N-CSR 1 ncsr0110.txt FORM NCSR SEMI ANNUAL REPORT --------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-00825 American Growth Fund, Inc. 110 16th Street Suite 1400 Denver, Colorado 80202 303-626-0600 800-525-2406 Date of fiscal year end: 07/31/2009 Date of reporting period: 01/31/2010 Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory,disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 1 Reports to Stockholders --------------------------------------------------------------------------- --------------------------------------------------------------------------- (cover, photograph) American Growth Fund, Inc. Semi Annual Report for the six months ended January 31, 2010 cover page 1 --------------------------------------------------------------------------- (photograph, Robert Brody) March 19, 2010 Dear Shareholders: Since July 31, 2009 through February 28, 2010; we have seen the Fund increase in value by 9.34%* while the Value Line Composite Index has increased by 5.23%. In the last 6 months we have seen the market start to anticipate the end of this economic down turn. The stock market usually leads the actual economy by 6 months to a year. In my long history of over 50 years in the investment business, I have seen many different markets. I am confident that our economy will rebound and we will continue to be a world leader. I remain optimistic that the stock market and American Growth Fund will continue to show an upward trend. The Fund´s performance has been led by computer and peripherals, biotechnology, and drug opportunities. We have repositioned your Fund to take advantage of the market and are confident we will continue to outperform the Value Line Composite Index. We remain bullish in these sectors and continue to look for outperforming opportunities. Our philosophy has always been to find the best and most stable companies for you. As you will see in the following pages, most of the companies you hold an interest in are household names. My staff and I are always available to discuss your account or answer any question you might have. Please call our toll free number, 800 525-2406 or, within Colorado, 303 626-0600. American Growth Fund wishes you A Good Future! Sincerely, (graphic, Robert Brody´s signature) Robert Brody *see page 24 for additional information concering the performance of the fund over 1, 5 and 10 years. page 2 --------------------------------------------------------------------------- How American Growth Fund, Inc. Has Its Shareholders´ Money Invested STATEMENT OF INVESTMENTS January 31, 2010 (unaudited) Description of Security Shares Market Value COMMON STOCK Computer & Peripherals Industry 39.02% Hewlett Packard Company.........................88,400 $ 4,160,988 (A designer and manufacturer of precision electronic products.) Cisco Systems*..................................69,500 1,561,665 (The leading supplier of high-performance inter-networking products.) EMC Corp.*......................................70,000 1,166,900 (Designs, manufactures, markets, and supports high performance storage products for selected mainframe and open computing systems.) --------- 6,889,553 Biotechnology Industry 13.73% Amgen Inc.*.....................................41,450 2,423,996 (Utilizes biotechnology to develop human pharmaceutical --------- products.) Drug 9.84% Cephalon Inc.*..................................27,200 1,736,448 (A biopharmaceutical company which develops and markets --------- products to treat neurological and sleep disorders, cancer and pain.) Semiconductor Industry 6.15% Intel Corp......................................56,000 1,086,400 (A leading manufacturer of integrated circuits.) --------- Pharmacy Services 5.31% Walgreens Co....................................26,000 937,300 (The nation´s second largest drug retail chain --------- and distributor.) *Non-income producing security See accompanying notes to financial statements. page 3 --------------------------------------------------------------------------- How American Growth Fund, Inc. Has Its Shareholders´ Money Invested STATEMENT OF INVESTMENTS January 31, 2010 (unaudited) Description of Security Shares Market Value Diversified Company Industry 4.41% General Electric................................40,000 $ 643,200 (One of the largest & most diversified industrial companies.) Chemed Corp......................................2,900 134,850 (The nation´s leading provider of plumbing and --------- drain services throughout North America.) 778,050 Insurance Industry 3.83% AXA ADS.........................................32,824 675,846 (The holding company of an international group of --------- insurance and related financial services.) Wireless Networking Industry 3.30% Network Appliance, Inc.*........................20,000 582,600 (A leading supplier of network attached data storage and --------- access devices, called filers.) Beverage Industry 2.81% Central European Distribution Corp*.............15,500 496,775 (Engages in the production, distribution and importing of --------- alcoholic beverages in Poland.) Semiconductor Capital Equipment 2.35% Teradyne, Inc.*.................................24,000 224,160 (The world´s largest producer of automated test equipment for semiconductors.) Novellus Systems*................................9,100 190,190 (Designs, manufactures, markets and services equipment --------- used in the fabrication of integrated circuits.) 414,350 *Non-income producing security See accompanying notes to financial statements. page 4 --------------------------------------------------------------------------- How American Growth Fund, Inc. Has Its Shareholders´ Money Invested STATEMENT OF INVESTMENTS January 31, 2010 (unaudited) Description of Security Shares Market Value Entertainment Industry 2.07% Time Warner, Inc................................13,333 $ 365,991 (A leading internet/media provider.) --------- Railroad 1.68% Kansas City Southern*...........................10,000 297,000 (A holding company that has railroad investments in the --------- U.S., Mexico and Panama.) Machinery Industry 1.45% Flowserve Corp...................................1,600 144,272 (Makes, designs and markets fluid-handling equipment(pumps, valves and mechanical seals) for industries that use difficult-to-handle or corrosive fluids.) Middleby Corp*...................................2,500 112,650 (Develops, manufactures, markets and services equipment --------- used for commercial food cooking, preparation and processing.) 256,922 Computer Software and Services Industry 1.43% Fair, Isaac & Co................................11,500 252,195 (Provides decision-making solutions to clients in the --------- financial services, telecommunications and retail industries.) Cable TV Industry 0.83% Time Warner Cable*...............................3,346 145,852 (The second largest cable operator in the U.S.) --------- *Non-income producing security See accompanying notes to financial statements. page 5 --------------------------------------------------------------------------- How American Growth Fund, Inc. Has Its Shareholders´ Money Invested STATEMENT OF INVESTMENTS January 31, 2010 (unaudited) Description of Security Shares Market Value Hotel/Gaming Industry 0.68% Scientific Games Corp*...........................8,500 $ 119,680 (An international provider of services, systems, and --------- products to the lottery and pari-mutuel wagering operators.) Retail/Wholesale Food Industry 0.64% Safeway, Inc. ...................................5,000 112,250 (Operates about 1,750 super markets in North America, and --------- Western Canada regions and operates 32 manufacturing and processing facilities .) Air Transport 0.28% Jetblue Airways*................................10,000 49,400 (Provides passenger air transportation services in the --------- United States.) Internet Information Providers 0.16% AOL Inc.