Form N-1A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 18
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20
Registrant:
C/FUNDS GROUP, INC.
(formerly CALDWELL FUND, INC.)
P.O. Box 622, Venice, FL 34284-0622
(800) 338-9477
Agent for Service:
Roland G. Caldwell, Jr.
250 Tampa Ave. W., Venice, FL 34285
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective
(check appropriate box):
Immediately upon filing pursuant to rule 485(b)
on (date) pursuant to rule 485(b)
X 75 days after filing pursuant to rule 485(a)
on (date) pursuant to rule 485(a)
_________________________________________________________________
_________________________________________________________________
Registrant has elected, under Rules 24(f)2, or Rule 24(f)1 if
appropriate, to register an indefinite number of shares and
thereunder declares that, in addition to the registration and
issuance of a total of 207,471 shares through December 31,
1996, for a total consideration, net of redemptions, of
$2,400,890, on which registration fees are fully paid, is added
an indefinite number of shares. A Rule 24(f)2 Notice has been
filed declaring shares sold for the calendar year ended
December 31, 1996.
Re: File #2-96218d, 1933 Act re registration of
C/FUNDS GROUP, INC.
File #811-4246, 1940 Act re registration of
C/FUNDS GROUP, INC.
A No-Load Fund Group
C/FUNDS GROUP, INC.
P. O. Box 622, Venice, Florida 34284-0622
Voice: 1(941) 488-6772 Toll Free: 1(800) 338-9477 Fax: (941)
496-4661
PROSPECTUS
September 15, 1997
C/Funds Group, Inc., "the Company", is a Florida corporation
registered and operating as a diversified open-end regulated
investment company that continuously offers its shares to the
general public in seven portfolio series (the "Funds"), each of
which has a different purpose and specific investment
objectives. Funds currently being offered by the Company to the
public are as follows:
1. C/FUND
2. C/GROWTH STOCK FUND
3. ADAMS EQUITY FUND
4. C/GOVERNMENT FUND
5. C/TAX-FREE FUND
6. C/COMMUNITY ASSOCIATION RESERVE FUND
7. C/FINANCIAL FUND
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Table of Contents
A Brief Description of the Funds 2
Financial Information 3
Capitalization and History 3
Performance and Expense Information 4
Custodian, Auditor and Distributor 5
Advisory Board 6
Fund Investment Objectives 7
C/Fund 7
C/Growth Stock Fund 8
Adams Equity Fund 9
C/Financial Fund 9
C/Government Fund 10
C/Tax-Free Fund 10
C/Community Association Reserve Fund 11
Investment Advisor 11
How to Buy Shares 12
How to Redeem Shares 13
Portfolio Transactions 14
Broker Allocations 14
Federal Income Tax Status 14
IRA and Retirement Accounts 15
Application Blank Insert
Custodian Investment Advisor
Caldwell Trust Company Omnivest Research
201 Center Road, Suite 2 Corporation
Venice, FL 34292 250 Tampa Ave. West
Voice: 1(941) 493-3600 Venice, FL 34285
Toll-Free: 1(800) 338-9476 Voice: 1(941) 485-
Fax: 1(941) 496-4660 0654
Toll-Free: 1(800)
338-9477
Fax: 1(941) 496-
4660
THIS PAGE LEFT INTENTIONALLY BLANK
A BRIEF DESCRIPTION OF THE FUNDS
C/FUND. This "total return" Fund is managed so as to seek to
attract conservative investors seeking a fair current income
plus some potential for appreciation. It invests in both stocks
and fixed-income securities in proportions as it deems
appropriate to achieving its primary objectives while
attempting to minimize risk of a decline in net asset value.
The mix between stocks and fixed investments changes from
time to time in response to changing market conditions with some
balance maintained most of the time within these two major
categories.
C/GROWTH STOCK FUND. This aggressively managed fund is managed
primarily so as to appeal to investors seeking the potential of
rapid appreciation in principal value. This requires Fund
investors to assume a higher degree of risk and more volatility
of net asset value. The Fund invests and maintains
substantially all of its assets in common stocks or equivalents
issued by more rapidly growing companies, both large and
small. Its portfolio will stay fully invested in equities most
of the time regardless of general market conditions, as it seeks
rapid appreciation in net asset value as its primary
investment objective. Stock selections are made using a variety
of research sources, including proprietary analytical
methodology to identify companies having management that appears
to understand how to, and is, managing actively and vigorously,
to add to its company's shareholder wealth on a regular and
systematic basis.
ADAMS EQUITY FUND. The investment objective of this Fund series
is to seek to achieve high total returns for shareholders
by investing primarily in selected common stocks. The
selection method used to identify issues to purchase is a
proprietary process developed by Mr. William Adams, sub-
advisor to this Fund's portfolio. The process he developed
involves a variety of inputs, including trading price momentum
for target company shares. Assets of the Fund series that are
not invested in stocks at any moment in time will be held in
short term interest-bearing investments until such time as
stock issues are identified for and selected for purchase. Only
rarely will any other fixed-income investments be acquired,
which if purchased, are most likely to be equity related by being
convertible or exchangeable into a common stock of the issuing
company. Current income and capital gains tax considerations
are of secondary significance to the investment strategy being
followed in managing this portfolio.
C/FINANCIAL FUND. The manager of this Fund's portfolio invests
its assets in common shares or equivalents of companies
engaged substantially in the banking, thrift, and related
diversified financial service businesses. The objective of
the Fund is to seek to earn high returns by selecting for
purchase shares in those companies the Fund manager believes to
have unusual prospects for rapid earnings growth and capital
accumulation and/or as a result of amalgamating with other
banks or financial service companies via mergers or equivalents
during this period of consolidation within the financial services
industry. Appreciation in value of its holdings is sought
with dividend yield only a secondary factor that is given
consideration by the manager of the Fund when investing Fund
assets.
C/GOVERNMENT FUND. This Fund is mainly for investors seeking
income and safety of principal. It invests substantially all
of its assets in obligations of the U.S. government or one or
more of its Agencies as it seeks to achieve the Fund's primary
objectives with a minimum of volatility in its net asset value.
Investing solely in governments offers the adviser the
opportunity to reduce the risk of price changes in its
portfolio of securities by employing portfolio strategies that
include yield curve timing and portfolio maturity step-
laddering to assist achieve the Fund's primary investment
objectives.
C/TAX-FREE FUND. This Fund is mostly for investors who are
seeking to enhance net spendable income after federal income
taxes. It invests substantially all assets in investment grade
municipal securities, mostly of 12 years maturity or less, that
pay interest that is federally tax exempt in the United
States. Its primary objective is to earn as high an income
as possible consistent with management's desire to minimize
fluctuation of net asset value.
C/COMMUNITY ASSOCIATION RESERVE FUND. This is a "specialty" fund
that is not offered to or available for purchase by the general
public. It is open to and intended as a repository exclusively
for "Community Associations" located in Florida and registered
and operating under the regulation of the State of Florida
Bureau of Condominiums, that desire to invest association
reserve funds safely while earning an income on funds higher
than is available on bank deposits and other similar money
market accounts. The Fund invests substantially all of its
assets in obligations of the U.S. government and/or its
Agencies. Its primary investment objective is to earn a high
income on association reserve funds with a minimum of
fluctuation in the Fund's daily net asset value so as to
preserve the desired safety and stability of statutory,
voluntarily-created reserve funds of association owners.
A fuller expression of the investment objectives of each Fund
is spelled out herein as well as in a companion statement of
additional information. This Prospectus is designed to provide
investors with concise information that an investor should
know about the Company and its Funds before investing. You
should retain this document for future reference. A Statement of
Additional Information for the Company and its Funds dated this
same date, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference, copies of
which are available without charge at the address and telephone
numbers shown above.
--------------------------------
FINANCIAL INFORMATION
The Company's latest Interim and/or Annual Financial
Statements for its Funds, including the Statement of Assets
and Liabilities, Statement of Operations, Statement of Changes in
Net Assets, Schedule of Fund Investments, Per Share Tables,
Notes to financial statements, and other supplementary
information if applicable, are incorporated by reference as an
integral part of this Prospectus. Financial statements are
provided to all as part of this Prospectus, except to existing
shareholders who have already received it. The most recently
published financial reports will be furnished without
charge upon request at the address on the cover of this
Prospectus.
--------------------------------
CAPITALIZATION AND HISTORY
The Company was organized October 24, 1984, and its entire
capitalization consists solely of 5 million shares of
authorized common stock with a par value of $.001 each. When
issued, each share or fraction thereof is fully paid, non-
assessable, transferable and redeemable. Fractional shares
are issued to three decimal places, but do not carry voting
rights. Shareholders have the right to vote for the election
of directors of the corporation and all have equal rights with
respect to voting except that the holders of shares of a
particular series will have the exclusive right to vote on
matters affecting only the rights of the holders of such series.
