to
the Fund.
Consistent with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD"), the Investment Adviser may also consider
distribution of Fund shares when allocating Fund portfolio transactions between
or among brokers and dealers that otherwise offer best price and execution.
The Fund will not purchase securities from, or sell securities to, the
Investment Adviser.
Certain other clients of the Investment Adviser may have investment
objectives and policies similar to those of the Fund. The Investment Adviser
may, from time to time, make recommendations that result in the purchase or sale
of a particular investment by its other clients simultaneously with
9
<PAGE>
the Fund. If transactions on behalf of more than one client during the same
period increase the demand for the investments being purchased or the supply of
investments being sold, there may be an adverse effect on price or quantity. In
addition, it is possible that the number of options or futures transactions that
the Fund may enter into may be affected by options or futures transactions
entered into by other investment advisory clients of the Investment Adviser. It
is the policy of the Investment Adviser to allocate advisory recommendations and
the placing of orders in a manner that is deemed equitable by the Investment
Adviser to the accounts involved, including the Fund. When two or more of the
clients of the Investment Adviser (including the Fund) are purchasing or selling
the same security on a given day from, to or through the same broker-dealer,
such transactions may be averaged as to price.
MANAGEMENT OF THE FUND
The Fund's Board of Directors is responsible for the overall management and
operation of the Fund. The Fund's officers are responsible for the day-to-day
operations of the Fund under the supervision of the Board of Directors.
INVESTMENT ADVISER
Pursuant to an Investment Advisory Agreement with the Fund (the "Investment
Advisory Agreement"), the Investment Adviser serves as the Fund's investment
adviser and, as such, is responsible for the overall management of the Fund's
investment portfolio. The Investment Adviser was incorporated in December 1982.
As of March 31, 1996, the Investment Adviser managed approximately $3.0 billion
of assets for the Fund, Jundt U.S. Emerging Growth Fund and 20 institutional
clients.
The Investment Adviser is a growth-oriented manager. The Investment Adviser
believes that the U.S. economy, due to its heterogeneous nature and immense
size, provides investors with significant growth opportunities. In selecting
investments, the Investment Adviser emphasizes fundamental prospects of
individual companies rather than macroeconomic trends.
Under the Investment Advisory Agreement, the Fund pays the Investment
Adviser a monthly fee equal on an annual basis to 1.00% of the Fund's average
daily net assets. This fee is higher than the advisory fee paid by most other
investment companies.
James R. Jundt serves as director, Chairman of the Board, Chief Executive
Officer and Secretary of the Investment Adviser and beneficially owns 76% of the
Investment Adviser's capital stock. Mary Joann Jundt, wife of James R. Jundt, is
the trustee of a trust that beneficially owns 4% of the Investment Adviser's
capital stock. The current beneficiaries of the trust are the children of Mr.
and Mrs. Jundt (including Marcus E. Jundt, Vice Chairman of the Board and a
director of the Investment Adviser) and the children of such children. Mrs.
Jundt votes the shares owned by the trust. The remaining 20% of the Investment
Adviser's capital stock is beneficially owned by Gail M. Knappenberger, formerly
a director and officer of the Investment Adviser.
PORTFOLIO MANAGERS
The Investment Adviser has no formal investment committee. All investment
decisions are made by one or more of the firm's four portfolio managers (James
R. Jundt, Donald M. Longlet, Thomas L.
10
<PAGE>
Press and Marcus E. Jundt). The Investment Adviser places significant emphasis
on the team approach in conducting its portfolio management activities. The
portfolio managers confer frequently throughout the typical business day as to
investment opportunities, and most investment decisions are made after
consultation with the other portfolio managers.
James R. Jundt, CFA, began his investment career in 1964 with Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), New York, New York, as a
security analyst before joining Investors Diversified Services, Inc. in
Minneapolis, Minnesota (now known as American Express Financial Advisers, Inc.)
in 1969, where he served in analytical and portfolio management positions until
1979. From 1979 to 1982, Mr. Jundt was a portfolio manager for St. Paul
Advisers, Inc. ("St. Paul Advisers," subsequently known as AMEV Advisers, Inc.
and now known as Fortis Advisers, Inc.) in Minneapolis. In December 1982, Mr.
Jundt left St. Paul Advisers and founded the Investment Adviser. He has served
as Chairman of the Board, President and Chief Executive Officer of Jundt Funds,
Inc. since 1995. Mr. Jundt has approximately 32 years of investment experience.
Mr. Jundt also serves as a Director and Chairman of the Distributor.
Donald M. Longlet, CFA, began his investment career in 1968 with
Northwestern National Bank of Minneapolis (now known as Norwest Bank Minnesota,
National Association) where he served as a security analyst and portfolio
manager until 1982. Mr. Longlet worked as a portfolio manager for AMEV Advisers,
Inc. (now known as Fortis Advisers, Inc.) from 1983 until 1989, when he joined
the Investment Adviser as a portfolio manager. He has served as Vice President
and Treasurer of Jundt Funds, Inc. since 1995. Mr. Longlet has approximately 28
years of investment experience.
Thomas L. Press was a Senior Vice President of Investment Advisers, Inc. and
Co-Manager of the IAI Emerging Growth Fund from 1992 until July 1993, when he
joined the Investment Adviser as a portfolio manager. From 1987 to 1992, Mr.
Press was a Vice President, Institutional Sales in the Chicago office of Morgan
Stanley & Co., Inc., and prior thereto, was an institutional salesman and trader
in the Chicago office of Salomon Brothers Inc. Mr. Press has approximately 11
years of investment experience. Mr. Press also serves as a Director, President,
Secretary and Treasurer of the Distributor.
Marcus E. Jundt has been a portfolio manager for the Investment Adviser
since June 1992. Mr. Jundt was employed as a research analyst for Victoria
Investors from 1988 to 1992, and from 1987 to 1988 was employed by Cargill
Investor Services, where he worked on the floor of the Chicago Mercantile
Exchange. Mr. Jundt has approximately 9 years of investment and related
experience.
ADMINISTRATOR
Under the terms of an Administration Agreement between Princeton
Administrators, L.P. (the "Administrator") and the Fund (the "Administration
Agreement"), the Administrator performs or arranges for the performance of
certain administrative services (I.E., services other than investment advice and
related portfolio activities) necessary for the operation of the Fund,
including, but not limited to, maintaining certain of the books and records of
the Fund, preparing or reviewing certain reports and other documents required by
United States federal, state and other applicable laws and regulations to
maintain the registration of the Fund and its shares and providing the Fund with
administrative office facilities. For the services rendered to the Fund and the
facilities furnished, the Fund pays the Administrator a monthly fee equal to the
greater of (a) $125,000 per annum, or (b) an
11
<PAGE>
annual rate equal to .20% of the Fund's average daily net assets up to $600
million and .175% of the Fund's average daily net assets in excess of $600
million. The principal address of the Administrator is P.O. Box 9011, Princeton,
New Jersey 08543. The Administrator is an affiliate of Merrill Lynch.
THE DISTRIBUTOR; RULE 12b-1 DISTRIBUTION PLANS
Pursuant to a Distribution Agreement between the Distributor and the Fund,
the Distributor serves as the principal underwriter of each Class of the Fund's
shares. Additionally, the Fund has adopted Distribution Plans pursuant to Rule
12b-1 under the Investment Company Act with respect to its Class B, Class C and
Class D shares, pursuant to which each such Class pays the Distributor certain
fees in connection with the distribution of shares of such Class and/or the
maintenance of shareholder accounts.
Under its Distribution Plan, each of Class B, Class C and Class D pays the
Distributor a Rule 12b-1 "account maintenance fee" equal on an annual basis to
.25% of the average daily net assets attributable to each such Class. This
account maintenance fee is designed to compensate the Distributor and certain
broker-dealers and financial institutions with which the Distributor has entered
into selling arrangements for the provision of certain services to the holders
of Fund shares, including, but not limited to, answering shareholder questions,
providing shareholders with reports and other information and providing various
other services relating to the maintenance of shareholder accounts.
The Distribution Plans of Class B and Class C provide for the additional
payment of a Rule 12b-1 "distribution fee" to the Distributor, equal on an
annual basis to .75% of the average daily net assets attributable to each such
Class. This fee is designed to compensate the Distributor for advertising,
marketing, and distributing the Class B and Class C shares, including the
provision of initial and ongoing sales compensation to the Distributor's sales
representatives and to other broker-dealers and financial institutions with
which the Distributor has entered into selling arrangements.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN; SUBACCOUNTING AGENTS
Investors Fiduciary Trust Company (the "Transfer Agent"), 1004 Baltimore,
Kansas City Missouri 64105, serves as the Fund's transfer agent and dividend
disbursing agent. Norwest Bank Minnesota, N.A., Norwest Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402, serves as the Fund's custodian. In
addition, the Fund compensates certain broker-dealers that sell Fund shares for
performing various accounting and administrative services with respect to large
street-name accounts maintained by such broker-dealers.
HOW TO BUY FUND SHARES
ALTERNATIVE PURCHASE ARRANGEMENTS
The Fund offers investors the choice among three Classes of shares (Class B,
Class C and Class D) which offer different sales charges and bear different
expenses. (THE FUND'S CLASS A SHARES ARE OFFERED FOR SALE EXCLUSIVELY TO CERTAIN
SPECIFIED INVESTORS AND ARE NOT OFFERED FOR SALE TO THE PUBLIC GENERALLY.) These
alternatives permit an investor to choose the method of purchasing shares that
is most beneficial given the amount of the purchase, the length of time the
investor expects to hold the shares and other circumstances.
As more fully set forth below, a broker-dealer or financial institution may
receive different levels of compensation depending upon which Class of shares is
sold. In addition, the Distributor from time to time may pay certain additional
cash incentives of up to $100 and/or non cash incentives to its investment
executives and other broker-dealers and financial institutions in consideration
of their sales of Fund shares. In some instances, other incentives may be made
available only to selected
12
<PAGE>
broker-dealers and financial institutions, based on objective standards
developed by the Distributor, to the exclusion of other broker-dealers and
financial institutions. The Distributor in its discretion may from time to time,
pursuant to objective criteria established by it, pay fees to qualifying
brokers, dealers or financial intermediaries for certain services or activities
which are primarily intended to result in sales of Fund shares.
GENERAL PURCHASE INFORMATION
The minimum initial investment is $1,000, and the minimum additional
investment is $50. The Fund may waive or reduce these minimums for certain
automatic investment plan accounts, retirement and employee savings plans or
custodial accounts for the benefit of minors. The Fund's shares may be purchased
at their public offering price (see below) from the Distributor, from the
Transfer Agent, from other broker-dealers who are members of the NASD and who
have selling agreements with the Distributor, and from certain financial
institutions that have selling agreements with the Distributor.
When purchasing Fund shares, investors must specify which Class of shares is
being purchased. If no Class is specified, the order will be deemed an
investment in Class D shares. (However, for investors qualifying to purchase
Class A shares, the order will be deemed an investment in Class A shares.) No
share certificates will be issued by the Fund.
Banks, acting as agents for their customers and not for the Fund or the
Distributor, from time to time may purchase Fund shares for the accounts of such
customers. Generally, the Glass-Steagall Act prohibits banks from engaging in
the business of underwriting, selling or distributing securities. Should the
activities of any bank, acting as agent for its customers in connection with the
purchase of the Fund's shares, be deemed to violate the Glass-Steagall Act,
management will take whatever action, if any, is appropriate in order to provide
efficient services for the Fund. Fund management does not believe that a
termination in the relationship with any bank would result in any material
adverse consequences to the Fund. In addition, state securities laws on this
issue may differ and banks and financial institutions may be required to
register as dealers pursuant to state law. Fund shares are not deposits or
obligations of, or guaranteed or endorsed by, any bank and are not insured or
guaranteed by the U.S. Government, the FDIC, the Federal Reserve Board or any
other federal agency.
When orders are placed for shares of the Fund, the public offering price
used for the purchase will be the net asset value per share next determined,
plus the applicable sales charge, if any. If an order is placed with the
Distributor or other broker-dealer, the broker-dealer is responsible for
promptly transmitting the order to the Fund.
Shares of the Fund may be purchased by opening an account either by mail or
by phone. Shares are deemed to be purchased as of the time of determination of
the Fund's net asset value on the day the purchase order for the purchase of its
shares is received in good form and accepted by the Fund.
An investor who may be interested in having shares redeemed shortly after
purchase should consider making unconditional payment by certified check or
other means approved in advance by the Distributor. Payment of redemption
proceeds will be delayed as long as necessary to verify by expeditious means
that the purchase payment has been or will be collected. Such period of time
typically will not exceed 15 days.
AUTOMATIC INVESTMENT PLAN. Investors may make systematic investments in
fixed amounts automatically on a monthly basis through the Fund's Automatic
Investment Plan. Additional information is available from the Transfer Agent.
13
<PAGE>
PURCHASES BY MAIL. To open an account by mail, complete the general
authorization form attached to this Prospectus, and mail it, along with a check
payable to "The Jundt Growth Fund, Inc." to:
c/o National Financial Data Services
P.O. Box 419168
Kansas City, MO 64141-6168
PURCHASES BY TELEPHONE. To open an account by telephone, call (800)
370-0612 to obtain an account number and instructions. Information concerning
the account will be taken over the phone. The investor must then request a
commercial bank with which he or she has an account and which is a member of the
Federal Reserve System to transmit Federal Funds by wire to the Fund as follows:
State Street Bank & Trust Company ABA #011000028
For credit of: The Jundt Growth Fund, Inc.
Account No.: 9905-154-2
Account Number: (assigned by telephone)
Information on how to transmit Federal Funds by wire is available at any
national bank or any state bank that is a member of the Federal Reserve System.
The bank may charge the shareholder for the wire transfer. The investor will be
required to complete the general authorization form attached to this Prospectus
and mail it to the Fund after making the initial telephone purchase.
CLASS A SHARES -- LIMITED PURCHASER CLASS
Class A shares are not generally available for sale to the public and are
offered for sale exclusively to: (a) directors, officers, employees and
consultants of the Fund (including partners and employees of outside legal
counsel to the Fund), the Investment Adviser and the Distributor, members of
their immediate families, and their lineal ancestors and descendants; (b)
shareholders of the Fund at the time of the Open-End Conversion, but only so
long as such shareholders remain Fund shareholders and/or shareholders of the
related Jundt U.S. Emerging Growth Fund (a liquidation of the shareholder's
account in both funds will thereupon terminate such person's privilege to invest
in Class A shares); and (c) accounts for the benefit of any of the foregoing.
The public offering price of Class A shares of the Fund is their next
determined net asset value plus the applicable front-end sales charge ("FESC").
The Fund receives the net asset value. The FESC varies depending on the size of
the purchase and is allocated between the Distributor and other broker-dealers.
The current FESC schedule is as follows:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
-------------------------------
(AS A % OF DEALER REALLOWANCE
OFFERING (AS A % OF (AS A % OF
AMOUNT OF INVESTMENT PRICE) NET INVESTMENT) OFFERING PRICE)
- ------------------------------------------------------------- -------------- --------------- ------------------
<S> <C> <C> <C>
Less than $25,000............................................ 5.25% 5.54% 4.50%
$25,000 but less than $50,000................................ 4.75% 4.99% 4.25%
$50,000 but less than $100,000............................... 4.00% 4.17% 3.50%
$100,000 but less than $250,000.............................. 3.00% 3.09% 2.50%
$250,000 but less than $1,000,000............................ 2.00% 2.04% 1.75%
$1,000,000 and greater....................................... NONE* NONE* *
</TABLE>
- ------------------------
* On any sale of Class A shares to an investor in the amount of $1 million or
more, the Distributor will pay the dealer a commission equal to 1% of the
amount of that sale that is less than $2.5 million, .50% of the amount of
the sale that equals or exceeds $2.5 million but is less than $5 million and
.25% of the sale that equals or exceeds $5 million. Although such purchases
are not
14
<PAGE>
subject to a FESC, a contingent deferred sales charge of 1% will be imposed
at the time of redemption if redeemed within one year. See "How to Redeem
Fund Shares -- Contingent Deferred Sales Charge."
In connection with the distribution of the Fund's Class A shares, the
Distributor receives all applicable sales charges. The Distributor, in turn,
pays other broker-dealers selling such shares the "dealer reallowance" set forth
above. In the event that shares are purchased by a financial institution acting
as agent for its customers, the Distributor or the broker-dealer with whom such
order was placed may pay all or part of its dealer reallowance to such financial
institution in accordance with agreements between such parties.
