SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
--
Pre-Effective Amendment No. / /
------- --
Post-Effective Amendment No. 26 /X/
------- --
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940
Amendment No. 27 /X/
(Check appropriate box or boxes.)
THE CAMELOT FUNDS (FORMERLY THE FAIRMONT FUND TRUST)- FILE NOS. 2-70825
-----------------------------------------------------------------------
AND 811-3139
------------
1346 SOUTH THIRD STREET, LOUISVILLE, KENTUCKY 40208
---------------------------------------------------
(Address of Principal Executive Offices) Zip Code
(Exact Name of Registrant as Specified in Charter)
Registrant's Telephone Number, including Area Code: (502) 636-5633
-------------
MORTON H. SACHS, 1346 SOUTH THIRD STREET, LOUISVILLE, KENTUCKY 40208
-------------------------------------------------------------- -----
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, 441 Vine Street, Cincinnati, Ohio 45202
Approximate Date of Proposed Offering:
It is proposed that this filing will become effective:
/_/ immediately upon filing pursuant to paragraph (b)
/X/ on April 30, 1999 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE FAIRMONT FUND
A SERIES OF
THE CAMELOT FUNDS
1346 South Third Street
Louisville, Kentucky 40208
(502) 636-5633
(800) 262-9936
PROSPECTUS
May 1, 1999
The Fairmont Fund seeks capital appreciation by investing in equity
securities that its Adviser believes are undervalued.
Member of 100% No-Load(TM) Mutual Fund Council.
LIKE ALL MUTUAL FUNDS THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF ACCURACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY
HOW THE FUND HAS PERFORMED
COSTS OF INVESTING IN THE FUND
HOW TO INVEST IN THE FUND
HOW TO SELL YOUR INVESTMENT
DETERMINATION OF NET ASSET VALUE
DIVIDENDS, DISTRIBUTIONS AND TAXES
MANAGEMENT OF THE FUND
ADDITIONAL INFORMATION ABOUT INVESTMENT TECHNIQUES,
RELATED RISKS AND THE FUND
FINANCIAL HIGHLIGHTS
- 2 -
<PAGE>
RISK/RETURN SUMMARY
OUR OBJECTIVE
The investment objective of the Fund is capital appreciation. The Fund
invests primarily in common stock of U.S. companies that its Adviser believes
are undervalued.
HOW WE SELECT INVESTMENTS
We choose our investments by carefully selecting securities that we
believe are reasonably priced and represent basic investment value. We seek
special opportunities for capital appreciation in securities that are selling at
a discount from historical prices and/or at below average price-earnings ratios.
In choosing these stocks for long term investments and for market timing
purposes, we use not only subjective judgment but also economic projections,
technical analysis and earnings projections.
We use an aggressive trading strategy to achieve our objective and
actively trade to obtain short term profits. We believe that favorable changes
in market prices are more likely to begin when securities are out of favor,
price-earnings ratios are relatively low, investment expectations are limited,
and there is little investor interest in the particular security or industry
involved. We may invest primarily in equity securities of small to medium-sized
U.S. companies, most of which are listed on a national exchange.
PRINCIPAL RISKS OF INVESTING IN THE FUND
All investments carry risks to some degree. The principal risks of
investing in the Fund are the market risks common to all equity investments and
the unique risks associated with each individual investment in the Fund's
portfolio. Market risks arise from changes in such things as general economic
conditions and political stability. Unique risks come from changes that affect a
specific investment such as corporate earnings or sales forecasts. In addition,
the stocks of small to medium sized companies are subject to certain risks
including:
- possible dependence on a limited product line, market, financial
resources or management group less frequent trading and trading with
smaller volume than exchange listed stocks, which may make it difficult
for the Fund to buy or sell the stocks greater fluctuation in value
than larger, more established company stocks
We try to reduce risk by carefully selecting our investments and diversifying
our portfolio.
Before investing, you should understand that:
- The value of the Fund's shares will fluctuate over time.
- You could lose money if you sell when the Fund's share price is lower
than when you invested.
- There is no assurance that the Fund will meet its investment
objective.
- Future returns will not necessarily resemble past performance.
The Fund may invest up to 25% of its assets in foreign securities
through the purchase of American Depository Receipts (ADRs). An ADR is a
certificate of ownership issued by a U.S. bank as
- 3 -
<PAGE>
a convenience to investors instead of the underlying foreign security which the
bank holds in custody. In general, foreign investments involve higher risks than
U.S. investments. Foreign markets tend to be more volatile than those of the
U.S. and bring increased exposure to foreign economic, political and other
events that can have a negative effect on the value of issuers in a particular
foreign country.
HOW THE FUND HAS PERFORMED
The chart and table below show the variability of the Fund's returns,
which is one indicator of the risks of investing in the Fund. The bar chart
shows changes in The Fund's returns from year to year over the past ten years.
The table shows how the Fund's average annual total returns (net of fees and
expenses) compare to those of the Russell 2000 Index. Of course, the Fund's past
performance is not necessarily an indication of its future performance.
[ insert bar chart with the following plot points: ]
1988 3.12
1989 6.84
1990 -22.13
1991 40.56
1992 14.04
1993 15.56
1994 7.27
1995 27.92
1996 9.52
1997 15.27
1998 -4.88
The highest return for a quarter was 24.82% (Q1, 1991); and the lowest return
was -20.83% (Q3, 1998).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
------ ------- -------- ----------------
<S> <C> <C> <C> <C>
The Fairmont Fund -4.88% 10.50% 9.77% 12.49%
Russell 2000 Index -2.54% 11.86% 12.91% 13.40%
</TABLE>
COSTS OF INVESTING IN THE FUND
The following table describes the expenses and fees that you may pay
if you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Sales Load Imposed on Purchases...................................None
Sales Load Imposed on Reinvested Dividends........................None
Redemption Fees...................................................None
- 4 -
<PAGE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
Management Fees..................................................1.68%
12b-1 Fees........................................................None
Other Expenses....................................................None
Total Fund Operating Expenses....................................1.68%
EXPENSE EXAMPLE:
The example below is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example uses
the same assumptions as other mutual fund prospectuses: a $10,000 initial
investment, 5% annual total return, constant operating expenses, and sale of all
shares at the end of each time period. Your actual expenses may be different.
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Your costs: $170 $528 $910 $1982
</TABLE>
HOW TO INVEST IN THE FUND
You can open a Fund account with a minimum initial investment of $1,000
and make additional purchases in any amount. We do not charge a commission or
sales fee on your purchases.
