Class E Shares : AMREX

Effective November 30, 2018

The Securities and Exchange Commission has not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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Table of Contents

Account Minimum, 14
ADDITIONAL INVESTMENT INFORMATION, 5
AUTOMATIC CASH WITHDRAWAL PLAN, 16
BROKERAGE, 19
CALCULATION OF NET ASSET VALUE, 20
Chief Compliance Officer, 12
CLASSIFICATION, 2
CONTROL PERSONS AND PRINCIPAL HOLDERS OF
SECURITIES, 12
CUSTODIAN AND INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM, 25
DISCLOSURE OF PORTFOLIO HOLDINGS, 7
Distribution Arrangements, 15
DISTRIBUTION OF SHARES, 14
DISTRIBUTION PLANS, 17
Dividends and Distributions, 15
DIVIDENDS, DISTRIBUTIONS AND TAXES, 20
Fee Table, 4
Financial Highlights, 16
Frequent Purchases and Redemptions of Fund
Shares, 15
FUND HISTORY, 2
How does the Fund implement its principal
investment objective, 7
How is the Fund managed, 12
How to Redeem Shares, 14
INVESTMENT ADVISORY AGREEMENT, 12
Investment Objectives, Principal Investment
Strategies, Related Risks, and Disclosure of
Portfolio Holdings, 7
Investment Objectives/Goals, 4
INVESTMENT RISKS, 3
INVESTMENT STRATEGIES, 2
MANAGEMENT OF THE FUND, 8
Management, Organization, and Capital Structure,
11

OTHER SERVICE PROVIDERS, 13
Payments to Broker-Dealers and Other Financial
Intermediaries, 7
PERFORMANCE DATA, 23
Portfolio Holdings, 11
Portfolio Manager, 7, 12
PORTFOLIO MANAGERS, 14
Portfolio Turnover, 4
PORTFOLIO TURNOVER, 7
Pricing of Fund Shares, 12
Principal Investment Strategy, 4
Principal risks of investing in the Fund, 5
PRINCIPAL UNDERWRITER, 13
Proxy Voting, 17
PROXY VOTING POLICIES, 11
Purchase and Sale of Fund Shares, 7
Purchase of Fund Shares, 13
Retirement Plans, 13
RETIREMENT PLANS, 16
Risk Return Summary, 4
Risk/Return Bar Chart and Table, 6
Risks presented by the Fund’s Investing in
Companies Involved in the Legal Cannabis
Business, 8
Sales Charges, 15
SERVICE AGREEMENTS, 13
Shareholder Information, 12
Special Services Available when Purchasing Fund
Shares, 13
Tax Consequences, 7
TEMPORARY DEFENSIVE POSITION, 7
The Investment Adviser, 7, 11
TRANSFER AGENT, 25
Understanding the Financial Highlights, 17
What is the Fund’s investment objective, 7

Series Two Prospectus Page 3


 

Risk/Return Summary
Investment Objectives/Goals
The Fund’s primary objective is growth of capital.

Fee Table

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in the American Growth Fund. More information about these breakpoints can be found under “Distribution Arrangements” on page 15 of this prospectus.

  Class E  
SHAREHOLDER FEES: (fees paid directly from your investment)    
Maximum sales charge (load) imposed on purchases (as a percentage of offering 5.75 %
price)    
Maximum deferred sales charge (load) as a percentage of original purchase price or 1%  
redemption proceeds, whichever is lower (c)    
Maximum sales charge (load) imposed on reinvested dividends None  
Redemption Fees None  
Exchange Fee None  
Annual Fund Operating Expenses (Expenses that you pay each year as a percentage of the value of  
your investment) ended July 31, 2018:    

 

Management Fees 1.00 %
Distribution and Service (12b-1) fees 0.30 %
Other Expenses 13.85 %
Acquired Fund fees and expenses (a) (b) 0.02 %
Total Annual Fund Operating Expenses 15.17 %

 

(a) The Total Annual Fund Operating Expenses may not correlate to the ratio of expenses to average net assets in the Financial Highlights Table below, which do not include acquired fund fees and expenses.

(b)      The acquired fund fees and expenses are based on estimated amounts for the current fiscal year.
(c)      Purchases of $1,000,000 or more or more may be subject to a contingent deferred sales charge of 1.00% if the shares are

redeemed within one year of the date of the purchase.

This Example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Example also assumes that your investment has a 5% return each year and that the Fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

    1 Year   3 Years   5 Years   10 Years
Class E $ 1,930   $ 4,243 $ 6,109 $ 9,350
You would pay the following expenses if you did not redeem your shares:    
Class E $ 1,930   $ 4,243 $ 6,109 $ 9,350

 

The Example does not reflect sales charges (loads) on reinvested dividends and other distributions. If these sales charges (loads) were included, your costs would be higher.

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. During the most recent fiscal year, the Fund’s portfolio turnover rate was 8% of the average value of its portfolio.

Principal Investment Strategy

Investment Research Corporation (the "Adviser") manages the Fund by searching for

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companies/investments with growth potential that could show faster growth than markets indexes. The Adviser also looks for securities that are considered undervalued or out of favor with investors or are expected to increase in price over time. We use a consistent approach to build the Fund’s security portfolio which is made up primarily of common stocks involved, in at least some way, in the legal cannabis business. In addition to the principal investment strategy, we may also invest in securities convertible into common stock in companies involved, in at least some way, in the legal cannabis business. Examples of companies associated with the legal cannabis industry could include legally registered publicly traded companies in fields such as agriculture, pharmaceutical, hydroponic or tobacco companies or REITs. These securities may be issued by large companies and also small and mid-sized companies, Micro Cap and Real Estate Investment Trusts (“REITs”). Income through dividend payments is a secondary objective. Income also becomes a Fund objective when it is in a temporary, defensive position. The legal cannabis business does not need to be the sole focus point of a company for Series Two to invest in it nor does it need to account for a majority of its overall revenues. For example, Series Two may invest in Company XYZ, a pharmaceutical company developing uses for medical cannabis even if the revenues produced as a result of the sales of medical cannabis is responsible for less than 5% of XYZ’s overall revenue. The Fund may invest in securities of other investment companies, including exchange-traded funds, to obtain desired exposures.