For example, holders of a particular series will have the
exclusive right to vote on any investment advisory agreement or
investment restriction that relates only to such series. The
holders of each series have distinctive rights with respect to
dividends and redemption which are more fully described in
this Prospectus and the statement of additional information.
Dividends are declared at the discretion of the Board of
Directors for each Fund, no less often than required for the
corporation to maintain qualification under SubChapter M of
the IRS code. In event of liquidation or dissolution, holders
of each series will receive pro-rata, subject to certain
rights of creditors, (a) the proceeds of the sale of the assets
held in the respective portfolio to which the shares of the
series relate, less (b) the liabilities of the series
attributable to the respectable portfolio. General corporate
liabilities and assets, if any, will be fairly allocated
between the portfolios based on the respective liquidation value
of each portfolio upon liquidation of the Company.
Shareholders may vote their respective series shares at each
annual or special meeting and on any and all other matters on
which they are entitled to vote by law or under provisions of
the corporation's articles of incorporation. All shares are of
the same class, and each full share has one vote. The Company
is incorporated in the State of Florida. All shareholder
inquiries should be directed to the Company at the address and
telephone number listed on the cover page of this Prospectus.
The last Shareholder Meeting took place on March 31, 1997 at the
Venice Golf & Country Club, Venice, Florida and at that meeting
the shareholders approved and ratified the (1) Election of
directors, (2) Renewal of all investment advisor contracts for
all series with Omnivest Research Corporation for the next
year and (3) Appointment of Gregory Sharer and Stuart, CPA as
auditors. The results by series are tabulated below:
Series Outstanding Voted Percent
C/Fund 308,360 196,725 63.8%
C/Growth Stock 174,098 134,279 77.1%
Adams Equity 81,241 57,089 70.3%
C/Government 450,745 318,305 70.6%
C/Tax-Free 423,028 385,476 91.1%
C/Comm Assoc Reserve 64,259 53,865 83.8%
Total 1,501,731 1,145,735 76.3%
-------------------------------------
PERFORMANCE AND EXPENSE INFORMATION
PERFORMANCE: Performance history for the six (6) series
portfolio's for the calendar year 1996 is included in the
Company's Annual Report to Shareholder and is incorporated in
this Prospectus by reference. A discussion by Management of
the factors and strategies that affect the performance of each
Fund series throughout the year is likewise enclosed by reference
in the Investment Letters that are mailed to all shareholders
monthly. Financial statements are provided to all as part of
this Prospectus and are furnished without charge upon request.
EXPENSE: The following information is designed to help you
compare the fees and expenses charged by each Fund with those
of other mutual funds. As you know, all series funds in C/FUNDS
GROUP, INC. are "NO LOAD" funds, which means that you pay
no sales commissions to buy shares, nor does any Fund charge
for redeeming shares, nor does it have other deferred, hidden
or other charges. As a result all monies invested go to work
100% for you the investor, immediately. Examples of each Fund's
expenses are presented as follows:
C/ Admas C/ C/
Growth Equi- Finan- C/ Tax C/
C/ Stock ty cial Govt Free CAR
Fund Fund Fund Fund Fund Fund Fund
1. Shareholder
Transaction
Expenses:
Sales Commissions None None None None None None None
to Purchase
Shares
Commissions to None None None None None None None
Reinvest
Dividends
Redemption Fees None None None None None None None
2. Annual Fund Operating Expenses (Expenses paid out by the
Company before it distributes its net investment income, as
a percentage of each respective Fund's average net assets
for the last year ended):
Investment 1.0% 1.0% 1.0% 1.0% .5% .5% .0%1
Advisor's
Fee
12b-1 Fee None None None None None None None
Other Operating .90% .90% .36% 1.0%4 .52 .53 -2
Expenses
Total Fund 1.90% 1.90% 1.36% 2.0%4 1.02% 1.03% -3
Expenses
1 Absent Waiver, Advisor Expense Would Have Been 0.50%
2 Absent Waiver, Other Operating Expense Estimated to be .52%
3 Absent Waiver, Total Expense Estimated to be 1.02%
4 Estimated. C/Financial Fund has no operating history as of
the date of this prospectus.
C/FUND Example:
If you bought shares of C/FUND on January 1, for which you paid
$1,000, and if we assume a 5% annual return, and that all
shares were redeemed December 31st, you would pay the
following expenses over:
1 year 3 years 5 years 10
years
$20 $62 $106 $228
C/GROWTH STOCK FUND Example:
If you bought shares of C/GROWTH STOCK FUND on January 1, for
which you paid $1,000, and if we assume a 5% annual return, and
that all shares were redeemed December 31st, you would pay the
following expenses over:
1 year 3 years 5 years 10
years
$20 $62 $106 $228
ADAMS EQUITY FUND Example:
If you bought shares of ADAMS EQUITY FUND on January 1, for
which you paid $1,000, and if you assume a 5% annual return,
and that all shares were redeemed December 31st, you would pay
the following expenses over:
1 year 3 years 5 years 10
years
$14 $44 n/a n/a
C/FINANCIAL FUND Example:
I you had bought shares of C/FINANCIAL FUND on January 1, for
which you paid $1,000, and if we assume a 5% annual return, and
that all shares were redeemed December 31st, you would pay the
following expenses over:
1 year 3 years 5 years 10
years
$21 $65 n/a n/a
C/GOVERNMENT FUND Example:
If you bought shares of C/GOVERNMENT FUND on January 1, for
which you paid $1,000, and if we assume a 5% annual return,
and that all shares were redeemed December 31st, you would pay
the following expenses over:
1 year 3 years 5 years 10
years
$11 $33 $58 $128
C/TAX-FREE FUND Example:
If you bought shares of C/TAX FREE FUND on January 1, for
which you paid $1,000, and if we assume a 5% annual return,
and that all shares were redeemed December 31st, you would pay
the following expenses over:
1 year 3 years 5 years 10
years
$11 $33 $58 $129
C/C.A.R. FUND Example:
If you bought shares of C/CAR FUND on January 1, for which you
paid $1,000, and if we assume a 5% annual return, and that all
shares were redeemed December 31st, you would pay the following
expenses over:
1 year 3 years 5 years 10
years
n/a n/a n/a n/a
This expense information is designed to help you understand
the various costs and expenses customarily charged by mutual
funds. The example, however, should not be considered as
representative of past or future expenses or returns of the
Funds. Actual expenses and returns vary from year to year and
may be higher or lower than those shown. The advisor paid all
the expenses of C/CAR FUND and waived the advisors fee,
Therefore the Fund does not have an expense ratio.
-------------------------------------
CUSTODIAN, AUDITOR AND DISTRIBUTOR
Custodian: Caldwell Trust Company, 201 Center Road, Venice,
FL, 34292, serves as custodian of the assets of the Funds. As
custodian, the trust company is empowered under an agreement as
agent for the corporation: (1) to hold all assets, securities and
cash for each separate series fund of the Company in the name
of the trust company or in its nominee name or names and
account to each Fund regularly therefore; (2) to accept
instructions for the purchase, sale or reinvestment of all Fund
assets from the president of the Company or from the Fund's
investment advisers; and (3) to disburse funds for authorized
shareholder redemptions.
Auditor: Gregory, Sharer & Stuart, CPAs, 100 2nd Ave. S.,
St. Petersburg, FL 33701, Certified Public Accountants, has
been appointed as the independent public accountant and auditor
for the Company and its Funds. Neither the firm nor any of its
principals or staff holds any financial interest directly or
indirectly in the Company or in any of its Fund series.
Distributor: The Company acts as distributor of all shares
of its Fund series and maintains its own shareholder register
by series, acting as transfer agent for all common shares
outstanding.
-------------------------------------
ADVISORY BOARD
Under the terms of Article XIII of the Company's By-Laws, the
President with the approval of the Board of Directors, may
appoint up to 15 individuals to assist the President and
Directors to define and set overall investment strategies in an
attempt to reach the investment objective of each fund series
as stated. The following persons have been appointed to the
Company's Advisory Board to serve until a successor shall
have been appointed by the President. A brief description of
their respective backgrounds and affiliations is noted:
Name and Address Affiliations and Occupations
Arthur B. Laffer, Former Distinguished Professor
Ph.D. Pepperdine University,
Regents Square 1 California. Credited as one of
4275 Executive Sq. the architects of "supply-side"
Suite 330 economics. Professor Laffer was
La Jolla, CA 92037 the Chas. B. Thornton Professor
of Business at the University
of Southern California. He is
Chairman and Chief Southern
California. He is Chairman and
Chief Executive Officer, A. B.