INVESTING BY MAIL. To open a Fund account by mail, send the attached
application, with a check made payable to The Fairmont Fund in the amount of the
purchase price, to the following address:
The Fairmont Fund
1346 South Third Street
Louisville, KY 40208
You can make additional purchases at any time by sending a check, with
your account number, to the above address.
INVESTING BY WIRE. You may purchase shares of the Fund by wiring your
investment directly to the Fund's custodian. Before you invest by wire, you need
to mail a completed application to us at the address above. Then, call the Fund
(502-636-5633) to obtain an account number and instructions. There is currently
no fee for receipt of wired Funds, but the Fund or custodian may charge one in
the future.
OTHER PURCHASE INFORMATION. You may purchase shares on any day that the
New York Stock Exchange is open for trading. We may reject any purchase request
in whole or in part. No request will be binding until we accept it. We will mail
you a statement after every transaction and each quarter.
TAX SHELTERED RETIREMENT PLANS. Since the Fund seeks capital
appreciation, you may want to purchase shares of the Fund for your tax sheltered
retirement plans, including: (a) Keogh (HR-10) Plans (for self-employed
individuals); (b) qualified corporate pension and profit sharing plans (for
employees); (c) individual retirement accounts (IRAs); and (d) tax deferred
investment plans (for
- 5 -
<PAGE>
employees of public school systems and certain types of charitable
organizations). We recommend that you consult with an attorney or tax adviser
regarding these plans.
Call us for information on the procedure to open an IRA. Custodial fees
for an IRA will be paid by redemption of Fund shares from the IRA unless you pay
these fees directly to the IRA custodian.
HOW TO SELL YOUR INVESTMENT
You may sell all or part of your shares on any day that the New York
Stock Exchange is open for trading. The proceeds of your sale may be more or
less than the purchase price of your shares, depending on the market value of
the Fund's securities at the time of your sale.
BY MAIL. To sell all or part of your shares, send us a written request
(to the address above) with the following information:
- your account number;
- the amount of money or number of shares being redeemed;
- the name(s) on the account; and
- the signatures of all registered account owners, signed as their
names appear on the original application.
In certain instances, we may require additional documents to insure proper
authorization.
BY PHONE. Under certain circumstances, you may also sell your shares by
telephone. Call us for additional information.
OTHER REDEMPTION INFORMATION. We will typically pay you within seven
days after receiving a proper redemption request. However, we will not mail any
proceeds unless your investment check has cleared the bank, which normally takes
seven days after deposit.
Because we must pay certain fixed costs to maintain your account, we
may require you to redeem all of your shares, after sixty day's notice, if
redemptions cause the value of your account to fall below $500. You may increase
the value of your account to $500 during that sixty day period to avoid
redemption. We may also redeem your shares if the Board of Trustees determines
that failure to do so may have materially adverse consequences to Fund
shareholders.
DETERMINATION OF NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset
value per share (NAV). The NAV is calculated at the close of trading (normally
4:00 p.m. Eastern time) on each day the New York Stock Exchange is open for
business. The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If
market prices are not available, or if an event occurs after the close of the
trading market that materially affects the values, assets may be valued at their
fair value.
- 6 -
<PAGE>
Requests to purchase and sell shares are processed at the NAV next
calculated after we receive your order in proper form.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS. The Fund typically distributes
substantially all of its net investment income in the form of dividends and
taxable capital gains to its shareholders every December. These distributions
are automatically reinvested in the Fund unless you request cash distributions
on your application or through a written request. Dividends paid by the Fund may
be eligible in part for the dividends received deduction for corporations.
TAXES. In general, selling shares of the Fund and receiving
distributions (whether reinvested or taken in cash) are taxable events.
Depending on the purchase price and the sale price, you may have a gain or a
loss on any shares sold. Any tax liabilities generated by your transactions or
by receiving distributions are your responsibility. Because distributions of
long term capital gains are subject to capital gains taxes, regardless of how
long you have owned your shares, you may want to avoid making a substantial
investment when the Fund is about to make a long term capital gains
distribution.
Early each year, the Fund will mail to you a statement setting forth
the federal income tax information for all distributions made during the
previous year. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your Fund
investment.
MANAGEMENT OF THE FUND
The Sachs Company, 1346 South Third Street, Louisville, Kentucky (the
Adviser), is the investment adviser to the Fund. In this capacity, the Adviser
manages the Fund's assets and makes its investment decisions. The Adviser has
provided investment advice to individuals, corporations, pension and profit
sharing plans, and trust accounts, since 1974. Morton H. Sachs, Trustee,
Chairman of the Board and Chief Executive Officer of the Fund, and President,
sole Director and Shareholder of the Adviser, has been responsible for the
day-to-day management of the Fund since its inception in 1981.
The Adviser pays all of the Fund's operating expenses (except brokerage
fees and commissions, taxes, interest and extraordinary expenses). During the
fiscal year ended December 31, 1998, the Fund paid the Adviser a fee equal to
1.68% of its average daily net assets. The Adviser is also a registered
broker-dealer and, in that capacity, receives brokerage commissions from the
Fund.
ADDITIONAL INFORMATION ABOUT INVESTMENT TECHNIQUES, RELATED RISKS AND THE FUND
The Fund's investment strategy of active and frequent trading will
result in a significantly higher portfolio turnover rate. This higher portfolio
turnover will result in correspondingly greater brokerage commission expenses
(which will lower the Fund's total return) and may result in the distribution to
shareholders of additional capital gains for tax purposes.
- 7 -
<PAGE>
For temporary defensive purposes, or when investment opportunities are
limited, the Fund may hold all or a portion of its assets in cash or securities
of other investment companies. The Fund may also hold obligations of the U.S.
Government, its agencies or instrumentalities or may enter into repurchase
agreements that are fully collateralized by such obligations. As a result of
engaging in these temporary or defensive measures, the Fund may not achieve its
investment objective.
The investment objective of the Fund may be changed without shareholder
approval.
YEAR 2000 ISSUE. Like other mutual Funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser or the Fund's various
service providers do not properly process and calculate date-related information
and data from and after January 1, 2000. This is commonly known as the "Year
2000 Issue."
The Adviser has taken steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to computer systems that are used and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact on the Fund. In
addition, the Adviser cannot make any assurances that the Year 2000 Issue will
not affect the companies in which the Fund invests or worldwide markets and
economies.