SPECIAL PURCHASE PLANS -- REDUCED SALES CHARGES. Certain investors (or
groups of investors) may qualify for reductions in, or waivers of, the sales
charges shown above. Investors should contact their broker-dealer or the Fund
for details about the Combined Purchase Privilege, Cumulative Quantity Discount
and Letter of Intention plans. Descriptions are also included in the
authorization form and in the Statement of Additional Information. These special
purchase plans may be amended or eliminated at any time by the Distributor
without notice to existing Fund shareholders.
RULE 12b-1 FEES. Class A shares are not subject to any Rule 12b-1 account
maintenance or distribution fees.
WAIVER OF SALES CHARGES. Class A shares will be issued at net asset value,
and not subject to a FESC or contingent deferred sales charge ("CDSC"), if the
purchase of such shares by a qualifying investor is funded by the proceeds from
the redemption of shares of any unrelated open-end investment company that
charges a sales charge. In order to exercise this privilege, the purchase order
must be received by the Fund within 60 days after the redemption of shares of
the unrelated investment company. Class A shares also will be issued at their
net asset value, and not subject to a FESC or CDSC, to: (a) directors, officers,
employees and consultants of the Fund (including partners and employees of
outside legal counsel to the Fund), the Investment Adviser and the Distributor,
members of their immediate families, and their lineal ancestors and descendants;
and (b) accounts for the benefit of any of the foregoing. Investors that qualify
to purchase Class A shares and would qualify to purchase Class D shares at net
asset value, I.E., without the imposition of an FESC or CDSC, may also invest in
Class A shares at net asset value. See "Class D Shares -- Initial Sales Charge
Alternative -- Waiver of Sales Charges."
CLASS B SHARES -- CONTINGENT DEFERRED SALES CHARGE ALTERNATIVE
The public offering price of Class B shares of the Fund is the net asset
value of the Fund's shares. Class B shares are sold without an initial sales
charge so that the Fund receives the full amount of the investor's purchase.
However, a CDSC of up to 4% will be imposed if shares are redeemed within six
years of purchase. For additional information, see "How to Redeem Fund Shares --
Contingent Deferred Sales Charge." In addition, Class B shares are subject to
higher Rule 12b-1 fees as described
15
<PAGE>
below. The CDSC will depend on the number of years since the purchase was made,
according to the following table, and will be calculated on an amount equal to
the lesser of the net asset value of the shares at the time of purchase or their
net asset value at the time of redemption.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES CHARGE
(AS A PERCENTAGE OF AMOUNT SUBJECT TO
REDEMPTION DURING CHARGE)
- ---------------------------------------------------------------------- -------------------------------------------
<S> <C>
1st Year Since Purchase............................................... 4%
2nd Year Since Purchase............................................... 4%
3rd Year Since Purchase............................................... 3%
4th Year Since Purchase............................................... 3%
5th Year Since Purchase............................................... 2%
6th Year Since Purchase............................................... 1%
Thereafter............................................................ None
</TABLE>
Proceeds from the CDSC are paid to the Distributor and are used to defray
expenses of the Distributor related to providing distribution-related services
to the Fund in connection with the sale of Class B shares, such as the payment
of compensation to selected broker-dealers, and for selling Class B shares. The
combination of the CDSC and the Rule 12b-1 fee enable the Fund to sell the Class
B shares without deduction of a sales charge at the time of purchase. Although
Class B shares are sold without an initial sales charge, the Distributor pays a
sales commission equal to 4% of the amount invested to broker-dealers who sell
Class B shares and an annual fee of 0.25% of the amount invested that begins to
accrue one year after the shares are sold. Orders for Class B shares of $250,000
or more will be treated as orders for Class D shares (or Class A shares, if the
investor is eligible to purchase Class A shares) or declined.
RULE 12b-1 FEES. Class B shares are subject to a Rule 12b-1 account
maintenance fee payable at an annual rate of .25% of the average daily net
assets of the Fund attributable to Class B shares and a Rule 12b-1 distribution
fee payable at an annual rate of .75% of the average daily net assets
attributable to Class B shares. The higher Rule 12b-1 fee will cause Class B
shares to have a higher expense ratio and to pay lower dividends than Class A or
Class D shares. For additional information about this fee, see "Management of
the Fund -- The Distributor; Rule 12b-1 Distribution Plans."
CONVERSION FEATURE. On the "designated conversion date" (the 15th day of
each month, or the next business day if the 15th day is not a business day)
following the eighth anniversary of their sale, Class B shares (including a pro
rata portion of the shares of the Fund received in connection with dividend and
distribution reinvestments) will automatically convert to Class D shares and
will no longer be subject to the higher Rule 12b-1 fees attributable to Class B
shares. Such conversion will be on the basis of the relative net asset values of
the two Classes. Class D shares issued upon such conversion will not be subject
to any FESC or CDSC. Class B shares acquired by exercise of the "reinstatement
privilege" will convert into Class D shares based on the time of the original
purchase of Class B shares. See "How to Redeem Fund Shares -- Reinstatement
Privilege." The conversion of Class B shares into Class D shares is subject to
the continuing availability of a ruling from the Internal Revenue Service that
payment of different dividends by each of the Classes of shares does not result
in the Fund's dividends or distributions constituting "preferential dividends"
under the Internal Revenue Code of 1986, as amended (the "Code"), and that such
conversions do not constitute taxable events for federal tax purposes. There can
be no assurance that such ruling will continue to be
16
<PAGE>
available, and the conversion of Class B shares into Class D shares will not
occur if such ruling is not available at the time of conversion. In such event,
Class B shares would continue to be subject to higher expenses than Class D
shares for an indefinite period.
CLASS C SHARES -- LEVEL LOAD ALTERNATIVE
The public offering price of Class C shares of the Fund is the net asset
value of the Fund's shares. Class C shares are sold without an initial sales
charge so that the Fund receives the full amount of the investor's purchase.
However, a CDSC of 1% will be imposed if shares are redeemed within one year of
purchase. For additional information, see "How to Redeem Fund Shares --
Contingent Deferred Sales Charge." In addition, Class C shares are subject to
higher annual Rule 12b-1 fees as described below.
Proceeds from the CDSC are paid to the Distributor and are used to defray
expenses of the Distributor related to providing distribution-related services
to the Fund in connection with the sale of Class C shares, such as the payment
of compensation to selected broker-dealers, and for selling Class C shares. The
combination of the CDSC and the Rule 12b-1 fee enable the Fund to sell the Class
C shares without deduction of a sales charge at the time of purchase. Although
Class C shares are sold without an initial sales charge, the Distributor pays a
sales commission equal to 1.00% of the amount invested to broker-dealers who
sell Class C shares at the time the shares are sold and an annual fee of 1.00%
of the amount invested that begins to accrue one year after the shares are sold.
RULE 12b-1 FEES. Class C shares are subject to a Rule 12b-1 account
maintenance fee payable at an annual rate of .25% of the average daily net
assets of the Fund attributable to Class C shares and a Rule 12b-1 distribution
fee payable at an annual rate of .75% of the average daily net assets
attributable to Class C shares. The higher Rule 12b-1 fee will cause Class C
shares to have a higher expense ratio and to pay lower dividends than Class A or
Class D shares. For additional information about this fee, see "Management of
the Fund -- Distributor; Rule 12b-1 Distribution Plans."
As between Class B and Class C shares, an investor that anticipates an
investment in the Fund of longer than six years (the CDSC period applicable to
Class B shares) would conclude that Class B shares are preferable to Class C
shares because the Class B shares will automatically convert to Class D shares
(to which lower Rule 12b-1 expenses apply) after eight years. However, an
investor with an anticipated investment time frame of less than six years (or
with an uncertain time frame) may choose Class C shares because of the larger
and longer-term CDSC applicable to Class B shares.
17
<PAGE>
CLASS D SHARES -- INITIAL SALES CHARGE ALTERNATIVE
The public offering price of Class D shares of the Fund is their next
determined net asset value plus the applicable FESC. The Fund receives the net
asset value. The FESC varies depending on the size of the purchase and is
allocated between the Distributor and other broker-dealers. The current FESC
schedule is as follows:
<TABLE>
<CAPTION>
FRONT-END SALES CHARGE
-------------------------------
(AS A % OF DEALER REALLOWANCE
OFFERING (AS A % OF (AS A % OF
AMOUNT OF INVESTMENT PRICE) NET INVESTMENT) OFFERING PRICE)
- ------------------------------------------------------------- -------------- --------------- ---------------------
<S> <C> <C> <C>
Less than $25,000............................................ 5.25% 5.54% 4.50%
$25,000 but less than $50,000................................ 4.75% 4.99% 4.25%
$50,000 but less than $100,000............................... 4.00% 4.17% 3.50%
$100,000 but less than $250,000.............................. 3.00% 3.09% 2.50%
$250,000 but less than $1,000,000............................ 2.00% 2.04% 1.75%
$1,000,000 and greater....................................... NONE* NONE* *
</TABLE>
- ------------------------
* On any sale of Class D shares to an investor in the amount of $1 million or
more, the Distributor will pay the dealer a commission equal to 1% of the
amount of that sale that is less than $2.5 million, .50% of the amount of
the sale that equals or exceeds $2.5 million but is less than $5 million and
.25% of the sale that equals or exceeds $5 million. Although such purchases
are not subject to a FESC, a CDSC of 1% will be imposed at the time of
redemption if redeemed within one year. See "How to Redeem Fund Shares --
Contingent Deferred Sales Charge."
In connection with the distribution of the Fund's Class D shares, the
Distributor receives all applicable sales charges. The Distributor, in turn,
pays other broker-dealers selling such shares the "dealer reallowance" set forth
above and an annual fee of 0.25% of the amount invested that begins to accrue
one year after the shares are sold. In the event that shares are purchased by a
financial institution acting as agent for its customers, the Distributor or the
broker-dealer with whom such order was placed may pay all or part of its dealer
reallowance to such financial institution in accordance with agreements between
such parties.
SPECIAL PURCHASE PLANS -- REDUCED SALES CHARGES. Certain investors (or
groups of investors) may qualify for reductions in, or waivers of, the sales
charges shown above. Investors should contact their broker-dealer or the Fund
for details about the Combined Purchase Privilege, Cumulative Quantity Discount
and Letter of Intention plans. Descriptions are also included in the
authorization form and in the Statement of Additional Information. These special
purchase plans may be amended or eliminated at any time by the Distributor
without notice to existing Fund shareholders.
RULE 12b-1 FEES. Class D shares are subject to a Rule 12b-1 account
maintenance fee payable at an annual rate of .25% of the average daily net
assets of the Fund attributable to Class D shares. For additional information
about this fee, see "Management of the Fund -- The Distributor; Rule 12b-1
Distribution Plans."
WAIVER OF SALES CHARGES. Class D shares will be issued at net asset value,
and not subject to a FESC or CDSC, if the purchase of such shares is funded by
the proceeds from the redemption of shares of any unrelated open-end investment
company that charges a sales charge. In order to exercise this
18
<PAGE>
privilege, the purchase order must be received by the Fund within 60 days after
the redemption of shares of the unrelated investment company. Class D shares
also will be issued at their net asset value, and not subject to a FESC or CDSC,
to the following categories of investors:
- Investment executives and other employees of broker-dealers and financial
institutions that have entered into agreements with the Distributor for
the distribution of Fund shares, and parents and immediate family members
of such persons.
- Trust companies and bank trust departments for funds held in a fiduciary,
agency, advisory, custodial or similar capacity.
- States and their political subdivisions, and instrumentalities,
departments, authorities and agencies of states and their political
subdivisions.
- Registered investment advisers and their investment advisory clients.
- Employee benefit plans qualified under Section 401(a) of the Code (which
does not include Individual Retirement Accounts), and custodial accounts
under Section 403(b)(7) of the Code (also known as tax-sheltered
annuities).
HOW TO REDEEM FUND SHARES
The Fund will redeem its shares in cash at the net asset value per share
next determined after receipt of a shareholder's written request for redemption
in good order. If shares for which payment has been collected are redeemed,
payment will be made within three days. Shareholders that own more than one
Class of the Fund's shares should clearly specify the Class or Classes of shares
being redeemed.
The Fund imposes no charges (other than any applicable CDSC) when shares are
redeemed directly through the Transfer Agent. Service agents may charge a
nominal fee for effecting redemptions of Fund shares. It is the responsibility
of each service agent to transmit redemption orders to the Transfer Agent. Any
certificates representing Fund shares being redeemed must be submitted with the
redemption request. The value of shares redeemed may be more or less than their
original cost depending upon the then-current net asset value of the Class being
redeemed.
The Fund may suspend this right of redemption and may postpone payment only
when the New York Stock Exchange is closed for other than customary weekends or
holidays, or if permitted by the rules of the SEC during periods when trading on
the New York Stock Exchange is restricted or during any emergency which makes it
impracticable for the Fund to dispose of its securities or to determine fairly
the value of its net assets, or during any other period permitted by order of
the SEC for the protection of investors.
Although the Fund has no current intention of doing so, the Fund reserves
the right to redeem its shares in kind. However, the Fund will pay in cash all
redemption requests by any shareholder that, during any 90-day period, amount to
no more than the lesser of: (a) $250,000; or (b) 1% of the Fund's net asset
value at the beginning of such 90-day period. If a redemption were made in kind,
a shareholder would incur transaction costs in disposing of any securities
received.
The Fund expects to redeem all of the shares of any shareholder whose
account has remained below $1,000 as a result of redemptions for at least 60
days after the mailing to the shareholder of a "notice of intention to redeem."
19
<PAGE>
CONTINGENT DEFERRED SALES CHARGE
The CDSC will be calculated on an amount equal to the lesser of the net
asset value of the shares at the time of purchase or their net asset value at
the time of redemption. No CDSC will be imposed on any redeemed shares that have
been held for longer than the applicable CDSC period or to the extent the value
of any redeemed shares represents reinvestment of dividends or capital gains
distributions or capital appreciation of shares redeemed.
In determining whether a CDSC is applicable to any redemption, the
calculation will be determined in the manner that results in the lowest rate
being charged. Therefore, it will be assumed that a redemption of Class B shares
is made first of shares representing reinvestment of dividends and capital gains
distributions and then of remaining shares held by the shareholder for the
longest period of time. If a shareholder owns Class B and Class D shares, then
absent a shareholder choice to the contrary, Class B shares not subject to a
CDSC will be redeemed in full prior to any redemption of Class D shares not
subject to a CDSC.
The CDSC does not apply to: (a) redemption of shares when a Fund exercises
its right to liquidate accounts which are less than the minimum account size;
(b) redemptions in the event of the death or disability of the shareholder
within the meaning of Section 72(m)(7) of the Code; and (c) redemptions
representing a minimum required distribution from an individual retirement
account processed under a systematic withdrawal plan.
REINSTATEMENT PRIVILEGE
The Distributor, upon notification, intends to provide, out of its own
assets, a pro rata refund of any CDSC paid in connection with a redemption of
shares of the Fund (by crediting such refunded CDSC to such shareholder's
account) if, within 90 days of such redemption, all or any portion of the
redemption proceeds are reinvested in shares of the same Class of the Fund. Any
reinvestment within 90 days of a redemption with respect to which the CDSC was
paid will be made without the imposition of an FESC but will be subject to the
same CDSC to which such amount was subject prior to the redemption. The CDSC
period will run from the original investment date of the redeemed shares but
will be extended by the number of days between the redemption date and the
reinvestment date.
EXCHANGE PRIVILEGE
Except as described below, shareholders may exchange some or all of their
Fund shares for shares of Jundt U.S. Emerging Growth Fund (a series of Jundt
Funds, Inc.), and vice versa, provided that the shares to be acquired in the
exchange are eligible for sale in the shareholder's state of residence. Class B
shareholders may exchange their shares for Class B shares of the other Fund,
Class C shareholders may exchange their shares for Class C shares of the other
Fund and Class A and Class D shareholders may exchange their shares for Class D
shares (or Class A shares, if the shareholder is eligible to purchase Class A
shares) of Jundt U.S. Emerging Growth Fund. Class D shareholders of Jundt U.S.