Laffer, Canto Associates,
Lomita, CA., and was a Member
of the President Reagan's
Economic Policy Advisory Board,
Wash., DC.
Jude Wanniski Political/Economic consultant
86 Maple Avenue and President and Chief
Morristown, NJ 07960 Executive Officer,
Polyconomics, Inc., Morristown,
NJ. Author of the book "The
Way the World Works", a major
work on the "supply-side"
theory of economics, he is
considered as one of its
leading exponents and
spokesmen. Advisor to President
Bush, he is formerly Associate
Editor of the Wall Street
Journal, New York, NY.
Alan Reynolds Head of Economic Research,
P. O. Box 26-919 Hudson Institute Indianapolis,
Indianapolis, IN 46226 Indiana; former OMB Transition
Member, Reagan Administration,
Washington, DC
Alvin Moscow Writer and author of numerous
3249 Manor Ridge books, including "Collision
Gainesville, GA 30506 Course", "The Rockefeller
Inheritance", and others. Co-
author or consultant on "Six
Crises" by Richard Nixon,
"Managing" by Harold S. Geneen,
"As It Happened" by William
Paley, and "Every Secret Thing"
by Patricia Hearst. He is a
former journalist, NYC.
Ted C. Van Antwerp Philanthropist. Vice President
988 Blvd. of Arts and Director Asolo State
Sarasota, FL 33577 Theatre (Florida); Trustee, New
College; President, MVA, Inc.
Willett J. Worthy Jr. Vigneron, President and founder
5758 Madison Road , Grand River Wine Company,
Madison, OH 44057 Madison, Ohio. Former member
on the investment staff at the
Cleveland Trust Company,
Cleveland, OH.
Manuel Johnson, Ph.D. Economist, Johnson Smick
1133 Connecticut Ave. International Former Vice
NW Chairman of the Federal Reserve
Washington DC 20036 Board
-------------------------------------------
FUND INVESTMENT OBJECTIVES
C/FUND. A description of the investment objective and policies
of this Fund is best embodied in the statement that its
investment advisor pursues investment practices that seek to
maximize "total" investment returns to its shareholders.
Total return is defined herein to include both enhancement of
the value of its investment holdings by capital gains, realized
and unrealized, plus investment income from dividends and
interest. The Fund shall attempt to maximize total returns
primarily by investing a portion of its assets in shares of
common stocks or equivalents that would most commonly be
traded on the New York Stock Exchange or on NASDAQ. It intends
to acquire mostly equity investments when the advisor believes
market conditions indicate that probabilities for maximum total
returns will derive from such equity investments, and mostly
fixed-income investments when, in the opinion of the
investment advisor, probabilities are believed greater that
such returns will be garnered from owning investments having
less risk of price decline. The Fund may and intends to
invest and reinvest some or all of its assets accordingly so as
to try to limit an erosion of and enhance the stability of
the value of the Fund 's net asset value. Simply stated, the
Fund intends to buy and hold a reasonably balanced percentage
of its assets in common stocks or equivalents while equity
markets appear favorable, but may and is prepared to restructure
the portfolio to be more heavily invested in fixed-income
investments whenever it is believed by its investment advisor
that it would be appropriate to do so.
While the Fund intends to acquire regularly traded common
stocks, convertible preferred stocks and convertible bonds as
its primary form of equity investments, and intends to hold most
of its asset value in such investments most of the time, it
reserves unto itself the right to acquire other investments such
as government or A-rated or better corporate fixed-income
securities as it deems appropriate when and as it chooses. In
the case of non-rated fixed-income issues, the Fund may
purchase those issues that are deemed by the advisor to be of
comparable quality. There is no plan nor is it intended
that the Fund will buy, sell, hold or deal in options or
warrants in the ordinary course of business. It will seek to
acquire and hold securities that hold promise for appreciation
in value and that pay dividends at payout rates that are deemed
by the advisor to be commensurate with the type of business
involved. The Fund believes this investment approach may
maximize or exceed total average returns over time as
measured against the returns produced by the popular market
averages, such as the Dow-Jones Industrial Average and the
Standard and Poor's 500 Average. However, because total
returns earned from a portfolio of equity investments can be
significantly and adversely affected by an investment strategy
that retains positions in equity issues during periods of
major market weakness (often for reasons that may be
unavoidable for larger mutual funds due to the size of the
position held relative to the smaller size positions the Fund
will hold), the Fund's investment advisor plans to strive to
reduce the scope and frequency of such declines in its
asset value by reducing, even to total elimination if necessary,
the risk from equity investments in favor of fixed-income
investments during periods when protection of asset values is
deemed of paramount importance. During such periods, the Fund
will most often acquire highest quality fixed-income
investments, such as U.S. Government issues, money market
investments, and other investments of similar quality, each
having a duration until maturity that has been selected to
achieve the Fund's then-existing goals in that market
environment. It is intended that some portion of Fund assets
will always be invested in fixed investments like U.S. Government
notes or bonds. If the Fund can be successful in: (1) reducing
risk of decline in equity prices during periods of market
weakness; and (2) earning average or better total returns on
its investments during periods of general market strength, it
would be arithmetically true that growth in the value of the
assets would exceed the average return earned in the general
market as measured against the returns produced by the popular
market averages. While it is the intention of the Fund to seek
to achieve this objective, there can be no assurance to an
investor that it will be able to do so. An important element of
this investment approach requires that movement of monies from
one kind of investment to another be correctly timed by the
advisor, which will not always be possible. Investors in the
Fund shares should also be aware that risk is inherent when
investing in common stocks, such risks include the senior right
of lenders ahead of claims of common shareholders upon
liquidation of the issuing company, as well as the risk
that dividends may not be earned, declared or paid by its
directors, which may in turn cause significant fluctuations in a
common stock's market price. Although it is a policy of the
Fund that it will invest in issues of the type that are traded
most commonly on the New York Stock Exchange, this is not
meant to preclude the Fund from acquiring some shares of
companies or other business entities, some of which may trade
over the counter or are less well-known. This general policy
is believed by the Fund's advisor to be desirable because it
will allow flexibility as necessary to take advantage of
investment opportunities while adhering to a primary policy of
investing its assets in higher quality issues, primarily
securities listed on the major share exchanges or traded in the
over-the-counter market.
Diversification of investments as to type and as to the industry
or field of endeavor of the company involved is widely
acknowledged as one method to reduce risk of loss from holding
only a few issues. The Fund 's advisor, too, believes
diversification to be a worthy goal for reducing risks and
intends to follow such a policy most of the time. However,
because the Fund believes any severe restriction of
investment flexibility could at times prove a detriment to the
best interests of its shareholders, it retains the right to
invest and reinvest assets from time to time in issues only as
necessary to be in conformance with the Investment Company Act
of 1940, and to qualify itself under Subchapter M of the
Internal Revenue Code. (Please refer to Federal Income Tax
section of this Prospectus on page 14 for further details.)
For additional restrictions that the Fund has imposed upon
itself please refer to the appropriate section in the Fund 's
"Statement of Additional Information" on file with the
Securities and Exchange Commission and which is available to
shareholders upon request and without cost from the Fund by
telephoning or writing the company at the phone number/address
shown on the front cover of this Prospectus.
C/GROWTH STOCK FUND. The investment objective of this Fund is
maximum potential to shareholders for appreciation in
principal. The Fund purchases primarily common stocks or
equivalents, such as convertible preferreds or bonds, with
substantially all of the assets of the Fund all of the time.
Although some stock issues purchased will include shares issued
by companies having large capitalizations, a major portion of
Fund assets will be committed to owning shares of companies
that are deemed by the investment advisor to possess above
average growth prospects, regardless of the capitalization size
of the company or its annual sales volume. It is anticipated
that in seeking to meet these aggressive objectives shareholders
in this Fund should be aware that this may involve a higher
degree of price volatility. Accordingly, the net asset value per
Fund share is expected to experience above average
fluctuations. Portfolio turnover is not considered as a
constraining factor by the investment advisor, if and when
decisions are deemed by the advisor necessary in order to
either take profits or losses, or when advisor is seeking to
reemploy Fund assets into securities or investment positions
the adviser believes have greater prospects for meeting
Fund objectives. Accordingly shareholders should expect
the Fund to have higher turnover than for other funds having
longer term orientations. This investment approach may give rise
to frequent realizations of capital gains or losses by the
Fund, which are distributable annually to shareholders for
inclusion in their personal income tax return. (For
further information about capital gains tax status, see
"Federal Income Tax Status" section on page 14). Portfolio
income from dividends and interest is of secondary
consideration to this Fund's primary objective of principal
growth. Selection of companies in which to make equity
investments will be carried out under a disciplined approach that
will employ as one of its primary tools a quantitative,
computer-generated analysis of corporate financial information
that produces data that will be used to assist the investment
advisor determine whether management of a targeted company
appears to understand the importance to its shareholders of
the need to add to shareholder wealth, which the adviser's
research indicates ultimately creates a positive impact on
the market value of a company's outstanding shares. The
Fund's investment advisor believes this to be due importantly to
an enterprise's having earned a return on invested capital
that is consistently higher than its "cost" of invested capital.