- 8 -
<PAGE>
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
For a share outstanding throughout each period.
<TABLE>
<CAPTION>
YEARS ENDED
--------------------------------------------------------------------------
December December December December December
31 31 31 31 31
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 27.68 26.45 27.02 24.06 22.43
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss............................ (0.27) (0.16) (0.10) (0.08) (0.16)
Net Gains or Losses on Securities
(both realized and unrealized)............ (1.08) 4.20 2.67 6.80 1.79
---- ----- ----- ----- -----
Total From Investment Operations............ (1.35) 4.04 2.57 6.72 1.63
LESS DISTRIBUTIONS
Dividends (from net investment income)......... .00 .00 .00 .00 .00
Distributions (from capital gains)............. .00 2.81 3.14 3.76 .00
Returns of Capital............................. .00 .00 .00 .00 .00
----- ----- ----- ----- -----
Total Distributions......................... .00 2.81 3.14 3.76 .00
Net Asset Value, End of Period.................... $ 26.33 27.68 26.45 27.02 24.06
======= ===== ===== ===== =====
TOTAL RETURN...................................... (4.88)% 15.27% 9.52% 27.92% 7.27%
- ------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000s)............... $ 23,839 $ 31,856 $ 30,731 $ 28,191 $ 22,195
Ratio of Expenses to Average Net Assets........... 1.68% 1.63% 1.66% 1.70% 1.74%
Ratio of Net Income to Average Net Assets......... (0.18)% (0.57)% (0.59)% (0.55)% (0.79)%
Portfolio Turnover Rate........................... 3.42 1.83 2.37 2.47 2.75
</TABLE>
- 9 -
<PAGE>
[BACK COVER PAGE]
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
Prospectus, contains detailed information on Fund policies and operation.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Funds' latest
semi-annual or annual fiscal year end.
Call the Fund at 800-262-9936 to request free copies of the SAI and the
Fund's annual and semi-annual reports, to request other information about the
Fund and to make shareholder inquiries.
You may also obtain information about the Fund (including the SAI and
other reports) from the Securities and Exchange Commission on their Internet
site at http://www.sec.gov or at their Public Reference Room in Washington, D.C.
Call the SEC at 800-SEC-0330 for room hours and operation. You may also obtain
Fund information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
- 10 -
<PAGE>
THE FAIRMONT FUND
-----------------
A Series Of
THE CAMELOT FUNDS
-----------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
MAY 1, 1999
-----------
This Statement of Additional Information ("SAI") is not a Prospectus.
It should be read in conjunction with the Prospectus of The Fairmont Fund dated
May 1, 1999. This SAI incorporates by reference the financial statements and
independent auditor's report from The Trust's Annual Report to Shareholders for
the fiscal year ended December 31, 1998 ("Annual Report"). A free copy of the
Prospectus and Annual Report can be obtained by writing The Fund at 1346 South
Third Street, Louisville, Kentucky 40208 or by calling The Fund collect at (502)
636-5633.
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
DESCRIPTION OF THE TRUST........................................................
INVESTMENT POLICIES.............................................................
OTHER RESTRICTIONS..............................................................
U.S. GOVERNMENT OBLIGATIONS.....................................................
INVESTMENT ADVISORY AGREEMENT...................................................
TRUSTEES AND EXECUTIVE OFFICERS.................................................
PORTFOLIO TRANSACTIONS AND BROKERAGE............................................
DETERMINATION OF NET ASSET VALUE................................................
TAXES ......................................................................
CUSTODIAN.......................................................................
TRANSFER AGENT..................................................................
AUDITORS
PERFORMANCE INFORMATION.........................................................
FINANCIAL STATEMENTS............................................................
1
<PAGE>
DESCRIPTION OF THE TRUST
------------------------
The Camelot Funds (The Trust) is an open-end investment company
established as a business trust under Kentucky law by Declaration of Trust dated
December 29, 1980. The Board of Trustees supervises the business activities of
the Trust. The Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of separate series. This Statement of
Additional Information provides information relating to The Fairmont Fund (The
Fund), which is a no-load, diversified series of the Trust established on
December 29, 1980.
Each share of a series represents an equal proportional interest in the
assets and liabilities belonging to the series. Upon liquidation of a series,
shareholders are entitled to share pro rata in the net assets of the series
available for distribution to shareholders. Shares of each series are fully paid
and have no preemptive or conversion rights. Kentucky law provides that no
assessment shall be made against the interest of any shareholder and no
shareholder shall be personally liable for any debts or liabilities incurred by
the Trustees or by The Trust.
Shareholders are entitled to one (1) vote for each full share held and
fractional votes for fractional shares held and may vote in the election of
Trustees and on other matters submitted to the vote of shareholders. Voting
rights are cumulative, which means that each shareholder has the right to
cumulate the voting power he possesses and to give one (1) nominee for Trustee
as many votes as the number of Trustees to be elected multiplied by the number
of his shares, or to distribute his votes on the same principle among two or
more candidates, as the shareholder desires. Shares are voted in the aggregate
and not by series, except when the matter to be voted upon affects only the
interest of a particular series.
As of February 24, 1999, no shareholder accounts exceeded 5%. As of
February 24, 1999, the Trustees and Officers of The Trust as a group owned of
record and beneficially 4.78% of the outstanding shares of The Fund.
INVESTMENT POLICIES
-------------------
The Fund has adopted the following investment policies, which may be
changed only with approval of a majority of the outstanding shares of The Fund.
As used in this Statement of Additional Information, the term "majority" of the
outstanding shares of The Fund means the lesser of (1) 67% or more of the
outstanding shares of The Fund present at a meeting, if the holders of more than
50% of the outstanding shares of The Fund are present or represented at such
meeting; or (2) more than 50% of the outstanding shares of The Fund.
1. BORROWING MONEY. The Fund may borrow money, if it borrows money (a)
---------------
from a bank, provided that immediately after such borrowing there is an asset
coverage of 300% for all borrowings of The Fund; or (b) from a bank or other
persons for temporary purposes only, provided that such temporary borrowings are
in an amount not exceeding 5% of The Fund's total assets at the time when the
borrowing is made. The Fund may enter into reverse repurchase transactions and
any other transactions which may be deemed to be borrowings, provided that The
Fund has an asset coverage of 300% for all borrowings and commitments of The
Fund pursuant to reverse repurchase and other such transactions.
