THE FAIRMONT FUND
UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1997
<PAGE>
<TABLE>
<CAPTION>
THE FAIRMONT FUND
SCHEDULE OF INVESTMENTS
(UNAUDITED)
JUNE 30, 1997
<S> <C> <C>
INVESTMENTS IN SECURITIES
COMMON STOCKS (SHARES) VALUE PERCENT
- ---------------------- ----- -------
ADVERTISING
15,000 WPP Group PLC ADS....................................... $ 611,250 1.90%
----------
AUTOMOBILE PARTS
175,000 TBC Corporation (a)..................................... 1,465,625 4.56
----------
BANKING
42,000 Imperial Bancorp (a).................................... 1,212,750
40,000 North Fork Bancorporation Inc........................... 855,000
75,000 UST Corporation......................................... 1,678,125
----------
3,745,875 11.67
----------
BUSINESS SERVICES
145,000 Butler International Inc (a)............................ 1,966,563 6.12
----------
COMPUTER PERIPHERAL EQUIPMENT
110,000 Madge N.V (a)........................................... 701,250 2.18
----------
COMPUTER SOFTWARE
10,000 Intuit Inc (a).......................................... 229,375
1,750 Lycos Inc (a)........................................... 22,312
----------
251,687 0.78
----------
EMPLOYMENT AGENCY
100,000 Employee Solutions Inc (a).............................. 556,250 1.73
----------
HOSPITAL AND MEDICAL SERVICE PLANS
25,000 Coventry Corporation (a)................................ 378,125
55,000 Maxicare Health Plans Inc (a)........................... 1,230,625
----------
1,608,750 5.01
----------
MEDICAL EQUIPMENT
17,000 Haemonetics Corporation (a)............................. 325,125 1.01
----------
MEDICAL LABORATORIES
300,000 Meris Laboratories Inc (a).............................. 18,750 0.06
----------
MORTGAGE BANKER/BROKER
20,000 Aames Financial Corporation............................. 370,000
100,000 Southern Pacific Funding Corporation (a)................ 1,662,500
----------
2,032,500 6.33
----------
MULTILINE INSURANCE
35,000 USF&G Company........................................... 840,000 2.62
----------
OIL AND GAS EXPLORATION
100,000 Oryx Energy Company (a)................................. 2,112,500 6.58
----------
<PAGE>
THE FAIRMONT FUND
SCHEDULE OF INVESTMENTS
(UNAUDITED)
JUNE 30, 1997
INVESTMENTS IN SECURITIES (CONTINUED)
COMMON STOCKS (SHARES) VALUE PERCENT
- ---------------------- ----- -------
PAPER PRODUCTS
100,000 Corporate Express Inc (a)............................... $ 1,443,750 4.50%
----------
PASSENGER TRANSPORTATION
150,000 Greyhound Lines Inc (a)................................. 675,000 2.10
----------
PERSONAL SERVICES
45,000 Regis Corporation....................................... 1,063,125 3.31
----------
PHARMACEUTICALS
38,000 Novartis AG............................................. 3,054,250 9.51
----------
RETAIL STORES
100,000 Strouds Inc (a)......................................... 175,000 0.55
----------
SAVINGS INSTITUTIONS
70,000 Dime Financial Corporation.............................. 1,785,000
20,000 Great Financial Corporation............................. 702,500
65,000 IMC Mortgage Company (a)................................ 1,080,625
30,000 Mechanics Savings Bank (a).............................. 566,250
----------
4,134,375 12.88
----------
SHOES
26,000 Timberland Company (a).................................. 1,677,000 5.22
----------
TELEPHONE COMMUNICATIONS
50,000 Telex Chile SA.......................................... 281,250 0.88
----------
WOMEN'S APPAREL
20,000 Talbots Inc............................................. 680,000 2.12
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TOTAL COMMON STOCKS (Cost $22,926,100)........................... 29,419,875 91.62
BANK REPURCHASE AGREEMENT
With Star Bank NA of Cincinnati, issued 6/30/97 due 7/1/97,
fully collateralized by GNMA, 6.00%
due 5/20/22 (Cost $3,862,000)....................................... 3,862,000 12.03
---------- ---------
TOTAL INVESTMENTS (Cost $26,788,100)............................. 33,281,875 103.65
OTHER ASSETS LESS LIABILITIES.................................... ( 1,172,813) ( 3.65)
---------- ---------
NET ASSETS.................................................. $ 32,109,062 100.00%
========== =========
<FN>
(a) Common stocks which have not declared a dividend in 1997.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
THE FAIRMONT FUND
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
JUNE 30, 1997
ASSETS
<S> <C> <C>
INVESTMENTS IN SECURITIES, At Value (Note 2)
Common stocks (Cost $22,926,100)...................................$ 29,419,875
Bank repurchase agreement........................................... 3,862,000
-----------