When this can be ascertained to be taking place within a
company, shareholder wealth is increased and the prospects
become higher that the quoted price of its shares will at some
point reflect the wealth effect that has been generated. This
approach is deemed by the advisor to be an important ingredient
that will contribute to the Fund's ultimate success toward
meeting its objective of maximum growth of net asset value.
ADAMS EQUITY FUND. The investment objective of this Fund series
is to seek to outperform other similar mutual funds that also
invest a minimum of 65% of total assets in equities (commonly
referred to as common stocks). Equities represent a residual
share ownership interest in a for-profit enterprise, or are
preferred shares or fixed-income obligations of an issuer that
are convertible at some point in time at some price into
common stock of that same issuer. The Fund may invest in
shares of small, medium and large capitalization companies
without regard to size. The methodology that will be used to
manage this portfolio employs a valuation process in which a
companies earnings and earnings growth rate are compared with the
aid of a proprietary formula, to the rate of return on long
government bonds. This produces a present value for the
targeted company's shares within a dynamic process, wherein long
government bond returns and company earnings and growth rates
fluctuate. This value is then compared with the current market
for shares to determine if the shares are over or under
valued. Investments will be selected from among those
companies having an undervaluation in order to achieve the
Fund's investment objectives, often necessitating buy and
sell signals, which may or may not be acted upon, depending
upon many other factors at the time, such as the condition of
the general economy, the level of inflation then existing or
projected, and all other financial information about any given
company that the advisor believes to be of importance to the
decision making. Funds awaiting investment, either from new
cash received or from sale of investments, will be temporarily
invested in short term government securities or other money
market type fixed investments as are commonly purchased for
such purposes. Income from dividends and interest are of
secondary importance to this Fund, which seeks high total
returns as its primary goal for Fund shareholders. Portfolio
turnover is not considered as a constraining factor by the
investment advisor, if and when decisions are deemed by the
advisor necessary in order to either take profits or losses, or
when advisor is seeking to reemploy Fund assets into
securities or investment positions the adviser believes have
greater prospects for meeting Fund objectives. This
investment approach may give rise to frequent realizations of
capital gains or losses by the Fund, which are distributable
annually to shareholders for inclusion in their personal income
tax return. (For further information about capital gains tax
status, see "Federal Income Tax Status" section on page 14).
Generally, shareholders should expect the Fund's turnover not to
exceed 150%.
C/FINANCIAL FUND This fund series portfolio invests
substantially all its assets all the time in equity securities of
both large and small public companies primarily engaged in the
financial services industry. Banks, thrifts and financial
service conglomerates that may also offer mutual fund,
insurance, or brokerage services are included in this sector
or industry, and are eligible for purchase by this Fund's
manager.
The widespread and on-going consolidation of the financial
services industry is deemed by the manager as likely to
continue for some time into the future as former boundaries
between the differing types of financial services become blurred
and/or integrated. The emergence and wide usage of electronic
capabilities and the linkage of worldwide financial
organizations competing actively for business has permanently
altered former barriers to entry and most financial service
companies are or are attempting to become full service
providers to a whole range of customers, including corporate,
individual, and institutional users of financial services. As
this trend continues, an increasing number of participants
are seeking to consolidate, merge, amalgamate or join together
by one method or another, in order to gain the efficiencies that
size offers them. During this period, keen analysis and
attention enables investment managers to identify what many have
come to believe are lucrative targets for probable merger, sale
or amalgamation.
The Fund seeks to locate both these candidates, because of the
enhanced values that usually flow from such transactions, and
other companies that are expanding themselves, either by external
methods, or internally by entrance into markets or related
businesses that allow them to grow more rapidly and more
profitably relative to the Economy as a whole. The Fund, by
focusing its investments in this rapidly changing sector,
intends to try to capitalize on these changes to produce
commensurate returns for its shareholders.
Shares of the companies in which the Fund invests may be both
large financial service companies, which have widely traded
shares, or in shares of smaller banks or thrifts that have more
narrow or limited markets for the company's outstanding
shares. Investments in the smaller companies will tend to
depend upon availability of shares for purchase and thus may be
less liquid when sale is contemplated. Illiquidity of the
Fund because of this investment strategy is not believed by
the manager to likely become a factor for investor concern in its
daily activities because of the manager's practices which
maintains adequate liquidity to meet probable shareholder daily
redemption requests for all but extraordinary periods. Generally,
shareholders should expect the Fund's turnover not to exceed
150%.
C/GOVERNMENT FUND. The investment objective of this Fund
series shall be to seek to earn higher interest rate
returns than are available from government-only money market
mutual funds in turn for accepting fluctuations in the Fund's
net asset value. Substantially all assets of the Fund will
be invested in U.S. Treasury issues or in obligations issued by
the various Agencies of the U.S. government. The maturities
of the issues acquired may change from time to time in
accordance with the views of the investment advisor in response
to his expectations as to the future trend of interest rates.
The investment advisor will seek to minimize changes in the
Fund's net asset value per share by making portfolio
adjustments from time to time. Notwithstanding this
objective, shareholders should be aware that shares of this Fund
will be subjected to price fluctuations similar to those
encountered when buying and holding government issues directly.
The reduction of price risk is a major item of importance to
the Fund's investment advisor, it being an expressed goal of
the Fund to provide a safe investment vehicle for investors
seeking to earn the higher income yields available on
government issues having maturities longer than one year's
duration. Although there can be no assurance this objective
can be achieved, various management practices will be
undertaken from time to time toward the goal of reducing or
minimizing net asset value volatility. The investment
advisor to the Fund intends to seek to hold the net asset value
per share as close as possible to its original issue price per
share by using several portfolio management techniques. One
will be to buy seasoned issues below or above par or face
value. Another will to step-ladder the portfolio so as to
have issues maturing in every year. There shall be no
restrictions on the investment advisor in respect to
maturities or terms of the actual government issues bought as
investments in the portfolio. However, it is planned and has
long been the inclination and practice of the Fund's manager to
buy and own government issues having maturities within the 2 to
10 year term range. Monies of the Fund that are of necessity
temporarily uninvested from time to time will be automatically
"swept" overnight by computer into a short term, government-
only money market fund as maintained and offered client's by
the Fund's custodian bank trust department. These type funds,
though technically classed as mutual funds, will be used by the
Fund: (a) because of the convenience they offer to earn
interest for short periods on funds in transit or on small
balances that are otherwise impractical to invest effectively;
and (b) because for all practical purposes they are unavoidable
in the modern world of bank custodianship. It is the intention
of the Fund to invest all available monies directly in
government issues to the extent practical, economical, and
warranted by the then-existing interest rate climate as it
relates to the Fund's investment objectives.
C/TAX-FREE FUND. This Fund invests substantially all its
assets in securities issued by states, municipalities and
other governmental jurisdictions, mainly in the State of Florida,
that possess the legal capacity to borrow money by the issuance
of bonded indebtedness, on which the interest has been declared
by law to be exempt from Federal income tax to a lending
investor. The primary objective of the Fund is to earn its
shareholder investors a high after-tax current income while
attempting to minimize volatility of the Fund's net asset value.
The investment adviser's management approach is to attempt to
maintain stability of the value of the Fund's investment
portfolio by acquiring and holding a combination of issues, most
of which qualify as investment grade of varying maturities,
usually 12 years duration or less. Further to this goal, issues
may be purchased that are seasoned and pay a rate of interest
that may be higher or lower than the market rate generally
existing at the time on similar newly issued tax-free
obligations of like duration and quality. In those cases,
the prices paid on such issues would be more or less than par or
face value, which would give rise to either a gain or loss to
the Fund if held to maturity. The investment adviser believes by
managing a portfolio in this manner wherein a diversified list of
various issues are held and managed it will be possible to
reduce overall portfolio net asset value volatility over a period
of time. The Fund is actively managed by adjusting holdings to
reflect expected interest rate changes in general, shortening
average maturities when rates are rising and lengthening
maturities when rates are declining or expected to decline.