2. PLEDGING. The Fund may mortgage, pledge, hypothecate or in any
--------
manner transfer, as security for indebtedness, any assets of The Fund if it is
necessary in connection with borrowings described in policy (1) above. For
purposes of the Statement of Intention below, margin deposits, security
interests, liens and collateral arrangements with respect to permitted
investments and techniques are not deemed to be a mortgage, pledge or
hypothecation of assets.
3. UNDERWRITING. The Fund may act as underwriter of securities issued
------------
by other persons if immediately thereafter the amount of its outstanding
underwriting commitments, plus the value of its investments in securities of
issuers (other than investment companies) of which it owns more than 10% of the
outstanding voting securities, does not exceed 25% of its total assets. This
limitation and the Statement of Intention are not applicable to the extent that,
in connection with the disposition of portfolio securities (including restricted
securities), The Fund may be deemed an underwriter under certain federal
securities laws.
4. REAL ESTATE. The Fund may purchase, hold or deal in real estate, and
-----------
may invest in securities which are secured by or represent interests in real
estate, mortgage-related securities or directly in mortgages.
5. LOANS. The Fund may make loans to other persons, including (a)
-----
loaning portfolio securities, (b) engaging in repurchase agreements, (c)
purchasing debt securities, and (d) making direct investments in mortgages. For
purposes of the Statement of Intention below, the term "loans" shall not include
the purchase of a portion of an issue of publicly distributed bonds, debentures
or other securities.
2
<PAGE>
6. MARGIN PURCHASES. The Fund may not purchase securities or evidences
----------------
of interest thereon on "margin." For purposes of this limitation and the
Statement of Intention below, (a) short term credit obtained by The Fund for the
clearance of purchases and sales or redemption of securities and (b) margin
deposits and collateral arrangements with respect to permitted investments and
techniques are not considered to be purchases on "margin." This limitation is
not applicable to activities that may be deemed to involve purchases on "margin"
by The Fund, provided that The Fund's engagement in such activities is
consistent with or permitted by the Investment Company Act of 1940, the rules
and regulations promulgated thereunder or interpretations of the Securities and
Exchange Commission, its staff or other legal authority.
7. SENIOR SECURITIES. The Fund may not issue senior securities. This
-----------------
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by The Fund, provided that The Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, the rules and regulations promulgated thereunder or
interpretations of the Securities and Exchange Commission, its staff or other
legal authority.
8. SHORT SALES. The Fund may not effect short sales of securities.
-----------
9. OPTIONS. The Fund may not purchase or sell put or call options.
-------
10. COMMODITIES. The Fund may not purchase, hold or deal in commodities
-----------
or commodities futures contracts.
11. CONCENTRATION. The Fund will not invest 25% or more of its total
-------------
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. Government, its
agencies and instrumentalities or repurchase agreements with respect thereto.
12. DIVERSIFICATION. As a diversified series of The Trust, The Fund
---------------
will not purchase the securities of any issuer if such purchase at the time
thereof would cause less than 75% of the value of the total assets of The Fund
to be invested in cash and cash items (including receivables), securities issued
by the U.S. Government, its agencies or instrumentalities and repurchase
agreements with respect thereto, securities of other investment companies, and
other securities for the purposes of this calculation limited in respect of any
one issuer to an amount not greater in value than 5% of the value of the total
assets of The Fund and to not more than 10% of the outstanding voting securities
of such issuer.
STATEMENT OF INTENTION. It is The Fund's intention (which may be
----------------------
changed by the Board of Trustees without shareholder approval) that it will not
engage in any of the investment practices permitted by (1)-(7) above in the
coming year, except borrowing for temporary purposes and repurchase
transactions. If the Board of Trustees determines that it would be appropriate
for The Fund to employ any of the other investment practices permitted by
(1)-(7) above, The Fund's Prospectus or Statement of Additional Information will
be amended with appropriate disclosure prior to The Fund engaging in the
practice.
With respect to the percentages adopted by The Fund as maximum
limitations in its investment policies, an excess above the fixed percentage
(except for the percentage limitation relative to the borrowing of money) shall
not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken.
Notwithstanding any of the foregoing policies or limitations, any
investment company, whether organized as a trust, association or corporation, or
a personal holding company, may be merged or consolidated with or acquired by
The Fund, provided that if such merger, consolidation or acquisition results in
an investment in the securities of any issuer prohibited by said paragraphs, The
Fund shall, within ninety days after the consummation of such merger,
consolidation or acquisition, dispose of all of the securities of such issuer so
acquired or such portion thereof as shall bring the total investment therein
within the limitations imposed by said paragraphs above as of the date of
consummation.
OTHER RESTRICTIONS
------------------
ILLIQUID SECURITIES. It is the current position of the staff of the
-------------------
Securities and Exchange Commission that The Fund may not invest more than 15% of
its net assets in illiquid securities, including restricted securities, real
estate, mortgages and nonpublicly offered debt securities. The Trust has made a
commitment, which may be changed by the Board of Trustees without shareholder
approval, to comply with the above restriction.
U.S. GOVERNMENT OBLIGATIONS
---------------------------
The Fund may invest in "U.S. Government obligations," which term refers
to a variety of securities which are issued or guaranteed by the United States
Treasury, by various agencies of the United States Government, and by various
3
<PAGE>
instrumentalities which have been established or sponsored by the United States
Government. The term is also deemed by The Fund to include participation
interests in U.S. Government obligations. Participation interests are pro-rata
interests in U.S. Government obligations held by others. Certificates of deposit
or safekeeping are documentary receipts for U.S. Government obligations held in
custody by others.
U.S. Treasury securities are backed by the "full faith and credit" of
the United States Government. Other U.S. Government obligations may or may not
be backed by the "full faith and credit" of the United States. In the case of
securities not backed by the "full faith and credit" of the United States, the
investor must look principally to the agency issuing or guaranteeing the
obligation for ultimate repayment, and may not be able to assert a claim against
the United States itself in the event the agency or instrumentality does not
meet its commitments. Furthermore, there can be no assurance that the United
States Government will provide financial support if not obligated to do so by
law.
