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Dear Shareholders:

I am pleased to deliver to you the American Growth Fund Series Two Annual Report for the year ending July
31, 2016.
This past year has been full of changes for Series Two. On July 29, 2016 your American Growth Fund, Inc.
Series Two switched its Investment Strategy to focus on the budding cannabis business. It is believed that it is the
first diversified mutual fund approved to do so by the Securities and Exchange Commission. 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. Last year, Factbook publisher Cannabusiness Media estimates, there was
between $1.6 billion and $1.9 billion of legal cannabis sold for medical use in the U.S., and another $600 million to
$700 million was sold for legal, recreational use³. The Factbook projects that legal cannabis businesses will do
roughly $8 billion in revenue by 2018³.

Investment Strategy
The Fund searches for companies/investments with growth potential that could show faster growth than
markets indexes. We also look 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. 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 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.

Performance Overview
Your American Growth Fund Series Two Class E Shares delivered you a (14.43)% return since July 31,
2015 through close of business on July 31, 2016. The Dow Jones Industrial Average posted a gain of 7.01% since
July 31, 2015 through close of business on July 31, 2016 while the S&P 500 posted a loss of 5.62% since July 31,
2015 through close of business on July 31, 2016. Additional data, including long term performance data, can be
found on page 19 of this report. Past performance is no guarantee of future results.

Manager’s Discussion
The Cannabis business continues to expand. This past April Pennsylvania became the 24^th state to approve
cannabis for medical purposes⁴. Arizona’s Proposition 205 would legalize cannabis for those over the age of 21 as
would Nevada’s Initiative to Regulate and Tax Marijuana, Maine’s Marijuana Legalization Act, Massachusetts
Regulation and Taxation of Marijuana Act and California’s Proposition 64⁵. Massachusetts Regulation and Taxation
of Marijuana Act and California’s Proposition 64 would also allow “cannabis cafes” that would allow on site
consumption⁵. Additionally Arkansas, Florida, Montana and North Dakota have medical Marijuana bills on the ballots.
Federally, the Drug Enforcement Agency ruled that Marijuana would remain a Schedule l controlled substance, which
declares it has "no currently accepted medical use and a high potential for abuse." However, the DEA also stated that
"will allow additional entities to apply to become registered with DEA so that they may grow and distribute marijuana
for FDA-authorized research."¹³
Politically, Hillary Clinton’s pick of Tim Kaine as a running mate received an “F” Grade because of his
opposition to legalization and decriminalization of marijuana, which was later changed to a “C”. Hillary Clinton is on
record as a supporter of medical marijuana. Donald Trump shifts back and forth on marijuana legalization. Early in
the campaign he was open to letting states do what they wanted, then he reversed course and took a stand against
legalizing marijuana. Now he says he is 100% for medical marijuana, even though that contradicts the Republican
platform. ¹²
Globally, in Israel hundreds of medical professionals, farmers, patients and cannabis activists descend on
Israel for the Cann10 International Medical Conference where Israeli scientists are plowing ahead with new clinical
trials in order to approve cannabis use for a wider variety of diseases⁹. The All Party Parliamentary Group in the
United Kingdom has called for cannabis to be made legal for medical conditions⁸. Tilburg, Netherlands is allowing
residents who rely on medical cannabis to grow marijuana⁶. In Canada, Aurora Cannabis is planning to expand its
operations by 600,000 square feet over the next two years, a more than tenfold increase over its 55,200 square-foot

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facility and would boost production to 70,000 kilograms per year, up from 7,000¹⁰. However, Scotiabank and Royal
Bank of Canada have begun closing client accounts, and turning away new clients, who have anything to do with the
cannabis industry⁷. The German federal government is plowing €5.2 billion to €6.1 billion each year into repressive
anti-drug measures, with the lion’s share focused on cannabis, according to data released by the country’s Left party.
Charges for selling or growing cannabis make up nearly three-quarters of all registered drug offenses in the country
of 80 million residents¹¹.

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,

Timothy Taggart
President
American Growth Fund, Inc.