The combination of these two techniques should, in the opinion
of the investment adviser, allow the Fund to maintain more
stability in its net asset value than would be true if
securities of various maturities were acquired and held to
maturity without regard to interest rate fluctuations in the
market or without regard for anticipating the trend of future
interest rates. There can be no assurance that management will
be able to select issues of the type, quality and term that will
respond exactly as necessary to guarantee stability of the Fund's
net asset value, and accordingly investors should be aware
that some fluctuation in the Fund's share price will occur.
Obligations issued by the State of Florida carry a "AA" S&P
rating, with each municipality rated in accordance with the
financial condition of that particular municipality or taxing
district. Florida is now the fourth most populous of the 50
United States, is generally well regarded by debt rating
agencies because of its low debt default history and the very
strong financial condition of the State Treasury, tends to be
more oriented to tourism and retirees, is more rapidly growing
because of its climatic and geographic attractions, and has a
generally favorable tax structure for individuals and business,
with no individual income tax.
C/COMMUNITY ASSOCIATION RESERVE FUND. This specialty Fund is
offered exclusively to Florida-based "Community Associations"
that are registered with and are regulated by the Florida Bureau
of Condominiums and is not available for purchase by the
general public. Laws and regulations currently in place
narrowly restrict the investment of association "reserve"
funds, to safeguard these funds to ensure availability in the
future to pay for designated capital expenditures made by
association officers and directors on behalf of unit owners.
It is common for association reserve funds to be deposited
in insured banks and savings and loan accounts, which presents a
problem when reserve account balances of many large
associations exceed insurance limits, as often happens. This
Fund is specifically designed and managed to serve as a
repository for such reserve funds, and accordingly has set as
its primary objective the safety and stability of its net asset
value while seeking an income return higher than is available
from other forms of eligible investments. The Fund's
objectives and limitations qualifies it as an eligible
investment for such Association reserve funds under Florida
law by virtue of its limited investment universe, namely
obligations of the U.S. government or its Agencies. Issues
purchased and held by the Fund are of short to intermediate
duration most often having an average maturity of under 5 years
in order to minimize the fluctuation in the value of Association
reserve account balances. The primary objective of the Fund is
to seek to earn a rate of return on invested balances that is
higher than that being offered on insured deposit accounts
and banks and other eligible savings institutions. The
investment adviser manages the Fund's portfolio of government
obligations so as to seek to achieve the Fund's objectives while
confronting the conflicting problem created by increased price
volatility that is attendant to investing in issues having
longer than one-year's maturity. The degree of exposure to
price uncertainty can be closely ascertained mathematically for
intermediate term fixed obligations. When the price risk is
compared against duration in such a manner a high probability can
be achieved that the return rate from investing in higher
interest paying issues of longer maturity can be decided on the
basis of whether it is profitable enough to more than justify
and/or totally offset the added risk of loss from price
change. With this in mind, the adviser believes Fund objectives
are achievable and associations can earn higher returns on
reserve fund balances. Such balances are usually held for
longer term purposes, thus a better matching of risks and rewards
is achieved than that offered by the mismatch of maturities
that occurs when limiting investment of such long-term monies
balances to short-term non-fluctuating deposit accounts in
financial institutions. This Fund's goals will be sought by
also using portfolio management techniques which may include,
among others, yield-curve timing and portfolio maturity step-
laddering.
----------------------------------------------
INVESTMENT ADVISOR
The Company and its series of Funds retains Omnivest Research
Corporation ("ORC"), (formerly Caldwell & Co.)., a Florida
corporation wholly owned by Trust Companies of America, Inc.
which is controlled by Roland G. Caldwell and his family, as
investment advisor under annual contracts with each Fund
series. ORC has its registered offices at 250 Tampa Avenue
West, Venice, Florida, 34285. The Company shares facilities,
space and staff with both its custodian and with ORC. ORC is
registered under the Investment Advisors Act of 1940 and with the
Florida Division of Securities, Tallahassee, Florida, and as
such periodically files reports with both agencies, which are
available for public inspection. The advisor has been providing
services to and has had experience with the management of
investment companies since 1984.
Mr. William Adams, an officer of ORC, serves as sub-advisor
with responsibilities to assist with the analysis and selection
of specific investments for the Adams Equity Fund series. Mr.
Adams has been employed in the securities industry since 1975,
primarily as an account executive with several leading brokerage
firms where he assisted in the management of client
portfolios, both fixed and equity, for individual investors.
Although Mr. Adams has been active in such capacity
continuously during this period using his proprietary model to
make stock selections, he has had no previous experience in the
management of a mutual fund portfolio.
Mr. John Doe, a Chartered Financial Analyst ("CFA") has in excess
of 20 years experience with brokerage and other financial
service companies as a "Securities Analyst." He manages the
C/Financial Fund and is registered as a sub-advisor within ORC
and its regulatory agencies. He has had no previous mutual
fund management experience prior to being named as manager of
this Fund series.
Mr. Roland G. Caldwell is a principal officer and the primary
investment professional of ORC. He serves as President and a
director of both ORC and the Company. ORC, as advisor to all
fund series, receives a fee from C/Fund, C/Growth Stock Fund,
C/Financial Fund, and Adams Equity Fund series at the rate of 1%
per annum of the average daily market value of its net
assets, and at the rate of .5% per annum of the average
daily market value of C/Government Fund, C/Tax-Free Fund and
C/Community Association Reserve Fund. Although 1% of assets is
higher than fees paid by some other equity mutual funds, it is
generally believed by the advisor to be in line with that charged
by other advisors to funds having similar objectives. The fee
has also been established in recognition that the advisor pays
some costs of the administration of the Company's fund series
portfolios, including maintenance of accounting records and
shareholder ledgers, and that advisor has foregone receiving
any reimbursement of organizational expenses. Under terms of
the contract with the Company, the advisor is responsible
for payments to Advisory Board members, if any, and to
Directors of the Company who are affiliated as employees or
staff of the advisor. At present the Company leases mutual
fund software from C/Data Systems. C/Data is wholly-owned
by Trust Companies of America, Inc., a closed corporation
the majority interest of which is controlled by Roland Caldwell
and other family members. (For additional details, please refer
to the History of Investment Advisor section in the Statement
of Additional Information). Under terms of the advisory
agreement total expenses of each Fund series have been
voluntarily limited to no more than 2% of Fund net assets in
any one year. Should actual expenses incurred ever exceed
the 2% limitation, such excess expenses are reimbursed by
the advisor to the Fund and fully disclosed to Fund
shareholders in financial statements in accordance with
generally accepted accounting practices. The investment
management history of ORC and its principal, Roland G.
Caldwell, includes serving as portfolio manager and/or
investment advisor to corporations, individuals, retirement
accounts, charitable foundations, and insurance companies.
Mr. Caldwell has been active without interruption since 1958
in the field of investment research and/or portfolio
management, both privately and as an officer of large
domestic and foreign trust/banking institutions. As of the date
of this Prospectus the sole business and activity of ORC is to
provide investment management and advice under contract to the
Company's fund series.
---------------------------------------
HOW TO BUY SHARES
Investors may begin an investment in shares of any one or more
Fund series with no minimum, simply by completing an
application blank (form enclosed), signing it, then returning
it to the Company either in person or by mail, along with
their check made payable to the respective Fund name, (e.g.,
"C/Fund"), to P. O. Box 622, Venice, FL., 34284-0622.
Certified checks are not necessary. All purchases will be
made on the business day your completed application and check
are in the Company's possession and your order has been accepted.
Purchase of shares for your account are made on the day of
acceptance at the Net Asset Value ("NAV") per share of each
Fund as calculated that same day. The NAV is calculated each
day at the last known trade price on or after 4:00 p.m. NY
time, and on such other days as there is sufficient trading in
the Company's portfolio of securities to materially affect its
NAV per share. Securities in the Company's portfolio will
ordinarily be valued based upon market quotes. If quotations
are not available, securities or other assets will be valued by a
method which the Board of Directors believes most accurately
reflects fair value. The NAV per share is determined at each
calculation by dividing the total market value of all assets,
cash and securities held, less liabilities if any, by the
total number of shares outstanding that day. The Company
reserves the right to reject purchase applications or to
terminate the offering of shares made by this Prospectus if in
the opinion of the Board of Directors such termination and/or
rejection would be in the interest of shareholders. In the event
your check does not clear, your order(s) will be canceled and you
may be liable for losses or fees incurred, or both. There is
no minimum investment required for any purchase of shares.
Purchases may be made in person, by mail or by telephone,
providing mutually satisfactory telephone arrangements have
been made with the Company beforehand. The Company cannot
be held responsible for having acted on telephone instructions
it believed were being received in good faith. In order to
accommodate IRA investments and IRA rollovers, which are often
odd amounts, the Company offers to all IRA participants the
right to invest or rollover such IRA monies in the Company shares
in any amount that is eligible or allowed under current Internal
Revenue Service rules.