Treasury securities include Treasury bills, Treasury notes, and
Treasury bonds. Government agencies which issue or guarantee securities backed
by the "full faith and credit" of the United States include the Government
National Mortgage Association and the Small Business Administration. Government
agencies and instrumentalities which issue or guarantee securities not backed by
the "full faith and credit" of the United States include the Farm Credit System,
the Federal Home Loan Banks, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation. The Fund may invest in securities issued
or guaranteed by any of the entities listed above or by any other agency or
instrumentality established or sponsored by the United States Government.
INVESTMENT ADVISORY AGREEMENT
-----------------------------
The Trust has entered into a Management Agreement (the Agreement) with
The Sachs Company, 1346 South Third Street, Louisville, Kentucky (the Adviser),
under which the Adviser manages The Trust's portfolios of investments subject to
the approval of the Board of Trustees.
The Adviser is an investment manager which has provided investment
advice to individuals, corporations, pension and profit sharing plans and trust
accounts since 1974, when it was formed as a Kentucky proprietorship. The
Adviser was incorporated in Kentucky in 1975, and its principal place of
business is in Louisville, Kentucky. The Adviser is a broker-dealer registered
under the Securities Exchange Act of 1934, and as a broker operates on a
fully-disclosed basis through Legg Mason Wood Walker, Inc., Conners & Co., Inc.,
or Maxus Securities Corporation.
Under the terms of the Agreement, The Fund pays the Adviser a fee
computed and accrued daily and paid monthly at an annual rate of 2% of the
average value of the daily net assets of The Fund up to and including
$10,000,000, 1-1/2% of such assets of The Fund from $10,000,000 to and including
$30,000,000 and 1% of such assets of The Fund in excess of $30,000,000;
provided, however, that the total fees paid during the first and second halves
of each fiscal year of The Trust shall not exceed the semiannual total of the
daily fee accruals requested by the Adviser during the applicable six month
period. Pursuant to the Agreement, the Adviser pays all operating expenses of
The Trust except brokerage fees and commissions, taxes, interest, expenses
incurred by The Trust in connection with the organization and registration of
shares of any series of The Trust established after May 7, 1987, and such
extraordinary or nonrecurring expenses as may arise, including litigation to
which The Trust may be a party and indemnification of The Trust's Trustees and
Officers with respect to the litigation.
For the fiscal years ended December 31, 1998, 1997 and 1996, the
Adviser received advisory fees of $449,641, $515,556 and $503,732, respectively.
The Trust pays no direct remuneration to any Officer of The Trust,
although Morton H. Sachs, by reason of his affiliation with the Adviser, will
receive benefits from the advisory fees and brokerage commissions paid to The
Trust's Adviser, The Sachs Company.
4
<PAGE>
TRUSTEES AND EXECUTIVE OFFICERS
-------------------------------
The Trustees and Executive Officers of The Trust and their principal
occupations during the last five years are set forth below. Each Trustee who is
an "interested person" of the Trust, as defined in the Investment Company Act of
1040, is indicated by an asterisk.
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME, ADDRESS AND AGE WITH TRUST DURING PAST FIVE YEARS
- --------------------- ---------- ----------------------
<S> <C> <C>
*Morton H. Sachs Trustee He is the President and sole
1346 South Third St. Chairman of the Board Director and shareholder of
Louisville, KY 40208 Chief Executive Officer The Sachs Company, The Trust's
Age: 65 Adviser.
Jennifer S. Dobbins Vice President She is a Vice President and
1346 South Third St. Assistant Secretary a Registered Principal of
Louisville, KY 40208 The Trust's Adviser.
Age:39
Inda M. Wangerin Secretary She is a Vice President and
1346 South Third St. Adviser.
Louisville, KY 40208
Age: 77
Louis T. Young Treasurer He is an employee of The
1346 South Third St. Trust's Adviser. Accountant
Louisville, KY 40208 of The Trust's
Age: 50
Raphael O. Nystrand Trustee Since 1978, he has been a
3015 Springcrest Drive Professor and Dean of the
Louisville, KY 40241 School of Education,
Age: 61 University of Louisville.
He was on leave from this
position to serve as
Secretary of Education and
Humanities for the
Commonwealth of Kentucky
during calendar year 1984.
Boyce F. Martin, III Trustee Since June 1992, he has been
400 West Market a Director and Treasurer of
32nd Floor Eli H. Brown & Sons, Inc., a
Louisville, KY 40202 real estate business; since
Age: 33 October 1995, he has been an
attorney at Brown, Todd &
Heyburn, PLLC; and since
October 1997, he has been a
Director of Jamison Door Co.,
a manufacturing company.
</TABLE>
The compensation paid to the Trustees of The Trust for the year ended December
31, 1998 is set forth in the following table:
Total Compensation from Trust
(The Trust is not in a fund complex)**
Name
Raphael O. Nystrand $4,000
Morton H. Sachs $0
Boyce F. Martin, III $1,000
** Trustee fees are Trust expenses. However, the Adviser makes the
actual payment because the management agreement obligates the Adviser to pay
(with limited exceptions) all of the operating expenses of the Trust.
5
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------
Subject to policies established by the Board of Trustees of The Trust,
the Adviser is responsible for The Fund's portfolio decisions and the placing of
The Fund's portfolio's transactions. In placing portfolio transactions, the
Adviser seeks the best qualitative execution for The Fund, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to The Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to The Fund and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and
economic analysis, and statistical services and information with respect to the
availability of securities or purchasers or sellers of securities. Although this
information is useful to The Fund and the Adviser, it is not possible to place a
dollar value on it. It is the opinion of the Board of Trustees and the Adviser
that the review and study of this information will not reduce the overall cost
to the Adviser of performing its duties to The Fund under the Agreement.
Research services furnished by brokers or dealers through whom The Fund effects
securities transactions may be used by the Adviser in servicing all of its
accounts and not all such services may be used by the Adviser in connection with
The Fund. Due to research services provided by brokers, The Fund directed to
brokers $2,084,021 of brokerage transactions (on which commissions were $5,250)
during the fiscal year ended December 31, 1998.
While The Fund does not deem it practicable and in its best interests
to solicit competitive bids for commission rates on each transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that the Adviser, in
its capacity as a registered broker-dealer, will effect substantially all
securities transactions which are executed on a national securities exchange and
over-the-counter transactions conducted on an agency basis. Such transactions
will be executed at competitive commission rates through Legg Mason Wood Walker,
Inc., Conners & Co., Inc., or Maxus Securities Corporation.
