-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KUb1+s0YwonbK4uojpqE6PNNUQ7Osyx4BE8/BCUihLMWhi/UVZKk5CLAKUyYaOXM bptEue+7MFa2i7u4wA58Cg== 0000909012-98-000096.txt : 20040503 0000909012-98-000096.hdr.sgml : 20040503 19980303132700 ACCESSION NUMBER: 0000909012-98-000096 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980303 DATE AS OF CHANGE: 19981028 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAMELOT FUNDS /KY CENTRAL INDEX KEY: 0000350796 IRS NUMBER: 616121673 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03139 FILM NUMBER: 98556381 BUSINESS ADDRESS: STREET 1: 1346 S THIRD ST CITY: LOUISVILLE STATE: KY ZIP: 40208 BUSINESS PHONE: 5026365633 FORMER COMPANY: FORMER CONFORMED NAME: FAIRMONT FUND TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FAIRMONT FUND DATE OF NAME CHANGE: 19861103 N-30D 1 ANNUAL REPORT THE FAIRMONT FUND FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1997 WITH REPORT OF INDEPENDENT AUDITORS COMMENTS FROM MORTON H. SACHS, CHAIRMAN 1997 demonstrated once again that not all stocks move in lockstep with the major market indexes. Though the Fund had a decent year, finishing up 15.27%, it, like many of its peers, could not match the blistering pace set by the S&P 500 Index which was up 33.37%. Though we have felt for some time that the large capitalization stocks that dominate the Index are overvalued and ripe for a price correction, they continued to attract substantial interest during the year. When the market started its slide in early March, we anticipated that the large caps would be more vulnerable than the smaller cap, undervalued stocks we emphasize. Apparently, nervous investors felt more comfortable with "big name" stocks and the ensuing flight to quality propped up this sector. The persistence of a low interest rate, low inflation economic forecast helped the market shrug off any bad news and surge higher. The Fund rebounded dramatically (+38%) in the six months following the April lows as our financial services, insurance and specialty retailer stocks did well, but year-to-date performance still lagged the S&P at the end of October. The 4th quarter proved to be the most vexing of the year. Worry over the crisis in Asia and slowing corporate earnings brought the broad market advance to a screeching halt on October 27. Some of the S&P 500 stocks recovered rather quickly, leading the Index to a strong close. The Fund's holdings have been slower to respond. Our financial sector stocks (e.g. CFX Corp., Imperial Bankcorp, North Fork Bancorporation) were stellar performers, but our specialty retailers (e.g. Timberland Co., Corporate Express), which had done so well earlier in the year, could not regain their momentum. Some of the technology stocks (e.g. Software Spectrum) were hard hit due to weaker demand and shrinking profit margins. Several healthcare stocks (e.g. Staff Builders, Maxicare, MedPartners) suffered declines as well. As we head into 1998, we foresee that the market will continue to be volatile and unlikely to generate the high returns of the last several years. Nevertheless, we expect that the undervalued, out-of-favor type of stock that populates our portfolio will offer less risk and more potential than that of the S&P 500. We will continue to exercise caution and discipline as we weigh our alternatives. TEN YEAR COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE FAIRMONT FUND AND THE S&P 500 AVERAGE ANNUAL TOTAL RETURN 1 YEAR 5 YEAR 10 YEAR ------- ------ ------- 15.27% 14.89% 10.66% PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. [Graph omitted here] Graph depicts the comparison of a $10,000 investment between the Fairmont Fund and the S&P 500 from 1987 through 1997. FUND S&P 500 GROWTH OF GROWTH OF $10,000 $10,000 (10 YEAR) (10 YEAR) --------- --------- 1987 $ 10,000 $ 10,000 1988 10,312 11,656 1989 11,017 15,343 1990 8,579 14,866 1991 12,059 19,385 1992 13,752 20,859 1993 15,892 22,958 1994 17,047 23,258 1995 21,807 31,992 1996 23,883 39,334 1997 27,530 52,460 INDEPENDENT AUDITOR'S REPORT To The Shareholders and Board of Directors: Fairmont Fund We have audited the accompanying statement of assets and liabilities of Fairmont Fund, including the schedule of investments, as of December 31, 1997, and the related statements of operations for the year then ended, the statement 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 ended. 