All shares purchased will be held in an account that is opened
for each shareholder and maintained by the Company for each Fund
and no share certificates will be issued unless specifically
requested in writing by the purchasing shareholder. Each
shareholder account will be credited with and will hold all
shares purchased and issued, including shares issued on payment
date as a result of the automatic reinvestment of dividends
and/or capital gain distributions. Those investors desiring
distributions in cash rather than in additional shares or who
wish share certificates to be issued may do so by making a
request in writing, providing all necessary documentation to the
complete satisfaction of the Company. Purchasers may telephone
the Company at 1(800) 338-9477 or write to the address shown on
the front cover of this Prospectus to obtain information as to
the documentation that would be required by the Company before
it will issue share certificates. Fractional shares will be
allocated to each share account for all purchases and
redemptions, including reinvested distributions. For example,
if a purchase of $1,000 is made at a NAV of $11.76 per share,
a total of 85.034 shares will be credited to your share
account on the purchase date. Fractional shares will be
disregarded for all voting purposes.
---------------------------------------------
HOW TO REDEEM SHARES
As an "Open-End" fund, the Company offers to stand ready to
redeem all or any portion of your shares of any Fund series
on any day that a NAV is calculated for that Fund and the price
paid to you will be the NAV per share next determined after
the Company receives your request for redemption. Unless
prior telephone arrangements have been made with the Company,
redemption requests must be in writing, signed by the owner(s)
in the exact same way as the shares are registered shown on the
original application form in the corporate records. In the case
of stock powers deposited beforehand by those desiring
telephone redemption privileges, the signature(s) must be
guaranteed by an official of a commercial bank, trust company,
or member firm on the New York Stock Exchange. If a share
certificate was issued, it must be deposited with the Company
before a redemption can be completed, along with all
necessary legal documentation, including but not necessarily
limited to, a written redemption request that has been signed and
the signature guaranteed as above indicated. Shareholders
wishing to expedite redemption requests by telephone may do
so, providing they have deposited a validly signed and guaranteed
stock power beforehand with the Company and providing no share
certificates have been issued. Payment for redeemed shares
will normally be made by the Company the next business day
immediately following the redemption date. The Company
reserves the right, however, to withhold payment up to 5
business days if necessary to protect the interests of the
Company or its shareholders. Redemption requests from
shareholders who have purchased shares within 15 days prior to
such redemption request shall not be eligible to receive
payment for such shares until such time as the Company has
ascertained, to its satisfaction, that funds originally
invested have cleared and are available for payout. A
shareholder who makes a small initial investment will be
subject to a mandatory redemption if such shareholder
redeems a portion of the investment, such that the remaining
investment is deemed by the Company to be too small to justify
the costs of maintaining an open account.
Although the Company makes no redemption charge for shares
redeemed, regardless of the date of purchase, it reserves the
right to refuse or discontinue sale of shares to any investor
who, in the opinion of the Company, is or may, by frequent
or short-term purchase and redemption request practices or by
other actions, disrupt normal Company operations or who
otherwise, by carrying out such practices, could adversely affect
the interests of the Company or Fund shareholders. Redemption
of shares, whether it be a normal voluntary redemption or an
involuntary redemption, may result in the shareholder
realizing a taxable capital gain or loss. Proceeds from
redemptions will be mailed to shareholders at the address to
which the account is registered by the Company.
-------------------------------------------
PORTFOLIO TRANSACTIONS
The policy of the Company is to limit each Fund's portfolio
turnover to transactions necessary to carry out the
respective investment policies of each Fund and/or to obtain cash
for each series, as necessary, for redemptions of its shares.
Portfolio turnover rates, which are the lesser of the total
purchases or sales on an annualized basis, divided by the
average total market value of the assets held, will vary from
period to period depending upon market conditions. The turnover
rate for equity portfolios tends to be higher than normal during
formative years, after which it is the advisor's goal to
minimize turnover by buying and holding rather than trading
securities to the extent that it remains consistent with the
objectives of the respective fund series portfolio. Turnover is
calculated for government securities purchases and sales if
maturing beyond 1 year from date of purchase. This tends to
increase the portfolio turnover percentages, which percentages
are reported for each respective fund series in the financial
statements incorporated herein by reference.
------------------------------------------
BROKER ALLOCATIONS
The placement of orders for the purchase and sale of portfolio
securities will be made under the control of the President
of the Company, subject to the overall supervision of the Board
of Directors. All orders are placed at the best price and best
execution obtainable, except that the Company shall be permitted
to and does select broker-dealer firms that charge low commission
rates, have demonstrated superior execution capabilities, and
which provide economic, corporate and investment research
services. In the opinion of the adviser, the Company, and its
Board of Directors, selections based upon such criteria serve
the best interests of the Company and Fund shareholders.
Commissions paid to firms supplying such research include the
cost of such services.
-----------------------------------------------
FEDERAL INCOME TAX STATUS
The Company intends to keep qualified all Funds for, and elect
the special tax treatment afforded, a qualifying "regulated
investment company" under SubChapter M of the Internal Revenue
Code. To qualify the Company must: (1) distribute to each
shareholder at least 90% of aggregate taxable net income of
each Fund at least annually; (2) invest and reinvest so that no
more than 30% of aggregate Fund profits are derived from gains
on the sale of securities held less than three months; and (3)
invest its portfolios so that 50% or more of Fund assets are
invested in security issues, no one of which exceeds 5% of
the value of Fund aggregate assets at purchase price. The
Company should and intends to qualify for such special tax
treatment due to stricter, self-imposed restrictions.
Distributions to the Fund shareholders are derived from interest
and dividends received in each Fund and from net long term
capital gains that each Fund realized during the tax year.
All distributions are normally construed to be dividends to
Fund shareholders subject to taxation, and with the
exception of dividends paid by the Tax-Free Fund, are taxable in
most instances as ordinary income when received, whether
received as cash or as additional shares. The information you
will require in order to correctly report the amount and type of
dividends and distributions on your tax return will be
provided by the Company early each calendar year, sufficiently in
advance of the date for filing the return. To avoid the Company
having to withhold a portion of your dividends, it is necessary
that you supply the Company with needed information, including
a valid, correct Social Security or Tax Identification Number.
Because federal tax laws, as amended by Congress in 1986,
require regulated investment companies to distribute
substantially all income earned and gains realized during the
year to avoid paying an added excise tax on undistributed
income, management intends to do so and report to Fund
shareholders accordingly and to reflect changes made by Congress,
if any, regarding the deductibility of certain fund expenses
by shareholders of mutual funds. Tax rules make it mandatory
that most individual shareholders report 100% of all income
earned on shares owned with no deduction allowed for certain
fees and expenses incurred, i.e., all distributions of
dividends, interest, and capital gains realized are normally
subject to tax. It is the intention of the Company, to the best
of its ability, to report all required information to Fund
shareholders on a timely basis after the close of each year-
end. Further changes or interpretations of rules made from time
to time by the Internal Revenue Service may serve to
temporarily or permanently alter existing tax treatment of Fund
distributions to shareholders. The Company makes every effort,
with the assistance of its tax advisors and independent public
accountants, to act in the best interest of its Fund shareholders
at all times. Such changes and/or delays in IRS rules make it
difficult for regulated investment company's and its shareholders
to be certain as to all interpretations at all times. The
Company disclaims any direct responsibility for timely
shareholder tax filings or payments.
-----------------------------------------------
IRA AND RETIREMENT ACCOUNTS
Those eligible to open and/or make deposits to an Individual
Retirement Account ("IRA"), or Self-Employed IRA ("SEP-
IRA"), may use the Company as custodian to hold shares of all
Fund series only, but not to hold any other form of investments,
securities or assets. A trust company or other eligible
custodian must be used to hold non-Fund related securities or
investments. Caldwell Trust Company, the Fund's custodian, is
eligible to serve as custodian for such purposes, and can and
will serve as custodian for shares of any Fund series upon
request. (For more information regarding such services and
fees, please call or write Caldwell Trust Company direct or the
Company at the address and phone number shown on the front
page of this Prospectus). For those who have or open an IRA
or SEP-IRA account, and wish to invest all or portion of their
deposits in shares of any Fund series may do so by opening a
"Self-Directed" IRA or SEP-IRA account with the Company.