Transactions in the over-the-counter market can be placed directly with
market makers who act as principals for their own account and include mark-ups
in the prices charged for over-the-counter securities. Transactions in the
over-the-counter market can also be placed with broker-dealers who act as agents
and charge brokerage commissions for effecting over-the-counter transactions.
The Fund may place its over-the-counter transactions either directly with
principal market makers, or with broker-dealers if that is consistent with the
Adviser's obligation to obtain best qualitative execution. Under the Investment
Company Act of 1940, persons affiliated with The Fund such as the Adviser are
prohibited from dealing with The Fund as a principal in the purchase and sale of
securities. Therefore, The Sachs Company will not serve as The Fund's dealer in
connection with over-the-counter transactions. However, The Sachs Company may
serve as The Fund's broker in over-the-counter transactions conducted on an
agency basis and will receive brokerage commissions in connection with such
transactions. Such agency transactions will be executed through Legg Mason Wood
Walker, Inc., Conners & Co., Inc., or Maxus Securities Corporation.
The Fund will not effect any brokerage transactions in its portfolio
securities with the Adviser if such transactions would be unfair or unreasonable
to Fund shareholders, and the commissions will be paid solely for the execution
of trades and not for any other services. The Agreement provides that the
Adviser may receive brokerage commissions in connection with effecting such
transactions for The Fund. In determining the commissions to be paid to The
Sachs Company, it is the policy of The Fund that such commissions will, in the
judgment of The Trust's Board of Trustees, be (a) at least as favorable to The
Fund as those which would be charged by other qualified brokers having
comparable execution capability and (b) at least as favorable to The Fund as
commissions contemporaneously charged by The Sachs Company on comparable
transactions for its most favored unaffiliated customers, except for customers
of The Sachs Company considered by a majority of The Trust's disinterested
Trustees not to be comparable to The Fund. The disinterested Trustees from time
to time review, among other things, information relating to the commissions
charged by The Sachs Company to The Fund and its other customers, and
information concerning the commissions charged by other qualified brokers.
6
<PAGE>
Any profits from brokerage commissions earned by The Sachs Company as a
result of portfolio transactions for The Fund will accrue to Morton H. Sachs who
is the sole shareholder of The Sachs Company. The Agreement does not provide for
a reduction of the Adviser's fee by the amount of any profits earned by The
Sachs Company from brokerage commissions generated from portfolio transactions
of The Fund. For the fiscal years ended December 31, 1998, 1997 and 1996, The
Fund's portfolio transactions generated total brokerage commissions of $603,816,
$435,650 and $548,598, respectively. For the fiscal year ended December 31,
1998, The Sachs Company was paid $581,836 or 96% of the total brokerage
commissions for effecting (through Legg Mason, Conners & Co., or Maxus
Securities) 99% of The Fund's commission transactions. For the fiscal year ended
December 31, 1997, The Sachs Company was paid $372,542 or 86% of the total
brokerage commissions for effecting (through Legg Mason, Conners & Co. or Maxus
Securities) 98% of The Fund's commission transactions. For the fiscal year ended
December 31, 1996, The Sachs Company was paid $487,272 or 89% of the total
brokerage commissions for effecting (through Legg Mason or Conners & Co.) 98% of
The Fund's commission transactions.
While The Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. The Sachs Company will not receive reciprocal brokerage business as a
result of the brokerage business placed by The Fund with others.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to its objective of seeking best
qualitative execution of portfolio transactions, the Adviser may give
consideration to sale of shares of The Fund as a factor in the selection of
brokers and dealers to execute portfolio transaction for each series of The
Fund.
When The Fund and another of the Adviser's clients seek to purchase or
sell the same security at or about the same time, the Adviser may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for The Fund because of the increased volume of the
transaction. If the entire order is not filled, The Fund may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, The Fund may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. In the event that the entire blocked order is not
filled, the purchase or sale will normally be allocated [on a pro rata basis].
Transactions of advisory clients (including The Fund) may also be blocked with
those of the Adviser or any of its affiliates. The Adviser and its affiliates
will be permitted to participate in a blocked transaction only after all orders
of advisory clients (including The Fund) are filled.
For the fiscal year ended December 31, 1997, The Fund's portfolio
turnover rate was 250%. For the fiscal year ended December 31, 1998, The Fund's
portfolio turnover rate was 350%. This increase was due to The Fund's investment
strategy of active and frequent trading.
DETERMINATION OF NET ASSET VALUE
--------------------------------
The net asset value of the shares of The Fund is determined as of 4:00
p.m. Eastern time on each day The Fund is open for business. The Fund is open
for business on every day except Saturdays, Sundays and the following holidays:
New Year's Day, Martin Luther King, Jr. Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. For a
description of the methods used to determine the net asset value, see
"Determination of Net Asset Value" in the Prospectus.
TAXES
-----
The Fund has qualified, and intends to continue to qualify, under
Subchapter M of the Internal Revenue Code. By so qualifying, The Fund will not
be liable for federal income taxes to the extent its taxable net investment
income and net realized capital gains are distributed to shareholders. The Fund
is required by federal law to withhold and remit to the U.S. Treasury a portion
(31%) of the dividend income and capital gains distributions of any account
unless the shareholder provides a taxpayer identification number and certifies
that the taxpayer identification number is correct and that the shareholder is
not subject to backup withholding.
CUSTODIAN
---------
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202 has been
retained to act as Custodian of The Trust's investments. The Custodian acts as
The Trust's depository, safekeeps its portfolio securities and investments,
collects all income and other payments with respect thereto, disburses funds at
The Fund's request and maintains records in connection with its duties. Certain
investments may be held by a depository in the United States.
7
<PAGE>
TRANSFER AGENT
--------------
The Trust has entered into agreements with Maxus Information Systems,
Inc. (d/b/a Mutual Shareholder Services), 1301 East Ninth Street, Suite 3600,
Cleveland, Ohio, 44114 ("Maxus"), for Maxus to act as The Fund's transfer agent,
effective upon conversion of all records, and to provide The Trust with
accounting services, record-keeping, administration and shareholder service
functions. The conversion is expected to be completed in February or March,
1999. Until the conversion, the Trust acted as its own transfer agent and
dividend paying agent. To enable The Trust to perform these functions, The
Adviser provided computer services and personnel to The Trust. For its services
as fund accountant, Maxus receives an annual fee from the Adviser based upon the
average value of The Fund, with a maximum annual fee of $59,250. At The Fund's
current asset value, the annual fee is $30,500. For all other services provided,
Maxus receives from the Adviser an annual fee of $9.25 per shareholder (with a
minimum charge of $775 per month) for shareholders services provided and a
monthly fee of $12 per state for state registration and qualification of Fund
shares provided.