Principal risks of investing in the Fund
The primary risks of investing in the Fund are:

~ General Risk - All investments are subject to inherent risk. Markets can trade in random or cyclical price
patterns and prices can fall over time. The value of Series Two can fluctuate as markets fluctuate over
long and short periods of time,
~ Political, Economic and Regulatory Risk - Changes in economic and tax policies, high inflation rates,
government instability, and other political or economic actions or factors that may have an adverse effect
on Series Two,
~ Cannabis Industry Risk – The cannabis industry is a very young, fast evolving industry with possible
increased exposure to rule changes, changes in laws, increasing regulations, increasing competition
which may cause businesses to suddenly close or businesses to shrink as well as the possibility that a
company currently operating legally may suddenly find itself exposed to illegal activities,
~ REITs Risk - REITs may be subject to certain risks associated with the direct ownership of real property
including declines in the value of real estate, risks related to general and local economic conditions, over
building and increased competition, increase in property taxes and operating expenses, and variations in
rental income,

~ Stock Market Risk - the value of an investment may fluctuate,
~ Industry and security risk - the risk that the value of securities in a particular industry or the value of an

individual stock or bond will decline because of changing expectations for the performance of that
industry or for the individual company issuing the stock or bond. The Fund may have significant holdings
in certain industries and thus may be more susceptible to volatility in those industries, and thus more
susceptible to losses.
~ Management Risk - risks that the Adviser’s assessment of a company’s growth prospects may not be
accurate,
~ REITs Risk – Real Estate Investment Trusts (“REITs”) includes declines in the value of real estate, risks
related to general and local economic conditions, over building and increased competition, increase in
property taxes and operating expenses, and variations in rental income,

~ Mid Cap Risk - mid cap stocks tend to have a greater exposure to market fluctuations and failure,
~ Small Cap Risk - small cap stocks tend to have a high exposure to market fluctuations and failure,
~ Micro Cap Risk - low-priced stocks issued by the smallest of companies. Many microcap companies do

not file financial reports with the SEC, so it's hard for investors to get the facts about the company's
management, products, services, and finances. Microcap stocks historically have been more volatile and
less liquid than the stock of larger companies,
~ Liquidity Risk - Series Two may face increased liquidity risk which is the risk that a given security or
asset may not be readily marketable,
~ New Issuer Risk - New Issuers have been in the business less than 3 years, may face increased
pressures from established companies, new unseasoned management, may be more volatile and may

Series Two Prospectus Page 5


 

offer less liquidity then larger companies,

~ Convertible Security Risk - risk of loss of principal before maturity,
~ Large Cap Company Risk - slower response to competitors, technology and consumer tastes and

slower growth rates during periods of economic expansion,
~ Portfolio Turnover Risk - High portfolio turnover (generally, turnover in excess of 100% in any given
fiscal year) may result in increased transaction costs to the Fund, which may result in higher fund
expenses and lower total return.
~ Investments in Other Investment Companies Risk - the Fund’s investments in other investment
companies will be subject to the risks of the other investment companies’ portfolio securities and the Fund
will bear indirectly the fees and expenses of the other investment companies in which it invests.
~ Exchange-Traded Funds (“ETFs”) Risk - The Fund is subject to the risks associated with the securities
or other investments in which the ETFs invest. The Fund’s shareholders will indirectly bear fees and
expenses paid by the ETFs in which it invests, in addition to the Fund’s direct fees and expenses. An
index-based ETF’s performance may not match that of the index it seeks to track. An actively managed
ETF’s performance will reflect its adviser’s ability to make investment decisions that are suited to
achieving the ETF’s investment objective.

Loss of some or all of the money you invest is a risk of investing in Series Two.
Because of the nature of the Fund, you should consider the investment to be a long-term investment that
typically provides the best results when held for a number of years.
Please see the Statement of Additional Information for further discussion of risks.

Risk/Return Bar Chart and Table
The bar chart and table are intended to provide you with an indication of the risks of investing in the Fund
by showing changes in performance from year to year and by showing how the Fund’s average annual
returns for Class E shares for 1 year and since inception (February 23, 2011) of Series Two compared to
those of the Standard and Poor’s 500 Index total return. Past performance, before and after taxes, is not
predictive of future performance. Sales load and account fees are not reflected in the chart. If the sales
load and account fees were included, the returns would be less than those that are shown. Updated
performance information for the Fund is available at the Fund’s web site (www.americangrowthfund.com)
or toll free telephone number (800) 525-2406.

Best calendar quarter ended 12/11: 12.48%. Worst calendar quarter ended 09/11: -5.61%. Year to date performance for the period ended 09/30/2018 was -8.28%.

Average annual total returns         Since Inception**  
for the periods ended One Year   Five Year**      
December 31, 2017         (02/23/2011 )
Class E Return before taxes* -11.05 % 0.11 % -1.12 %
Class E Return after taxes on -11.05 % -2.32 % -2.86 %

 

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Distributions            
Class E Return after taxes on            
Distributions and Sale of Fund -11.05 % -1.62 % -2.11 %
Shares            
Standard and Poor’s 500 Index            
(reflects no deduction for fees, 21.83 % 15.79 % 13.13 %
expenses, or taxes)            

 

*Assumes redemption at end of time period.

** For the periods shown prior July 29, 2016, the Fund returns reflect the Fund's performance prior to the change in the Fund's investment strategy to focus on the cannabis business.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes; Actual after-tax returns depend on an investor’s tax situation and may differ from those shown, and after-tax returns shown are not relevant to investors who hold their Fund shares through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts; After-tax returns are shown for only Class E and after-tax returns for other Classes will vary.