Total investments in securities.........................................................$ 33,281,875
CASH ............................................................................................ 18,464
RECEIVABLES
Investment securities sold.......................................... 113,246
Dividends........................................................... 11,454
Interest ........................................................... 563
-----------
Total receivables....................................................................... 125,263
-----------
Total assets....................................................................... 33,425,602
LIABILITIES
PAYABLES
Investment securities purchased....................................$ 1,201,135
Shares redeemed..................................................... 72,356
Management fee (Note 3)............................................. 42,477
Other ........................................................... 572
-----------
Total liabilities....................................................................... 1,316,540
-----------
NET ASSETS ...................................................................................... $ 32,109,062
============
NET ASSETS CONSIST OF
Capital stock (1,075,298 shares outstanding) (Note 8).......................................$ 25,329,338
Accumulated net realized gains on investments............................................... 365,008
Net unrealized appreciation on investments (Note 5)......................................... 6,493,775
Undistributed net investment loss........................................................... ( 79,059)
NET ASSETS $..................................................................................$ 32,109,062
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
($32,109,062 divided by 1,075,298 shares)..................................................$ 29.86
===========
</TABLE>
See accompanying notes.
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<TABLE>
<CAPTION>
THE FAIRMONT FUND
STATEMENT OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1997
<S> <C>
INVESTMENT INCOME (Note 2)
Dividends...................................................................................$ 104,962
Interest .................................................................................... 63,848
-----------
Total investment income.................................................................. 168,810
EXPENSES
Management fee (Note 3)...................................................................... 247,869
-----------
Net investment loss................................................................. ( 79,059)
-----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS (Note 2)
Net realized gains from investment transactions.............................................. 738,646
Net change in unrealized appreciation on investments......................................... 3,015,752
-----------
Net realized and unrealized gains on investments......................................... 3,754,398
-----------
Net increase in net assets resulting from operations ............................... $ 3,675,339
============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
THE FAIRMONT FUND
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1997 AND YEAR ENDED DECEMBER 31, 1996
1997 1996
---- ----
<S> <C> <C> <C> <C>
FROM OPERATIONS
Net investment loss............................................ $( 79,059) $( 178,912)
Net realized gains on investments............................... 738,646 3,637,050
Net change in unrealized appreciation
on investments.............................................. 3,015,752 ( 765,433)
------------- ------------
Net increase in net assets
resulting from operations................................... 3,675,339 2,692,705
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 4)
Distributions from net investment income........................ 0 ( 3,273,575)
------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 8) SHARES SHARES
---------- --------
Proceeds from sale of shares.................... 34,417 927,740 90,818 2,591,421
Shares issued in reinvestment
of distributions............................ 0 0 119,600 3,163,405
Payments for shares redeemed.................... ( 120,797) ( 3,225,021) ( 92,010) (2,633,953)
---------- ------------- ----------- ------------
Net increase or decrease in net assets
from capital share transactions............. ( 86,380) ( 2,297,281) 118,408 3,120,873
=========== ------------- ========== ------------
Net increase in net assets.................................. 1,378,058 2,540,003
NET ASSETS