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 generally accepted auditing standards. 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. 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 December 31, 1997, by correspondence with the custodian and brokers. 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 Fairmont Fund as of December 31, 1997, 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 generally accepted accounting principles. McCurdy & Associates CPA's, Inc. Westlake, Ohio 44145 January 13, 1998 THE FAIRMONT FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1997
INVESTMENTS IN SECURITIES COMMON STOCKS (SHARES) VALUE PERCENT ------- ------- AIRLINE 20,000 Japan Airlines Co. Ltd. (a) ........... $ 105,000 0.33 ---------- AUTOMOBILE PARTS 175,000 TBC Corporation (a) ................... 1,673,43 5.25 ---------- BANKING 25,000 North Fork Bancorporation, Inc. ....... 839,063 75,000 UST Corporation ....................... 2,081,250 ---------- 2,920,313 9.17 ---------- BUSINESS SERVICES 130,000 Butler International, Inc. (a) ........ 2,275,00 7.14 ---------- CHEMICALS 6,000 Pioneer Companies Inc. Class A Stock (a) 78,750 0.25 ---------- COMPUTER SOFTWARE AND PERIPHERAL EQUIPMENT 50,000 Software Spectrum (a) .................. 593,750 15,000 ACT Manufacturing, Inc. (a) ............ 211,875 85,000 Madge N.V. (a) ......................... 329,375 ---------- 1,135,000 3.56 ---------- EMPLOYMENT AGENCY 130,000 Employee Solutions Inc. (a) ............ 560,625 1.76 ---------- ENGINEERING 20,000 Fluor Corporation ...................... 747,500 2.35 ---------- HOME HEALTH CARE 250,000 Staff Builders, Inc. New Class A (a) ... 523,438 1.64 ---------- HOSPITAL AND MEDICAL SERVICE PLANS 55,000 Maxicare Healthcare Plans, Inc. (a) .... 598,125 15,000 Medpartners, Inc. (a) .................. 335,625 ---------- 933,750 2.93 HOUSEHOLD PRODUCTS 15,000 Fortune Brands, Inc. ................... 555,937 1.75 ---------- MORTGAGE BANKER/BROKER 85,000 Southern Pacific Funding Corporation (a) 1,115,625 3.50 ---------- MULTILINE INSURANCE 50,000 USF&G Company .......................... 1,103,125 3.46 ---------- NONFERROUS METALS 15,000 Cominco, Ltd. .......................... 231,563 0.73 ---------- OFFICE SUPPLIES 60,000 BT Office Products International, Inc.(a). 465,000 1.46 ---------- See accompanying notes. THE FAIRMONT FUND SCHEDULE OF INVESTMENTS DECEMBER 31, 1997 INVESTMENTS IN SECURITIES (CONTINUED) COMMON STOCKS (SHARES) VALUE PERCENT ----- ------- OIL AND GAS EXPLORATION 100,000 Oryx Energy Company (a) ................ $2,550,000 8.00% ----------- PAPER PRODUCTS 80,000 Corporate Express, Inc. (a) ............ 1,030,000 3.23 ----------- PERSONAL SERVICES 70,000 Regis Corporation ...................... 1,758,750 5.52 ----------- PHARMACEUTICALS 31,000 Novartis AG ADR ........................ 2,522,625 7.92 ----------- RETAIL 105,000 Spiegel, Inc., Class A (a) ............. 518,437 40,000 Heilig-Meyers Company .................. 480,000 45,000 Garden Ridge Corporation (a) ........... 641,250 ----------- 1,639,687 5.15 ----------- SAVINGS INSTITUTIONS 50,000 CFX Corporation ........................ 1,525,000 70,000 Dime Financial Corporation ............. 2,135,000 55,000 Mechanics Savings Bank (a) ............. 1,433,437 ----------- 5,093,437 15.99 ----------- SHOES 25,000 Timberland Company (a) ................. 1,451,563 4.56 ----------- TELEPHONE COMMUNICATIONS 70,000 Empresas Telex-Chile SA ADR ............ 275,625 0.87 ----------- ------ TOTAL COMMON STOCKS (Cost $25,709,932) ........... 30,745,750 96.52 BANK REPURCHASE AGREEMENT With Star Bank NA of Cincinnati, issued 12/31/97 due 1/2/98, fully collateralized by Government National Mortgage Association, 6.00% due 5/20/22 (Cost $2,504,000) ........................ 2,504,000 7.86 ----------- ------ TOTAL INVESTMENTS (COST $28,213,932) ............. 33,249,750 104.38 OTHER ASSETS LESS LIABILITIES .................... ( 1,394,010) ( 4.38) ----------- ------ NET ASSETS .................................. $ 31,855,740 100.00% =========== ====== (a) Common stocks which did not declare a dividend in 1997.