The Investment Adviser

The investment adviser is Investment Research Corporation. The Investment Advisor and Underwriter are under common ownership and share many of the same employees.

Portfolio Manager

The Fund is managed by an Investment Committee made up of Timothy Taggart, the Fund´s President, and Robert Fleck, an employee of the Advisor, who has both acted in this capacity since April of 2011.

Purchase and Sale of Fund Shares

When purchasing Fund shares there is no minimum initial or subsequent amount required. You can purchase and sell your shares on any business day through your financial adviser, by mail by writing to: American Growth Fund, 1636 Logan Street, Denver, CO, 80203, by wire if the purchase or sale is over $1,000 or by calling 800-525-2406 if the purchase or sale is $5,000 or less. For more information please visit www.agfseries2.com.

Tax Consequences

Distributions from the Fund’s long-term capital gains are taxable as capital gains, while distributions from short-term capital gains and net investment income are generally taxable as ordinary income.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s Web site for more information.

Investment Objectives, Principal Investment Strategies, Related Risks, and Disclosure of Portfolio Holdings What is the Fund’s investment objective?

The Fund’s investment objective, which is fundamental and cannot be changed without shareholder approval, is growth of capital. Income through dividend payments is a secondary objective. Income also becomes a Fund objective when it is in a temporary, defensive position.

How does the Fund implement its principal investment objective?

In attempting to achieve its principal investment objective, the Fund will attempt to invest at least 80% of its assets in securities involved at least some way in the legal cannabis business. Securities convertible into common stocks traded on national securities exchanges or over-the-counter or REITs may also be utilized. Examples of companies associated with the legal cannabis industry could include legally

Series Two Prospectus Page 7


 

registered publicly traded companies in fields such as agriculture, pharmaceutical, hydroponic or tobacco companies or REITs. The legal cannabis business does not need to be the sole focus point of a company for Series Two to invest in it nor does it need to account for a majority of its overall revenues. For example, Series Two may invest in Company XYZ, a pharmaceutical company developing uses for medical cannabis, even if the revenues produced as a result of the sales of medical cannabis is responsible for less than 5% of XYZ’s overall revenue.

At the time of purchase, with respect to 75% of the Fund's total assets, we do not invest more than 5% in any one issuer nor do we invest more than 25% in any one industry. We also follow a rigorous selection process designed to identify undervalued securities before choosing securities for the portfolio.

The Fund may invest in companies of all sizes. Investment Research Corporation, the Fund’s investment adviser (the Adviser or IRC), will choose securities that it believes have a potential for capital appreciation because of existing or anticipated economic conditions or because the securities are considered undervalued or out of favor with investors or are expected to increase in price over time.

The Fund may invest in REITs if the investment committee believes that it could be advantageous to the stockholders. These REITs could be involved in the areas of the legal cannabis business such as property development and rental or other legal endeavors associated with the legal cannabis business.

The Fund may invest in securities of other investment companies, including exchange-traded funds.

Using the following approach, we look for companies having some of these characteristics:

~ Companies and/or securities involved legally in the cannabis business;
~ Large capitalization companies, although the Fund may invest in companies of all sizes, if the Adviser

believes it is in the best interests of the Fund. Large cap companies are generally companies with market
capitalization exceeding $5 billion at the date of acquisition;

~ growth that is faster than the market as a whole and sustainable over the long term;
~ strong management team;
~ leading market positions and growing brand identities;
~ financial, marketing, and operating strength.

When the Adviser believes the securities the Fund holds may decline in value, the Fund may sell them and, if the Adviser believes market conditions warrant the Fund may assume a temporary defensive position. While in a defensive position, the Fund may invest all or part of its assets in corporate bonds, debentures (both short and long term) or preferred stocks rated A or above by Moody Investors Service, Inc., Standard and Poor’s, or Fitch Ratings (or, if unrated, of comparable quality in the opinion of the Adviser), United States Government securities, repurchase agreements meeting approved credit worthiness standards (e.g., whereby the underlying security is issued by the United States Government or any agency thereof), or retain funds in cash or cash equivalents. There is no maximum limit on the amount of fixed income securities in which the Fund may invest for temporary defensive purposes. If the Fund takes a temporary defensive position in attempting to respond to adverse market, economic, political or other conditions, it may not achieve its investment objective. The Fund’s performance could be lower during periods when it retains or invests its assets in these more defensive holdings.

Risks

Investing in any mutual fund involves risk, including the risk that you may receive little or no return on your investment, and the risk that you may lose part or all of the money you invest.

In addition, the legal cannabis business is a quickly growing and emerging business. As a result there are additional risks that you should consider.

~ Stock Market Risk - the value of an investment may fluctuate,

~ Industry and Security Risk - the risk that the value of securities in a particular industry or the value of an

individual stock or bond will decline because of changing expectations for the performance of that
industry or for the individual company issuing the stock or bond. The Fund may have significant holdings

Series Two Prospectus Page 8


 

in certain industries and thus may be more susceptible to volatility in those industries, and thus more
susceptible to losses.