Emerging Growth Fund may exchange Class D shares for Class A shares of the Fund
provided that such shareholder has continuously held shares of the Fund and/or
Jundt U.S. Emerging Growth Fund since the Open-End Conversion.
The minimum amount which may be exchanged is $1,000. The Fund and Jundt U.S.
Emerging Growth Fund will execute the exchange on the basis of the relative net
asset values next determined after receipt by the Fund. If a shareholder
exchanges shares of the Fund that are subject to a CDSC for shares of Jundt U.S.
Emerging Growth Fund, the transaction will not be subject to a CDSC. However,
when shares acquired through the exchange are redeemed, the shareholder will be
treated as if no
20
<PAGE>
exchange took place for the purpose of determining the CDSC. There is no
specific time limit on exchange frequency; however, the Fund is intended for
long term investment and not as a trading vehicle. The Investment Adviser
reserves the right to prohibit excessive exchanges (more than four per quarter).
The Distributor reserves the right, upon 60 days' prior notice, to restrict the
frequency of, or otherwise modify, condition, terminate or impose charges upon,
exchanges. An exchange is considered a sale of shares on which the investor may
realize a capital gain or loss for income tax purposes. A shareholder may place
exchange requests directly with the Fund, through the Distributor or through
other broker-dealers. An investor considering an exchange should obtain a
prospectus of Jundt U.S. Emerging Growth Fund and should read such prospectus
carefully. Contact the Fund, the Distributor or any of such other broker-dealers
for further information about the exchange privilege.
EXPEDITED REDEMPTIONS
The Fund offers several expedited redemption procedures, described below,
which allow a shareholder to redeem Fund shares at net asset value determined on
the same day that the shareholder placed the request for redemption of those
shares. Pursuant to these expedited redemption procedures, the Fund's shares
will be redeemed at their net asset value next determined following the Fund's
receipt of the redemption request. The Fund reserves the right at any time to
suspend or terminate the expedited redemption procedures or to impose a fee for
this service. There is currently no additional charge to the shareholder for use
of the Fund's expedited redemption procedures.
EXPEDITED TELEPHONE REDEMPTION. Shareholders redeeming at least $1,000 and
no more than $25,000 of shares (which are not then represented by share
certificates) may redeem by telephoning the Fund directly at (800) 370-0612. The
applicable section of the authorization form must have been completed by the
shareholder and filed with the Fund before the telephone request is received.
The Fund will employ reasonable procedures to confirm that telephone
instructions are genuine, including requiring that payment be made only to the
shareholder's address of record or to the bank account designated on the
authorization form and requiring certain means of telephonic identification. If
the Fund fails to employ such procedures, it may be liable for any losses
suffered by shareholders as a result of fraudulent instructions. The proceeds of
the redemption will be paid by check mailed to the shareholder's address of
record or, if requested at the time of redemption, by wire to the bank
designated on the authorization form.
EXPEDITED REDEMPTIONS THROUGH CERTAIN BROKER-DEALERS. Certain
broker-dealers who have sales agreements with the Distributor may allow their
customers to effect an expedited redemption of shares of the Fund purchased
through such a broker-dealer by notifying the broker-dealer of the amount of
shares to be redeemed. The broker-dealer is then responsible for promptly
placing the redemption request with the Fund on the customer's behalf. Payment
will be made to the shareholder by check or wire sent to the broker-dealer.
Broker-dealers offering this service may impose a fee or additional requirements
for such redemptions.
MONTHLY CASH WITHDRAWAL PLAN
An investor who owns or buys shares of the Fund valued at $10,000 or more at
the current offering price may open a Withdrawal Plan and have a designated sum
of money paid monthly to the investor or another person. The applicable CDSC may
apply to monthly redemptions of Class B or Class C shares. See "Monthly Cash
Withdrawal Plan" in the Statement of Additional Information.
21
<PAGE>
DETERMINATION OF NET ASSET VALUE
The net asset value of each Class of the Fund's shares is determined once
daily as of 15 minutes after the close of business on the New York Stock
Exchange (generally 4:00 p.m., New York time) on each day during which the New
York Stock Exchange is open for trading. Any assets or liabilities initially
expressed in terms of non-U.S. dollar currencies are translated into U.S.
dollars at the prevailing market rates as quoted by one or more banks or dealers
on the day of valuation. The net asset value is computed by dividing the market
value of the securities held by the Fund plus any cash or other assets
(including interest and dividends accrued but not yet received) minus all
liabilities (including accrued expenses) by the total number of shares
outstanding at such time. Expenses, including but not limited to the fees paid
to the Investment Adviser and the Administrator and any account maintenance
and/or distribution fees payable to the Distributor, are accrued daily.
Portfolio securities which are traded on a national securities exchange or
on the NASDAQ National Market System are valued at the last sale price on such
exchange or market as of the close of business on the date of valuation.
Securities traded on a national securities exchange or on the NASDAQ National
Market System for which there were no sales on the date of valuation and
securities traded on other over-the-counter markets, including listed securities
for which the primary market is believed to be over-the-counter, are valued at
the mean between the most recently quoted bid and asked prices. Options are
valued at market value or fair value if no market exists. Futures contracts are
valued in a like manner, except that open futures contract sales are valued
using the closing settlement price or, in the absence of such a price, the most
recent quoted asked price. Securities and assets for which market quotations are
not readily available are valued at fair value as determined in good faith by
the Fund's Board of Directors or by the Investment Adviser in accordance with
policies and procedures established by the Board of Directors. Short-term
investments that mature in 60 days or less are valued at amortized cost, which
approximates fair value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Substantially all of the Fund's net realized gains and net investment
income, if any, will be paid to shareholders annually. Dividends and
distributions may be taken in cash or automatically reinvested in additional
Fund shares (of the same Class of shares as the shares to which the dividends or
distributions relate) at net asset value on the ex-dividend date. Dividends and
distributions will be automatically reinvested in additional Fund shares unless
the shareholder has elected in writing to receive dividends and distributions in
cash.
TAXES
The Fund historically has qualified, and intends to continue to qualify, as
a "regulated investment company" under Subchapter M of the Code. If so
qualified, the Fund will not be subject to federal income taxes to the extent
its earnings are timely distributed. The Fund also intends to make distributions
as required by the Code to avoid the imposition of the 4% federal excise taxes.
The Fund will distribute substantially all of its net investment income and
net capital gains to investors. Distributions to shareholders from the Fund's
income and short-term capital gains are taxed as dividends (as ordinary income),
and long-term capital gain distributions are taxed as long-term capital gains.
Distributions of long-term capital gains will be taxable to the investor as
long-term capital gains regardless of the length of time the shares have been
held. A portion of the Fund's
22
<PAGE>
dividends may qualify for the dividends received deduction for corporations. The
Fund's distributions are taxable when they are paid, whether a shareholder takes
them in cash or reinvests them in additional Fund shares, except that dividends
and distributions declared in December but paid in January are taxable as if
paid on or before December 31. The federal income tax status of all
distributions will be reported to shareholders annually. In addition to federal
income taxes, dividends and distributions may also be subject to state or local
taxes, and if the shareholder lives outside the United States, the dividends and
distributions could also be taxed by the country in which the shareholder
resides.
"BUYING A DIVIDEND"
On the ex-dividend date for a dividend or distribution by the Fund, its
share price is reduced by the amount of the dividend or distribution. If an
investor purchases shares of the Fund on or before the record date ("buying a
dividend"), the investor will pay the full price for the shares (which includes
realized but undistributed earnings and capital gains of the Fund that
accumulate throughout the year), and then receive a portion of the purchase
price back in the form of a taxable distribution.
OTHER TAX INFORMATION
Under federal tax law, some shareholders may be subject to a 31% withholding
on reportable dividends, capital gains distributions and redemption payments
("backup withholding"). Generally, shareholders subject to backup withholding
will be those for whom a taxpayer identification number is not on file with the
Fund or any of its agents or who, to the Fund's or agent's knowledge, have
furnished an incorrect number. In order to avoid this withholding requirement,
investors must certify that the taxpayer identification number provided is
correct and that the investment is not otherwise subject to backup withholding,
or is exempt from backup withholding.
THE FOREGOING TAX DISCUSSION IS GENERAL IN NATURE, AND EACH INVESTOR IS
ADVISED TO CONSULT HIS OR HER TAX ADVISER REGARDING SPECIFIC QUESTIONS AS TO
FEDERAL, STATE, LOCAL OR FOREIGN TAXATION.
PERFORMANCE INFORMATION
Advertisements and communications to shareholders may contain various
measures of the Fund's performance, including various expressions of total
return. Additionally, such advertisements and communications may occasionally
cite statistics to reflect the Fund's volatility or risk. Performance for each
Class of the Fund's shares may be calculated on the basis of average annual
total return and/or total return. These total return figures reflect changes in
the price of the shares and assume that any income dividends and/or capital
gains distributions made by the Fund during the measuring period were reinvested
in shares of the same Class. The Fund presents performance information for Class
A shares commencing with the Fund's inception and for Class B, Class C and Class
D shares commencing with the Open-End Conversion. Performance information for
Class A shares for the period prior to the Open-End Conversion reflects the
performance of the Fund as a closed-end fund. As an open-end fund, the Fund
incurs certain additional expenses as a result of the continuous offering and
redemption of its shares. Class A and Class D average annual total return
figures reflect the maximum initial FESC (but do not reflect the imposition of
any CDSC upon redemption), and Class B and Class C average annual total return
figures reflect any applicable CDSC. Performance for each Class is calculated
separately.
23
<PAGE>
Average annual total return is calculated pursuant to a standardized formula
which assumes that an investment was purchased with an initial payment of $1,000
and that the investment was redeemed at the end of a stated period of time,
after giving effect to the reinvestment of dividends and distributions during
the period. The return is expressed as a percentage rate which, if applied on a
compounded annual basis, would result in the redeemable value of the investment
at the end of the period. Advertisements of the performance of the Fund's Class
A shares will cover one and, when available, five and ten-year periods, as well
as the time period since the inception of the Fund. Advertisements of the
performance of the Fund's Class B, Class C and Class D shares will cover the
time period since the Open-End Conversion and, when available, one, five and
ten-year periods.
Total return is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Total return generally is expressed as a
percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the maximum offering price per
share (in the case of Class A or Class D shares) or the net asset value per
share (in the case of Class B or Class C shares) at the beginning of the period.
Advertisements may include the percentage rate of total return or may include
the value of a hypothetical investment at the end of the period which assumes
the application of the percentage rate of total return. Total return also may be
calculated by using the net asset value per share at the beginning of the period
instead of the maximum offering price per share at the beginning of the period
for Class A or Class D shares, or without giving effect to any applicable CDSC
at the end of the period for Class B or Class C shares. Calculations based on
the net asset value per share do not reflect the deduction of the applicable
front-end or contingent deferred sales charge which, if reflected, would reduce
the performance quoted.
In each case performance figures are based upon past performance. The
investment results of the Fund, like all others, will fluctuate over time; thus,
performance figures should not be considered to represent what an investment may
earn in the future or what the Fund's total return or average annual total
return may be in any period.
The Fund's performance from time to time in reports or promotional
literature may be compared to generally accepted indices or analyses such as
those published by Lipper Analytical Service, Inc., Standard & Poor's
Corporation, Dow Jones & Company, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc. and Investment Company Data Incorporated. Performance ratings
reported periodically in national financial publications also may be used.
The Fund's Annual Reports will contain certain performance information
regarding the Fund and will be made available to any recipient of this
Prospectus upon request and without charge.
GENERAL INFORMATION
The Fund was incorporated under the laws of the State of Minnesota on May
20, 1991 and is registered with the SEC under the Investment Company Act as an
open-end management investment company. This registration does not involve
supervision of management or investment policy by an agency of the federal
government. The Fund initially was registered with the SEC as a closed-end
management investment company but converted into an open-end management
investment company immediately following the close of business on the New York
Stock Exchange on December 28, 1995.
The Fund is authorized to issue up to 10 billion shares of its common stock,
par value $.01 per share. Currently, the Fund's shares are classified in four
Classes (Class A, Class B, Class C and Class D) with 1 billion of the Fund's
authorized shares allocated to each Class. The Fund's Board of
24
<PAGE>
Directors, without shareholder approval, is authorized to designate additional
Classes of shares in the future (subject only to the Fund's overall authorized
number of shares that have not been previously designated); however, the Board
has no present intention to do so. Each Fund share has one vote, and
shareholders will vote in the aggregate and not by Class except as otherwise
required by law. Therefore, all Fund shares, irrespective of Class designation,
have equal voting rights regarding the election of Fund directors, the
ratification of the Fund's independent auditors and the approval of amendments
to the Fund's Investment Advisory Agreement. In accordance with rules and
regulations under the Investment Company Act, however, only shares of a given
Class have the right to vote on amendments to the Rule 12b-1 Distribution Plan
applicable to such Class. Additionally, because Class B shares (if held for the
applicable time period) automatically convert into Class D shares, any proposed
amendment to the Class D Distribution Plan that would increase the fees payable
thereunder must be approved by Class D AND Class B shareholders (each voting
separately as a Class).
The Fund is not required under Minnesota law to hold annual or periodically
scheduled regular meetings of shareholders, and does not intend to hold such
meetings. The Board of Directors may convene shareholder meetings when it deems
appropriate and is required under Minnesota law to schedule regular or special
meetings in certain circumstances. Additionally, under Section 16(c) of the
Investment Company Act, the Fund's Board of Directors must promptly call a
meeting of shareholders for the purpose of voting upon the question of removal
of any director when requested in writing to do so by the record holders of not
less than ten percent of the Fund's outstanding shares.
Under Minnesota law, the Fund's Board of Directors has overall
responsibility for managing the Fund in good faith, in a manner reasonably
believed to be in the Fund's best interests, and with the care an ordinarily
prudent person in a like position would exercise in similar circumstances. The
Fund's Articles of Incorporation limit the liability of the Fund's officers and
directors to the fullest extent permitted by law.
The Fund and the Investment Adviser have adopted a Code of Ethics that has
been filed with the SEC as an exhibit to the Fund's Registration Statement (of
which this Prospectus is a part). The Code of Ethics does not permit any
director, officer or employee of the Fund, the Investment Adviser or the
Distributor, other than the Fund's directors and officers who are not interested
persons of the Fund, the Investment Adviser or the Distributor (collectively,
the "Disinterested Directors and Officers"), to purchase any security in which
the Fund is permitted to invest. If such person owns a security in which,
following its purchase by such person, the Fund becomes permitted to invest, the
person would not be permitted to acquire any additional interest in such
security and must observe strict limitations in connection with any disposition
of such security. Disinterested Directors and Officers are permitted to purchase
and sell securities in which the Fund may invest, but may not effect any
purchase or sale at any time during which the Fund has a pending buy or sell
order for the same security. Information about how the Code of Ethics can be
inspected or copied at the SEC's public reference rooms or obtained at the SEC's
headquarters is available through the SEC's toll-free telephone number, (800)
SEC-0330.
For a further discussion of the above matters, see "General Information" in
the Statement of Additional Information.
25
<PAGE>
THE JUNDT GROWTH FUND, INC. GENERAL AUTHORIZATION FORM
I wish to establish or revise my account in the Fund in accordance with these
instructions, the terms and conditions of this form and the current Prospectus
of the Fund, a copy of which I have received.
<TABLE>
<S> <C>
INSTRUCTIONS: 1) Please complete Sections A through J, as applicable. Be sure to sign the
certifications in Section J.
2) Please send this completed form and your check payable to the Fund to:
THE JUNDT GROWTH FUND, INC., C/O NATIONAL FINANCIAL DATA SERVICES, P.O. BOX 419168,
KANSAS CITY, MO 64141-6168
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
A. ACCOUNT
REGISTRATION / / Individual ---------------------------------------------------------------------------------
First Name Middle Last Name Social Security #
1. NAME / / Joint Investor* ----------------------------------------------------------------------------
First Name Middle Last Name Social Security #
*The account will be registered "Joint tenants with rights of survivorship" unless otherwise
specified.