1. http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
2. http://data.bls.gov/timeseries/LNS14000000
3. http://www.forbes.com/sites/caroltice/2015/02/05/why-legal-cannabis-is-2015s-best-startup-opportunity/#41f37e5ba4a7
4. http://www.cityam.com/249292/investmentcaselegalisedcannabismarkets
5. https://www.greenrushdaily.com/2016/09/08/9-states-marijuana-initiatives-november-ballots/
6. https://www.leafly.com/news/politics/break-past-policy-dutch-mayor-allows-cannabis-patients-grow-home/
7. http://www.cannabisbusinesstimes.com/article/091216-canadian-banks-refuse-cannabis/
8. http://www.bbc.com/news/health-37336678
9. http://www.timesofisrael.com/in-israel-booming-medical-marijuana-looks-to-conquer-new-highs/
10. http://www.huffingtonpost.ca/2016/09/09/marijuana-production-legalization_n_11938450.html
11. https://www.leafly.com/news/politics/germany-austria-pouring-billions-cannabis-prohibition/
12. http://www.forbes.com/sites/debraborchardt/2016/07/28/neither-clinton-or-trump-is-a-hit-with-marijuana-
supporters/#f70f8634d7e9
13. http://www.cnn.com/2016/08/11/health/dea-marijuana-schedule-l/

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*Non-income producing security
See accompanying notes to financial statements

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See accompanying notes to financial statements.

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See accompanying notes to financial statements.

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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, 2016, aggregated $0 and $369,261, respectively.
3. Per share amounts have been calculated using the Average Shares Method.

See accompanying notes to financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of
American Growth Fund, Inc. Series Two

We have audited the accompanying statement of assets and liabilities of American Growth Fund, Inc.,
Series Two (the “Fund”), a series of American Growth Fund, Inc., including the statement of investments,
as of July 31, 2016, and the related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then. These financial statements and financial highlights are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and financial highlights are
free of material misstatement. The Fund is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no
such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of securities owned
as of July 31, 2016, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly,
in all material respects, the financial position of American Growth Fund, Inc. Series Two as of
July 31, 2016, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights for each of the five
years in the period then ended, in conformity with accounting principles generally accepted in
the United States of America.

TAIT, WELLER & BAKER LLP

Philadelphia, Pennsylvania
September 28, 2016

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1. Trustees and officers of the fund serve until their resignation, removal or retirement.
2. Timothy Taggart, John Pasco III and Gerald Opalinski are "interested persons” of the Fund as defined by the
Investment Company Act of 1940 because of the following position which they hold.

Timothy Taggart is the sole shareholder, president and a director of Investment Research Corporation. He is also
president and a director of World Capital Brokerage, Inc., the Distributor.

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John Pasco III is the President of Commonwealth Fund Services, Inc., the Company´s transfer agent and accounting
service agent.
Gerald Opalinski is a registered representative of World Capital Brokerage, Inc.
None of the above named persons received any retirement benefits or other form of deferred compensation from the
Fund. There are no other funds that together with the Fund constitute a Fund Complex.
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)

Meeting of the Board of Directors Held on September 22, 2016

At a regular meeting of the Board of Directors (the “Board”) held on September 22, 2016 (the “Meeting”), the Board,
including a majority of the Directors who are not interested persons of the Board (the “Independent Directors”),
considered the approval for another year of the investment advisory agreement (the “Agreement”) between
Investment Research Corporation (the “Adviser”) and American Growth Fund, Inc. (the “Fund”).

In connection with its review and approval of the Agreement for another year at the Meeting, the Independent
Directors present considered materials furnished by the Adviser, including information about, but not limited to, the
Adviser’s personnel, operations and financial condition. The Independent Directors also submitted questions to the
Adviser prior to the Meeting. At the Meeting, representatives from the Adviser presented information to the Board
regarding the Adviser and the Series Two Fund and responded to questions from the Board.

Matters considered by the Board, including the Independent Directors, at the Meeting in connection with its re-
approval of the Agreement included the following:

Performance. The Board reviewed American Growth Fund’s investment performance reports, which compared the
performance of Series Two with several other mutual funds with generally similar investment strategies, at least in
part, over various time periods, as well as with the Series Two Fund’s benchmark index, the S&P 500 (the “S&P
500”), and discussed these reports with representatives of the Adviser. The Board and the Independent Directors
considered Series Two comparative performance for three months, six months, one year, three year and five year
periods. The Board noted and discussed Series Two’s under performance versus other funds and the S&P 500 with
the Adviser, which was at least partially attributable to the ongoing transition in the Series Two Fund’s investment
strategy. The Adviser indicated that certain investment reporting services may have underreported the Series Two
performance by reflecting the capital gain distribution on Series Two as a lowered return on investment, and showed
the Board the differences caused by the different ways that distribution had been treated.