Copies of the appropriate forms to open an account may be
obtained by writing or calling the Company. Retirement
plan and other "rollovers" are eligible to be rolled into an
IRA or SEP-IRA account with the Company, as are rollovers from
most other types of qualified retirement accounts. The Company
makes no charge of any kind to open, maintain or close an IRA
account invested 100% in shares of any Fund series. Monies
deposited into other types of profit-sharing, pension or
retirement plans, including Keogh accounts, may also be
invested in shares of any Fund series. However, the
qualification and certification of such "Plans" must first be
prearranged with a pension or tax specialist who is qualified to
assist and oversee plan compliance requirements. Although the
Company retains an expert to assist investors in establishing
such plans, it neither offers nor possesses the necessary
professional skills or knowledge regarding the establishment,
compliance or maintenance of IRS-qualified retirement plans.
The Company recommends that professional counsel be retained by
the investor for such purposes. (Note: Shares issued by the Tax-
Free Fund are not appropriate for purchase in IRAs and other
retirement plans, which are already exempt from paying Federal
income tax on income received).
APPLICATION
PURCHASE REQUEST:
Date:_______________________________
I authorize C/Funds Group, Inc. to open a New Account for
purchase of shares of the Fund series checked below in
accordance with these instructions and all applicable provisions
of this Application as outlined in the current Prospectus
which I have received.
Account Registration
If two or more co-applicants, all must sign, and Account will be
registered "JTWROS" (joint tenants with right of survivorship)
unless otherwise specified. Shareholder signature(s) required.
For telephone instructions, names and addresses must agree
exactly with current registration:
(Print Name of Applicant) Print Name of Co-applicant,if any)
(Street or Mailing Address
of Applicant(s))
(City, State, and Zip) (Print Social Security Number
or Tax ID of Applicant)
(Telephone Number) (Date of Birth of Applicant)
Type of Account (Circle Please)
IN Individual IRA IRA/SEP Account
JT Joint Tenants WROS CU Custodian/Agent
CO Corporation GDN Guardian
TR Trustee UGM Uniform Gift to Minors Act
Other
Legal Description of Account (Optional)
Check One or More:
__ Request To Open a New Account For:
__ Check Enclosed for $____ made payable to "C/FUND"
__ Check Enclosed for $____ made payable to "C/GROWTH STOCK FUND"
__ Check Enclosed for $____ made payable to "ADAMS EQUITY FUND"
__ Check Enclosed for $____ made payable to "C/FINANCIAL FUND"
__ Check Enclosed for $____ made payable to "C/GOVERNMENT FUND"
__ Check Enclosed for $____ made payable to "C/TAX FREE FUND"
__ Check Enclosed for $____ made payable to "C/COMMUNITY
ASSOCIATION RESERVE
FUND"
Under penalties of perjury, I certify (1) that the number shown
on this form is my correct taxpayer identification number and (2)
that I am not subject to backup withholding because (a) I have
not been notified that I am subject to backup withholding as a
result of failure to report all interest and dividends, or (b)
the Internal Revenue Service has notified me that I am no longer
subject to backup withholding.
X_________________________ X____________________________________
Signature of Applicant) (Signature of Co-Applicant, if any)
OPTIONAL AUTHORIZATION TO REDEEM BY PHONE
I hereby supply C/Funds Group, Inc. with a validly signed stock
power and authorize the Company to redeem shares from my
Account pursuant to my telephone instructions, and agree and
understand that I do not and cannot hold the corporation, its
officers or directors, nor any of its agents responsible for the
authenticity of telephone instructions.
Signed: X______________________ X______________________________
Insert
All Applications Are Accepted in State of Florida And Purchases
Made Under Florida Law And Were Not Solicited, Registered Nor
Accepted Under Any Other Jurisdiction.
15
STATEMENT OF ADDITIONAL INFORMATION
for
C/FUNDS GROUP, INC.
September 15, 1997
C/FUNDS GROUP, INC., ("the Company"), is an open-end
diversified management investment company that operates a
series of funds in seven portfolios ("the Funds") under the
names: C/FUND, C/GROWTH STOCK FUND, ADAMS EQUITY FUND,
C/FINANCIAL FUND, C/GOVERNMENT FUND, C/TAX-FREE FUND, AND
C/COMMUNITY ASSOCIATION RESERVE FUND.
This Statement of Additional Information is not a Prospectus but
rather should be read in conjunction with the Prospectus
dated the same date, a copy of which may be obtained without
charge from the Company by calling or writing its corporate
offices at the address and telephone numbers herein noted.
Table of Contents
Investment Objective and Policies 3
Investment Restrictions 7
History and Background of Investment Advisor9
Board of Directors 10
Director's Compensation Table 11
Investment Advisory Board 11
Brokerage Allocations 11
Net Asset Value Calculation 12
Purchase of Shares 12
Redemption of Shares 13
Federal Tax Status 14
Appendix 15
Financials Attached
Custodian Investment Advisor
Caldwell Trust Company Omnivest Research
201 Center Road, Suite 2 Corporation
Venice, FL 34292 250 Tampa Ave. West
Voice: 1(941) 493-3600 Venice, FL 34285
Toll-Free: 1(800) 338-9476 Voice: 1(941) 485-
Fax: 1(941) 496-4660 0654
Toll-Free: 1(800) 338-
9477
Fax: 1(941) 496-4660
THIS PAGE LEFT INTENTIONALLY BLANK
Investment Objective and Policies
Each Fund series portfolio has its own individual investment
objective, essentially coinciding with the implications of its
name, i.e.,
C/Fund is a "total return" fund that buys and owns
both common stocks or equivalents, and fixed-income
obligations in any proportion as deemed appropriate at
any given time by its adviser, seeking growth and
income;
C/Growth Stock Fund is substantially all invested in
common stocks or equivalents all of the time as
it seeks maximum growth of net asset value with
only minor concern for volatility;
Adams Equity Fund buys and holds equities (common
stocks or securities convertible into common stocks) as
its primary investment, its objective being to seek
growth in shareholder value with current income yield
of secondary importance;
C/Financial Fund invests portfolio assets primarily
in equity securities of issuers engaged in the
financial services industry, principally banks,
thrifts, and related diversified financial service
companies;
C/Government Fund invests substantially all of its
assets in fixed-income obligations issued by the U.S.
Government or one or more of its Agencies for safety of
principal and income;
C/Tax-Free Fund invests substantially all its assets
in fixed-income obligations of municipalities or
government bodies, mainly in the State of Florida,
authorized to issue such obligations on which the
interest paid is granted tax-exempt status when paid
to individual taxpayers, for safety of principal and
tax-free income; and,
C/Community Association Reserve Fund, which is a
specialized fund offered only to qualified community
associations in the State of Florida that wish to
invest association reserve funds for the safety and
income offered by an investment in this Fund's
portfolio of U.S. Government or Agency obligations.
Inasmuch as each Fund's specific objectives are described in
the accompanying Prospectus, the remainder of this explanation
shall attempt to outline in more detail some of the investment
characteristics and approaches that the investment adviser
believes are relevant to the adviser's style of investing in
respect to the types of securities and investments the Company's
Fund portfolios will be making as each seeks to meet its
respective investment objective, as follows:
Common Stocks or Equivalents -- Often referred to herein as
"equities", these kinds of investments either represent a
residual share ownership interest in a publicly-traded for-profit
enterprise, or are preferred shares or fixed-income obligations
of an issuer that are convertible at some point in time at some
price into common stock of that same issuer. Because equities
normally possess no fixed requirement to pay a dividend in any
pre-agreed contractual amount unless declared, and have no
maturity date when an investor can receive repayment in full
of an initial investment, the market price for such securities
tends to fluctuate up or down in reflection of the changing
prospects for the issuing enterprise and in reflection of
changing market conditions generally. Such open-endedness
makes equity investments definitionally more risky and thus
inappropriate for some investment purposes.
Likewise, because there is no fixed-income component to common
stocks (excluding convertible preferreds and fixed obligations
from this definition because of their hybrid nature), owners of
equities are in a position to either benefit or lose value
depending upon the success of the underlying enterprise, which
potential provides attraction to investors who are prepared to
accept such risks in exchange for the prospect that their
investment might appreciate in price and/or pay a lucrative
stream of dividends by comparison with alternative types of
investments.
The investment advisor to the Company's Fund portfolios
believes equities or equivalents are the singular most
attractive investment type available to investors in the modern
world, which view is based upon a superior long term record
of equity performance, the liquidity afforded by today's
marketplace, and the favorable prospects longer term for most
underlying enterprises in the economic environment presently
existing. Accordingly, for those investors able to afford such
risk of price fluctuation, even the potential of a total loss
of investment in the most extreme of cases, common stocks and
equivalents are expected to continue to be the primary form
of investment in Fund portfolios in which such investments are
authorized.