/ / Trust Account -----------------------------------------------------------------------------
Name of Trust Tax Identification #
----------------------------------------------------------------------------------------------
Date of Trust Trustee(s)
/ / Corporation, Partnership or Other Entity ----------------------------------------------------
Type of Entity Tax Identification #
----------------------------------------------------------------------------------------------
Name of Entity
</TABLE>
<TABLE>
<S> <C> <C>
/ / Transfer/Gift to Minors
-------------------------------------------------------------------------------------
Custodian's Name (one name only) Minor's State of Residence
-------------------------------------------------------------------------------------
Minor's Name Minor's Social Security #
/ / Transfer on death to: ----------------------------------------------------------------------
Tax Identification #
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
2. ADDRESS ( )
------------------------------------------------- ---------------------------------------------------------
Address/Apt.
No. Area Code Business Telephone
( )
------------------------------------------------- ---------------------------------------------------------
City State Zip Code Area Code Home Telephone
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
B. INITIAL The minimum initial investment is $1,000. Class A and Class D shares (except for
INVESTMENT investments of $1 million or more) are subject to a front-end sales charge at the
time of purchase. Class B and Class C shares may be subject to a contingent deferred
sales charge at the time of redemption. If a Class is not selected, the purchase will
be made in Class D shares (Class A shares for investors qualified to purchase Class A
shares). Orders for Class B shares of $250,000 or more will be treated as orders for
Class D shares (Class A shares for investors qualified to purchase Class A shares).
</TABLE>
$
----------------------------------------------------
Class A Shares
$
----------------------------------------------------
Class B Shares
$
----------------------------------------------------
Class C Shares
$
----------------------------------------------------
Class D Shares
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
C. DEALER
INFORMATION ----------------------------------------------------------------------------------------------------
Name of Broker-Dealer Name of Representative Representative's Phone #
----------------------------------------------------------------------------------------------------
Branch Office Address Branch ID # Representative's ID #
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
D. DIVIDEND NOTE: IF NO ELECTION IS MADE, DIVIDENDS AND CAPITAL GAIN WILL AUTOMATICALLY BE REINVESTED.
DISTRIBUTIONS
/ / Reinvested in additional shares or / / receive dividends in cash*
*For "receive in cash", please choose a delivery option:
/ / Deposit directly into my bank account. ATTACHED IS A VOIDED CHECK, PHOTOCOPY OF A CHECK, OR A
SAVINGS DEPOSIT FORM SHOWING THE BANK ACCOUNT WHERE I WOULD LIKE YOU TO DEPOSIT THE DIVIDEND.
/ / Savings / / Checking
/ / Mail check to my address listed in Section A.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
E. AUTOMATIC / / Please arrange with my bank to invest $ ($100 minimum) per month in the Fund.
INVESTMENT Please charge my bank account on the 5th day (or next business day) of each month. ATTACHED IS A
PLAN VOIDED CHECK, PHOTOCOPY OF A CHECK, OR A SAVINGS DEPOSIT FORM SHOWING THE BANK ACCOUNT ON WHICH THE
INVESTMENT IS GOING TO BE DRAWN.
/ / Savings / / Checking
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
F. LETTER OF / / I elect to take advantage of the Letter of Intention and agree to the escrow provisions herein
INTENTION and certify that I am entitled to reduced rates in accordance with the provisions herein. My initial
(CLASS A AND investment will be at least 5% of the Letter of Intention amount. I intend to purchase, although
D ONLY) I am not obligated to do so, Fund shares within a 13-month period, an aggregate amount of which
will be at least:
/ / $25,000 / / $50,000 / / $100,000 / / $1,000,000
/ / This is a new Letter of Intention.
/ / This is a retroactive 90-day Letter, requiring adjustment of prior purchase(s).
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
G. COMBINED / / I elect to take advantage of the Combined Purchase Privilege. Below is a list of accounts of qualifying
PURCHASE individuals, organizations or other persons (see "Special Purchase Plans -- Combined Purchase Privilege" in the
PRIVILEGE Statement of Additional information) with which I wish to combine my purchase for reduced sales charge purposes.
(CLASS A AND
D ONLY)
1. 2.
-------------------------------------------------- --------------------------------------------------
Account Number Fund Name Account Number Fund Name
-------------------------------------------------- --------------------------------------------------
Owner(s) Name Owner(s) Name
-------------------------------------------------- --------------------------------------------------
Relationship Relationship
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
H. TELEPHONE / / I hereby authorize the Fund's transfer agent (the "Transfer Agent") to honor any telephone
REDEMPTION instructions from any of the registered shareholders or the registered representative of the
PRIVILEGE above account for redemptions of at least $1,000 and no more than $25,000. Redemptions greater
than $25,000 must be in writing and signature guaranteed. The Transfer Agent and the Fund will
employ reasonable procedures to confirm that telephone instructions are genuine, including
requiring that payment be made only to the address registered on the account or to the bank
account designated below and requiring certain means of telephone identification. If the
Transfer Agent and the Fund fail to employ such procedures, they may be liable for any losses
suffered as a result of unauthorized or fraudulent instructions. Provided the Transfer Agent and
the Fund employ such procedures, I will indemnify and hold harmless the Transfer Agent, the
Distributor, and the Fund from and against all losses, claims, expenses and liabilities that may
arise out of, or be in any way connected with a redemption of shares under this expedited
redemption procedure. Proceeds will be mailed as registered on the account or wired to the bank
account designated below.
/ / Savings / / Checking
ATTACHED IS A VOIDED CHECK, PHOTOCOPY OF A CHECK, OR A SAVINGS DEPOSIT FORM SHOWING THE BANK ACCOUNT
TO WHICH PROCEEDS OF $1,000 OR MORE MAY BE WIRED IF REQUESTED.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
I. MONTHLY / / Please send a check for $ on the 20th day (or preceding business day) of each month (minimum
WITHDRAWAL $100). This service is available only for accounts with balances of $10,000. A contingent
deferred sales charge may apply to redemptions of shares. Refer to "How to Redeem Fund Shares"
in the Prospectus.
</TABLE>
2
<PAGE>
________________________________________________________________________________
J. SIGNATURE
AND
CERTIFICATION
Substitute Form W-9 THE JUNDT GROWTH FUND, INC.
<TABLE>
<S> <C> <C>
SIGNATURE CARD AND ----------------------------------------
TAXPAYER IDENTIFICATION NUMBER Account Number (to be completed by the
CERTIFICATION Fund)
</TABLE>
________________________________________________________________________________
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PART I
------------------------------------
Social Security Number
--------------------------------------------------
Name PLEASE PRINT
---------------------------------------------
REQUIRED --> or
---------------------------------------------
Tax Identification Number
---------------------------------------------
NOTE: If the account is in more than one name, give the
actual owner of the account or the first name
listed on the account and their tax identification
number.
</TABLE>
________________________________________________________________________________
<TABLE>
<S> <C>
PART II Are you an organization that meets the Internal Revenue Service ("IRS") definition of an exempt payee
(I.E., corporations, the United States and its agencies, a state, etc., qualify as exempt but
individuals DO NOT qualify as exempt)?
Yes / / No / /
</TABLE>
________________________________________________________________________________
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER;
AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE I HAVE NOT BEEN
NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A
FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR THE IRS HAS NOTIFIED ME THAT
I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING.
CERTIFICATION INSTRUCTIONS: You must cross out item (2) above if you have been
notified by IRS that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
I hereby certify that I have received a current prospectus, agree to be bound by
its terms, and that I am empowered and duly authorized to execute and carry out
the terms of this General Authorization Form and to purchase and hold the shares
subscribed for thereby, and further certify that this General Authorization Form
has been duly and validly executed on behalf of the person or entity listed
above and constitutes a legal and binding obligation of such person or entity.
I hereby acknowledge that it is my obligation to notify my investment
representative (at the time of investment) about my eligibility for any of the
special purchase plans detailed in the Prospectus. Absent such notification,
none of such plans will automatically be applied to any investment in Fund
shares, and I have waived my eligibility for all applicable plans.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
________________________________________________________________________________
PLEASE
REQUIRED
SIGN HERE
Signature--> Date-->
________________________________________________________________________________
JOINT
Signature--> Date-->
________________________________________
INVESTORS
PLEASE
SIGN HERE
Signature--> Date-->
________________________________________________________________________________
The signature card is provided as a convenience to shareholders allowing
shareholders to submit written requests for redemption without signature
guarantee. (NOTE: For written redemption requests asking for proceeds to be
mailed to other than the shareholder(s) or address of record a signature
guarantee MUST be obtained. Signature guarantees are also required on
redemptions over $50,000.)
Please be sure to have all joint shareholders sign this card.
________________________________________________________________________________
NOTE: THIS SIGNED PAGE MUST ACCOMPANY THE PREVIOUS PAGE OF GENERAL AUTHORIZATION
FORM
3
<PAGE>
LETTER OF INTENTION AND TERMS OF ESCROW
(CLASS A AND D SHARES ONLY)
If you estimate that during the next 13 months you will make a series of
purchases totaling an amount which qualifies for a reduced sales charge, you may
elect to take advantage of a Letter of Intention. The total investment must
equal at least $25,000 in any class of Fund shares. The Letter of Intention does
not obligate you to make purchases totaling a given amount, nor is the Fund
making a binding commitment to sell you the full amount of the shares indicated.
As soon as the Fund is informed that you have chosen to invest with a Letter of
Intention, each purchase can receive the appropriate (lower) sales charge. You
or your dealer must inform us EACH TIME that a purchase is made under a Letter
of Intention. (Automatic Investment Plans are not allowed for Letter of
Intention purchasers.) Your first purchase must be at least 5% of the Letter of
Intention amount.
For example, if you choose a Letter of Intention at the $100,000 level, you are
telling the Fund that you expect your purchases over the next 13 months to total
at least $100,000. Your first purchase must be at least $5,000. Whenever you
make another purchase and tell the Fund you have a Letter of Intention for
$100,000, you will be able to buy shares at the public offering price associated
with a single purchase of $100,000.
Reduced rates on large transactions are limited to the following: an individual
or a "company" as defined in Section 2(a)(8) of the Investment Company Act of
1940; an individual, his or her spouse and their children under the age of 21
purchasing securities for their own account; a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account
(including a pension, profit sharing or other employee benefit trust created
pursuant to a plan qualified under Section 401 of the Internal Revenue Code);
tax-exempt organizations enumerated in Section 501(c)(3) of the Internal Revenue
Code; and any organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company, and provided that the purchase is
made through a central administration, or through a single dealer, or by other
means which result in economy of sales effort or expense. Such rates are not
allowable to a group of individuals whose funds are combined, directly or
indirectly, for the purchase of securities or to the agent, custodian or other
representative of such group.
Out of your initial purchase or purchases, 5% of the dollar amount specified in
the Letter of Intention shall be held in escrow by the Fund in the form of
shares computed at the applicable public offering price. For example, if the
amount of this Letter of Intention is $100,000 and the offering price (at the
time of the initial transaction) is $10 a share, 500 shares ($5,000 worth) would
be held in escrow. All shares purchased, including those escrowed, will be
registered in your name and recorded in the same account, which will be credited
fully with all income dividends and capital gain distributions declared. If the
total purchases equal or exceed the amount specified by you as your expected
aggregate purchases, the escrowed shares will be delivered to you or credited to
your account. If total purchases are less than the amount specified, you will
remit to the Fund an amount equal to the difference between the dollar amount of
sales charges actually paid and the amount of sales charges you would have paid
on your aggregate purchases if the total of such purchases had been made at a
single time. Neither dividends from investment income nor capital gain
distributions taken in shares will apply toward the completion of this Letter of
Intention. The contingent deferred sales charge (and not the front-end sales
charge) will apply to Letters of Intention for $1,000,000 or more. See "How to
Redeem Fund Shares -- Contingent Deferred Sales Charge" in the Prospectus.
However, if total purchases pursuant to such Letter of Intention are less than
$1,000,000 after a period of 13 months from the date of the first credited
investment, you will remit to the Fund an amount equal to the front-end sales
charge that would have applied if the actual aggregate amount invested were
invested at one time, less any contingent deferred sales charge paid on any
investment pursuant to such Letter of Intention redeemed during such period. The
Fund will prepare and mail a statement to you and your dealer or representative,
who shall be responsible for notifying you of the difference due and for
determining from you whether you prefer to pay it in cash or have it liquidated
from the escrowed shares. If the Fund has not received a check within 21 days of
notification, it will be assumed that the preferred method is liquidation. The
Fund will redeem a number of escrowed shares sufficient to realize the
difference and release or deliver the remainder.
The Fund is hereby irrevocably appointed your attorney to surrender for
redemption any or all escrowed shares under the conditions outlined above.
4
<PAGE>
INVESTOR'S CHECKLIST
QUESTIONS: CALL THE FUND AT (800) 370-0612
PURCHASE SHARES
BY MAIL: Send completed application, together with your check payable to the
Fund at:
The Jundt Growth Fund, Inc.
c/o National Financial Data Services
P.O. Box 419168
Kansas City, MO 64141-6168
BY WIRE/TELEPHONE: Call your investment dealer/advisor or the Fund at (800)
370-0612. The Fund will assign a new account number to you.
Then instruct your commercial bank to wire transfer "Federal
Funds" via the Federal Reserve System to:
State Street Bank & Trust Company ABA #011000028
For Credit of: The Jundt Growth Fund, Inc.
Account No.: 9905-154-2
Account Number: (assigned by telephone)
SIGNATURES
All shareholders must sign the General Authorization Form exactly as their
names appear on the account form. Be sure all joint tenants sign. Only the
custodian for a minor must sign. Fiduciaries and officers of the corporations or
other organizations should indicate their capacity or title.
NOTE: See "How to Buy Fund Shares" in the Prospectus for order effectiveness and
further information.
5
<PAGE>
THE JUNDT GROWTH FUND, INC.
ELIGIBILITY CERTIFICATION STATEMENT
This Eligibility Certification Statement must accompany your General
Authorization Form when you establish your account in order to qualify your
account: (1) to purchase Class A shares; and/ or (2) to purchase Class A shares
or Class D shares at net asset value; I.E. without the imposition of any sales
charges.
Name: ___________________________________________________________________
1. ELIGIBILITY TO PURCHASE CLASS A SHARES
The above-named purchaser is eligible to purchase Class A shares
of The Jundt Growth Fund, Inc. (the "Fund") because it falls into the following
category of investors:
(CHECK ALL BOXES THAT APPLY)
/ / Shareholder of the Fund on December 28, 1995 who has
continuously held Fund shares and/or shares of Jundt U.S. Emerging Growth Fund
since that date. Please give details, including name in which shares were held,
and name and telephone number of any broker who held such shares.
_______________________________________________________________________________
_______________________________________________________________________________
/ / Director, officer, employee or consultant of the Fund
(including partners and employees of outside legal counsel to the Fund), Jundt
Associates, Inc. or U.S. Growth Investments, Inc. or a member of the immediate
family, or a lineal ancestor or descendant, of any such person. Please give
details, including name of person and company or firm: _________________________
_______________________________________________________________________________
/ / Account for the benefit of any of the foregoing. Please
explain: _______________________________________________________________________
_______________________________________________________________________________
I hereby certify that the enclosed investment represents a purchase of
Fund shares for myself or a beneficial account. I also certify that, as
described in the Fund's current prospectus, I am eligible to purchase Class A
shares, and I will notify the Fund in the event I cease to be so eligible.
Signature: ______________________________
Date: _______________________________
<PAGE>
2. ELIGIBILITY TO PURCHASE CLASS A SHARES OR CLASS D SHARES AT NET
ASSET VALUE
The above-named purchaser is eligible to purchase Class D shares
(or, if eligible to purchase Class A shares, Class A shares) of the Fund at net
asset value because it falls into the following category of investors:
(CHECK ALL BOXES THAT APPLY)
/ / Investment executive or other employee of a broker-dealer
or financial institution that has entered into an agreement with U.S. Growth
Investments, Inc. for the distribution of Fund shares or a parent or immediate
family member of any such person. Please give details, including name of person
and broker-dealer or financial institution:
_______________________________________________________________________________
_______________________________________________________________________________
/ / Trust company or bank trust department for funds held in
a fiduciary, agency, advisory, custodial or similar capacity.
/ / States and their political subdivisions or
instrumentalities, departments, authorities and agencies thereof.
/ / Registered investment advisers or their investment
advisory clients.
/ / Section 401(a) employee benefit plans.
/ / Section 403(b)(7) custodial accounts.
I hereby certify that the enclosed investment represents a purchase of
Fund shares for myself or a beneficial account. I also certify that, as
described in the Fund's current prospectus, I am eligible to purchase Class A
shares or Class D shares, as applicable, at net asset value, and I will notify
the Fund in the event I become no longer eligible for net asset value purchases.