~ Management Risk - risks that the Adviser’s assessment of a company’s growth prospects may not be
accurate,

~ Political, Economic and Regulatory Risk - Changes in economic and tax policies, high inflation rates,
government instability, and other political or economic actions or factors that may have an adverse effect
on Series Two. Governmental and regulatory actions, including law changes, may have unexpected or
adverse consequences on particular markets, strategies, or investments. Legislation or regulation may
also change the way in which Series Two itself is regulated. Series Two cannot predict the effects of any
new governmental regulation or law that may be implemented on the ability of Series Two to invest in
certain assets, or the possible effect on our ability to access financial markets, and there can be no
assurance that any new governmental regulation will not adversely affect Series Two’s ability to achieve
its investment objectives,

~ REITs Risk – Under its modified fundamental investment policies, Series Two may invest in REITs
(Real Estate Investment Trust), including Equity REITs and Mortgage REITs. Equity REITs invest directly
in property while Mortgage REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real property including declines in the value of real estate,
risks related to general and local economic conditions, over building and increased competition, increase
in property taxes and operating expenses, and variations in rental income. REITS are dependent on
management skills, are not diversified, and are subject to heavy cash flow dependency, default by
borrowers and self-liquidation. REITs (especially mortgage REITs) are also subject to interest rate risk.
When interest rates decline, the value of a REIT’s investment in fixed-rate obligations can be expected to
rise. Conversely, when interest rate rise, the value of a REIT’s investment in fixed-rate obligations can be
expected to decline. Mortgage REITs may be affected by the quality of any credit extended to them,

~ Cannabis Industry Risk – Cannabis Industry Risk - The possession and use of cannabis, even for
medical purposes, is illegal under federal and certain states’ laws, which may negatively impact the value
of the Fund’s investments. Use of cannabis is regulated by both the federal government and state
governments, and state and federal laws regarding marijuana may conflict. Even in states in which the
use of cannabis has been legalized, its possession and use remains a violation of federal law. Federal
law criminalizing the use of cannabis pre-empts state laws that legalize its use for medicinal and
recreational purposes. The U.S. Department of Justice has made recent statements that it remains
committed to enforcing federal laws relating to controlled substances, which include cannabis. The
federal government’s enforcement activities could adversely affect the ability of the companies in which
the Fund invests to benefit from involvement in the cannabis industry, or it could reduce the pool of actual
and potential customers for certain of the Fund’s portfolio companies. Any of these outcomes would
negatively affect the value of the Fund’s investments. It is possible that it will never be legal to produce
and sell cannabis products in the United States or other national or local jurisdictions in which it is
currently prohibited.
The cannabis industry is a very young, fast evolving industry with increased exposure to the risks
associated with changes in applicable laws (including increased regulation, other rule changes, and
related federal and state enforcement activities) as well as market developments, which may cause
businesses to close suddenly or businesses to contract. In addition, there is a risk that a company
currently operating legally under state or other law suddenly may find itself accused (or found guilty) of
illegal activities under federal law or because of changes to state law. Companies involved in the
cannabis industry also face intense competition, may have limited access to the services of banks, may
have substantial burdens on company resources due to litigation, complaints or enforcement actions, and
are heavily dependent on receiving necessary permits and authorizations to engage in medical marijuana
research or to otherwise cultivate, possess or distribute marijuana. Since the use of marijuana is illegal
under United States federal law, federally regulated banking institutions may be unwilling to make
financial services available to growers and sellers of cannabis.

~ Mid Cap Risk - mid cap stocks tend to have a greater exposure to market fluctuations and failure,

Series Two Prospectus Page 9


 

~ Small Cap Risk - small cap stocks tend to have a high exposure to market fluctuations and failure,

~ Micro Cap Risk - low-priced stocks issued by the smallest of companies. Many microcap companies do
not file financial reports with the SEC, so it's hard for investors to get the facts about the company's
management, products, services, and finances. Microcap stocks historically have been more volatile and
less liquid than the stock of larger companies,

~ Liquidity Risk - Series Two may face increased liquidity risk which is the risk that a given security or
asset may not be readily marketable.

~ New Issuer Risk – New Issuers have been in the business less than 3 years, may face increased
pressures from established companies, new unseasoned management, may be more volatile and may
offer less liquidity then larger companies.

~ Convertible Securities Risk - Convertible securities have the risk of loss of principal at maturity, but this
loss is limited to the value of the bond floor.

~ Large Cap Company Risk - Larger more established companies may be unable to respond quickly to
new competitive challenges such as changes in technology and consumer tastes. Many larger companies
also may not be able to attain the high growth rate of successful smaller companies, especially during
extended periods of economic expansion.

~ Portfolio Turnover Risk - High portfolio turnover (generally, turnover in excess of 100% in any given
fiscal year) may result in increased transaction costs to the Fund, which may result in higher fund
expenses and lower total return.

~ Investments in Other Investment Companies - The Fund’s investments in other investment companies
will be subject to the risks of the purchased investment company’s portfolio securities. The Fund’s
shareholders must bear not only their proportionate share of the Fund’s fees and expenses, but they also
must bear indirectly the fees and expenses of the other investment company. In addition, the Fund’s net
asset value is subject to fluctuations in the net asset values of the other investment companies in which it
invests. The ability of the Fund to meet its investment objective will depend, to a significant degree, on the
ability of the other investment companies to meet their objectives.

~ Exchange-Traded Funds (“ETFs”) - ETFs are investment companies whose shares are listed on a
securities exchange and trade like a stock throughout the day. Investments in ETFs are subject to a
variety of risks, including risks associated with the underlying securities that the ETF holds. The Fund’s
net asset value will be subject to fluctuations in the market values of the ETFs in which it invests. Also,
ETFs that track particular indices typically will be unable to match the performance of the index exactly
due to the ETF’s operating expenses and transaction costs, among other things. Similar to investments in
other investment companies, the Fund’s shareholders must bear not only their proportionate share of the
Fund’s fees and expenses, but they also must bear indirectly the fees and expenses of the ETF. In
addition, the ability of the Fund to meet its investment objective will directly depend on the ability of the
ETFs to meet their investment objectives. The extent to which the investment performance and risks
associated with the Fund correlate to those of a particular ETF will depend upon the extent to which the
Fund’s assets are allocated from time to time for investment in the ETF, which will vary.