*........................................1,212 29,052 (Operates as a web services company for the worldwide --------- audience.) Total Common Stocks (cost $25,042,582)..........99.97% 17,649,660 ---------- Total Investments, at Market Value (cost $25,042,582)...................................99.97% 17,649,660 Cash and Receivable, Less Liabilities............0.03% 5,676 -------------------------- Net Assets.....................................100.00% $17,655,336 -------------------------- *Non-income producing security See accompanying notes to financial statements. page 6 --------------------------------------------------------------------------- Financial Statements AMERICAN GROWTH FUND, INC. STATEMENT OF ASSETS AND LIABILITIES, JANUARY 31, 2010 (unaudited) ASSETS: Investments, at market value (cost $25,042,582) $ 17,649,660 Cash..............................................................29,931 Receivables: Shares of beneficial interest sold................................123 Dividends and Interest ............................................37 ------------ Total assets..................................................17,679,751 ------------ LIABILITIES: Shares of beneficial interest redeemed.............................3,149 12b-1 fees.........................................................5,647 Management fee....................................................15,619 ------------ Total liabilities.................................................24,415 ------------ NET ASSETS..................................................$ 17,655,336 ============ COMPOSITION OF NET ASSETS: Paid-in capital.............................................$ 44,006,792 Accumulated net investment loss.................................(391,819) Accumulated net realized loss from investment transactions...(18,566,715) Net unrealized depreciation of investments....................(7,392,922) ------------ Net assets..................................................$ 17,655,336 ============ NET ASSET VALUE PER SHARE: Class A Shares: Net asset value and redemption price per share (based on net assets of $4,925,820 and 1,898,511 shares of beneficial interest outstanding) $ 2.59 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 2.75 Class B Shares: Net asset value, redemption price and offering price per share (based on net assets of $1,878,974 and 800,894 shares of beneficial interest outstanding) $ 2.35 Class C Shares: Net asset value, redemption price and offering price per share (based on net assets of $2,968,088 and 1,271,461 shares of beneficial interest outstanding) $ 2.33 Class D Shares: Net asset value and redemption price per share (based on net assets of $7,882,454 and 2,931,914 shares of beneficial interest outstanding) $ 2.69 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $ 2.85 See accompanying notes to financial statements. page 7 --------------------------------------------------------------------------- Financial Statements AMERICAN GROWTH FUND, INC. STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 2010 (unaudited) INVESTMENT INCOME: Dividends and Interest ...................................$ 72,872 ------------ Total investment income...........................................72,872 ------------ EXPENSES: Investment advisory fees (Note 4).................................91,297 Administration expenses (Note 4)..................................73,076 Transfer agent, shareholder servicing and data processing fees....48,177 Accounting Fees...................................................33,431 Rent expense (Note 4).............................................52,198 Custodian fees ....................................................3,432 Professional fees.................................................31,173 Registration and filing fees: Class A.....................................................12,394 Class B......................................................4,962 Class C......................................................7,565 Class D.....................................................19,933 Shareholder reports................................................1,864 Distribution and service fees: Class A............................................................7,640 Class B...........................................................10,295 Class C...........................................................15,525 Directors fees (Note 4)............................................4,000 Other expenses....................................................47,729 ------------ Total expenses...................................................464,691 ------------ Net Investment Loss.............................................(391,819) ------------ REALIZED AND UNREALIZED GAIN OR LOSS ON INVESTMENTS: Net realized loss on investments..............................(4,482,816) Net change in unrealized depreciation on investments...........5,651,455 ------------ Net gain on investments........................................1,168,639 ------------ Net increase in net assets resulting from operations...........$ 776,820 ============ See accompanying notes to financial statements. page 8 --------------------------------------------------------------------------- Financial Statements AMERICAN GROWTH FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS Six Months Ended January 31, 2010 Year Ended (unaudited) July 31, 2009 --------------------------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment loss...........................$ (391,819) $ (706,431) Net realized loss on investments..............(4,482,816) (3,712,948) Net change in unrealized depreciation on investments....................................5,651,455 252,073 Net increase (decrease) in net assets --------------------------------- resulting from operations........................776,820 (4,167,306) BENEFICIAL INTEREST TRANSACTIONS: Net increase (decrease) in net assets resulting from beneficial interest transactions (Note 2): Class A............................................7,981 (193,377) Class B.........................................(333,096) (634,524) Class C.........................................(113,354) (273,648) Class D.........................................(261,154) (523,035) Net change in net assets derived from --------------------------------- beneficial interest transactions................(699,623) (1,624,584) --------------------------------- Total increase (decrease).........................77,197 (5,791,890) Net Assets - Beginning of year................17,578,139 23,370,029 --------------------------------- Net Assets - End of period..................$ 17,655,336 $ 17,578,139 --------------------------------- Accumulated net investment loss.................(391,819) - ================================= See accompanying notes to financial statements. page 9 --------------------------------------------------------------------------- Financial Highlights Six Months Ended January 31, Class A (unaudited) Year Ended July 31, 2010 2009 2008 2007 2006 2005 ---- ---- ---- ---- ---- ---- Per Share Operating Data: Net Asset Value, Beginning of Period.............$2.49 $2.99 $3.44 $2.98 $3.00 $2.61 ---------------------------------------- Income (loss) from investment operations: Net investment loss3..............(0.06) (0.10) (0.12) (0.09) (0.08) (0.08) Net realized and unrealized gain (loss).............................0.16 (0.40) (0.33) 0.55 0.06 0.47 ---------------------------------------- Total income (loss) from investment operations.........................0.10 (0.50) (0.45) 0.46 (0.02) 0.39 ---------------------------------------- Net Asset Value, End of Period.....$2.59 $2.49 $2.99 $3.44 $2.98 $3.00 ---------------------------------------- Total Return at Net Asset Value1....4.0%(16.7)%(13.1)% 15.4% (0.7)% 14.9% Ratios/Supplemental Data: Net assets, end of period (in thousands)........................$4,926 $4,706 $5,953 $7,674 $6,452 $6,331 ---------------------------------------- Ratio to average net assets: Net investment loss.............(4.22)%4(4.12)%(3.37)%(2.83)%(2.80)%(2.97)% Expenses..........................5.02%4 5.11% 4.08% 3.67% 3.55% 3.65% Portfolio Turnover Rate2..............5% 12% 18% 0% 0% 5% 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 and sales of portfolio securities for a period, divided by the monthly average of the market value of securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (other than short-term securities) for the six months ended January 31, 2010, aggregated $868,092 and $1,881,988, respectively. 3. Net investment income (loss) per share is based upon relative daily net asset values. 4. Annualized See accompanying notes to financial statements. page 10 --------------------------------------------------------------------------- Financial Highlights Six Months Ended January 31, Class B (unaudited) Year Ended July 31, 2010 2009 2008 2007 2006 2005 ---- ---- ---- ---- ---- ---- Per Share Operating Data: Net Asset Value, Beginning of Period.............$2.25 $2.72 $3.16 $2.75 $2.79 $2.45 ---------------------------------------- Income (loss) from investment operations: Net investment loss3..............