I understand that any intention abuse of the net asset value purchase
privilege may result in the application of retroactive sales charges or other
penalties in the discretion of U.S. Growth Investments, Inc.
Signature: ______________________________
Date: _______________________________
- 2 -
<PAGE>
APPENDIX A
GENERAL CHARACTERISTICS AND RISKS OF FUTURES AND OPTIONS
STOCK INDEX FUTURES, OPTIONS ON STOCK INDICES AND OPTIONS ON STOCK INDEX FUTURES
CONTRACTS
The Fund may purchase and sell stock index futures, options on stock indices
and options on stock index futures contracts as a hedge against movements in the
equity markets.
A stock index futures contract is an agreement in which one party agrees to
deliver to the other an amount of cash equal to a specific dollar amount times
the difference between the value of a specific stock index at the close of the
last trading day of the contract and the price at which the agreement is made.
No physical delivery of securities is made.
Options on stock indices are similar to options on specific securities,
described below, except that, rather than the right to take or make delivery of
the specific security at a specific price, an option on a stock index gives the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of that stock index is greater than, in the case of a call
option, or less than, in the case of a put option, the exercise price of the
option. This amount of cash is equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars
times a specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. Unlike options on
specific securities, all settlements of options on stock indices are in cash and
gain or loss depends on general movements in the stocks included in the index
rather than price movements in particular stocks. Currently, options traded
include the S&P 100 Index, the S&P 500 Index, the NYSE Composite Index, the AMEX
Market Value Index, the National Over-the-Counter Index and other standard
broadly based stock market indices. Options are also traded in certain industry
or market segment indices such as the Computer Technology Index.
If the Fund's Investment Adviser expects general stock market prices to
rise, it might purchase a stock index futures contract, or a call option on that
index, as a hedge against an increase in prices of particular equity securities
it wants ultimately to buy. If the stock index does rise, the price of the
particular equity securities intended to be purchased may also increase, but
that increase would be offset in part by the increase in the value of the Fund's
futures contract or index option resulting from the increase in the index. If,
on the other hand, the Investment Adviser expects general stock market prices to
decline, it might sell a futures contract, or purchase a put option, on the
index. If that index does decline, the value of some or all of the equity
securities in the Fund's portfolio may also be expected to decline, but that
decrease would be offset in part by the increase in the value of the Fund's
position in such futures contract or put option.
The Fund may purchase and write call and put options on stock index futures
contracts. The Fund may use such options on futures contracts in connection with
its hedging strategies in lieu of purchasing and selling the underlying futures
or purchasing and writing options directly on the underlying securities or stock
indices. For example, the Fund may purchase put options or write call options on
stock index futures, rather than selling futures contracts, in anticipation of a
decline in general stock market prices or purchase call options or write put
options on stock index futures, rather than purchasing such futures, to hedge
against possible increases in the price of equity securities which the Fund
intends to purchase.
A-1
<PAGE>
In connection with transactions in stock index futures, stock index options
and options on stock index futures, the Fund will be required to deposit as
"initial margin" an amount of cash and short-term U.S. Government securities
equal to from 5% to 8% of the contract amount. Thereafter, subsequent payments
(referred to as "variation margin") are made to and from the broker to reflect
changes in the value of the futures contract.
OPTIONS ON SECURITIES
The Fund may write covered put and call options and purchase put and call
options on the securities in which it may invest that are traded on U.S.
securities exchanges. The Fund may also write call options that are not covered
for cross-hedging purposes.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or purchased, in the case
of a put option; the writer may be assigned an exercise notice at any time prior
to the termination of the obligation. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This amount, of
course, may, in the case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period. If a call
option is exercised, the writer experiences a profit or loss from the sale of
the underlying security. If a put option is exercised, the writer must fulfill
the obligation to purchase the underlying security at the exercise price which
will usually exceed the then market value of the underlying security.
The writer of an option that wished to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. The effect of the purchase is that
the writer's position will be canceled by the clearing corporation. However, a
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate its position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option previously
purchased. There is no guarantee that either a closing purchase or a closing
sale transaction can be effected.
Effecting a closing transaction in the case of a written call option will
permit the Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a written put option will permit the Fund to write another put option to the
extent that the exercise price thereof is secured by deposited cash or
short-term securities. Also, effecting a closing transaction will permit the
cash or proceeds from the concurrent sale of any securities subject to the
option to be used for other Fund investments. If the Fund desires to sell a
particular security from its portfolio on which it has written a call option, it
will effect a closing transaction prior to or concurrent with the sale of the
security.
The Fund will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Fund will realize a loss
from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Because increases in the market price of a call option will
generally reflect increases in the market price of the underlying security, any
loss resulting from the repurchase of a call option is likely to be offset in
whole or in part by appreciation of the underlying security owned by the Fund.
A-2
<PAGE>
An option position may be closed out only where there exists a secondary
market for an option of the same series. If a secondary market does not exist,
it might not be possible to effect closing transactions in particular options
with the result that the Fund would have to exercise the options in order to
realize any profit. If the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise. Reasons for the absence of a liquid secondary market include the
following: (i) there may be insufficient trading interest in certain options,
(ii) restrictions may be imposed by a national securities exchange ("Exchange")
on opening transactions or closing transactions or both, (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities, (iv) unusual or
unforeseen circumstances may interrupt normal operations on an Exchange, (v) the
facilities of an Exchange or the Options Clearing Corporation may not at all
times be adequate to handle current trading volume, or (vi) one or more
Exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that Exchange (or in
that class or series of options) would cease to exist, although outstanding
options on that Exchange that had been issued by the Options Clearing
Corporation as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.
The Fund may write options in connection with buy-and-write transactions;
that is, the Fund may purchase a security and then write a call option against
that security. The exercise price of the call the Fund determines to write will
depend upon the expected price movement of the underlying security. The exercise
price of a call option may be below ("in-the-money"), equal to ("at-the-money")
or above ("out-of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using in-the-money
call options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using out-of-the-money call options may be used when
it is expected that the premiums received from writing the call option plus the
appreciation in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. If the call options are exercised in such transactions, the
Fund's maximum gain will be the premium received by it for writing the option,
adjusted upwards or downwards by the difference between the Fund's purchase
price of the security and the exercise price. If the options are not exercised
and the price of the underlying security declines, the amount of such decline
will be offset in part, or entirely, by the premium received.
The writing of covered put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, the Fund may elect to close the position or take
delivery of the security at the exercise price and the Fund's return will be the
premium received from the put option minus the amount by which the market price
of the security is below the exercise price. Out-of-the-money, at-the-money and
in-the-money put options may be used by the Fund in the same market environments
that call options are used in equivalent buy-and-write transactions.
A-3
<PAGE>
The Fund may purchase put options to hedge against a decline in the value of
its portfolio. By using put options in this way, the Fund will reduce any profit
it might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
The Fund may purchase call options to hedge against an increase in the price
of securities that the Fund anticipates purchasing in the future. The premium
paid for the call option plus any transaction costs will reduce the benefit, if
any, realized by the Fund upon exercise of the option, and, unless the price of
the underlying security rises sufficiently, the option may expire worthless to
the Fund.
RISK FACTORS IN FUTURES AND OPTIONS TRANSACTIONS
The effective use of futures and options strategies depends, among other
things, on the Fund's ability to terminate futures and options positions at
times when the Investment Adviser deems it desirable to do so. Although the Fund
will not enter into a futures or option position unless the Investment Adviser
believes that a liquid secondary market exists for such future or option, there
is no assurance that the Fund will be able to effect closing transactions at any
particular time or at an acceptable price.
The use of futures and options involves the risk of imperfect correlation
between movements in futures and options prices and movements in the price of
securities which are the subject of the hedge. Such correlation, particularly
with respect to stock index futures and options on stock indices, is imperfect,
and such risk increases as the composition of the Fund's portfolio diverges from
the composition of the relevant index. The successful use of these strategies
also depends on the ability of the Investment Adviser to correctly forecast
general stock market price movements.
A-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE JUNDT GROWTH FUND, INC.
------------------
PROSPECTUS
APRIL 30, 1996
------------------------
TABLE OF CONTENTS
The Fund.................................................................. 2
Risk Factors.............................................................. 2
Purchase Information...................................................... 2
Fees and Expenses......................................................... 3
Financial Highlights...................................................... 5
Investment Objective and Policies......................................... 6
Management of the Fund.................................................... 10
How to Buy Fund Shares.................................................... 12
How to Redeem Fund Shares................................................. 19
Determination of Net Asset Value.......................................... 21
Dividends, Distributions and Taxes........................................ 22
Performance Information................................................... 23
General Information....................................................... 24
Appendix A -- General Characteristics and Risks of Futures and Options.... A-1
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND, THE INVESTMENT ADVISER OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, SHARES OF THE FUND IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFERING
OR SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
INVESTMENT ADVISER
Jundt Associates, Inc.
1550 Utica Avenue South
Suite 950
Minneapolis, Minnesota 55416
DISTRIBUTOR
U.S. Growth Investments, Inc.
1550 Utica Avenue South
Suite 950
Minneapolis, Minnesota 55416
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9011
Princeton, New Jersey 08543
TRANSFER AGENT
Investors Fiduciary Trust Company
1004 Baltimore
Kansas City, Missouri 64105
CUSTODIAN
Norwest Bank Minnesota, N.A.
90 South Seventh Street
Minneapolis, Minnesota 55402
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
4200 Norwest Center
Minneapolis, Minnesota 55402
LEGAL COUNSEL
Faegre & Benson LLP
2200 Norwest Center
Minneapolis, Minnesota 55402
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE JUNDT GROWTH FUND, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
THE JUNDT GROWTH FUND, INC.
1550 UTICA AVENUE SOUTH, SUITE 950
MINNEAPOLIS, MINNESOTA 55416
(800) 370-0612
STATEMENT OF ADDITIONAL INFORMATION
DATED APRIL 30, 1996
The Jundt Growth Fund, Inc. (the "Fund") is a professionally managed,
diversified, open-end management investment company (commonly known as a mutual
fund). The Fund currently has four classes of shares (each a "Class" and,
collectively, "Classes") -- Class A, Class B, Class C and Class D shares. Class
A shares are offered for sale exclusively to certain specified investors and are
not offered for sale to the public generally.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Fund's Prospectus, dated April 30, 1996 (the
"Prospectus"), which has been filed with the Securities and Exchange Commission
(the "SEC"). To obtain a copy of the Prospectus, please call the Fund or your
investment executive.
TABLE OF CONTENTS
PAGE
----
Investment Objective, Policies and Restrictions........................... B-2
Taxes..................................................................... B-4
Advisory, Administrative and Distribution Agreements...................... B-5
Special Purchase Plans.................................................... B-9
Monthly Cash Withdrawal Plan.............................................. B-11
Determination of Net Asset Value.......................................... B-11
Calculation of Performance Data........................................... B-12
Directors and Officers.................................................... B-14
Counsel and Auditors...................................................... B-16
General Information....................................................... B-16
Financial and Other Information........................................... B-18
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS STATEMENT OF ADDITIONAL
INFORMATION OR IN THE PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
THE FUNDS INVESTMENT ADVISER OR PRINCIPAL UNDERWRITER. NEITHER THIS STATEMENT OF
ADDITIONAL INFORMATION NOR THE PROSPECTUS CONSTITUTES AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, SHARES OF THE FUND IN ANY STATE OR JURISDICTION
IN WHICH SUCH OFFERING OR SOLICITATION MAY NOT LAWFULLY BE MADE. NEITHER THE
DELIVERY OF THIS STATEMENT OF ADDITIONAL INFORMATION NOR ANY SALE MADE HEREUNDER
(OR UNDER THE PROSPECTUS) SHALL CREATE ANY IMPLICATION THAT INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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<PAGE>
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The Fund's investment objective and policies are set forth in the
Prospectus. Certain additional investment information is set forth below.
INVESTMENT RESTRICTIONS
The Fund has adopted certain FUNDAMENTAL RESTRICTIONS that may not be
changed without approval of shareholders owning a majority of the outstanding
voting securities of the Fund, as defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act"). Under the Investment Company Act,
"majority of the outstanding voting securities" means the affirmative vote of
the lesser of (a) more than 50% of the outstanding shares of the Fund; or (b)
67% or more of the shares present at a meeting if more than 50% of the
outstanding shares are represented at the meeting in person or by proxy. As
fundamental policies, the Fund may not:
1. Invest more than 25% of its total assets in any one industry
(securities issued or guaranteed by the United States Government, its
agencies or instrumentalities are not considered to represent industries);
2. With respect to 75% of the Fund's assets, invest more than 5% of the
Fund's assets (taken at a market value at the time of purchase) in the
outstanding securities of any single issuer or own more than 10% of the
outstanding voting securities of any one issuer, in each case other than
securities issued or guaranteed by the United States Government, its
agencies or instrumentalities;
3. Borrow money or issue senior securities (as defined in the
Investment Company Act) except that the Fund may borrow in amounts not
exceeding 15% of its total assets from banks for temporary or emergency
purposes, including the meeting of redemption requests which might require
the untimely disposition of securities;
4. Pledge, mortgage or hypothecate its assets other than to secure
borrowings permitted by restriction 3 above (collateral arrangements with
respect to margin requirements for options and futures transactions are not
deemed to be pledges or hypothecations for this purpose);
5. Make loans of securities to other persons in excess of 25% of its
total assets; provided the Fund may invest without limitation in short-term
obligations (including repurchase agreements) and publicly distributed
obligations;
6. Underwrite securities of other issuers, except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in selling
portfolio securities;
7. Purchase or sell real estate or any interest therein, including
interests in real estate limited partnerships, except securities issued by
companies (including real estate investment trusts) that invest in real
estate or interests therein;
8. Purchase securities on margin, or make short sales of securities,
except for the use of short-term credit necessary for the clearance of
purchases and sales of portfolio securities, but it may make margin deposits
in connection with transactions in options, futures and options on futures;
B-2
<PAGE>
9. Purchase or sell commodities or commodity contracts, except that,
for the purpose of hedging, it may enter into contracts for the purchase or
sale of debt and/or equity securities for future delivery, including futures
contracts and options on domestic and foreign securities indices;
10. Make investments for the purpose of exercising control or
management; or
11. Invest more than 15% of its assets in illiquid securities.
In addition to the foregoing fundamental restrictions, the Fund has adopted
certain NON-FUNDAMENTAL RESTRICTIONS, which may be changed by the Fund's Board
of Directors without the approval of the Fund's shareholders. As non-fundamental
policies, the Fund may not:
1. Invest in securities issued by other investment companies in excess
of limitations imposed by federal and applicable state law;
2. Invest more than 10% of its net assets (taken at market value at the
time of purchase) in illiquid securities;
3. Invest more than 10% of its assets (taken at market value at the
time of purchase) in the outstanding securities of any single issuer;
4. Purchase or sell interests in oil, gas or other mineral exploration
or development plans or leases;
5. Invest in warrants if at the time of acquisition more than 5% of its
total assets, taken at market value at the time of purchase, would be
invested in warrants, and if at the time of action more than 2% of its total
assets, taken at market value at the time of purchase, would be invested in
warrants not traded on the New York Stock Exchange. For purposes of this
restriction, warrants acquired by the Fund in units or attached to
securities may be deemed to be without value;
6. Own more than 10% of the outstanding voting securities of any one
issuer; or
7. Purchase equity securities in private placements.
8. Purchase puts, calls, straddles, spreads and any combination thereof
if by reason thereof the value of the Fund's aggregate investment in such
instruments (at the time of purchase) will exceed 5% of its total assets.
9. Purchase or retain the securities of any issuer if the Investment
Adviser or any officer or director of the Fund or the Investment Adviser
that individually owns 1/2 of 1% of the total outstanding securities of such
issuer collectively own more than 5% of the outstanding securities of such
issuer.
10. Invest more than 5% of its total assets collectively in restricted
securities AND in securities of issuers which, together with their
predecessors, have a record of less than three years of continuous
operations.
With respect to each of the foregoing fundamental and non-fundamental
investment restrictions involving a percentage of the Fund's assets, if a
percentage restriction or limitation is adhered to at the time of an investment
or sale (other than a maturity) of a security, a later increase or decrease in
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<PAGE>
such percentage resulting from a change of values or net assets will not be
considered a violation thereof. If and to the extent that the Fund invests in
the securities of other investment companies, the Investment Adviser will not
charge duplicate investment management fees on such investments.