Beginning of year............................................... 30,731,004 28,191,001
------------- ------------
End of period..................................................$ 32,109,062 $ 30,731,004
============= ============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
THE FAIRMONT FUND
FINANCIAL HIGHLIGHTS
(UNAUDITED)
(For a Share Outstanding Throughout Each Period)
Years Ended
Six Months ------------------------------------------------------
Ended December December December December
June 30 31 31 31 31
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............$ 26.45 27.02 24.06 22.43 19.41
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income......................... ( .12) ( .10) ( .08) ( .16) ( .14)
Net Gains or Losses on Securities
(both realized and unrealized)............ 3.53 2.67 6.80 1.79 3.16
------- -------- ------- ------- --------
Total From Investment Operations............ 3.41 2.57 6.72 1.63 3.02
LESS DISTRIBUTIONS
Dividends (from net investment income)........ .00 .00 .00 .00 .00
Distributions (from capital gains)............ .00 3.14 3.76 .00 .00
Returns of Capital............................ .00 .00 .00 .00 .00
------- -------- ------- ------- --------
Total Distributions......................... .00 3.14 3.76 .00 .00
Net Asset Value, End of Period..................$ 29.86 26.45 27.02 24.06 22.43
======= ======== ======= ======= ========
TOTAL RETURN..................................... 25.78%(a) 9.52% 27.92% 7.27% 15.56%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000s).............. $ 32,109 $ 30,731 $ 28,191 $ 22,195 $ 18,884
Ratio of Expenses to Average Net Assets.......... 1.63% (a) 1.66% 1.70% 1.74% 1.78%
Ratio of Net Income to Average Net Assets........ ( .52)%(a) ( .59)% ( .55)% ( .79)% ( .66)%
Portfolio Turnover Rate.......................... 2.09 (a) 2.37 2.47 2.75 1.55
Average Commission Rate.......................... .0620 .0570
<FN>
(a) Computed on an annualized basis.
</FN>
</TABLE>
See accompanying notes.
<PAGE>
THE FAIRMONT FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 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.
(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. The Adviser also pays The Fund's
officers' salaries. 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 $247,869 for the six months ended June 30, 1997.
<PAGE>
THE FAIRMONT FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 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 $206,545 for
the six months ended June 30, 1997.
Certain officers and/or Trustees of The Fund are officers of the Adviser.
(4) Distributions to Shareholders
No distributions to shareholders were declared for the six months ended June 30,
1997. The following is a summary of distributions to shareholders for the year
ended December 31, 1996.
<TABLE>
<CAPTION>
PERIOD PAID PER SHARE
ENDED DATE DECLARED IN CASH REINVESTED TOTAL AMOUNT
----- ------------- ------- ---------- ----- ------
<S> <C> <C> <C> <C> <C>
12/31/96 DECEMBER 31, 1996 $110,169 $3,163,405 $3,273,574 $3.14
</TABLE>
(5) Investments
For the six months ended June 30, 1997, the cost of purchases and proceeds from
sales of investments, other than temporary cash investments, were $28,941,569
and $32,883,365, respectively.
Following is information regarding unrealized appreciation (depreciation) and
aggregate cost of securities based upon federal income tax cost at June 30,
1997:
<TABLE>
<CAPTION>
TAX COST
--------
<S> <C>
Aggregate gross unrealized appreciation for
all securities with value in excess of cost...................................$ 7,588,205
Aggregate gross unrealized depreciation for
all securities with cost in excess of value...................................( 1,654,341)
------------
Net unrealized appreciation........................................................$ 5,933,864
===========
Aggregate cost of securities.......................................................$ 23,486,011
===========
</TABLE>
(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.
(7) There are no reportable financial instruments which have any off-balance
sheet risk as of June 30, 1997.
(8) At June 30, 1997 an indefinite number of capital shares (no par value) were
authorized, and paid-in capital amounted to $25,329,338. Transactions in capital
shares were as follows:
<TABLE>
<S> <C>
Shares sold..................................... 34,417
Shares redeemed................................. ( 120,797)
--------
Net decrease.................................... ( 86,380)
--------
Shares outstanding:
Beginning of period.................... 1,161,678
-----------
Ending of period....................... 1,075,298
===========
</TABLE>