~ Pharmaceutical Industry Risk - Companies in the pharmaceutical industry are heavily dependent on
patent protection. The expiration of patents may adversely affect the profitability of the companies.
Pharmaceutical companies are also subject to extensive litigation based on product liability and other

Series Two Prospectus Page 10


 

similar claims. Many new products are subject to approval of the Food and Drug Administration, a process that can be long and costly. Expanding international operations may lead to risks resulting from differences between U.S. and foreign legal, political and economic systems, regulatory regimes and market practices.

Loss of some or all of the money you invest is a risk of investing in Series Two.

Before you invest in the Fund you should carefully evaluate the risks associated with investing in companies involved in the legal cannabis business.

Please see the Statement of Additional Information for further discussion of risks associated with investing in companies involved in the legal cannabis business.

Portfolio Holdings

A description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities is available in the Fund’s SAI which is available on the Fund’s website, www.americangrowthfund.com.

Annual Fund operating expenses

For the year ended July 31, 2018 the Fund paid $7,962 in administrative expenses and $7,085 in investment advisory fees. Distribution and service fees for the year ended July 31, 2018 for Class E were $2,126. Directors fees for the year ended July 31, 2018 were $1,237. Other expenses totaled $90,226 which were $5,803 in office expenses, $3,693 in transfer agent fees, $5,803 in accounting fees, $4,067 in custodian fees, $18,947 in auditing fees, $24,547 in legal fees, and $21,997 other dues, fees and subscriptions and $7,112 in miscellaneous expenses. The Expense Ratio, which reflects the effect of expenses paid directly by the Fund, for the year ended July 31, 2018 for Class E was 15.15%.

Management, Organization, and Capital Structure The Investment Adviser

Investment Research Corporation ("IRC") has been the Adviser for the Fund since American Growth Fund, Inc. Series Two’s inception in 2011. IRC is located at 1636 Logan Street, Denver, CO 80203. The Fund offers one class of shares.

The Fund has an agreement to pay IRC an annual fee for its services based on a percentage of the Fund’s Class E average net assets. Under the investment advisory contract with IRC, IRC will receive annual compensation for investment advice on this class, computed and paid monthly, equal to 1% of the first $30 million of the Fund´s Class E average annual net assets and 0.75% of such assets in excess of $30 million.

On April 12, 2011 the Investment Committee was activated with the purpose of offering investment advice to the senior portfolio manager of the Fund. The members of the Investment Committee are Timothy Taggart and Robert Fleck.

On October 31, 2018, the Board of Directors reviewed and approved the expenses to be reimbursed by the Fund to IRC as well as the Investment Advisory Agreement with IRC. A discussion regarding the basis for the Board of Directors approving the Investment Advisory Agreement will be available in the Fund’s Semi-Annual Report to Shareholders for the half- year ended January 31, 2019.

IRC may compensate third party advisors from IRC’s own revenue for assisting IRC in establishing relationships with other third party investment advisors and/or sub-manager programs and disseminating information concerning IRC to financial professionals.

Series Two and the Adviser have a Code of Ethics designed to ensure that the interests of Fund shareholders come before the interests of the people who manage the Fund. Among other provisions, the Code of Ethics prohibits portfolio managers and other investment personnel from buying securities in an initial public offering without prior written consent or from profiting from the purchase and sale of the same security within one calendar day. In addition, the Code of Ethics requires portfolio managers and other

Series Two Prospectus Page 11


 

employees with access to information about the purchase or sale of securities by the Fund to obtain approval before executing personal trades in these specific securities. A copy of the Fund’s Code of Ethics can be obtained for free online at www.americangrowthfund.com or by calling us at 1-800-525-2406.

How is the Fund managed?

The daily operations of the Fund are managed by its officers subject to the overall supervision and control of the board of directors.

Portfolio Manager

The Fund is managed by an Investment Committee, activated in April of 2011, made up of; Timothy Taggart, the Fund’s President who has been a member of the Investment Committee since September of 2010 and is the President of the Fund’s principal underwriter and distributor, World Capital Brokerage, Inc. ("WCB"), and Robert Fleck, employee of the Adviser and Investment Committee member since September 2010. Mr. Fleck is owner of World Capital Advisors (“WCA”). WCA is not a sub-advisor to the Fund. Mr. Taggart and Mr. Fleck are jointly and primarily responsible for portfolio management.

Since April 12, 2011, Mr. Taggart has been responsible for managing the Fund’s security portfolio through his positions with IRC, and the Fund’s Investment Committee; and directing the distribution of Fund shares through his positions with WCB. For the years prior to that Mr. Taggart served on the Board of Directors for IRC, as Treasurer and Chief Compliance officer as well as on the Board of Directors for WCB as President and Chief Compliance Office.

Since April 12, 2011, Mr. Fleck has been responsible for managing the Fund’s security portfolio through his positions with IRC, and the Fund’s Investment Committee. For the years prior to that Mr. Fleck served as President and CEO of World Capital Advisors, LLC., a registered Investment Advisor.

Additional information is available in the Statement of Additional Information available on the Fund’s web site at www.americangrowthfund.com or by calling 800-525-2406.

Chief Compliance Officer

Michael L. Gaughan is the Fund’s Chief Compliance Officer (CCO). The Fund’s CCO seeks to ensure that policies and guidelines, set forth by the CCO and the Board of Directors, that guard against violations of federal security laws, are adhered to. These policies and procedures are annually reviewed by the CCO and the Board of Directors to determine their adequacy and their effectiveness.

Shareholder Information Pricing of Fund Shares

The price you pay for shares will depend on when we receive your purchase order. If we or an authorized agent receive your order before the close of trading on the New York Stock Exchange on a business day, you will pay that day’s closing share price, which is based on the Fund’s net asset value (“NAV”). If we receive your order after the close of trading, you will pay the next business day’s price. A business day is any day that the New York Stock Exchange is open for business. Currently the Exchange is closed when the following holidays are observed: New Year’s Day, Martin Luther King, Jr.’s Birthday, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. We reserve the right to reject any purchase order.

