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Investment Research Corporation (the "Adviser") manages the Fund by searching for 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 the legal cannabis and hemp businesses. The Fund will concentrate (i.e., invest more than 25% of its total assets) in the securities of issuers in the Pharmaceuticals, Botanical Medical Chemical and Biotechnology Industry Group. Under normal market conditions, the Fund will invest at least 80% of its net assets (plus any borrowings for investment purposes) in exchange-traded equity securities of companies engaged in legal cannabis and hemp related businesses. The Fund considers a company to be engaged in the legal cannabis and hemp business if the company derives at least 50% of its revenue from the legal cannabis and hemp industries. As of the date of this Prospectus, the Fund’s holdings do not include companies that grow or distribute cannabis within the United States. The Fund may invest in companies that are listed on exchanges in countries where cannabis is legal, but which have operations in the United States. These companies only supply products and/or perform activities that are legal under applicable national and local laws, including U.S. federal and state laws.
The legal cannabis industry is composed of the following areas: (i) the legal production, growth and distribution of hemp, as well as extracts, derivative products or synthetic versions thereof; (ii) financial services (insurance offerings, property leasing, financing, capital markets activity and investments) provided to companies involved in the production, growth and distribution of cannabis; (iii) pharmaceutical applications of cannabis; (iv) cannabidiol (better known as CBD) and cannabis oil products, edibles, topicals, drinks and other products; and (v) products that may be used to consume cannabis. The cannabis plant contains more than 100 different chemicals called cannabinoids. Each one has a different effect on the body. Some possible uses for cannabis related medicine may include treatments for Alzheimer’s disease, epilepsy, mental health conditions like PTSD and nausea to name a few. Some examples of the types of companies we may invest in are:
The Fund’s equity investments will consist only of exchange traded equity securities of companies that are engaged in legal activities under applicable national and local laws, including U.S. federal and state laws. The Fund will not invest in companies that violate anti-money laundering as defined by various laws. The Fund will only invest in companies that list their securities on exchanges that require the companies’ compliance with all laws, rules and regulations applicable to their business, including U.S. federal and state laws.
These companies may be domestic or foreign entities and are engaged in the legal cannabis and hemp business under national and local laws, including U.S. federal and state law, as applicable. The fund may have exposure to emerging market issuers. In addition to the principal investment strategy, the Fund may also invest in securities convertible into common stock in companies involved in the legal cannabis and hemp business. These securities may be issued by large companies and also small and mid-sized companies, micro-cap companies as well as REITs. Income through dividend payments is a secondary objective. Income also becomes a Fund objective when it is in a temporary, defensive position. The Fund may invest in securities of other investment companies, including exchange-traded funds, to obtain desired exposures.
There are several reasons that could cause the Adviser to sell all, or a portion of, a position of the Fund’s portfolio holdings. These reasons include, in the Adviser’s opinion, one or more of the following occurs: (i) the company no longer meets the investment criteria defined above; (ii) a particular security has achieved the Adviser’s investment expectations; (iii) the reason(s) for maintaining the position are no longer valid; (iv) the Adviser’s view of the business fundamentals or management of the underlying company changes; (v) a more attractive investment opportunity is found; (vi) general market conditions trigger a change in the Adviser’s assessment criteria; (vii) for other portfolio management reasons; or (viii) the Fund requires cash to meet redemption requests.
The portfolio security holdings of Series Two and historical financial information and numbers, such as performance and expenses, may not give investors a current, relevant picture of Series Two financial data.
On July 29, 2016 American Growth Fund Series Two changed its fundamental investment policies governing purchase and sale of portfolio securities for Series Two (as approved in advance by the Series Two Board of Directors and Shareholders). As a direct result, the portfolio security holdings of Series Two are substantially different than they were prior to July 29, 2016. By regulation Series Two must report historical financial information and numbers even though its investment strategy and structure have substantially changed, resulting in such historical financial information and numbers not necessarily providing investors current, relevant financial data. For additional information concerning the revised investment strategy and structure of series two, you are invited to call us at 800-525-2406.