See accompanying notes. THE FAIRMONT FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1997 ASSETS INVESTMENTS IN SECURITIES, At Value (Note 2) Common stocks (Cost $25,709,932) ...... $ 30,745,750 Bank repurchase agreement ............. 2,504,000 ------------- Total investments in securities ............. $ 33,249,750 CASH .......................................................... 3,661 RECEIVABLES Investment securities sold ............ 1,785,640 Dividends ............................. 26,000 Interest .............................. 383 ------------- Total receivables ........................... 1,812,023 ------------ Total assets ....................... 35,065,434 LIABILITIES PAYABLES Investment securities purchased .......... $ 2,969,876 Distributions to shareholders (Note 4).... 192,475 Management fee (Note 3) .................. 44,417 Shares redeemed .......................... 2,353 Other .................................... 573 ------------ Total liabilities ........................... 3,209,694 ------------ NET ASSETS .................................................... $ 31,855,740 ============ NET ASSETS CONSIST OF Capital stock (1,150,684 shares outstanding) (Note 8).... $ 27,332,115 Accumulated net realized losses on investments (Note 6).. ( 512,192) Net unrealized appreciation on investments (Note 5)...... 5,035,817 ------------ NET ASSETS .................................................... $ 31,855,740 ============ NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE ($31,855,740 divided by 1,150,684 shares) ............ $ 27.68 ============ See accompanying notes. THE FAIRMONT FUND STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 INVESTMENT INCOME (Note 2) Dividends ...................................................... $ 224,793 Interest ....................................................... 91,365 Other .......................................................... 18,427 --------- Total investment income .................................... 334,585 EXPENSES Management fee (Note 3) ........................................ 515,556 --------- Net investment loss ........................................ (180,971) --------- NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS (Note 2) Net realized gains from investment transactions ................ 2,995,502 Net change in unrealized appreciation on investments ........... 1,557,794 --------- Net realized and unrealized gains on investments ........... 4,553,296 --------- Net increase in net assets resulting from operations .. $4,372,325 ========== See accompanying notes. THE FAIRMONT FUND STATEMENT OF CHANGES IN NET ASSETS YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
1997 1996 ---- ---- FROM OPERATIONS Net investment loss ................................ $ (180,971) $ (178,912) Net realized gains on investments .................. 2,995,502 3,637,050 Net change in unrealized appreciation on investments ............................ 1,557,794 (765,433) --------- -------- Net increase in net assets resulting from operations ................. 4,372,325 2,692,705 --------- --------- DISTRIBUTIONS TO SHAREHOLDERS (Note 4) Distributions from net realized gains on investments (2,953,085) (3,273,575) --------- --------- FROM CAPITAL SHARE TRANSACTIONS (Note 8) ........ Shares Shares ------ ------ Proceeds from sale of shares ........... 52,488 1,494,130 90,818 2,591,421 Shares issued in reinvestment of distributions .............. 99,733 2,760,610 119,600 3,163,405 Payments for shares redeemed ........... (163,215) (4,549,244) (92,010) (2,633,953) -------- ---------- ------- ---------- Net increase or decrease in net assets from capital share transactions (10,994) (294,504) 118,408 3,120,873 ======== ---------- ======= ---------- Net increase in net assets ................ 1,124,736 2,540,003 NET ASSETS Beginning of year .................................. 30,731,004 28,191,001 ---------- ---------- End of period ...................................... $31,855,740 $ 30,731,004 =========== ============
See accompanying notes. THE FAIRMONT FUND FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
Years Ended ----------- December December December December December 31 31 31 31 31 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Net Asset Value, Beginning of Period .................... $ 26.45 27.02 24.06 22.43 19.41 INCOME FROM INVESTMENT OPERATIONS Net Investment Loss ............................ (.16) (.10) (.08) (.16) (.14) Net Gains or Losses on Securities (both realized and unrealized) 4.20 2.67 6.80 1.79 3.16 -------- ----- ----- ----- ----- Total From Investment Operations ...... 4.04 2.57 6.72 1.63 3.02 LESS DISTRIBUTIONS Dividends (from net investment income) ......... .00 .00 .00 .00 .00 Distributions (from capital gains) ............. 2.81 3.14 3.76 .00 .00 Returns of Capital ............................. .00 .00 .00 .00 .00 -------- ----- ----- ----- ----- Total Distributions ................... 2.81 3.14 3.76 .00 .00 Net Asset Value, End of Period .......................... $ 27.68 26.45 27.02 24.06 22.43 ======== ===== ===== ===== ===== TOTAL RETURN ............................................ 15.27% 9.52% 27.92% 7.27% 15.56% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (in 000s) ..................... $ 31,856 $ 30,731 $ 28,191 22,195 $ 18,884 Ratio of Expenses to Average Net Assets ................. 1.63% 1.66% 1.70% 1.74% 1.78% Ratio of Net Income to Average Net Assets ............... (.57)% (.59)% (.55)% (.79)% (.66)% Portfolio Turnover Rate ................................. 1.83 2.37 2.47 2.75 1.55 Average Commission Rate ................................. .057 .057