We determine the Fund’s NAV per share at the close of trading of the New York Stock Exchange each business day that the Exchange is open. We calculate this value by adding the market value of all the securities and assets (both traded and non-traded) in the Fund’s portfolio, deducting all liabilities, and dividing the resulting number by the shares outstanding. The result is the NAV per share. We price securities and other assets for which market quotations are available at their market value. We price debt securities on the basis of valuations provided to us by an independent pricing service that uses methods approved by our board of directors. Any debt securities that have a maturity of less than 60 days are priced at amortized cost. We price all other securities at their fair value if no bid and asked prices are quoted for such day or information as to New York or other approved exchange transactions is not readily available, using a method approved by the board of directors. Non-traded REIT share prices are typically determined when the offering is launched and those prices may be more or less than the value of the properties within the portfolio at any given time. When pricing a non-traded REIT we use fair value, the

Series Two Prospectus Page 12


 

amount expected in a current sale, and will engage an outside, third party as needed with the final decision resting with the Fund’s Board of Directors. The effect of fair value pricing as described above is that securities may not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Trust’s Board of Trustees believes will reflect fair value. As such, fair value pricing is based on subjective judgments and it is possible that fair value may differ materially from the value realized on a sale. This policy is intended to assure that the Portfolio’s net asset value fairly reflects security values as of the time of pricing. Also, fair valuation of the Portfolio’s securities can serve to reduce arbitrage opportunities available to short-term traders, but there is no assurance that fair value pricing policies will prevent dilution of the Portfolio’s net asset value by those traders.

Purchase of Fund Shares

The Fund reserves the right to deny the opening of any account for any person it deems necessary. The Fund reserves the right to limit large purchases of the Fund.

Through your financial adviser

Your financial adviser can handle all the details of purchasing shares, including opening an account. Your adviser may charge a separate fee for this service.

By mail

Complete an investment application and mail it with your check, made payable to American Growth Fund, Inc. naming Series Two, Class E shares as the shares you wish to purchase, to American Growth Fund, Inc., 1636 Logan Street, Denver CO, 80203. If you are making an initial purchase by mail, you must include a completed investment application (or an appropriate retirement plan application if you are opening a retirement account) with your check.

By wire

Ask your bank to wire the amount you want to invest to UMB Bank, NA, ABA #101000695 A/C #9871691527. Include your account number and the name of the Fund Class in which you want to invest. If you are making an initial purchase by wire, you must call Shareholder Services at 1-800-525-2406 so we can assign you an account number.

Please read the complete Prospectus before investing.

Special Services Available when Purchasing Fund Shares

To help make investing with us as easy as possible, and to help you build your investments, we offer the following special services.

Automatic Investing Plan - The Automatic Investing Plan allows you to make regular monthly investments directly from your bank account.

Direct Deposit - With Direct Deposit you can make additional investments through payroll deductions or recurring government or private payments, such as direct transfers from your bank account.

Dividend Reinvestment Plan - Through our Dividend Reinvestment Plan, you may have your distributions reinvested in your account unless the Board declares a cash dividend in which case you would receive a check. Any shares that you purchase through the Dividend Reinvestment Plan are not subject to a front-end sales charge or to a contingent deferred sales charge. Under most circumstances, you may reinvest dividends only into like classes of shares.

Systematic Withdrawal Plan - Through our Systematic Withdrawal Plan you can arrange a regular monthly or quarterly payment from your account made to you or someone you designate. You may also have your withdrawals deposited directly to your bank account through our MoneyLine Direct Deposit Services.

Retirement Plans

Series Two may not be suitable and is not recommended for your retirement plan. If you feel otherwise you should consult with your financial adviser and/or tax professional before investing in Series Two. You

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may establish your IRA account even if you are already a participant in an employer-sponsored retirement plan. For more information please consult your financial adviser and/or tax professional, or call 1-800-525-2406.

How to Redeem Shares
Through your financial adviser

Your financial adviser can handle all the details of redeeming shares. Your adviser may charge a separate fee for this service.

By mail

You can redeem your shares (sell them back to the Fund) by mail by writing to: American Growth Fund, Inc., 1636 Logan Street, Denver, CO, 80203. All owners of the account must sign the request, and for redemptions of $5,000 or more, you must include a signature guarantee for each owner. Signature guarantees are also required when redemption proceeds are going to an address other than the address of record on an account. A signature guarantee is a certification by a bank, brokerage firm or other financial institution that a customer’s signature is valid; signature guarantees can be provided by members of the STAMP program (a program made up of members who are authorized to issue signature guarantees).

By wire

You can redeem $1,000 or more of your shares and have the proceeds deposited directly to your bank account the next business day after we receive your request. Bank information must be on file before you request a wire redemption.

By phone

You can redeem shares by phone. All shareholders must be on the call, redemption must be $5,000 or less and the proceeds must be sent to the address of record and made payable to all listed shareholders. Please remember that redemptions by check are restricted after an address change, unless a signature guaranteed letter requesting the redemption is submitted.

If you hold your shares in certificates, you must submit the certificates with your request to sell the shares. We recommend that you send your certificates by certified mail.

When you send us a properly completed request to redeem or exchange shares, you will receive the net asset value as determined on the business day we receive your request if we receive it before the close of the NYSE. We will deduct any applicable contingent deferred sales charges. We will send you a check, normally the next business day, but no later than seven days after we receive your request to sell your shares. If you recently purchased your shares by check, we will wait until your check has cleared, which can take up to 15 days, before we send your redemption proceeds.

Generally, all redemptions will be for cash. The Fund expects to satisfy all redemption requests, assuming they are in good order, under both regular market conditions as well as in stressed market conditions, by selling portfolio assets or by using holdings of cash or cash equivalents.

If you are required to pay a contingent deferred sales charge when you redeem shares, the amount subject to the fee will be based on the shares’ net asset value when you purchased them or their net asset value when you redeem them, whichever is less. This arrangement assures that you will not pay a contingent deferred sales charge on any increase in the value of your shares. The redemption price for purposes of this formula will be the NAV of the shares you are actually redeeming.