(0.06) (0.11) (0.14) (0.12) (0.17) (0.14) Net realized and unrealized gain (loss).............................0.16 (0.36) (0.30) 0.53 0.13 0.48 ---------------------------------------- Total income (loss) from investment operations.........................0.10 (0.47) (0.44) 0.41 (0.04) 0.34 ---------------------------------------- Net Asset Value, End of Period.....$2.35 $2.25 $2.72 $3.16 $2.75 $2.79 ---------------------------------------- Total Return at Net Asset Value1....4.4%(17.3)%(13.9)% 14.9% (1.4)% 13.9% Ratios/Supplemental Data: Net assets, end of period (in thousands)........................$1,879 $2,124 $3,408 $5,318 $5,054 $5,712 ---------------------------------------- Ratio to average net assets: Net investment loss.............(4.92)%4(4.81)%(4.05)%(3.57)%(3.57)%(3.75)% Expenses..........................5.72%4 5.79% 4.77% 4.39% 4.31% 4.42% Portfolio Turnover Rate2..............5% 12% 18% 0% 0% 5% 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 and sales of portfolio securities for a period, divided by the monthly average of the market value of securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (other than short-term securities) for the six months ended January 31, 2010, aggregated $868,092 and $1,881,988, respectively. 3. Net investment income (loss) per share is based upon relative daily net asset values. 4. Annualized See accompanying notes to financial statements. page 11 --------------------------------------------------------------------------- Financial Highlights Six Months Ended January 31, Class C (unaudited) Year Ended July 31, 2010 2009 2008 2007 2006 2005 ---- ---- ---- ---- ---- ---- Per Share Operating Data: Net Asset Value, Beginning of Period.............$2.24 $2.72 $3.15 $2.75 $2.78 $2.45 ---------------------------------------- Income (loss) from investment operations: Net investment loss3..............(0.06) (0.10) (0.13) (0.11) (0.04) (0.14) Net realized and unrealized gain (loss).............................0.15 (0.38) (0.30) 0.51 0.01 0.47 ---------------------------------------- Total income (loss) from investment operations ........................0.09 (0.48) (0.43) 0.40 (0.03) 0.33 ---------------------------------------- Net Asset Value, End of Period.....$2.33 $2.24 $2.72 $3.15 $2.75 $2.78 ---------------------------------------- Total Return at Net Asset Value1....4.0%(17.7)%(13.7)% 14.6% (1.1)% 13.5% Ratios/Supplemental Data: Net assets, end of period (in thousands)........................$2,968 $2,960 $3,986 $5,350 $4,855 $4,268 ---------------------------------------- Ratio to average net assets: Net investment loss.............(4.94)%4(4.82)%(4.07)%(3.56)%(3.50)%(3.75)% Expenses..........................5.72%4 5.81% 4.78% 4.39% 4.24% 4.43% Portfolio Turnover Rate2.............5% 12% 18% 0% 0% 5% 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 and sales of portfolio securities for a period, divided by the monthly average of the market value of securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (other than short-term securities) for the six months ended January 31, 2010, aggregated $868,092 and $1,881,988, respectively. 3. Net investment income (loss) per share is based upon relative daily net asset values. 4. Annualized See accompanying notes to financial statements. page 12 --------------------------------------------------------------------------- Financial Highlights Six Months Ended January 31, Class D (unaudited) Year Ended July 31, 2010 2009 2008 2007 2006 2005 ---- ---- ---- ---- ---- ---- Per Share Operating Data: Net Asset Value, Beginning of Period.............$2.57 $3.08 $3.54 $3.05 $3.06 $2.67 ---------------------------------------- Income (loss) from investment operations: Net investment loss3..............(0.05) (0.09) (0.10) (0.09) (0.19) (0.18) Net realized and unrealized gain (loss).............................0.17 (0.42) (0.36) 0.58 0.18 0.57 ---------------------------------------- Total income (loss) from investment operations.........................0.12 (0.51) (0.46) 0.49 (0.01) 0.39 ---------------------------------------- Net Asset Value, End of Period.....$2.69 $2.57 $3.08 $3.54 $3.05 $3.06 ---------------------------------------- Total Return at Net Asset Value1....4.7%(16.6)%(13.0)% 16.1% (0.3)% 14.6% Ratios/Supplemental Data: Net assets, end of period (in thousands)........................$7,882 $7,789$10,024$12,374$12,635$14,310 ---------------------------------------- Ratio to average net assets: Net investment loss.............(3.92)%4(3.82)%(3.06)%(2.55)%(2.56)%(2.76)% Expenses..........................4.72%4 4.81% 3.78% 3.36% 3.31% 3.43% Portfolio Turnover Rate2.............5% 12% 18% 0% 0% 5% 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 and sales of portfolio securities for a period, divided by the monthly average of the market value of securities owned during the period. Securities with a maturity or expiration date at the time of acquisition of one year or less are excluded from the calculation. Purchases and sales of investment securities (other than short-term securities) for the six months ended January 31, 2010, aggregated $868,092 and $1,881,988, respectively. 3. Net investment income (loss) per share is based upon relative daily net asset values. 4. Annualized See accompanying notes to financial statements. page 13 --------------------------------------------------------------------------- Notes to Financial Statements 1. Summary of Significant Accounting Policies American Growth Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The Fund´s primary investment objective is to seek capital appreciation. The Fund´s investment advisor is Investment Research Corporation (IRC). The Fund offers Class A, Class B, Class C and Class D shares. Class D shares are available to shareholders of accounts established prior to March 1, 1996. Class A and Class D have a maximum sales charge (load) imposed on purchases (as a percentage of offering price) of 5.75%. Purchases of Class A and Class D shares in amounts of $1,000,000 or more which are not subject to an initial sales charge generally will be subject to a contingent deferred sales charge of 1.0% of amounts redeemed within the first year of purchase. Class B has a Maximum deferred sales charge (Contingent Deferred Sales Charge) as a percentage of original purchase price or redemption proceeds, whichever is lower, for the 1 st 2 years of 5%, 3rd & 4th years - 4%, 5th yr. - 3%, 6th yr. - 2%, 7th yr. - 1%. Class C has a maximum deferred sales charge as a percentage of original purchase price or redemption proceeds, whichever is lower, of 1% for the first year. All classes of shares have identical rights to earnings, assets and voting privileges, except that each class has its own distribution and/or service plan and expenses directly attributable to that class and exclusive voting rights with respect to matters affecting that class. Class B shares will automatically convert to Class A shares seven years after date of purchase. The following is a summary of significant accounting policies consistently followed by the Fund. Reclassifications - Accounting principles generally accepted in the United States of America require that certain components of net assets be reclassified between financial and tax reporting. These reclassifications have no effect on net assets or net asset value per share. For the year ended July 31, 2009, the Fund decreased its net investment loss and decreased paid in capital by $706,431. Investment Valuation - Investment securities traded on the New York Stock Exchange or other stock exchange approved for this purpose by the board of directors will be valued on the basis of the closing sale thereof on such stock exchange, or, if such sale is lacking, at the mean between closing bid and asked prices on such day. If no bid and asked prices are quoted for such day or information as to New York or other approved exchange transactions is not readily available, the security will be valued by reference to recognized composite quotations or such other method as the board of directors in good faith deems will reflect its fair market value. Securities not traded on any stock exchange but for which market quotations are readily available are valued on the basis of the mean of the last bid and asked prices. Short-term securities are valued at the mean between the closing bid and asked prices or by such other method as the board of directors determines to reflect their fair market value. The board of directors in good faith determines the manner of ascertaining the fair market value of other securities and assets. Allocation of Income, Expenses, Gains and Losses - Income, expenses (other than those attributable to a specific class), gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class. Federal Income Taxes - No provision for federal income or excise taxes has been made because the Fund intends to comply with the provisions of subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to shareholders. The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund´s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (2006-2008), or expected to be taken in the Fund´s 2009 tax returns. The Fund identifies its major tax jurisdictions as U.S. Federal, Colorado State and foreign jurisdictions where the Fund makes significant investments; however the Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months. Classification of Distributions to Shareholders - The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund. Security Transactions and Related Investment Income - Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are reported on an identified cost basis which is the same basis used for federal income tax purposes. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the page 14 --------------------------------------------------------------------------- Notes to Financial Statements reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. Fair Value Measurements - The inputs and valuations techniques used to measure fair value of the Fund´s net assets are summarized into three levels as described in the hierarchy below: Level 1 - quoted prices in active markets for identical securities, Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc), and Level 3 - significant unobservable inputs (including the Fund´s own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used, as of January 31, 2010, in valuing the Fund´s assets carried at fair value: Equity Level Level 2 Level 3 Total ------------------------------ Computer & Peripherals Industry $6,889,553 $0 $0 $6,889,553 Biotechnology Industry 2,423,996 0 0 2,423,996 Drug 1,736,448 0 0 1,736,448 Semiconductor Industry 1,086,400 0 0 1,086,400 Pharmacy Services 937,300 0 0 937,300 Diversified Company Industry 778,050 0 0 778,050 Insurance Industry 675,846 0 0 675,846 Wireless Networking Industry 582,600 0 0 582,600 Beverage Industry 496,775 0 0 496,775 Semiconductor Capital Equipment 414,350 0 0 414,350 Entertainment Industry 365,991 0 0 365,991 Railroad 297,000 0 0 297,000 Machinery Industry 256,922 0 0 256,922 Computer Software and Services Industry 252,195 0 0 252,195 Cable TV Industry 145,852 0 0 145,852 Hotel/Gaming Industry 119,680 0 0 119,680 Retail/Wholesale Food Industry 112,250 0 0 112,250 Air Transport 49,400 0 0 49,400 Internet Information Providers 29,052 0 0 29,052 ------------------------------ Total Equity 17,649,660 0 0 17,649,660 New Accounting Pronouncement - In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update &Improving Disclosures about Fair Value Measurements& that requires additional disclosures regarding fair value measurements. Certain required disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, and other required disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Management is currently evaluating the impact it will have on its financial statement disclosures. page 15 --------------------------------------------------------------------------- Notes to Financial Statements 2. Shares of Beneficial Interest The Fund has authorized an unlimited number of no par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows: Six Months Ended Year Ended January 31, 2010 (unaudited) July 31, 2009 Shares Amount Shares Amount Class A: -------------------------------------------- Sold 184,083 $ 475,329 401,512 $ 903,495 Dividends and distributions reinvested - - - - Redeemed (178,701) (467,348) (501,100) (1,096,872) -------------------------------------------- Net increase (decrease) 5,382 $ 7,981 (99,588) $ (193,377) Class B: ============================================ Sold 20,323 $ 47,951 62,017 $ 134,097 Dividends and distributions reinvested - - - - Redeemed (162,080) (381,047) (372,609) (768,621) -------------------------------------------- Net decrease (141,757) $ (333,096) (310,592) $ (634,524) Class C: ============================================ Sold 140,306 $ 335,117 275,758 $ 587,945 Dividends and distributions reinvested - - - - Redeemed (188,088) (448,471) (424,558) (861,593) -------------------------------------------- Net decrease (47,782) $ (113,354) (148,800) $ (273,648) Class D: ============================================ Sold 915 $ 2,515 25,294 $ 61,824 Dividends and distributions reinvested - - - - Redeemed (97,828) (263,669) (252,262) (584,859) -------------------------------------------- Net decrease (96,913) $ (261,154) (226,968) $ (523,035) ============================================ 3. Realized and Unrealized Gains and Losses on Investments The identified tax cost basis of investments at January 31, 2010 was $25,042,582. Net unrealized depreciation on investments of $7,392,922, based on identified tax cost as of January 31, 2010, was comprised of gross appreciation of $3,528,114 and gross depreciation of $10,921,036. The difference between book basis and tax basis unrealized depreciation is attributable to the tax deferred losses on wash sales. 4. Underwriting, Investment Advisory Contracts and Service Fees Under the investment advisory contract with IRC, the advisor receives annual compensation for investment advice, computed and paid monthly, equal to 1% of the first $30 million of the Fund´s average annual net assets and 0.75% such assets in excess of $30 million. The Fund pays its own operating expenses. Class B and Class C shares are subject to annual service and distribution fees of 0.25% and 0.75% of average daily net assets, respectively. Class A shares are subject to annual service and distribution fees no greater than 0.30% of average daily net assets, respectively. For the six months ended January 31, 2010 commissions and sales charges paid by investors on the purchase of Fund shares totaled $83 of which $14 was retained by World Capital Brokerage, Inc. ("WCB"), an affiliated broker/dealer which serves as the underwriter and distributor of the Fund. Sales charges advanced to broker/dealers by WCB on sales of page 16 --------------------------------------------------------------------------- Notes to Financial Statements the Fund´s Class B and C shares totaled $5,267. For the six months ended January 31, 2010, WCB received contingent deferred sales charges of $2,346 upon redemption of Class B and C shares, as reimbursement for sales commissions advanced by WCB upon the sale of such shares. No payments were made by the Fund to WCB for brokerage commission on securities transactions. Certain officers of the Fund are also officers of WCB and IRC. For the six months ended January 31, 2010, the Fund paid directors´ fees and expenses of $4,000. For the six months ended January 31, 2010, under an agreement with IRC, the Fund was charged $73,076 for the costs and expenses related to employees of IRC who provided administrative, clerical and accounting services to the Fund. In addition, the Fund was charged $52,198 by an affiliated company of IRC for the rental of office space. 5. Federal Income Tax Matters Dividends paid by the Fund from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. At July 31, 2009, the Fund had available for federal income tax purposes an unused capital loss carryover of approximately $10,654,420, of which $1,915,926 expires 2011, $1,926,517 expires 2012, $2,254,368 expires 2013, $617,552 expires 2015, $3,656,587 expires 2016 and $283,470 expires 2017. The Fund distributes net realized capital gains, if any, to its shareholders at least annually, if not offset by capital loss carryovers. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to the differing treatment of net operating losses, foreign currency and tax allocations. Accordingly, these permanent differences in the character of income and distributions between financial statements and tax basis have been reclassified to paid-in capital. As of July 31, 2009 the components of distributable losses on a tax basis were as follows: Capital loss carry forward (10,654,420) Unrealized depreciation (13,067,327) Post October Loss (3,406,528) ------------ (27,128,275) ============ 6. Subsequent Events Management has evaluated the impact of all subsequent events on the Fund Through March 8, 2010, the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements. page 17 --------------------------------------------------------------------------- Analysis of Expenses (unaudited) As a shareholder of the Fund, you may incur two types of costs: (1) transaction costs, including front-end sales charges with respect to Class A and D shares or contingent deferred sales charges ("CDSC") with respect to Class B and C shares; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. The tables below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The tables below are based on an investment of $1,000 invested on August 1, 2009 and held for the six months ended January 31, 2010. Actual expenses This table provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,600 ending account value divided by $1,000 = 8.6), then multiply the result by the number under the heading entitled "Expenses Paid During the Period". For the six months ended January 31, 2010 Actual Total Return Without Beginning Ending Expenses Sales Account Account Paid During Charges(1) Value Value The Period(2) ------------------------------------------------------------- Class A 4.02% $1,000.00 $1,040.20 $25.39 Class B 4.44% $1,000.00 $1,044.40 $28.94 Class C 4.02% $1,000.00 $1,040.20 $28.94 Class D 4.67% $1,000.00 $1,046.70 $23.95 (1) Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charges with respect to Class A shares or the applicable Contingent Deferred Sales Charges ("CDSC") with respect to Class C Shares. Total return is not annualized, as it may not be representative of the total return for the year. (2) Expenses are equal to the annualized expense ratio of 5.02%, 5.72%, 5.72% and 4.72% for the Fund´s Class A, B, C, and D shares, respectively, multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period.) Hypothetical example for comparison purposes The table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not the Fund´s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in the Fund and other mutual funds. To do so, compare this 5.00% hypothetical example relating to the Fund with the 5.00% hypothetical examples that appear in the shareholder reports of other mutual funds. Please note that the expenses shown in the table below are meant to highlight your ongoing costs only and do not reflect any transactional costs. The example does not reflect the deduction of contingent deferred sales charges ("CDSC") with respect to Class B and C shares. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different mutual funds. In addition, if these transaction costs were included, your costs would have been higher. page 18 --------------------------------------------------------------------------- For the six months ended January 31, 2010 Hypothetical Annualized Beginning Ending Expenses Total Account Account Paid Expenses Return Value Value The Year(1) ---------------------------------------------------------- Class A 5.00% $1,000.00 $999.90 $24.89 Class B 5.00% $1,000.00 $996.43 $28.31 Class C 5.00% $1,000.00 $996.43 $28.31 Class D 5.00% $1,000.00 $1,001.39 $23.42 (1) Expenses are equal to the annualized expense ratio of 5.02%, 5.72%, 5.72% and 4.72% for the Fund´s Class A, B, C, and D shares, respectively, multiplied by the average account value over the period multiplied by 181/365 (to reflect the one-half year period.) Allocation of Portfolio Assets (Calculated as a percentage of Net Assets) January 31, 2010 Sector Breakdown ---------------- Computer & Peripherals Industry 39.02% Biotechnology Industry 13.73% Drug 9.84% Semiconductor Industry 6.15% Pharmacy Services 5.31% Diversified Company Industry 4.41% Insurance Industry 3.83% Wireless Networking Industry 3.30% Beverage Industry 2.81% Semiconductor Capital Equipment 2.35% Entertainment Industry 2.07% Railroad 1.68% Machinery Industry 1.45% Computer Software and Services Industry 1.43% Cable TV Industry 0.83% Hotel/Gaming Industry 0.68% Retail/Wholesale Food Industry 0.64% Air Transport 0.28% Internet Information Providers 0.16% ----------------------------------------------- Total Investments - Common Stocks 99.97% Cash and Receivables, less Liabilities 0.03% ----------------------------------------------- Total Net Assets 100.00% =============================================== NOTICE TO SHAREHOLDERS at July 31, 2009 (Unaudited) How to Obtain a Copy of the Fund´s Proxy Voting Policies A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge upon request by calling 1-800-525-2406 or on the SEC´s website at http://www.sec.gov. page 19 --------------------------------------------------------------------------- How to Obtain a Copy of the Fund´s Proxy Voting Records for the 12-Month Period Ended June 30, 2008 Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling 1-800-525-2406. Furthermore, you can obtain the Fund´s proxy voting records on the SEC´s website at http://www.sec.gov. Quarterly Filings on Form N-Q The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund´s Form N-Q is available on the SEC´s website at http://www.sec.gov. The Fund´s Form N-Q may be reviewed and copied at the SEC´s Public Reference Room in Washington, DC and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. Information included in the Fund´s Form N-Q is also available by calling 1-800-525-2406. INFORMATION ABOUT TRUSTEES AND OFFICERS (Unaudited) This chart provides information about the Trustees and Officers who oversee your Fund. Officers elected by the Trustees manage the day-to-day operations of the Fund and execute policies formulated by the Trustees. INDEPENDENT TRUSTEES Name, Address, and Age Position(s) Held with Fund Term of Office1 and Length of Time Served Principal Occupation(s) During Past 5 Years Number of Portfolios in Fund Complex Overseen by Director Other Directorships Held by Director -------------------- Robert Brody2 (84) 110 Sixteenth Street, Suite 1400 Denver, Colorado President, Director Since August 1958 See below for affiliations with Investment Research Corporation (the Adviser or IRC) and Distributor 1 World Capital Brokerage, Inc., Investment Research Corporation -------------------- Eddie R. Bush (70) 1400 W. 122nd Ave. Suite 100 Westminster, Colorado Director and Audit Committee Member (financial expert) Since September 1987 Certified Public Accountant 1 None -------------------- Harold Rosen (82) 1 Middle Road Englewood, CO Director Since December 1995 Owner of Bi-Rite Furniture Stores. 1 None -------------------- page 20 --------------------------------------------------------------------------- John Pasco III (62) 8730 Stony Point Parkway Suite 205 Richmond, VA 23235 Director Since December 2006 Mr. Pasco is Treasurer and a Director of Commonwealth Shareholder Services, Inc. ("CSS") a Fund Administrator; President and Director of First Dominion Capital Corp. ("FDCC"), a FINRA registered Broker Dealer; President and Director of Fund Services, Inc., a Transfer and Disbursing Agent; President and Treasurer of Commonwealth Capital Management, Inc. an SEC registered Investment Advisor; President of Commonwealth Capital Management, LLC, an SEC registered Investment Advisor; President and Director of Commonwealth Fund Accounting, Inc., which provides bookkeeping services to the Fund; and Chairman and Trustee of The World Insurance Trust, a registered investment company, since May, 2002. Mr. Pasco is also a certified public accountant. 