AUDITORS
--------
The firm of McCurdy & Associates CPA's, Inc., 27955 Clemens Road,
Westlake, Ohio 44145 has been selected as independent auditors for The Trust for
the year ending December 31, 1999. McCurdy & Associates CPA's, Inc. performs an
annual audit of The Trust's financial statements and provides financial, tax and
accounting consulting services as requested.
PERFORMANCE INFORMATION
-----------------------
AVERAGE ANNUAL TOTAL RETURN.
----------------------------
From time to time, The Fund advertises its "average annual total
return" for one, five and ten year periods, and for the period since inception
(September 2, 1981). Average annual total return figures are based on historical
performance and are not intended to indicate future performance. The "total
return" of The Fund refers to the dividends and distributions generated by an
investment in The Fund plus the change in the value of the investment from the
beginning of the period to the end of the period. The "average annual total
return" of The Fund refers to the rate of total return for each year of the
period which, when compounded over the period, would be equivalent to the
cumulative total return for the period. The dividends and distributions and the
principal value of an investment in The Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.
Average annual total return is computed by finding the average annual
compounded rates of return (over one, five and ten year periods, and since
inception) that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
OTHER PERFORMANCE INFORMATION.
- ------------------------------
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of The Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of The Fund or
considered to be representative of the stock market in general. For example, The
Fund's performance may be compared to that of the Standard & Poor's 500 Stock
Index, the Russell 2000 Index and the Dow Jones Industrial Average. The
investment performance figures for The Fund and the indices will include
reinvestment of dividends and capital gains distributions.
From time to time The Fund also advertises its rates of total return
and average annual total return for specified periods, including the period from
September 2, 1981 (date of initial public offering of shares), through a
specified month end. It also advertises the value of a $10,000 investment made
on September 2, 1981, as of a specified month end.
8
<PAGE>
<TABLE>
<CAPTION>
YEAR END VALUE OF
NET ASSET DIVIDENDS $10,000 TOTAL RETURN
YEAR ENDED VALUE(A) PAID (A) INVESTMENT (B) ONE YEAR SINCE INCEPTION (C)
- ---------- -------- -------- -------------- -------- -------------------
<S> <C> <C> <C> <C> <C>
12/31/81(c) $ 8.74 $ .00 $10,484 4.84%(c) 4.84%
12/31/82 11.02 .60 14,072 34.23% 40.72%
12/31/83 14.07 .74 19,093 35.68% 90.93%
12/31/84 14.76 .74 21,148 10.76% 111.48%
12/31/85 18.08 1.18 27,940 32.12% 179.40%
12/31/86 16.50 4.05 31,865 14.05% 218.65%
12/31/87 14.96 .26 29,388 -7.77% 193.88%
12/31/88 15.19 .24 30,306 3.12% 203.06%
12/31/89 16.02 .21 32,379 6.84% 223.79%
12/31/90 12.17 .30 25,212 -22.13% 152.12%
12/31/91 17.02 .09 35,439 40.56% 254.39%
12/31/92 19.41 .00 40,415 14.04% 304.15%
12/31/93 22.43 .00 46,704 15.56% 367.04%
12/31/94 24.06 .00 50,098 7.27% 400.98%
12/31/95 27.02 3.76 64,085 27.92% 540.85%
12/31/96 25.45 3.14 70,183 9.52% 601.83%
12/31/97 27.68 2.81 80,901 15.27% 709.01%
12/31/98 26.33 .00 76,955 -4.88% 669.55%
<FN>
(a) Per share data has been restated to reflect a three-for-one share
split on February 15, 1990 and a four-for-one share split on
November 30, 1986.
(b) Value at end of calendar year of $10,000 investment made on September
2, 1981.
(c) Not annualized and from the date of the initial offering of shares
(September 2, 1981).
</FN>
</TABLE>
The Fund's advertised rates of total return for specified periods and
the value of a $10,000 investment at the end of a specified period are based on
historical performance and are not intended to indicate future performance. The
rates of total return are calculated as indicated above for "total return" and
represent the cumulative total return for the specified period. For example, for
the one and two year periods, and for the period since inception, the cumulative
total returns through December 31, 1998 were, respectively: -4.88%, 9.64% and
669.55%. The average annual total returns are calculated as indicated above. The
dividends and distributions and the principal value of an investment in The Fund
will fluctuate so that a shareholder's shares, when redeemed, may be worth more
or less than the shareholder's original investment.
The Fund may include in advertisements data comparing performance with
other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., MONEY, INVESTOR'S
BUSINESS DAILY, BARRON'S, FORTUNE or BUSINESS WEEK). Performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. The Fund may also list its portfolio holdings in advertisements.
The Trust's annual report contains additional performance information that will
be made available upon request and without charge.
FINANCIAL STATEMENTS
--------------------
The financial statements and independent auditor's report required to
be included in the Statement of Additional Information are incorporated herein
by reference to the Trust's Annual Report to Shareholders for the fiscal year
ended December 31, 1998. The Trust will provide the Annual Report without charge
at written or telephone request.
9
<PAGE>
THE CAMELOT FUNDS
-----------------
PART C. OTHER INFORMATION
- ------- -----------------
ITEM 23. EXHIBITS.
- ------- ---------
(a) Articles of Incorporation.
(i) Copy of Registrant's Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective Amendment No. 24, is hereby
incorporated by reference.
(ii) Copy of Amendment No. 1 to Registrant's Declaration of Trust dated
June 1, 1981, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(iii) Copy of Amendment No. 2 to Registrant's Declaration of Trust
dated May 15, 1984, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(iv) Copy of Amendment No. 3 to Registrant's Declaration of Trust dated
October 28, 1986, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(v) Copy of Amendment No. 4 to Registrant's Declaration of Trust dated
April 28, 1988, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(vi) Copy of Amendment No. 5 to Registrant's Declaration of Trust dated
September 11, 1990, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(vii) Copy of Amendment No. 6 to Registrant's Declaration of Trust
dated July 29, 1998, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 26, is hereby incorporated by reference.
(b) By-Laws. Copy of Registrant's Amended and Restated By-Laws adopted
September 17, 1996, which was filed as an Exhibit to Registrant's
Post-Effective Amendment No. 23, is hereby incorporated by reference.