A medallion guarantee is not the same as a notary.

Please Note: certificates shares can only be sold after verification that they are legitimate and have not been previously reported loss or stolen.

Account Minimum

If you redeem shares and your account balance falls below a minimum of $1000, and stays there for a period of 12 months or longer, the Fund may redeem your account 30 days after written notice to you.

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Dividends and Distributions

The Fund’s policy is to declare and pay income dividends and capital gains distributions to its shareholders in December of each calendar year unless the board of directors of the Fund determines that it is to the shareholders’ benefit to make distributions on a different basis.

Unless the shareholder on his or her application or in writing previously requests dividend and distribution payments in cash, income dividends and capital gains distributions may be reinvested in Fund shares of the same class, at their relative net asset values as of the business day next following the distribution record date unless the Board declares a Cash distribution in which case you would receive a check. If no instructions are given on the application form, applicable income dividends and capital gains distributions will be reinvested.

The Fund intends to make distributions that may be taxed as ordinary income and capital gains (capital gains may be taxable at different rates depending on the length of the time the Fund holds its assets). We will send you a statement each year by January 31st detailing the amount and nature of all dividends and capital gains that you were paid for the prior year.

Distributions by the Fund, whether received in cash or reinvested in additional shares of the Fund, may be subject to federal income tax. Any capital gains may be taxable at different rates depending on the length of time the Fund held the assets. In addition, you may be subject to state and local taxes on distributions. An exchange of the Fund’s shares for shares of another fund will be treated as a sale of the Fund’s shares and any gain on the transaction may be subject to tax.

Frequent Purchases and Redemptions of Fund Shares

The Fund is not designed to serve as vehicles for frequent trading in response to short-term fluctuations in the securities markets. Accordingly, purchases, including those that are part of exchange activity, that American Growth Fund, Inc. has determined could involve actual or potential harm to the Fund may be rejected. Frequent trading of a mutual fund’s shares may lead to increased costs to that fund and less efficient management of the fund’s portfolio, resulting in dilution of the value of the shares held by long-term shareholders.

The Fund’s Board of Directors has not adopted policies or procedures with respect to frequent purchases and redemptions by Fund shareholders. Due to the size of the Fund the Board feels that the Fund’s best interests are better served by allowing the Management of the Fund to monitor such trading activity. If at any time the Management of the Fund feels that a trade or an account is, or could, adversely affect the Fund’s performance through frequent purchasing and redeeming of Fund shares significantly increasing the costs of processing share purchase and/or redemption transactions, management reserves the right to reject the trade, suspend trading of the account(s) for a specified period of time, or both. Rejection of a trade and/or suspension(s) of trading activity will cause a letter to be promptly issued to the party(ies) involved.

The Fund has no agreement with any person(s) or corporate entity that would allow for frequent purchases and redemptions of Fund shares.

Distribution Arrangements Sales Charges

Class E

Class E shares have an up-front sales charge of up to 5.75% that you pay when you buy shares. The offering price for Class E shares includes the front-end sales charge.

Class E shares are also subject to an annual 12b-1 fee no greater than 0.30% of average net assets. Purchase of Class E Shares in an amount equal to investments of $1,000,000 or more are not subject to an initial sales charge, but may be subject to a contingent deferred sales charge of 1.00% if such shares are redeemed within one year of purchase.

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Additionally, IRC reserves the right to waive the front-end sales charge on purchases by IRC employees and members of the Board of Directors of The American Growth Fund.

The Fund has adopted a plan under rule 12b-1 that allows the Fund to pay distribution fees for the sale and distribution of its shares. Because these fees are paid out of the Fund’s assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

  Class E Sales Charges            
 
  Amount of purchase Sales charge as % of   Sales charge as % of   Dealers commission as  
    offering price   amount invested   % of offering price  
  Less than $50,000 5.75 % 6.10 % 5.00 %
  $50,000 but less than 4.50 % 4.71 % 3.75 %
$ 100,000            
  $100,000 but less than 3.50 % 3.63 % 2.75 %
$ 250,000            
  $250,000 but less than 2.50 % 2.56 % 2.00 %
$ 500,000            
  $500,000 but less than 2.00 % 2.04 % 1.60 %
$ 1,000,000            
  $1,000,000 and over 0.00 % 0.00 % 0.00 %

 

This information is also available free of charge at www.americangrowthfund.com.

Financial Highlights

The financial highlight table is intended to help you understand the Fund’s financial performance since inception. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information for each period ended July 31, 2018 has been audited by Tait, Weller & Baker LLP, the Fund’s independent registered public accounting firm, whose report, along with the Fund’s financial statements, are included in the annual report, which is available upon request by contacting the Fund at 800-525-2406 or on the Fund’s web

site, www.americangrowthfund.com.                              
 
    Year Ended                          
July 31,

    2018     2017     2016     2015     2014  
Per Share Operating Data:                              
Net Asset Value,                              
Beginning of Period $ 4.04 $ 11.15 $ 12.28 $ 11.28 $ 10.14
Income gain (loss) from investment                              
operations:                              
Net investment loss3   (0.58 )   (0.64 )   (0.78 )   (0.62 )   (0.50 )
Net realized and unrealized gain (loss)   0.39   (0.61 )   (0.35 )   1.62   1.64
Total income gain (loss) from investment                              
operations   (0.19 )   (1.25 )   (1.13 )   1.00   1.14
Distributions:                              
Long-term capital gains distributions   -     (5.73 )   -     -     -  
Return of capital distributions   -     (0.13 )   -     -     -  

 

Series Two Prospectus Page 16


 

Total distributions   -)     (5.86 )   -)     -)     -)  
 
Net Asset Value, End of Period $ 3.85 ) $ 4.04 ) $ 11.15 ) $ 12.28 ) $ 11.28 )
 
Total Return at Net Asset Value1   (4.70 )%   (23.8 )%   (9.2 )%   8.9 %   11.2 %
Ratios/Supplemental Data:                              
Net assets, end of period (in thousands) $ 765   $ 589   $ 1,225   $ 1,476   $ 1,584  
Ratio to average net assets:                              
Net investment loss   (14.30 )%   (13.37 )%   (7.00 )%   (5.24 )%   (4.58 )%
Expenses   15.15 %   14.53 %   8.94 %   6.87 %   6.16 %
Portfolio Turnover Rate2   8 %   151 %   0 %   0 %   4 %

 

1. Assumes a hypothetical initial investment on the business day before the first day of the fiscal period with all dividends and distributions reinvested in additional shares on the reinvestment date and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in total returns.