See accompanying notes. THE FAIRMONT FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 (1) Organization The Fairmont Fund (The Fund) is a no-load, diversified series of The Fairmont Fund Trust (The Trust), which is a Kentucky Business Trust and an open-end investment company registered under the Investment Company Act of 1940. The Fund was established under a declaration of trust dated December 29, 1980 and began offering its shares publicly on September 2, 1981. The Fund's objective is capital appreciation which it seeks to achieve by investing in equity securities that its Adviser believes are undervalued. (2) Summary of Significant Accounting Policies (a) Valuation of Investment Securities - Purchases and sales of securities are recorded on a trade date basis. Portfolio securities which are traded on stock exchanges or in the over-the-counter markets are valued at the last sale price as of 4:00 P.M. Eastern time on the day the securities are being valued or, lacking any sales, at the mean between the closing bid and asked prices. Fixed income securities are valued by using market quotations, or independent pricing services which use prices provided by market makers or estimates of market values obtained from yield data relating to instruments or securities with similar characteristics. Securities and other assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Board of Trustees. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. (b) Gains and Losses on Investment Securities - Gains and losses from sales of investments are calculated on the "identified cost" method. Upon disposition of a portion of the investment in a particular security, it is The Fund's general practice to first select for sale those securities which qualify for long-term capital gain or loss treatment for tax purposes. (c) Repurchase Agreements - The Fund may acquire repurchase agreements from banks or security dealers (the Seller) which the Board of Trustees and the Adviser have determined creditworthy. The Seller of the repurchase agreement is required to maintain the value of collateral at not less than the repurchase price, including accrued interest. Securities pledged as collateral for repurchase agreements are held by The Fund's custodian in the Federal Reserve/Treasury book-entry system. (d) Capital Shares - The Fund records purchases of its capital shares at the daily net asset value next determined after receipt of a shareholder's check or wire and application in proper form. Redemptions are recorded at the net asset value next determined following receipt of a shareholder's written request in proper form. (e) Estimates and Assumptions - The preparation of financial statements in conformity with generally accepted accounting principles requires The Fund 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (3) Investment Advisory Agreement, Commissions and Related Party Transactions The Investment Advisory Agreement (the Agreement) provides that The Sachs Company (the Adviser) will pay all of The Trust's operating expenses, including fees to disinterested trustees, but excluding brokerage fees and commissions, taxes, interest and extraordinary expenses. Under the terms of the Agreement, The Fund pays the Adviser a fee at the rate of 2% of the first $10,000,000 of average daily net assets, 1-1/2% of the next $20,000,000, and 1% of the average daily net assets over $30,000,000. The management fee is accrued daily and paid monthly. The Adviser received management fees of $515,556 for the year ended December 31, 1997. THE FAIRMONT FUND NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 Morton H. Sachs, a trustee of The Fund, is the president and sole shareholder of the Adviser. The Adviser, as a registered broker-dealer of securities, effected substantially all of the investment portfolio transactions for The Fund. For this service the Adviser received commissions of $372,542 for the year ended December 31, 1997. Certain officers and/or Trustees of The Fund are officers of the Adviser. (4) Distributions to Shareholders The following is a summary of distributions to shareholders for the years ended December 31, 1997 and December 31, 1996. PERIOD PAID PER SHARE ENDED DATE DECLARED IN CASH REINVESTED TOTAL AMOUNT ----- ------------- ------- ---------- ----- ------ 12/31/97 December 31, 1997 $192,475 $2,760,610 $2,953,085 $ 2.81 12/31/96 December 31, 1996 $110,169 $3,163,405 $3,273,574 $ 3.14 (5) Investments For the year ended December 31, 1997, the cost of purchases and proceeds from sales of investments, other than temporary cash investments, were $54,316,345 and $57,731,165, respectively. Following is information regarding unrealized appreciation (depreciation) and aggregate cost of securities based upon federal income tax cost at December 31, 1997: TAX COST -------- Aggregate gross unrealized appreciation for all securities with value in excess of cost $ 7,478,569 Aggregate gross unrealized depreciation for all securities with cost in excess of value (2,954,944) ---------- Net unrealized appreciation $ 4,523,625 ============ Aggregate cost of securities $ 26,222,125 ============ (6) Income Taxes It is The Fund's policy to comply with the special provisions of the Internal Revenue Code available to investment companies and, in the manner provided therein, to distribute substantially all of its income to shareholders. Therefore no tax provision is required. The accumulated net realized loss is due only to temporary timing differences caused by wash sales and does not represent a capital loss carryforward for income tax purposes. (7) There are no reportable financial instruments which have any off-balance sheet risk as of December 31, 1997. (8) At December 31, 1997 an indefinite number of capital shares (no par value) were authorized, and paid-in capital amounted to $27,332,115. Transactions in capital shares were as follows: Shares sold 152,221 Shares redeemed (163,215) -------- Net decrease (10,994) Shares outstanding: Beginning of period 1,161,678 --------- Ending of period 1,150,684 ========= -----END PRIVACY-ENHANCED MESSAGE-----