1 Chair-man of the World Funds Inc. (10 Funds). Chair-man of The World Insur-ance Trust (1 Fund) -------------------- Dr. Brian Brody (56)* 6901 S. Pierce St. Suite #100M, Littleton, CO Director Since June 2008 Doctor of Professional Psychology 1 None -------------------- Timothy E. Taggart (55) 110 Sixteenth Street, Suite 1400 Denver, CO Treasurer and Chief Compliance Officer Since April 2004 Principal financial and accounting officer, employee of Adviser since 1983. See below for affiliation with Distributor. N/A N/A -------------------- Michael L. Gaughan (42) 2001 Avenue D Scottsbluff, NE Secretary Since September 2004 Employee of the Fund since 1995. N/A N/A -------------------- The Fund´s Statement of Additional Information includes additional information about the Fund´s trustees, and is available without charge upon request by calling 1-800-525-2406. BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT (Unaudited) At a meeting held on September 17, 2009, the board of trustees (the "Board") considered and approved the continuance of the investment advisory agreement (the "Advisory Agreement") with Investment Research Corp. (the "Advisor") pertaining to the American Growth Fund (the "Fund") for a period ending October 15, 2010. Prior to the meeting, the Board had requested detailed information from the Advisor regarding the Fund. This information formed the primary (but not exclusive) basis for the Board´s determinations. Below is a summary of the factors considered by the Board and the conclusions thereto that formed the basis for the Board approving the continuance of the Advisory Agreement: 1. The nature, extent and quality of the services provided and to be provided by the Advisor under the Advisory Agreement. The Board considered the Advisor´s specific responsibilities in all aspects of day-to-day investment management of the Fund. The Board considered the qualifications, experience and responsibilities of the portfolio managers, as well as the responsibilities of other key personnel at the Advisor involved in the day-to-day activities of the Fund, including administration, marketing and compliance. The Board noted the ongoing page 21 --------------------------------------------------------------------------- Advisor´s commitment to responsible Fund growth. The Board also considered the resources and compliance structure of the Advisor, including information regarding its compliance program, its chief compliance officer and the Advisor´s compliance record, and the Advisor´s business continuity plan. The Board also considered the prior relationship between the Fund and the Advisor, as well as the Board´s knowledge of the Advisor´s operations. The Board concluded that the Advisor had the quality and depth of personnel, resources, investment methods and compliance policies and procedures essential to performing its duties under the Advisory Agreement and that the nature, overall quality, cost and extent of such management services are satisfactory and reliable. 2. The Fund´s historical year-to-date performance and the overall performance of the Advisor. In assessing the quality of the portfolio management services delivered by the Advisor, the Board reviewed the short-term and long-term performance of the Fund on both an absolute basis, in comparison to the Standard and Poors 500 and in comparison to its peers. The Board noted the Fund´s Class A shares performed as well as, and in many cases better than, its peers and the Standard and Poors Index. The Board was presented details regarding the Fund´s performance by the Advisor and concluded that the fund was operating within the parameters of the Fund´s Objective as described in the Prospectus and that the advisor´s overall performance was satisfactory. 3. The costs of the services to be provided by the Advisor and the structure of the Advisor´s fees under the Advisory Agreement. In considering the advisory fee and total fees and expenses of the Fund, the Board held a discussion and concluded that based on past performance and the Advisor´s commitment to the betterment of the Fund that the fees and expenses associated with the Advisor were acceptable. It was also noted that the Fund´s 12b-1 fees were at an acceptable level. After taking into account all waivers and reimbursements, the Board concluded that the 12b-1 fees paid to the Advisor were fair and reasonable in light of comparative performance and expenses. 4. Economies of Scale. The Board also considered that economies of scale would be expected to be realized by the Advisor as the assets of the Fund grow and the Fund´s expense ratio begins to show signs of reduction. The Board concluded that there were no effective economies of scale to be shared by the Advisor at current asset levels, but considered revisiting this issue in the future as circumstances changed and asset levels increased. 5. The profits to be realized by the Advisor and its affiliates from their relationship with the Fund. The Board considered the 12b-1 fees paid to the Advisor and to affiliates for the sale and distribution of shares and shareholder service fees paid to the advisor and underwriter as well as other fees paid to affiliates. After such review, the Board determined that the profitability rates to the Advisor with respect to the Advisory Agreement are not excessive, and that the Advisor had maintained adequate profit levels to support the services to the Fund. No single factor was determinative of the Board´s decision to approve the continuance of the Advisory Agreement. The Board based their determination on the total mix of information available to them. Based on a consideration of all the factors in their totality, the Board determined that the advisory arrangements with the Advisor, including the advisory fee, were fair and reasonable to the Fund, and that the Fund´s shareholders received reasonable value in return for the advisory fees paid. The Board therefore determined that the continuance of the Advisory Agreement would be in the best interests of the Fund and its shareholders. HYPOTHETICAL PERFORMANCE CHARTS (unaudited) The following charts compare the change in value of a $10,000 investment in the American Growth Fund versus the Value Line Compsite Index. Returns reflect a sales load for Class A and D while Class B and C are without a sales load. Performance data quoted represents past performance and is no guarantee of future results. 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. Current performance data to the most recent month end can be obtained by calling 1-800-525-2406. page 22 --------------------------------------------------------------------------- (chart) A B C D Value Line 7/31/2000 10,000 10,000 10,000 10,000 10,000 7/31/2001 7,657 7,591 7,599 7,667 10,285 7/31/2002 4,577 4,502 4,506 4,610 8,853 7/31/2003 2,792 2,726 2,715 2,824 6,232 7/31/2004 4,134 4,006 3,997 4,197 9,107 7/31/2005 3,651 3,497 3,500 3,704 9,491 7/31/2006 4,228 4,020 4,024 4,303 10,657 7/31/2007 4,671 4,405 4,396 4,756 11,429 7/31/2008 3,959 3,717 3,707 4,050 10,086 7/31/2009 2,725 2,533 2,536 2,798 4,973 7/31/2010 3,476 3,235 3,211 3,584 7,291 page 23 --------------------------------------------------------------------------- On 3/1/96, the Fund adopted a multi-class distribution arrangement to issue additional classes of shares, designated as Class A, Class B and Class C shares. Shares existing prior to 3/1/96 became Class D shares. Class A and Class D shares are subject to a maximum front-end sales charge of 5.75%, Class B shares are subject to a maximum contingent deferred sales charge of 5% and Class C shares are subject to a 1% contingent deferred sales charge within the first year of purchase. The Fund may incur 12b-1 expenses up to an annual maximum of .30 of 1% on its average daily net assets of its Class A shares, 1% of its average daily net assets of its Class B shares, and 1% of its average daily net assets of its Class C shares. Class D shares have no 12b-1 fees. Performance figures for Class D shares include the 5.75% initial sales charge and assume the reinvestment of income dividends and capital gain distributions. Performance quoted represents past performance. The investment return and principal value of an investment will fluctuate so that the investors shares, when redeemed, may be worth more or less than their original cost. This material must be preceded or accompanied by a current prospectus. If you have not received, or need a current prospectus, please feel free to call for one at 1-800-525-2406. Please read the prospectus carefully before investing. Period ending 01/31/2010. For current performance figures please call 1-800-525-2406. 