2. The lesser of purchases or sales of portfolio securities for a period, divided by the monthly average of the market value of securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (other than short-term securities) from the year ended July 31, 2018, aggregated $218,893 and $46,044, respectively.

3. Per share amounts have been calculated using the Average Shares Method. The Average Shares Method is calculated by adding the shares by day divided by the number of days.

Understanding the Financial Highlights

The tables on the preceding page itemize what contributed to the changes in share price during the period. They also show the changes in share price for this period in comparison to changes over the last four fiscal periods.

On a per share basis, the tables include as appropriate:

~ share prices at the beginning of the period;
~ investment income and capital gains or losses;
~ distributions of income and capital gains paid to shareholders; and
~ share prices at the end of the period.

The tables also include some key statistics for the period as appropriate:
~ Total Return - the overall percentage of return of the Fund, assuming the reinvestment of all
distributions

~ Expense Ratio - operating expenses as a percentage of average net assets;
~ Net Investment Income Ratio - net investment income as a percentage of average net assets; and
~ Portfolio Turnover - the percentage of the Fund’s buying and selling activity.

Proxy Voting

A discussion on Proxy Voting can be found on Page 11 of the Fund’s Statement of Additional Information. The Statement of Additional Information, as well as how the Fund issued votes for the year ended June 30, 2018, can be obtained by calling 800-525-2406 or by visiting the Fund’s web site at www.americangrowthfund.com.

Escheatment

Certain states, including the state of Texas, have laws that allow shareholders to designate a representative to receive abandoned or unclaimed property (“escheatment”) notifications by completing and submitting a designation form that generally can be found on the official state website. If a shareholder resides in an applicable state, and elects to designate a representative to receive escheatment notifications, escheatment notices generally will be delivered as required by such state laws, including, as applicable, to both the shareholder and the designated representative. A completed designation form may be mailed to the Fund (if Shares are held directly with the Fund) or to the shareholder’s financial intermediary (if Shares are not held directly with the Fund). Shareholders should

Series Two Prospectus Page 17


 

refer to relevant state law for the shareholder’s specific rights and responsibilities under his or her state’s escheatment law(s), which can generally be found on a state’s official website.

Series Two Prospectus Page 18


 

American Growth Fund, Inc.   TRANSFER AGENT
1636 Logan Street   Fund Services, Inc.
Denver, CO 80203   8730 Stony Point Parkway
800.525.2406   Stony Point Bldg. III
303.626.0600   Suite # 205
303.626.0614 Fax Richmond, Va. 23235
DISTRIBUTOR   CUSTODIAN
World Capital Brokerage, Inc.   UMB Bank NA Investment Services Group
1636 Logan Street   928 Grand Blvd
Denver, CO 80203   Fifth Floor
303.626.0631   Kansas City, MO 64106
888.742.0631   INDEPENDENT REGISTERED
303.626.0614 Fax PUBLIC ACCOUNTING FIRM
INVESTMENT ADVISER   Tait, Weller & Baker LLP
Investment Research Corporation   Two Liberty Place
1636 Logan Street   50 South 16th Street, Suite 2900
Denver, CO 80203   Philadelphia PA 19102-2529
303.626.0632    

 

Additional information about the Fund’s investments is available in American Growth Fund’s annual and semi-annual reports to shareholders. In American Growth Fund’s annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.

You can find more detailed information about the Fund, including a description of the Fund’s policies and procedures with respect to the disclosure of the Fund’s portfolio securities, in the current Statement of Additional Information, which we have filed electronically with the Securities and Exchange Commission (SEC) and is incorporated by reference into this prospectus, is legally a part of this prospectus. If you want a free copy of the Statement of Additional Information, the annual or semi-annual report, or if you have any questions about investing in this Fund or shareholder inquiries, you can write to us at 1636 Logan Street, Denver, CO 80203, email us at info@americangrowthfund.com or view/print the annual, semi-annual and the statement of additional information online at http://www.agfseries2.com/download.htm, or call us, toll-free, at 800-525-2406. Requests to mail or email the Statement of Additional Information, Annual Report or Semi Annual Report will be processed and mailed, without charge, within three business days of your request via first-class mail. You may also obtain additional information about the Fund from your financial adviser.

Information about the Fund’s investments is available in the Fund’s Annual Report and Semi-Annual reports to shareholders (as well as the Fund’s Statement of Additional Information) can be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-551-8090. Reports and other information about the Fund are available on the EDGAR Database on the Commission’s Internet site at http://www.sec.gov. Copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov, or by writing the Commission’s Public Reference Section, Washington, D.C. 20549-1520.

Shareholder Service Center

Call the Shareholder Service Center Monday through Friday, 7:30 a.m. to 4:00 p.m. Mountain time at 800-525-2406.

~ For fund information; literature, price, and performance figures.
~ For information on existing regular investment accounts and retirement plan accounts including wire

investments; wire redemptions; telephone redemptions and telephone exchanges.

Investment Company Act File #811-825

Series Two Prospectus Page 19