(c) Instruments Defining Rights of Security Holder. None (other than in
the Declaration of Trust, as amended, and By-Laws of the Registrant.)
(d) Investment Advisory Contracts. Copy of Registrant's Management
Agreement for The Fairmont Fund series with The Sachs Company (formerly
Morton H. Sachs & Co.) which was filed as an exhibit to Registrant's
Post-Effective Amendment No. 24, is hereby incorporated by reference.
(e) Underwriting Agreements. None
-2-
<PAGE>
(f) Bonus or Profit Sharing Contracts. None.
(g) Custodial Agreements. Copy of Registrant's agreement with the
Custodian, Firstar Bank, N.A. (formerly Star Bank, N.A.), Cincinnati,
Ohio which was filed as an Exhibit to Registrant's Post-Effective
Amendment No. 22, is hereby incorporated by reference.
(h) Other Material Contracts. None.
(i) Legal Opinion.
(i) Opinion of Brown, Cummins & Brown, which was filed with
Registrant's Form 24F-2 for the fiscal year ended December 31, 1996, is
hereby incorporated by reference.
(ii) Consent of Brown, Cummins & Brown Co., L.P.A. is filed herewith.
(iii) Opinion of John S. Greenebaum, which was filed with Registrant's
Form 24F-2 for the fiscal year ended December 31, 1996, is hereby
incorporated by reference.
(iv) Consent of John S. Greenebaum is filed herewith.
(j) Other Opinions. Consent of McCurdy & Associates CPA's, Inc. is
filed herewith.
(k) Omitted Financial Statements. None.
(l) Initial Capital Agreements. Copy of Letters of Initial Stockholders
of The Fairmont Fund series which was filed as an Exhibit to
Registrant's Post-Effective Amendment No. 24, is hereby incorporated by
reference.
(m) Rule 12b-1 Plan. None.
(n) Financial Data Schedule. None.
(o) Rule 18f-3 Plan. None.
(p) Powers of Attorney for the Registrant and its Trustees and
Officers, which were filed as an Exhibit to Registrant's Post-Effective
Amendment No. 23, are hereby incorporated by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
------- -------------------------------------------------------------
None.
-3-
<PAGE>
ITEM 25. INDEMNIFICATION
------- ---------------
Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and trustees to the extent
permitted by applicable law. The indemnification provisions are in
accordance with Investment Company Act Release No. 11330 (September 2,
1980).
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the Registrant pursuant to the provisions of
Kentucky law and the Registrant's Declaration of Trust and By Laws, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
------- ----------------------------------------------------
(A) The Sachs Company, 1346 South Third Street, Louisville, Kentucky
40208 (the "Adviser") is a registered investment adviser and a
registered broker-dealer. It has engaged in no other business during
the past two fiscal years.
(B) Morton H. Sachs is the President and sole director of the Adviser.
The following list sets forth the business and other connections of Mr.
Sachs:
(i) Partner, Windhurst Farm, 1346 South Third Street,
Louisville, Kentucky 40208.
(ii) Shareholder and officer of Premier Care, Inc., 1346
South Third Street, Louisville, Kentucky 40208.
ITEM 27. PRINCIPAL UNDERWRITERS
------- ----------------------
None.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
------- --------------------------------
The Registrant will maintain physical possession of the
Declaration of Trust, By-Laws and minute books. All other accounts,
books and other documents required to be maintained by section 31(a) of
the Investment Company Act of 1940 and the rules promulgated thereunder
will be maintained by the Registrant, Firstar Bank, N.A. (formerly Star
Bank, N.A.), 425 Walnut Street, Cincinnati, Ohio 45202 as Custodian for
the Registrant or Maxus Information Systems, Inc., 1301 E. Ninth
Street, Suite 3600, Cleveland, Ohio 44114.
-4-
<PAGE>
ITEM 29. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A OR B
------- -------------------------------------------------
None.
ITEM 30. UNDERTAKINGS
------- ------------
None.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Cincinnati, State of
Ohio on the 30th day of April, 1999.
THE FAIRMONT FUND TRUST
By: /S/ DONALD S. MENDELSOHN
---------------------------
DONALD S. MENDELSOHN
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
MORTON H. SACHS* Chairman of the
Board & Trustee
*By: /S/ DONALD S. MENDELSOHN
---------------------------
LOUIS YOUNG* Treasurer DONALD S. MENDELSOHN
Attorney-in-Fact
RAPHAEL O. NYSTRAND* Trustee
April 30, 1999
BOYCE F. MARTIN, III Trustee
<PAGE>
EXHIBIT INDEX
PAGE
----
1. Consent of Brown, Cummins & Brown Co., L.P.A.................EX-99.B10.1
2. Consent of John S. Greenebaum................................EX-99.B10.2
3. Consent of McCurdy & Associates CPA's, Inc......................EX-99.B11
BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J. W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121 OF COUNSEL
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 GILBERT BETTMAN
LYNNE SKILKEN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
JOANN M. STRASSER
PAMELA L. KOGUT
April 23, 1999
The Camelot Funds
1346 South Third Street
Louisville, Kentucky 40208
Gentlemen:
A legal opinion that we prepared was filed with your Form 24F-2 for the
fiscal year ended December 31, 1996 (the "Legal Opinion"). We hereby give you
our consent to incorporate by reference the Legal Opinion into Post-Effective
Amendment No. 26 to your Registration Statement (the "Amendment"), and consent
to all references to us in the Amendment.
Very truly yours,
/s/
Brown, Cummins & Brown Co., L.P.A.
BCB/jlm
John S. Greenbaum, P.S.C.
Attorney at Law
1930 National City Tower
Louisville, Kentucky 40202
(502) 585-1750
FAX (502) 581-1066
April 29, 1999
The Camelot Fund
1346 South Third Street
Louisville, Kentucky 40208
Gentlemen:
A legal opinion that we prepared was filed with your Form 24F-2 for the
fiscal year ended December 31, 1996 (the "Legal Opinion"). We hereby give you
our consent to incorporate by reference the Legal Opinion into Post-Effective
Amendment No. 26 to your Registration Statement (the "Amendment"), and consent
to all references to us in the Amendment.
Very truly yours,
/s/
Johnson S. Greenebaum, P.S.C.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to all references made to us in this Post-Effective Amendment No. 26
to The Camelot Fund's Registration Statement on Form N1-A.
/S/
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
April 27, 1999