TAXES
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). To
so qualify, the Fund must, among other things: (a) derive in each taxable year
at least 90% of its gross income from dividends, interest, payments with respect
to securities loans, gains from the sale or other disposition of stock,
securities or foreign currencies, or other income derived with respect to its
business of investing in such stock, securities or currencies; (b) derive in
each taxable year less than 30% of its gross income from the sale or other
disposition of stock or securities, or options, futures, and certain forward
contracts or foreign currencies held for less than three months; and (c) satisfy
certain diversification requirements at the close of each quarter of the Funds
taxable year.
As a regulated investment company, the Fund will not be liable for federal
income taxes on the part of its taxable net investment income and net capital
gains, if any, that it distributes to shareholders, provided it distributes at
least 90% of its "investment company taxable income" (as that term is defined in
the Code) to Fund shareholders in each taxable year. However, if for any taxable
year a Fund does not satisfy the requirements of Subchapter M of the Code, all
of its taxable income will be subject to tax at regular corporate rates without
any deduction for distributions to shareholders, and such distributions will be
taxable to shareholders as ordinary income to the extent of the Fund's current
or accumulated earnings and profits.
The Fund will be liable for a nondeductible 4% excise tax on amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement. To avoid the tax, during each calendar year the Fund must
distribute: (i) at least 98% of its taxable ordinary income (not taking into
account any capital gains or losses) for the calendar year; (ii) at least 98% of
its capital gain net income for the twelve month period ending on October 31 (or
December 31, if the Fund so elects); and (iii) any portion (not taxed to the
Fund) of the respective balances from the prior year. To the extent possible,
the Fund intends to make sufficient distributions to avoid this 4% excise tax.
The Fund, or the shareholder's broker with respect to the Fund, is required
to withhold federal income tax at a rate of 31% of dividends, capital gains
distributions and proceeds of redemptions if a shareholder fails to furnish the
Fund with a correct taxpayer identification number ("TIN") or to certify that he
is exempt from such withholding, or if the Internal Revenue Service notifies the
Fund or broker that the shareholder has provided the Fund with an incorrect TIN
or failed to properly report dividend or interest income for federal income tax
purposes. Any such withheld amount will be fully creditable on the shareholders
federal income tax return. An individual's TIN is his social security number.
The Fund may write, purchase or sell options or futures contracts.
Generally, options and futures contracts that are "Section 1256 contracts" will
be "marked to market" for federal income tax purposes at the end of each taxable
year, I.E., each option or futures contract will be treated as sold for its fair
market value on the last day of the taxable year. Gain or loss from transactions
in options and
B-4
<PAGE>
futures contracts that are subject to the "marked to market" rule will be 60%
long-term and 40% short-term capital gain or loss. However, the Fund may be
eligible to make a special election under which certain "Section 1256 contracts"
would not be subject to the "marked to market" rule.
Code Section 1092, which applies to certain "straddles," may affect the
taxation of the Fund's transactions in options and futures contracts. Under
Section 1092, the Fund may be required to postpone recognition for tax purposes
of losses incurred in certain closing transactions in options and futures.
One of the requirements for qualification as a registered investment company
is that less than 30% of the Fund's gross income may be derived from gains from
the sale or other disposition of securities, including options, futures and
forward contracts, held for less than three months. Accordingly, the Fund may be
restricted in effecting closing transactions within three months after entering
into an option or futures contract.
ADVISORY, ADMINISTRATIVE AND DISTRIBUTION AGREEMENTS
INVESTMENT ADVISORY AGREEMENT
Jundt Associates, Inc. (the "Investment Adviser") has been retained as the
Fund's investment adviser pursuant to an investment advisory agreement entered
into by and between the Fund and Investment Adviser (the "Advisory Investment
Agreement"). Under the terms of the Investment Advisory Agreement, the
Investment Adviser furnishes continuing investment supervision to the Fund and
is responsible for the management of the Fund's portfolio. The responsibility
for making decisions to buy, sell or hold a particular security rests with the
Investment Adviser, subject to review by the Board of Directors.
The Investment Adviser furnishes office space, equipment and personnel to
the Fund in connection with the performance of its investment management
responsibilities. In addition, the Investment Adviser pays the salaries and fees
of all officers and directors of the Fund who are affiliated persons of the
Investment Adviser.
The Fund pays all other expenses incurred in the operation of the Fund
including, but not limited to, brokerage and commission expenses; interest
charges; fees and expenses of legal counsel and independent auditors; the Fund's
organizational and offering expenses, whether or not advanced by the Investment
Adviser; taxes and governmental fees; expenses (including clerical expenses) of
issuance, sale or repurchase of the Fund's shares; membership fees in trade
associations; expenses of registering and qualifying shares of the Fund for sale
under federal and state securities laws; expenses of printing and distributing
reports, notices and proxy materials to existing shareholders; expenses of
regular and special shareholders meetings; expenses of filing reports and other
documents with governmental agencies; charges and expenses of the Fund's
administrator, custodian and registrar, transfer agent and dividend disbursing
agent; expenses of disbursing dividends and distributions; compensation of the
Fund's officers, directors and employees who are not affiliated with the
Investment Adviser; travel expenses of directors of the Fund for attendance at
meetings of the Board of Directors; insurance expenses; indemnification and
other expenses not expressly provided for in the Investment Advisory Agreement;
and any extraordinary expenses of a non-recurring nature.
For its services, the Investment Adviser receives from the Fund a monthly
fee at an annual rate of 1% of the Fund's average daily net assets. These fees
exceed those paid by most other investment
B-5
<PAGE>
companies. During the fiscal years ended June 30, 1994, December 31, 1994 (a
six-month fiscal year occasioned by the change in the Fund's fiscal year end
from June 30 to December 31 during such period) and December 31, 1995, the Fund
paid the Investment Adviser fees of $2,586,007, $1,092,907 and $2,448,177,
respectively.
The Investment Advisory Agreement continues in effect from year to year, if
specifically approved at least annually by a majority of the Fund's directors,
including a majority of the directors who are not interested persons (as defined
in the Investment Company Act) of the Fund or the Investment Adviser
("Independent Directors") at a meeting in person. The Investment Advisory
Agreement may be terminated by either party, by the Independent Directors or by
a vote of the holders of a majority of the outstanding securities of the Fund,
at any time, without penalty, upon 60 days' written notice, and automatically
terminates in the event of its "assignment" (as defined in the Investment
Company Act).
PORTFOLIO TRANSACTIONS, BROKERAGE COMMISSIONS AND PORTFOLIO TURNOVER RATE
Subject to policies established by the Board of Directors of the Fund, the
Investment Adviser is responsible for investment decisions and for the execution
of the Fund's portfolio transactions. The Fund has no obligation to deal with
any particular broker or dealer in the execution of transactions in portfolio
securities. In executing such transactions, the Investment Adviser seeks to
obtain the best price and execution for its transactions. While the Investment
Adviser generally seeks reasonably competitive commission rates, the Fund does
not necessarily pay the lowest commission.
For the fiscal year ended December 31, 1995, the Fund paid brokerage
commissions of $371,811. No commissions were paid to brokers which are
affiliated persons of the Fund as defined in the Investment Company Act. The
Fund's portfolio turnover rate for these same periods was 19%, 48% and 155%,
respectively.
ADMINISTRATION AGREEMENT
Under the terms of an administration agreement by and between Princeton
Administrators, L.P. (the "Administrator") and the Fund (the "Administration
Agreement"), the Administrator performs or arranges for the performance of the
following administrative services: (a) maintenance and keeping of certain books
and records of the Fund; (b) preparation or review and, subject to the Fund's
review, filing certain reports and other documents required by federal, state
and other applicable U.S. laws and regulations to maintain the Fund's
registration as an open-end investment company; (c) coordination of tax related
matters; (d) response to inquiries from Fund shareholders; (e) calculation and
dissemination for publication of the net asset value of the Fund's shares; (f)
oversight and, as the Fund's Board of Directors may request, preparation of
reports and recommendations to the Board of Directors on the performance of
administrative and professional services rendered to the Fund by others,
including the Fund's custodian and any subcustodian, registrar, transfer agency,
and dividend disbursing agent, as well as accounting, auditing and other
services; (g) provision of competent personnel and administrative offices
necessary to perform its services under the Administration Agreement; (h)
arrangement for the payment of Fund expenses; (i) consultations with Fund
officers and various service providers in establishing the accounting policies
of the Fund; (j) preparation of such financial information and reports as may be
required by any banks from which the Fund borrows funds; and (k) provision of
such assistance to the Investment Adviser, the custodian and any subcustodian,
and the Fund's counsel and auditors as generally may be required to carry on
properly the business and operations of the Fund. Under the Administration
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<PAGE>
Agreement, the Fund agrees to cause its transfer agent to timely deliver to the
Administrator such information as may be necessary or appropriate for the
Administrator's performance of its duties and responsibilities to the Fund.
The Administrator is obligated, at its expense, to provide office space,
facilities, equipment and necessary personnel in connection with its provision
of services under the Administration Agreement; however, the Fund (in addition
to the fees payable to the Administrator under the Administration Agreement, as
described below) has agreed to pay reasonable travel expenses of persons who
perform administrative, clerical and bookkeeping functions on behalf of the
Fund. Additionally, the expenses of legal counsel and accounting experts
retained by the Administrator, after consulting with Fund counsel and
independent auditors, as may be necessary or appropriate in connection with the
Administrator's provision of services to the Fund, are deemed expenses of, and
shall be paid by, the Fund.
For the services rendered to the Fund and the facilities furnished, the Fund
is obliged to pay the Administrator, subject to an annual minimum fee of
$125,000, a monthly fee at an annual rate of .20% of the first $600 million of
the Fund's average daily net assets and .175% of the Fund's average daily net
assets in excess of $600 million. Prior to the conversion of the Fund from a
closed-end investment company into an open-end investment company, which
occurred immediately following the close of business on the New York Stock
Exchange on December 28, 1995 (the "Open-End Conversion"), the Fund paid the
Administrator, subject to an annual minimum fee of $150,000, a monthly fee at an
annual rate of .25% of the Fund's average weekly net assets not exceeding $300
million and .20% of the average weekly net assets in excess of $300 million.
During the fiscal years ended June 30, 1994, December 31, 1994 (which consisted
of the six-month period from July 1 to December 31, 1994) and December 31, 1995,
the Fund paid the Administrator fees and expense reimbursements of $636,273,
$273,227 and $611,386, respectively, under the Administration Agreement then in
effect.
The Administration Agreement will remain in effect unless and until
terminated in accordance with its terms. It may be terminated at any time,
without the payment of any penalty, by the Fund on sixty days written notice to
the Administrator and by the Administrator on ninety days written notice to the
Fund. The Administration Agreement terminates automatically in the event of its
assignment.
The principal address of the Administrator is P.O. Box 9011, Princeton, New
Jersey 08543.
THE DISTRIBUTOR
Pursuant to a Distribution Agreement by and between U.S. Growth Investments,
Inc. (the "Distributor") and the Fund (the "Distribution Agreement"), the
Distributor serves as the principal underwriter of the Fund's shares. The Fund's
shares are offered continuously by and through the Distributor. As agent of the
Fund, the Distributor accepts orders for the purchase and redemption of Fund
shares. The Distributor may enter into selling agreements with other dealers and
financial institutions, pursuant to which such dealers and/or financial
institutions also may sell Fund shares.
RULE 12B-1 DISTRIBUTION PLANS
Rule 12b-1 under the Investment Company Act provides that any payments made
by the Fund (or any Class thereof) in connection with the distribution of its
shares must be pursuant to a written plan describing all material aspects of the
proposed financing of distribution and that any agreements entered into in
furtherance of the plan must likewise be in writing. In accordance with Rule
12b-1,
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<PAGE>
effective at the time of the Open-End Conversion, the Fund adopted a separate
Rule 12b-1 Distribution Plan for each of its Class B, Class C and Class D
shares. There is no Rule 12b-1 Distribution Plan for the Fund's Class A shares.
Rule 12b-1 requires that the Distribution Plans (the "Plans") and the
Distribution Agreement be approved initially, and thereafter at least annually,
by a vote of the Board of Directors including a majority of the directors who
are not interested persons of the Fund and who have no direct or indirect
interest in the operation of the Plans or in any agreement relating to the
Plans, cast in person at a meeting called for the purpose of voting on the plan
or agreement. Rule 12b-1 requires that the Distribution Agreement and each Plan
provide, in substance:
(a) that it shall continue in effect for a period of more than one year
from the date of its execution or adoption only so long as such continuance
is specifically approved at least annually in the manner described in the
preceding paragraph;
(b) that any person authorized to direct the disposition of moneys paid
or payable by the Fund pursuant to the Plan or any related agreement shall
provide to the Fund's Board of Directors, and the directors shall review, at
least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made; and
(c) in the case of a Plan, that it may be terminated at any time by a
vote of a majority of the members of the Fund's Board of Directors who are
not interested persons of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements related
to the Plan or by a vote of a majority of the outstanding voting shares of
each affected Class or Classes of the Fund's shares.
Rule 12b-1 further requires that none of the Plans may be amended to
increase materially the amount to be spent for distribution without approval by
the shareholders of the affected Class or Classes and that all material
amendments of the Plan must be approved in the manner described in the paragraph
preceding clause (a) above.
Rule 12b-1 provides that the Fund may rely upon Rule 12b-1 only if the
selection and nomination of the Fund's disinterested directors are committed to
the discretion of such disinterested directors. Rule 12b-1 provides that the
Fund may implement or continue the Plans only if the directors who vote to
approve such implementation or continuation conclude, in the exercise of
reasonable business judgment and in light of their fiduciary duties under state
law, and under Sections 36(a) and (b) of the Investment Company Act, that there
is a reasonable likelihood that each Plan will benefit the Fund and its
shareholders. The Board of Directors has concluded that there is a reasonable
likelihood that the Distribution Plans will benefit the Fund and its
shareholders.
Under its Distribution Plan, each of Class B, Class C and Class D pays the
Distributor a Rule 12b-1 account maintenance fee equal on an annual basis to
.25% of the average daily net assets attributable to each such Class. This
account maintenance fee is designed to compensate the Distributor and certain
broker-dealers and financial institutions with which the Distributor has entered
into selling arrangements for the provision of certain services to the holders
of Fund shares, including, but not limited to, answering shareholder questions,
providing shareholders with reports and other information and providing various
other services relating to the maintenance of shareholder accounts.
The Distribution Plans of Class B and Class C provide for the additional
payment of a Rule 12b-1 distribution fee to the Distributor, equal on an annual
basis to .75% of the average daily net assets
B-8
<PAGE>
attributable to such Class. This fee is designed to compensate the Distributor
for advertising, marketing, and distributing the Class B and Class C shares,
including the provision of initial and ongoing sales compensation to the
Distributors sales representatives and to other broker-dealers and financial
institutions with which the Distributor has entered into selling arrangements.
No Rule 12b-1 account maintenance or distribution fees were paid by any
Class of the Fund's shares during the fiscal year ended December 31, 1995. Such
fees were voluntarily waived by the Distributor.
SPECIAL PURCHASE PLANS
AUTOMATIC INVESTMENT PLAN. As a convenience to investors, shares may be
purchased through a preauthorized automatic investment plan. Such preauthorized
investments (at least $50) may be used to purchase shares of the Fund at the
public offering price next determined after the Fund receives the investment
(normally the 5th of each month, or the next business day thereafter). Further
information is available from the Transfer Agent.