5 years 10 years 1 year annualized annualized (unaudited) (unaudited) (unaudited) Class D without load 28.10% -0.66% -9.78% Class D with load* 20.63% -1.83% -10.31% Class A without load 27.59% -0.97% -10.05% Class A with load* 20.47% -2.17% -10.58% Class B without load 27.72% -1.54% -10.70% Class C without load 26.63% -1.71% -10.77% *Includes a 5.75% sales charge based on a $10,000 initial purchase. TRANSFER AGENT: Fund Services, Inc., 8730 Stony Point Parkway, Stony Point Bldg. III - Suite # 205, Richmond, VA 23235 CUSTODIAN: UMB Bank NA Investment Services Group, 928 Grand Blvd, Fifth Floor, Kansas City, MO 64106 RETIREMENT PLAN CUSTODIAN: UMB Bank NA Investment Services Group, 928 Grand Blvd, Fifth Floor, Kansas City, MO 64106 INDEPENDENT AUDITORS: Tait, Weller & Baker LLP, 1818 Market St., Suite 2400, Philadelphia, PA 19103 LEGAL COUNSEL: Jones & Keller, World Trade Center, 1625 Broadway, 16th Floor, Denver, CO 80202 UNDERWRITER/DISTRIBUTOR: World Capital Brokerage, Inc., 110 Sixteenth Street, Suite 1400, Denver, CO 80202 OFFICERS AND DIRECTORS INVESTMENT ADVISOR Robert Brody President and Director Timothy E. Taggart Treasurer Dr. Brian Brody Director Eddie R. Bush Director Harold Rosen Director John Pasco III Director Michael L. Gaughan Secretary Investment Research Corporation 110 Sixteenth Street, Suite 1400 Denver, CO 80202 OFFICERS AND DIRECTORS Robert Brody President, Treasurer, and Director Timothy E. Taggart Executive Vice President and Director Michael L. Gaughan Secretary 3/2010 back cover page 24 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 2 Code of Ethics --------------------------------------------------------------------------- --------------------------------------------------------------------------- (a) American Growth Fund, Inc. has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. American Growth Fund, Inc. will provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Growth Fund, Inc. by calling 800-525-2406, on the internet at www.americangrowthfund.com or by writing to: American Growth Fund, Inc. 110 Sixteenth Street Suite 1400 Denver, CO 80202 (b) The Code of Ethics for American Growth Fund is as follows: AMERICAN GROWTH FUND, INC. CODE OF ETHICS American Growth Fund, Inc.´s code of ethics statement of general principles are listed below, and all advisory and access persons are expected to adhere to them at all times. 1. All advisory and access persons have a duty at all times to place the interests of shareholders first. 2. All personal securities transactions are to be conducted consistent with the code of ethics and in such a manner as to avoid any actual or potential conflict of interest or any abuse of any individual´s position of trust and responsibility; and 3. No advisory or access person will take inappropriate advantage of their position. A. "Definitions" 1. "Fund" means American Growth Fund, Inc. 2. "Access person" means officer, or advisory person of the Fund. 3. "Advisory person" means (a) any employee of the Fund or of any company in a control relationship to the Fund, who, in connection with his regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of a security by the Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (b) any natural person in a control relationship to the Fund who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of a security. A person does not become an "advisory person" simply by virtue of the following: (i) normally assisting in the reports, but not receiving information about current recommendations or trading; or (ii) a single instance of obtaining knowledge of current recommendations or trading activity, or infrequently and inadvertently obtaining such knowledge. 4. A security is "being considered for purchase or sale" when a recommendation to purchase or sell a security has been made and is being acted upon. 5. "Beneficial ownership" shall be interpreted in the same manner as it would be in determining whether a person is subject to the provisions of Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, except that the determination of direct or indirect beneficial ownership shall apply to all securities which an access person has or acquires. 6. "Control" shall have the same meaning as that set forth in Section 2(a)(9) of the Investment Company Act of 1940. 7. "Purchase or sale of a security" includes, inter alia, the purchase or sale of an instrument defined below as a security and the writing of an option to purchase or sell a security. 8. "Security" shall have the meaning set forth in Section 2(a)(36) of the Investment Company Act, except that it shall not include shares of registered open-end investment companies, securities issued by the Government of the United States, short term debt securities which are "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act, bankers´ acceptances, bank certificates of deposit, commercial paper, and such other money market instruments as designated by the Board of Directors for the Fund. 9. "Security held or to be acquired" by the Fund means any security as defined herein which within the most recent 15 days, (i) is or has been held by the Fund, or (ii) is being or has been considered by the Fund for purchase by the Fund. B. Applicability of Restrictions and Procedures American Growth Fund, Inc. applies the code of ethics equally to all access persons. The only exempted transactions are: 1. Purchases which are part of an automatic dividend reinvestment plan. 2. Purchases or sales which receive the prior approval of the Board of Directors for the Fund or the CCO because: (i) the potential harm to the Fund is remote; (ii) because they would be very unlikely to affect a highly institutional market, or (iii) because they clearly are not related economically to the securities to be purchased, sold or held by the Fund. C. Substantive Restrictions on Personal Investing Activities The following restrictions apply to all access persons: 1. Initial Public Offerings. All access persons are prohibited from acquiring any securities in an initial public offering without receiving written prior approval from the Chief Compliance Officer. 2. Private Placements. All access persons must have, written, prior approval of any acquisition of securities in a private placement. This prior approval must take into account, among other factors, whether the investment opportunity should be reserved for an investment company and its shareholders, and whether the opportunity is being offered to the individual by virtue of his or her position with the Fund. Anyone authorized to acquire securities in a private placement will be required to disclose that investment if or when they play a part in any subsequent considerations of an investment in the issuer. In such a circumstance, the investment company´s decision to purchase securities of the issuer would be subject to an independent review by investment personnel with no personal interest in the issuer. 3. Blackout Periods. All access persons are prohibited from executing a securities transaction on a day during which the Fund has a pending "buy" or "sell" order in that same security until that order is executed or withdrawn. In addition, the portfolio manager is prohibited from buying or selling a security within at least seven calendar days before and after the Fund trades in that security. Any such trades generally will be unwound or, if that is impractical, all profits from the trading will be disgorged to the appropriate investment company (or, alternatively, to a charitable organization). 4. Ban on Short-Term Trading Profits. In addition to the blackout periods described above, all access persons, absent permission to engage in short term trading, are prohibited from profiting in the purchase and sale, or sale and purchase, of the same (or equivalent) securities within 60 calendar days unless prior written approval is obtained from the Chief Compliance Officer ("CCO"). Any profits realized on such short-term, non CCO approved trades will be required to be disgorged. 5. Gifts. All access persons are prohibited from receiving any gift or other thing of more than de minimis value from any person or entity that does business with or on behalf of the Fund. Prior written approval for any gift must be obtained from the Fund. 6. Service as a Director. All access persons are prohibited from serving on the boards of directors of publicly traded companies, absent prior authorization based upon a determination that the board service would be consistent with the interests of the Fund and its shareholders. In the relatively small number of instances in which board service is authorized, persons serving as directors should be isolated from those making investment decision concerning the companies or company as which they serve as a director through "Chinese Wall" or other procedures. D. Compliance Procedures. The following compliance procedures have been adopted in order to assure that the above restrictions are complied with by all access persons: 1. Preclearance. All access persons excluding the dis-interested board of directors must "preclear" all personal securities investments. Written approval must be obtained from the designated officer of the Fund prior to the order being executed. 2. Records of Securities Transactions. All access persons must direct their brokers to supply to a designated compliance official, on a timely basis, duplicate copies of confirmations of all personal securities transactions and copies of periodic statements for all securities accounts. 3. Post-Trade Monitoring. We will from time to time monitor personal investment activity by access persons after pre-clearance has been granted. 