The Adviser reminded the Board that, on July 29, 2016 Series Two had, with the approval of shareholders, changed
its investment strategy to focus on investments related to the emerging state legalized cannabis industry which has
been projected by some analysts to grow to an $8 billion industry by 2018. Currently 24 states allow medical
marijuana with another 8 states having legislation or ballot proposals pending relating to various forms of cannabis
legalization. While the United States Drug Enforcement Agency (“DEA”) has again declined to remove marijuana from
the Schedule One controlled substance list, citing a lack of proven medical uses, the federal non-enforcement policy
continues to be mandated by the Rohrbacher-Farr amendment to the Department of Justice spending bill. Recent
court decisions have interpreted that 2016 budget amendment to prohibit spending any funds to enforce the federal
Controlled Substances Act against medical marijuana in states that have legalized it. The DEA did announce that it
would allow additional entities to become registered with the DEA in order to be able to grow marijuana for FDA
authorized medical research.

Nature, Extent and Quality of Services. The Directors noted that the Series Two Fund is an actively managed fund
and that the transition to a cannabis related fund was requiring a considerable amount of time and effort by the
Adviser. The Directors also considered that the Adviser currently manages approximately $16.7 million in assets for
the Fund (both Series One and Two combined). The Directors discussed the nature of the Adviser’s operations and
considered the long-term tenure and industry experience of the Adviser’s professional investment management staff.
The Board also reviewed the Adviser’s investment strategy, research capabilities and analytical methodology that it
utilizes in selecting investments for the Series Two Fund. The Directors also discussed the Adviser’s recent
enhancements to its compliance procedures. The Board then concluded that the Adviser had sufficient depth of
personnel, experience, resources, and investment and compliance processes to provide sufficient quality services to
the Fund.

Cost of Services and Profitability. The Board noted that the Agreement requires the Series Two Fund to pay the
Adviser an annual fee of approximately 1% of the Fund’s average net assets up to a “break point” at $30,000,000 at

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which point the fee is reduced to 3/4ths of 1% for any assets under management in excess of $30,000,000. The
Board also noted that, in addition to the 1% advisory fee, which amounted to $18,275 for the year from Series Two,
both the Series One and Series Two Funds shared certain operating costs with the Adviser and that affiliates of the
Adviser received additional revenue from the Fund for distributing the Fund’s shares and for office rent. The Board,
including the Independent Directors, specifically considered the profits realized by the Adviser and its affiliates in
relation to the operation of the Fund and determined that such profits were not excessive. In making this
determination, they relied upon an analysis of the profitability of the Fund’s business to the Adviser and its affiliates
provided by the Adviser. Based on all of this information, the Independent Directors concluded that the advisory fees
charged under the Agreement and the other amounts paid to the Adviser and its affiliates are fair and reasonable
under the circumstances.

Economies of Scale. After discussion, it was the consensus of the Board and the Independent Directors that the
Fund had not reached an asset level where any material economies of scale were being realized by the Adviser that
could be shared with the Fund. The Board specifically noted the existence of the “break point” on advisory fees in the
Agreement.

Conclusion. During the Board’s deliberations, neither the Board nor the Independent Directors identified any single
piece of information that was all important or controlling with respect to their evaluation of the fairness of the
Agreement to the Series Two Fund. The Board did, however, determine that it had received such information from the
Adviser as was reasonably necessary to evaluate the terms of the Agreement, including answers to the questions
raised by the Independent Directors before and during the Meeting as well as the assistance of legal counsel present
at the Meeting. Accordingly, the Board, including all of the Independent Directors, unanimously concluded that the
terms of the Agreement were fair and reasonable to the Series Two Fund and, in the exercise of the Directors’
reasonable business judgment, determined that the Agreement with the Adviser should be continued for another
year.

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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
Composite Index. Returns reflect a sales load for Class E while Class F is 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. The graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption
of fund shares. Current performance data to the most recent month end can be obtained by calling 1-800-525-2406.

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