COMBINED PURCHASE PRIVILEGE. The following persons (or groups of persons)
may qualify for reductions from the front-end sales charge ("FESC") schedule for
Class A or Class D shares set forth in the Prospectus by combining purchases of
any Class of Fund shares, if the combined purchase of all Fund shares totals at
least $25,000:
(i) an individual or a company as defined in Section 2(a)(8) of the
Investment Company Act;
(ii) an individual, his or her spouse and their children under
twenty-one, purchasing for his, her or their own account;
(iii) a trustee or other fiduciary purchasing for a single trust estate
or single fiduciary account (including a pension, profit-sharing or other
employee benefit trust) created pursuant to a plan qualified under Section
401 of the Code;
(iv) tax-exempt organizations enumerated in Section 501(c)(3) of the
Code;
(v) employee benefit plans of a single employer or of affiliated
employers;
(vi) any organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying
redeemable securities of a registered investment company, and provided that
the purchase is made through a central administration, or through a single
dealer, or by other means which result in economy of sales effort or
expense. An organized group does not include a group of individuals whose
sole organizational connection is participation as credit cardholders of a
company, policyholders of an insurance company, customers of either a bank
or broker-dealer, or clients of an investment adviser.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A purchase of Class A
or Class D shares may qualify for a Cumulative Quantity Discount. The applicable
FESC will then be based on the total of:
(i) the investor's current purchase; and
(ii) the net asset value (at the close of business on the previous day)
of Fund shares held by the investor; and
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<PAGE>
(iii) the net asset value of shares of any Class of Fund shares owned by
another shareholder eligible to participate with the investor in a Combined
Purchase Privilege (see above).
For example, if an investor owned shares worth $15,000 at the then current
net asset value and purchased an additional $10,000 of shares, the sales charge
for the $10,000 purchase would be at the rate applicable to a single $25,000
purchase.
To qualify for the Combined Purchase Privilege or to obtain the Cumulative
Quantity Discount on a purchase through an investment dealer, when each purchase
is made the investor or dealer must provide the Fund with sufficient information
to verify that the purchase qualifies for the privilege or discount.
LETTER OF INTENTION. Investors wishing to purchase Class A or Class D
shares may also obtain the reduced FESC shown in the Prospectus by means of a
written Letter of Intention, which expresses the investor's intention to invest
not less than $25,000 (including certain "credits," as described below) within a
period of 13 months in any Class of Fund shares. Each purchase of shares under a
Letter of Intention will be made at the public offering price applicable at the
time of such purchase to a single transaction of the dollar amount indicated in
the Letter of Intention. A Letter of Intention may include purchases of shares
made not more than 90 days prior to the date that an investor signs a Letter of
Intention; however, the 13-month period during which the Letter of Intention is
in effect will begin on the date of the earliest purchase to be included.
Investors qualifying for the Combined Purchase Privilege described above may
purchase shares under a single Letter of Intention.
For example, assume that on the date an investor signs a Letter of Intention
to invest at least $25,000 as set forth above and the investor and the investors
spouse and children under twenty-one have previously invested $10,000 in shares
which are still held by such persons. It will only be necessary to invest a
total of $15,000 during the 13 months following the first date of purchase of
such shares in order to qualify for the sales charges applicable to investments
of $25,000.
The Letter of Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Letter of Intention is 5% of such amount. Shares purchased with the first 5% of
such amount will be held in escrow to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount indicated is not
purchased. When the full amount indicated has been purchased, the escrow will be
released. To the extent that an investor purchases more than the dollar amount
indicated on the Letter of Intention and qualifies for further reduced sales
charges, the sales charges will be adjusted for the entire amount purchased at
the end of the 13-month period. The difference in sales charges will be used to
purchase additional shares at the then current offering price applicable to the
actual amount of the aggregate purchases.
Investors electing to take advantage of the Letter of Intention should
carefully review the appropriate provisions on the general authorization form
attached to the Prospectus.
MONTHLY CASH WITHDRAWAL PLAN
Any investor who owns or buys shares of the Fund valued at $10,000 or more
at the current offering price may open a Withdrawal Plan and have a designated
sum of money paid monthly to the investor or another person. Shares are
deposited in a Withdrawal Plan account and all distributions are reinvested in
additional shares of the Fund at net asset value. Shares in a Withdrawal Plan
account are then redeemed at net asset value to make each withdrawal payment.
Deferred sales
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<PAGE>
charges may apply to monthly redemptions of shares. Redemptions for the purpose
of withdrawal are made on the 20th of the month (or on the preceding business
day if the 20th falls on a weekend or is a holiday) at that day's closing net
asset value, and checks are mailed on the next business day. Payments will be
made to the registered shareholder or to another party if preauthorized by the
registered shareholder. As withdrawal payments may include a return on
principal, they cannot be considered a guaranteed annuity or actual yield of
income to the investor. The redemption of shares in connection with a Withdrawal
Plan may result in a gain or loss for tax purposes. Continued withdrawals in
excess of income will reduce and possibly exhaust invested principal, especially
in the event of a market decline. The maintenance of a Withdrawal Plan
concurrently with purchases of additional shares of a Class of Fund shares which
imposes an FESC would normally be disadvantageous to the investor because of the
FESC payable on such purchases. For this reason, an investor may not maintain an
Automatic Investment Plan for the accumulation of shares of a Fund or Class of
Fund shares which imposes an FESC (other than through reinvestment of
distributions) and a Withdrawal Plan at the same time. The cost of administering
Withdrawal Plans is borne by the Fund as an expense of all shareholders. The
Fund or the Distributor may terminate or change the terms of the Withdrawal Plan
at any time. The Withdrawal Plan is fully voluntary and may be terminated by the
shareholder at any time without the imposition of any penalty.
Since the Withdrawal Plan may involve invasion of capital, investors should
consider carefully with their own financial advisers whether the Withdrawal Plan
and the specified amounts to be withdrawn are appropriate in their
circumstances. The Fund makes no recommendations or representations in this
regard.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is calculated separately for each Class of
shares. The assets and liabilities attributable to each Class of shares is
determined in accordance with generally accepted accounting principles and
applicable SEC rules and regulations.
The portfolio securities in which the Fund invests will fluctuate in value,
and hence the net asset value of each Class of the Fund's shares will also
fluctuate. The net asset value per share and the maximum public offering price
of each Class of the Fund's shares as of March 29, 1996 were calculated as
follows:
CLASS A SHARES
<TABLE>
<S> <C>
Net Asset Value Per Share ($12.12) = Net assets attributable to Class A
($106,869,178)
---------------------------------------------
Class A shares outstanding (8,815,452)
</TABLE>
<TABLE>
<S> <C>
Maximum Public Offering Price Per = Net asset value per share ($12.12)
Share ($12.79) -------------------------------
1 - Maximum FESC (5.25%)
</TABLE>
CLASS B SHARES
<TABLE>
<S> <C>
Net Asset Value Per Share ($12.09) = Net assets attributable to Class B ($23,635)
----------------------------------------
Class B shares outstanding (1,955)
</TABLE>
(The public offering price per Class B Share is the same as the net asset value
per Class B Share.)
B-11
<PAGE>
CLASS C SHARES
<TABLE>
<S> <C>
Net Asset Value Per Share ($12.08) = Net assets attributable to Class C
($1,010.75)
------------------------------------------
Class C Shares Outstanding (83.682)
</TABLE>
(The public offering price per Class C Share is the same as the net asset value
per Class C Share.)
CLASS D SHARES
<TABLE>
<S> <C>
Net Asset Value Per Share ($12.11) = Net assets attributable to Class D ($78,972)
----------------------------------------
Class D shares outstanding (6,522)
</TABLE>
<TABLE>
<S> <C>
Maximum Public Offering Price Per = Net asset value per share ($12.11)
Share ($12.78) -------------------------------
1 - Maximum FESC (5.25%)
</TABLE>
CALCULATION OF PERFORMANCE DATA
For purposes of quoting and comparing the performance of each Class of the
Fund's shares to that of other mutual funds and to other relevant market indices
in advertisements or in reports to shareholders, performance may be stated in
terms of "average annual total return" or "cumulative total return." These total
return quotations are and will be computed separately for each Class of shares.
Under the rules of the SEC, funds advertising performance must include average
annual total return quotations calculated according to the following formula:
P(1+T)(n) = ERV
<TABLE>
<C> <C> <S>
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period of a hypothetical
$1,000 payment made at the beginning of such period.
</TABLE>
This calculation assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged to all shareholder accounts.
Cumulative total return is computed by finding the cumulative compounded
rate of return over the period indicated in the advertisement that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
ERV - P
CTR = (________) x 100
P
<TABLE>
<C> <C> <S>
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the period of a hypothetical
$1,000 payment made at the beginning of such period; and
P = initial payment of $1,000.
</TABLE>
B-12
<PAGE>
This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged to all shareholder accounts.
Under each of the above formulas, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication.
Performance information for any period prior to the Open-End Conversion reflects
the performance of the Fund as a closed-end fund and does not reflect payment of
the underwriting discount paid in connection with the public offerings of the
Funds shares as a closed-end fund. In addition, as an open-end fund, the Fund
incurs certain additional expenses as a result of the continuous offering and
redemption of its shares.
The average annual total return and cumulative total return figures
calculated in accordance with the foregoing formulas assume in the case of Class
A and Class D shares the maximum FESC has been deducted from the hypothetical
initial investment at the time of purchase, or in the case of Class B or Class C
shares the maximum applicable CDSC has been paid upon the hypothetical
redemption of the shares at the end of the period.
The following table sets forth average annual total return and cumulative
total return figures for certain periods ended on March 31, 1996. Performance
prior to the Open-End Conversion (December 29, 1995) can be restated to reflect
the imposition of the applicable FESC or CDSC but otherwise must reflect actual
expenses borne by the Fund during such time periods (and cannot be restated to
reflect expenses to be borne by each Class of the Fund's shares following the
Open-End Conversion, including, but not limited to, Rule 12b-1 fees). Therefore,
to avoid investor confusion, performance that occurred prior to March 31, 1996
(most of which occurred prior to the Open-End Conversion) will be calculated and
quoted only on the Fund's Class A shares, and will assume investments are not
subject to any CDSC. SUCH PERFORMANCE SHOULD NOT BE UTILIZED IN EVALUATING THE
RELATIVE MERITS OF EACH AVAILABLE CLASS OF FUND SHARES.
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION(1)
--------- -------------
<S> <C> <C>
Average Annual Total Return on Class A Shares:
With deduction of maximum FESC.................................................. 10.41% 6.29%
Without deduction of maximum FESC............................................... 16.53% 7.55%
Cumulative Total Return on Class A Shares
With deduction of maximum FESC.................................................. 10.41% 32.24%
Without deduction of maximum FESC............................................... 16.53% 39.57%
</TABLE>
- ------------------------
(1) The Fund commenced operations as a closed-end fund on September 3, 1991.
Past performance is not predictive of future performance. All advertisements
containing performance data of any kind will include a legend disclosing that
such performance data represents past performance and that the investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Advertisements and communications may compare the performance of Fund shares
with that of other mutual funds, as reported by Lipper Analytical Services, Inc.
or similar independent services or financial publications, and may also contrast
the Fund's investment policies and portfolio flexibility
B-13
<PAGE>
with other mutual funds. From time to time, advertisements and other Fund
materials and communications may cite statistics to reflect the performance over
time of Fund shares, utilizing generally accepted indices or analyses,
including, but not limited to, those published by Lipper Analytical Service,
Inc., Standard & Poors Corporation, Dow Jones & Company, Inc., CDA Investment
Technologies, Inc., Morningstar, Inc. and Investment Company Data Incorporated.
Performance ratings reported periodically in national financial publications
also may be used. In addition, advertising materials may include the Investment
Adviser's analysis of, or outlook for, the economy or financial markets, compare
the Investment Adviser's analysis or outlook with the views of others in the
financial community and refer to the expertise of the Investment Adviser's
personnel and their reputation in the financial community.
DIRECTORS AND OFFICERS
Directors and officers of the Fund, together with information as to their
principal occupations during the past five years, are set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME AND ADDRESS POSITIONS WITH THE FUND PAST 5 YEARS AND OTHER AFFILIATIONS
- -------------------------------- ---------------------------- -------------------------------------------------
<S> <C> <C>
James R. Jundt (1)(2) Chairman of the Board, Chairman of the Board, Chief Executive Officer,
1550 Utica Avenue South President and Chief Secretary and portfolio manager of the
Suite 950 Executive Officer Investment Adviser since its inception in 1982.
Minneapolis, MN 55416 Also a trustee of Gonzaga University and the
Minneapolis Institute of Arts and a director of
three private companies. Chairman of the Board,
President and Chief Executive Officer of Jundt
Funds, Inc. since 1995. Director and Chairman of
the Board of the Distributor since 1995.
John E. Clute Director Dean and Professor of Law, Gonzaga University
East 702 Sharp Avenue School of Law (since August 1, 1991); previously
Spokane, WA 99202 Senior Vice President -- Human Resources and
General Counsel, Boise Cascade Corporation for
more than five years. Director of Jundt Funds,
Inc. since 1995. Also a director of Hecla Mining
Company.
</TABLE>
B-14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME AND ADDRESS POSITIONS WITH THE FUND PAST 5 YEARS AND OTHER AFFILIATIONS
- -------------------------------- ---------------------------- -------------------------------------------------
<S> <C> <C>
Floyd Hall Director Chairman, President and Chief Executive Officer
3100 West Big Beaver Road of K-Mart Corporation since June 1995. Chairman
Troy, MI 48084 and Chief Executive Officer of The Museum
Company and Alva Replicas Company from July 1989
to June 1995; from March 1984 to July 1989
Chairman and Chief Executive Officer of The
Grand Union Company. Director of Jundt Funds,
Inc. since 1995. Also a director of Jamesway
Corp. as well as a private company.
Demetre M. Nicoloff Director Cardiac and thoracic surgeon, Cardiac Surgical
1492 Hunter Drive Associates, P.A., Minneapolis, Minnesota.
Wayzata, MN 55391 Director of Jundt Funds, Inc. since 1995. Also a
director of Optical Sensors for Medicine, Inc.,
ATS Medical, Inc., Micromedics, Inc., Possis
Medical Inc., Applied Biometrics, Inc. and
Sonometrics, Inc.
Darrell R. Wells Director Managing Director, Security Management Company.
4350 Brownsboro Road Director of Jundt Funds, Inc. since 1995. Also a
Louisville, KY 40207 director of Churchill Downs Inc., and Citizen's
Financial Inc., as well as several private
companies.
Donald M. Longlet Vice President and Treasurer Portfolio manager since May 1989 with the
1550 Utica Avenue South Investment Adviser; portfolio manager with AMEV
Suite 950 Advisers, Inc., St. Paul, Minnesota, from
Minneapolis, MN 55416 January 1983 to April 1989. Vice President and
Treasurer of Jundt Funds, Inc. since 1995.
James E. Nicholson Secretary Partner with the law firm of Faegre & Benson LLP,
2200 Norwest Center Minneapolis, Minnesota, which has served as
Minneapolis, MN 55402 general counsel to the Investment Adviser, the
Fund and the Distributor since their inception.
Secretary of Jundt Funds, Inc. since 1995.
</TABLE>
- ------------------------
(1) Director who is an "interested person" of the Fund, as defined in the
Investment Company Act.
B-15
<PAGE>
(2) "Controlling person" of the Investment Adviser, as defined in the Investment
Company Act. Mr. Jundt beneficially owns 76% of the capital stock of the
Investment Adviser. Mr. Jundt also owns 100% of the capital stock of the
Distributor and is, therefore, a "controlling person" of the Distributor as
well.
Since January 1, 1996, the Fund and Jundt Funds, Inc. together have agreed
to pay each director who is not an "interested person" of either the Fund or
Jundt Funds, Inc. a fee of $12,000 per year plus $1,200 for each meeting
attended and reimburses each such director for the expenses of attendance at
such meetings. Prior to January 1, 1996, (which preceded the payment of any fees
to the directors of the newly organized Jundt Funds, Inc.), the Fund paid each
such director a fee of $10,000 per year plus $1,000 for each meeting attended.
No compensation is paid by the Fund to its officers or to any of its directors
who are "interested persons" of either the Fund or Jundt Funds, Inc.
Director fees and expenses aggregated $82,249 for the fiscal year ended
December 31, 1995. The following table sets forth for such periods the aggregate
compensation (excluding expenses) paid by the Fund and Jundt Funds, Inc. to the
directors:
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
FROM THE FUND
------------------------------------------
TWELVE-MONTH PENSIONS OR RETIREMENT
PERIOD ENDED BENEFITS ACCRUED AS
NAME OF DIRECTOR DECEMBER 31, 1995 PART OF FUND EXPENSES
- ----------------------------------------------------------------------- ----------------- -----------------------
<S> <C> <C>
James R. Jundt......................................................... None None
Demetre M. Nicoloff.................................................... $ 15,000 None
Darrell R. Wells....................................................... $ 15,000 None
John E. Clute.......................................................... $ 15,000 None
Floyd Hall............................................................. $ 14,000 None
</TABLE>
COUNSEL AND AUDITORS
Faegre & Benson LLP, 2200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, serves as the Fund's general counsel. KPMG Peat
Marwick LLP, 4200 Norwest Center, 90 South Seventh Street, Minneapolis,
Minnesota 55402, has been selected as the independent auditors of the Fund for
its fiscal year ending December 31, 1996.