4. Disclosure of Personal Holdings. All access persons are required to disclose all personal securities holdings upon commencement of employment and thereafter on a quarterly basis. 5. Certification of Compliance With Codes of Ethics. All access persons are required to certify annually that they have read and understand the code of ethics and recognize that they are subject thereto. Further, all access persons are required to certify annually that they have complied with the requirements of the code of ethics and that they have disclosed or reported all personal securities transactions required to be disclosed or reported pursuant to the requirements of the code. 6. Quarterly Transaction Reports. All access persons are required to submit on a quarterly basis a dated Quarterly Transaction Report as provided by the Fund. Access persons are required to disclose all security transactions in detail including; transaction type, trade date, price, name of security, number of shares, name of broker and the dollar amount of transaction. Access persons must also provide copies of all statements for all accounts held regardless of whether there was a transaction in that quarter reported. 7. Review by The Board of Directors. The Fund´s management will prepare an annual report to the board of directors that, at a minimum --- a. Summarizes existing procedures concerning personal investing and any changes in the procedures made during the past year; b. Identifies any violations requiring significant remedial action during the past year; and c. Identifies any recommended changes in existing restrictions or procedures based upon the Fund´s experience under its code of ethics, evolving industry practices, or developments in applicable laws or regulations. E. Sanctions Upon discovering a violation of this Code, the Board of Directors or CCO may impose such sanctions as it deems appropriate, including, inter alia, a letter of censure or suspension or termination of the employment of the violator. F. Review Process All monthly reports will be reconciled back to their pre-approved list by a non-interested person. The CCO will perform an additional review. (c) All access persons can now purchase Initial Public Offerings for any securities with prior writen approval from the Chief Compliance Officer. (d) No waivers were granted. (e) N/A (f) Included in the report N-CSR. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 3 Audit Committee Financial Expert --------------------------------------------------------------------------- --------------------------------------------------------------------------- (a) Ed Bush serves as a non-independent audit committee financial expert for American Growth Fund, Inc.´s Audit Committee. Ed Bush is a CPA with a private practice. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 4 Principal Accountant Fees and Services --------------------------------------------------------------------------- --------------------------------------------------------------------------- (a) Audit Fees The fee for the audit by Tait, Weller & Baker LLP. for the fiscal year ended July 31, 2008 was $26,100. Actual expenses for the audit conducted by Tait, Weller & Baker, LLP for fiscal year ended July 31, 2009 totaled $27,400. Tait, Weller & Baker LLP. has provided no other services to us. (b) No other fees were paid to Tait, Weller & Baker LLP. (c) No other fees were paid to Tait, Weller & Baker LLP. (d) No other fees were paid to Tait, Weller & Baker LLP. (e)(1) Audit Committees Pre-Approval Policies and Procedures The Audit Committee has not adopted pre-approval policies and procedures. The Audit Committee approves the engagement of the American Growth Fund, Inc.´s accountant to render audit or non-audit services before the accountant is engaged by American Growth Fund,Inc. All services provided to American Growth Fund Inc. during 2008 and 2009 were pre-approved by the audit committee. (e)(2) No Items were approved by the Audit Committee. (f) All services were performed by the principal accounts full time, permanent employees. (g) All services were performed by the principal accounts full time, permanent employees. (h) None. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 5 Audit Committee of Listed Registrants --------------------------------------------------------------------------- --------------------------------------------------------------------------- (a) American Growth Fund, Inc. Audit Committee: Ed Bush - CPA with a private practice (Financial Expert) Dr. Brian Brody - Doctor of Professional Psychology John Pasco III - Treasurer and a Director of Commonwealth Shareholder Services, Inc. ("CSS") a Fund Administrator; President and Director of First Dominion Capital Corp. ("FDCC"), a FINRA registered Broker Dealer; President and Director of Fund Services, Inc., a Transfer and Disbursing Agent; President and Treasurer of Commonwealth Capital Management, Inc. an SEC registered Investment Advisor; President of Commonwealth Capital Management, LLC, an SEC registered Investment Advisor; President and Director of Commonwealth Fund Accounting, Inc., which provides bookkeeping services to the Fund; and Chairman and Trustee of The World Insurance Trust, a registered investment company, since May, 2002. Mr. Pasco is also a certified public accountant. (b) N/A --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 6 Schedule of Investments --------------------------------------------------------------------------- --------------------------------------------------------------------------- Included in the before presented Annual Report. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 7 Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies --------------------------------------------------------------------------- --------------------------------------------------------------------------- n/a --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 8 Portfolio Managers of Closed-End Management Investment Companies. --------------------------------------------------------------------------- --------------------------------------------------------------------------- n/a --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 9 Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchases --------------------------------------------------------------------------- --------------------------------------------------------------------------- n/a --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 10 Submission of Matters to a Vote of Security Holders --------------------------------------------------------------------------- --------------------------------------------------------------------------- None. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 11 Controls and Procedures --------------------------------------------------------------------------- --------------------------------------------------------------------------- (a) The registrants principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant´s disclosure controls and procedures as of a date within 90 days of the filing date of this report on Form N-CSR, that the design and operation of such procedures are effective to provide reasonable assurance that information required to be disclosed by the investment company in the reports that it files or submits under the Securities Exchange Act of 1940 is recorded, processed, summarized and reported within the time periods specified in the Commissions rules and forms. (b) There were no changes in the Fund´s internal controls over fiscal reporting. --------------------------------------------------------------------------- --------------------------------------------------------------------------- Item 12 Exhibits --------------------------------------------------------------------------- --------------------------------------------------------------------------- 30a-2(a) certification brody 30a-2(a) sertification taggart Code of Ethics 2010 --------------------------------------------------------------------------- --------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) ______________________________________________________________ By (Signature and Title)*__________________________________________________ Date________________________ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Robert Brody, President Date 03/25/2010 By (Signature and Title)* /s/ Timothy E. Taggart, Executive Vice President Date 03/25/2010 * Print the name and title of each signing officer under his or her signature.