GENERAL INFORMATION
Under Minnesota law, each Fund director owes certain fiduciary duties to the
Fund and to its shareholders. Minnesota law provides that a director "shall
discharge the duties of the position of director in good faith, in a manner the
director reasonably believes to be in the best interest of the corporation, and
with the care an ordinary prudent person in a like position would exercise under
similar circumstances." Fiduciary duties of a director of a Minnesota
corporation include, therefore, both a duty of "loyalty" (to act in good faith
and act in a manner reasonably believed to be in the best interests of the
corporation) and a duty of "care" (to act with the care an ordinarily prudent
person in a like position would exercise under similar circumstances). Minnesota
law authorizes corporations to eliminate or limit the liability of directors:
(a) for any breach of the directors' duty of "loyalty" to the corporation or its
shareholders; (b) for acts or omissions not in good faith or that involve
intentional
B-16
<PAGE>
misconduct or a knowing violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws; or, (c) for any transaction from which
the directors derived an improper personal benefit. The Fund's Articles of
Incorporation limit the liability of the Fund's directors to the fullest extent
permitted by Minnesota statutes, except to the extent that such liability cannot
be limited as provided in the Investment Company Act (which prohibits any
provisions which purport to limit the liability of directors arising from such
directors' willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their role as directors).
Minnesota law does not eliminate the duty of "care" imposed upon a director.
It only authorizes a corporation to eliminate monetary liability for violations
of that duty. Minnesota law, further, does not permit elimination or limitation
of liability of "officers" to the corporation for breach of their duties as
officers (including the liability of directors who serve as officers for breach
of their duties as officer). Minnesota law does not permit elimination of the
availability of equitable relief, such as injunctive or rescissionary relief.
These remedies, however, may be ineffective in situations where shareholders
become aware of such a breach after a transaction has been consummated and
rescission has become impractical. Further, Minnesota law does not permit
elimination or limitation of a director's liability under the Securities Act of
1933 or the Securities Exchange Act of 1934, and it is uncertain whether and to
what extent the elimination of monetary liability would extend to violations of
duties imposed on directors by the Investment Company Act and the rules and
regulations thereunder.
The Fund is not required under Minnesota law to hold annual or periodically
scheduled regular meetings of shareholders. Regular and special shareholder
meetings are held only at such times and with such frequency as required by law.
Minnesota corporation law provides for the Board of Directors to convene
shareholder meetings when it deems appropriate. In addition, if a regular
meeting of shareholders has not been held during the immediately preceding
fifteen months, a shareholder or shareholders holding three percent or more of
the voting shares of the Fund may demand a regular meeting of shareholders of
the Fund by written notice of demand given to the chief executive officer or the
chief financial officer of the Fund. Within ninety days after receipt of the
demand, a regular meeting of shareholders must be held at the expense of the
Fund. Irrespective of whether a regular meeting of shareholders has been held
during the immediately preceding fifteen months, in accordance with Section
16(c) under the Investment Company Act, the Fund's Board of Directors shall
promptly call a meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in writing to do so by the
record holders of not less than 10 percent of the outstanding shares.
Additionally, the Investment Company Act requires shareholder votes for all
amendments to fundamental investment policies and restrictions and for all
investment advisory contracts and amendments thereto.
Upon issuance and sale in accordance with the terms of the Fund's Prospectus
and Statement of Additional Information, each Fund share will be fully paid and
non-assessable. Shares have no preemptive, subscription or conversion rights and
are redeemable as set forth under "How To Redeem Fund Shares" in the Prospectus.
B-17
<PAGE>
Except as set forth below, no person owned of record or, to the Fund's
knowledge, owned of record or beneficially more than 5% of any Class of the
Fund's common shares as of March 29, 1996:
<TABLE>
<CAPTION>
RECORD (R) OR
BENEFICIAL
NUMBER OF (B) PERCENTAGE OF
NAME AND ADDRESS SHARES OWNED OWNERSHIP CLASS
- ---------------------------- -------------- ------------- ----------------
<S> <C> <C> <C>
CLASS A SHARES
James R. Jundt 763,890 B 8.7%
1550 Utica Avenue South
Minneapolis, MN 55416
Merrill Lynch FBO 6,593,320 R 74.9%
Merrill Lynch Customers
Mutual Fund Operations
Jacksonville, Florida 32246
CLASS B SHARES
Merrill Lynch FBO 1,871 R 95.7 %
Merrill Lynch Customers
Mutual Fund Operations
Jacksonville, Florida 32246
CLASS C SHARES
James R. Jundt 84 R and B 100 %
1550 Utica Avenue South
Minneapolis, MN 55416
CLASS D SHARES
Roger D. Lyng IRA 542 B 8.3 %
12312 Stonehaven Lane
Bowie, MD 20715
The Henderson Family Trust 1,408 B 21.6 %
8 Monterey Ter
Crinda, CA 94563
First Tennessee Bank 4,488 B 68.8 %
165 Madison Ave.
Memphis, TN 38103
</TABLE>
FINANCIAL AND OTHER INFORMATION
The Fund's Annual Report dated December 31, 1995 is incorporated herein by
reference, in reliance on the report of the Fund's independent auditors included
therein and pursuant to the authority of said firm as experts in accounting and
auditing.
The Prospectus and this Statement of Additional Information do not contain
all the information included in the Funds Registration Statement filed with the
SEC under the Securities Act of 1933 and the Investment Company Act (the
"Registration Statement") with respect to the securities offered by the
Prospectus and this Statement of Additional Information. Certain portions of the
Registration Statement have been omitted from the Prospectus and this Statement
of Additional Information pursuant to the rules and regulations of the SEC. The
Registration Statement including the exhibits filed therewith may be examined at
the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or in this Statement of Additional
Information as to any contract or other document referred to are not necessarily
complete, and, in each instance, reference is
B-18
<PAGE>
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement of which the Prospectus and this Statement of Additional
Information form a part, each such statement being qualified in all respects by
such reference.
B-19
<PAGE>
JUNDT FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
PART C
OTHER INFORMATION
<PAGE>
PART C
OTHER INFORMATION
ITEM 24 -- FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements for The Jundt Growth Fund, Inc. (the "Registrant")
are included in Part B of this Registration Statement (Statement of Additional
Information).
(b) Exhibits:
<TABLE>
<C> <S>
1 Amended and Restated Articles of Incorporation and Certificate of
Designation*
2 By-Laws (as amended)*
3 Not applicable
4 Not applicable
5 Amended Investment Advisory Agreement*
6.1 Distribution Agreement*
6.2 Form of Selected Dealer Agreement*
7 Not applicable
8 Custodian Contract*
9.1 Transfer Agency and Service Agreement*
9.2 Amended Administration Agreement*
9.3 Financial Services Agreement*
10 Opinion and Consent of Faegre & Benson LLP*
11 Consent of KPMG Peat Marwick LLP
12 Not applicable
13 Not applicable
14 Not applicable
15.1 Class B Distribution Plan*
15.2 Class C Distribution Plan*
15.3 Class D Distribution Plan*
16 Schedules Supporting Computations of Performance Data*
17 Not applicable
18 Rule 18f-3 Plan*
19 Code of Ethics*
20 Powers of Attorney*
</TABLE>
- ------------------------
*Exhibits incorporated by reference to the Exhibits (designated by the same
number) filed with Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A (File Nos. 33-98182 and 811-06317) filed
with the Commission via EDGAR on December 18, 1995.
ITEM 25 -- PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
The Registrant is under common control with Jundt Funds, Inc., an open-end
management investment company, by virtue of the fact that the Registrant and
Jundt Funds, Inc. share a common investment adviser. There are no other persons,
to the Registrants knowledge, that are directly or indirectly controlled by or
under common control with the Registrant.
C-1
<PAGE>
ITEM 26 -- NUMBER OF HOLDERS OF SECURITIES
The following table sets forth the number of holders of shares of the
Registrant as of March 29, 1996:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- ------------------------------------------------------------------------------ --------------
<S> <C>
Class A Common Shares, par value $.01 per share............................... 1,982
Class B Common Shares, par value $.01 per share............................... 3
Class C Common Shares, par value $.01 per share............................... 3
Class D Common Shares, par value $.01 per share............................... 6
</TABLE>
ITEM 27 -- INDEMNIFICATION
The Articles of Incorporation (Exhibit 1) and Bylaws (Exhibit 2) of the
Registrant provide that the Registrant shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to the
full extent permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided that no such indemnification may be made
if it would be in violation of Section 17(h) of the Investment Company Act of
1940, as now enacted or hereafter amended. Section 302A.521 of the Minnesota
Statutes, as now enacted, provides that a corporation shall indemnify a person
made or threatened to be made a party to a proceeding against judgments,
penalties, fines, settlements and reasonable expenses, including attorneys' fees
and disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person: (a) has not been indemnified by another organization for
the same judgments, penalties, fines, settlements and reasonable expenses
incurred by the person in connection with the proceeding with respect to the
same acts or omissions; (b) acted in good faith; (c) received no improper
personal benefit; (d) complied with the Minnesota Statute dealing with
directors' conflicts of interest, if applicable; (e) in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful; and (f)
reasonably believed that the conduct was in the best interests of the
corporation or, in certain circumstances, reasonably believed that the conduct
was not opposed to the best interests of the corporation.
The Articles of Incorporation of the Registrant further provide that, to the
fullest extent permitted by the Minnesota Business Corporations Act, as existing
or amended (except as prohibited by the Investment Company Act of 1940, as
amended) a director of the Registrant shall not be liable to the Registrant or
its shareholders for monetary damages for breach of fiduciary duty as director.
The form of Selected Dealer Agreement (Exhibit 6.2) between the Registrant's
principal underwriter, U.S. Growth Investments, Inc. (the "Distributor"), and
any broker-dealer with which the Distributor enters into such Selected Dealer
Agreement provides that each of the parties to the Selected Dealer Agreement
agrees to indemnify and hold the other harmless, including such parties'
officers, directors and any person who is or may be deemed to be a controlling
person of such party, from and against any losses, claims, damages, liabilities
or expenses, whether joint or several, to which any such person or entity may
become subject under the Securities Act of 1933 or otherwise insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon: (a) any untrue statement or alleged untrue
statement of material fact, or any omission or alleged omission to state a
material fact made or omitted by such indemnifying party therein; or (b) any
willful misfeasance or gross misconduct by such indemnifying party in the
performance of its duties and obligations thereunder.
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 such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the
C-2
<PAGE>
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities 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 such Act and
will be governed by the final adjudication of such issue.
ITEM 28 -- BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
In addition to serving as investment adviser to the Registrant, the
Investment Adviser (Jundt Associates, Inc.) serves as the investment adviser to
Jundt U.S. Emerging Growth Fund (a series of Jundt Funds, Inc.) and as a
sub-adviser to Diversified Investors Funds Group (Growth Series) as well as the
investment adviser to numerous private accounts.
See "Management of the Fund -- Investment Adviser" and "Management of the
Fund -- Portfolio Managers" in the Registrant's Prospectus and "Advisory,
Administrative and Distribution Agreements" and "Directors and Officers" in the
Registrant's Statement of Additional Information.
ITEM 29 -- PRINCIPAL UNDERWRITERS
(a) The Distributor is the only principal underwriter of the Registrant's
shares and also serves as principal underwriter of Jundt U.S. Emerging Growth
Fund (a series of Jundt Funds, Inc.).
(b) The following describes certain information regarding the officers and
directors of the Distributor:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH THE DISTRIBUTOR WITH THE REGISTRANT
- ----------------------- ------------------------------------------- -------------------------------------------
<S> <C> <C>
James R. Jundt Director and Chairman of the Board Chairman of the Board, President and Chief
Executive Officer
Thomas L. Press Director, President, Secretary and None.
Treasurer
</TABLE>
(c) Not applicable.
ITEM 30 -- LOCATION OF ACCOUNTS AND RECORDS
The Registrant's custodian is Norwest Bank Minnesota, N.A., Norwest Center,
90 South Seventh Street, Minneapolis, Minnesota 55402.
The Registrant's transfer agent and dividend disbursing agent is Investors
Fiduciary Trust Company, 1004 Baltimore, Kansas City, Missouri 64105.
Other records will be maintained by the Registrant at its principal offices,
which are located at 1550 Utica Avenue South, Suite 950, Minneapolis, Minnesota
55416 and by Princeton Administrators, L.P., the Registrant's administrator,
located at 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
ITEM 31 -- MANAGEMENT SERVICES
Not applicable.
ITEM 32 -- UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) Registrant hereby undertakes to furnish to each person to whom a
prospectus of the Registrant has been furnished the latest Annual Report of the
Registrant. Such Annual Report will be furnished by the Registrant without
charge upon request by any such person.
C-3
<PAGE>
(d) Pursuant to Section 16(c) of the Investment Company Act of 1940, as
amended, the Registrant hereby undertakes to call a shareholder meeting for the
purpose of voting upon the question of removal of one or more directors (and to
assist shareholders in communications with each other if and when requested in
writing to do so by the recordholders of not less than ten percent of the
Registrant's outstanding shares.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement on Form N-1A to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, and State of
Minnesota, on the 26th day of April, 1996.
THE JUNDT GROWTH FUND, INC.
By /s/ JAMES R. JUNDT
-----------------------------------
James R. Jundt
CHAIRMAN OF THE BOARD
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-1A has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME/SIGNATURE TITLE DATE
- ---------------------------------------- ------------------------------ ------------------
<C> <S> <C>
Director, Chairman of the
/s/ JAMES R. JUNDT Board, President and Chief
- ---------------------------------------- Executive Officer (Principal April 26, 1996
James R. Jundt Executive Officer)
/s/ DONALD M. LONGLET Vice President and Treasurer
- ---------------------------------------- (Principal Financial and April 26, 1996
Donald M. Longlet Accounting Officer)
*
- ---------------------------------------- Director
John E. Clute
*
- ---------------------------------------- Director
Floyd Hall
*
- ---------------------------------------- Director
Demetre M. Nicoloff
*
- ---------------------------------------- Director
Darrell R. Wells
*By /s/ JAMES R. JUNDT
-------------------------------------- April 26, 1996
James R. Jundt
ATTORNEY-IN-FACT
(Pursuant to Powers of Attorney
dated as of October 4, 1995, filed
as Exhibit 20 to this Registration
Statement on Form N-1A.)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
NUMBER AND NAME OF EXHIBIT PAGE NUMBER
- ----------------------------------------------------------------------- -----------
<S> <C> <C>
1 Amended and Restated Articles of Incorporation and
Certificate of Designation................................. *
2 By-Laws (as amended)........................................ *
5 Amended Investment Advisory Agreement....................... *
6.1 Distribution Agreement...................................... *
6.2 Form of Selected Dealer Agreement........................... *
8 Custodian Contract.......................................... *
9.1 Transfer Agency and Service Agreement....................... *
9.2 Amended Administration Agreement............................ *
9.3 Financial Services Agreement................................ *
10 Opinion and Consent of Faegre & Benson LLP.................. *
11 Consent of KPMG Peat Marwick LLP............................ Filed
electronically
15.1 Class B Distribution Plan................................... *
15.2 Class C Distribution Plan................................... *
15.3 Class D Distribution Plan................................... *
16 Schedules Supporting Computations of Performance Data....... *
18 Rule 18f-3 Plan............................................. *
19 Code of Ethics.............................................. *
20 Powers of Attorney.......................................... *
</TABLE>
- ------------------------
*Exhibits incorporated by reference to the Exhibits (designated by the same
number) filed with Pre-Effective Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A (File Nos. 33-98182 and 811-06317) filed
with the Commission via EDGAR on December 18, 1995.
<PAGE>
Exhibit 11
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Jundt Growth Fund, Inc.:
We consent to the use of our report incorporated herein by reference and to
the references to our Firm under the headings "FINANCIAL HIGHLIGHTS" in Part
A and "COUNSEL AND AUDITORS" in Part B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
April 29, 1996