In broad terms the investment advisor categorizes for-profit
enterprises into two basic groups: (1) seasoned large
capitalization entities; and (2) newer smaller capitalization
entities. The features that help determine which category best
fits any given enterprise are: annual sales volume and the rate
of growth being experienced in sales; the market value of all
shares outstanding; the amount of debt owed; the
profitability of the enterprise; the length of time it has been
successfully in business; and, the kind of business in which it
specializes or is seeking to participate. In most instances,
the category applicable to a given enterprise will be
obvious, as for instance, with companies like General
Motors, AT&T, IBM, General Electric, and American Home Products,
which are seasoned, large for-profit, widely-held
enterprises that have long records to analyze. On the other
hand an enterprise that offers its shares into the public
market for the first time that has been in business only 3-5
years or so, is clearly an unseasoned enterprise that in all
likelihood has a relatively small annual sales volume and a
small market capitalization value.
There are also many less obvious examples. These include
companies that have been in business for many years, yet still
have relatively small market capitalizations and annual sales
volumes, may owe considerable debt as a percentage of total
capital, have unseasoned management, or offer a product or
service that is less well-defined or well understood. The
investment adviser makes decisions using all of the above
criteria as well as commonly accepted financial data like per
share figures, return rates on capital, etc.
Further and in addition to the customary kinds and sources of
financial information, the investment adviser also utilizes
computer generated data that provides useful information to the
adviser for determining if a subject enterprise, regardless of
size, is being managed by a team that appears to understand
how to, and the need to, add to shareholder wealth on a regular
and sustained basis. The inputs required to produce the
necessary data are proprietary to the investment adviser and its
sources. Among other factors, these inputs include an
enterprise's "cost of capital" and its rate of return on
invested capital. Shareholder wealth is believed by the adviser
to be created when the return on investment is exceeding its
cost of capital. Both current and past experience are
important determinants of whether an enterprise is succeeding on
this basis, which in turn is evidence to the adviser as to the
management's capabilities in this important regard.
On a general basis, the adviser invests C/Fund assets mostly
in shares of larger, more seasoned enterprises; C/Growth
Stock Fund mostly in shares of smaller, less seasoned
enterprises; Adams Equity Fund in stocks of companies of all
sizes, large, medium and small; and C/Financial Fund in companies
offering financial services to the general public.
When the adviser or sub-advisor to any of the funds believes an
enterprise is appropriate for investment in a particular Fund a
purchase decision will be made regardless that such
enterprise may be categorized by others in the investment field
as being of any particular class size by capitalization. In
general, however, the adviser adheres to a practice of
favoring seasoned issues in the more conservative Funds, and
issues that appear to possess faster growth prospects,
regardless of size, in the more aggressive Funds.
In the Adams Equity Fund, the manager relies heavily upon a
proprietary valuation process. This process is dynamic and
considers a company's growth rates and rate of return on assets
in concert with the changing interest rate levels on long
term U.S. government bonds. Using this dynamic process,
under and over valued securities are determined, which in turn
generates buy and sell signals that the manager may choose
to act upon. General market and economic conditions are also
given consideration when making final purchase or sale
decisions in this portfolio. During periods when sales
proceeds are not immediately reinvested in other equities the
funds will be held in high quality, short-term interest-
bearing investments until such time as equity candidates are
found for investment.
In the C/Financial Fund the manager purchases equity securities
that have been issued by companies providing financial
services. These companies are largely regulated by federal and
state government agencies. Accordingly, the prices of equity
securities of such issuers have traditionally been
constrained relative to general market equity issues that are
not subject to similar regulatory constraints on business
activities. The history of such regulatory controls began early
in the 20th Century after considerable economic upheaval led
to political pressure to increase controls toward the objective
of minimizing or reducing boom and bust economic conditions. A
key element of such regulation was to mandate the separation
of many of the various forms of financial services by
prohibiting providing companies from engaging in competing
activities, banking and securities underwriting being one of
the most notable separations. Near the end of this Century, as
financial service providers sought to compete in what many began
to see as closely allied financial services, the line between
the various businesses blurred sufficiently to encourage
regulators to permit limited crossovers by banks into
securities, mutual fund and insurance activities and vice versa.
As this trend began to accelerate in the past several years,
the securities of financial service companies began to
reflect these changes. This was evidenced by a movement toward
valuing the equity prices of financial service companies more
closely in line with the general level of equity share price
valuations for non-financial company equities. A continuation
of this trend is anticipated ahead, which the Fund manager
believes offers opportunities to locate and acquire issues of
financial service providers that have not fully reflected the
potentials of a target company. Detailed sector and company
analyses are undertaken by the manager of this Fund to identify
such opportunities for purchase, which securities constitute
the principal investments for this Fund's assets. Liquid
assets, such as money market and short term deposit type
investments, are maintained solely for liquidity purposes
and for funds awaiting more permanent investment into such
financial service company equity securities, or securities
convertible into such equity issues.
Fixed-Income Obligations (Taxable) -- The U.S. Treasury,
federally authorized Agencies and other governmental bodies,
public enterprises, and state, local and municipal authorities
all issue many kinds of fixed obligations, including Bills,
Notes, Bonds, Indentures, First Mortgage Obligations,
Participation Certificates, and others. Each of these kinds of
obligations have characteristics and terms unique to each
issue, which are complex and awkward to describe in detail
individually. The investment adviser, when seeking to make
fixed-income investments with Fund monies, examines all
relevant data known to the advisor as to term, rate of
interest, call features, conditions of repayment, collateral,
guarantees, etc., before making a purchase selection.
In the current environment, wherein U.S. government obligations
have come to dominate the fixed-income market, and wherein rates
of interest on most fixed-income obligations issued are related
or pegged in some way off rates on similar government
obligations, the advisor believes there is less need to seek or
invest in fixed-income investments that are non-government
related. Further, investors in general have become more risk-
averse in recent years, thus giving rise to a favor for fixed-
income investments that have some form of insurance or
government guarantee or backing. With the substantial growth
in the size of the government-related securities market due to
the borrowing needs of the U.S. Treasury and other Agencies of
the U.S. government, rates of interest being paid on such
issues are no longer significantly lower than rates being paid
on privately-issued fixed-income obligations of high
quality. For these and other reasons the investment adviser
to the Company and its Fund portfolios favors the purchase of
government-related type obligations, mostly Notes and Bonds, for
all Funds, most particularly those Funds where safety of
principal and income are primary objectives. Although there
is no prohibition against acquiring corporate fixed-income
obligations in C/Fund as part of its fixed-income component
from time to time, the adviser favors and intends to continue
to favor government-related issues, which possess superior
marketability to all other forms of fixed-income securities.
(Please refer to the Appendix to the this statement of
additional information for a further definition of quality as
defined by a major fixed-income rating agency).
Fixed-Income Obligations (Non-Taxable) -- Tax-free fixed-
income obligations are issued in many different types and
forms by a variety of qualified issuing jurisdictions in the
U.S. States, cities, counties, taxing districts, and other
similar jurisdictions each have features and enabling laws that
allow them to offer fixed-income obligations, the interest on
which is exempt from federal income taxes when paid to a
purchasing investor. Again, there are far too many individual
features to describe each in full detail herein. The
investment advisor intends to purchase issues in the C/Tax-Free
Fund that adviser believes possess those features and
characteristics that make them attractive and appropriate to
the objectives of that Fund. Like all fixed-income investments,
length of time to maturity, the quality of the issuer as
determined by its apparent ability to pay interest and repay
its obligations on a timely manner, and the general interest rate
environment greatly influence the market price of fixed-income
obligations. Accordingly, in keeping with the adviser's desire
and this Fund's objectives, close attention is paid to issue
quality, term until maturity, and the overall interest rate
outlook when making individual selections for purchase.
Although some non-rated issues may be acquired if and when
the adviser believes such issues would be rated high if they
were rated, it is the custom and a long-standing style of the
adviser to invest in and hold mostly investment grade issues
of medium to intermediate term maturities. The adviser
believes that whether an issue is seasoned or newly issued is
of less importance, except to the extent this may affect an
issue's liquidity, which the adviser views as highly important.
It is the intention, though not an obligation, to seek to make
the Tax-Free Fund exempt from the Intangibles Tax in Florida.
Total Return Concept -- It is the view of the investment advisor
to Company Funds that the concept of "total return" is an all-
important, though not well understood, factor affecting all
investors and asset managers in contemporary times. The adviser
further believes that most if not all managers of assets either
knowingly or unknowingly utilize the concept while seeking to
maximize returns for their respective clients, regardless of
type of investment used. The risk of loss of value due to price
change or the risk of loss of value due to a deterioration in the
financial health of the issuer are both taken into
consideration as elements that are vitally importantly
influences over the selection of investment types and
specific securities within each type. The goal of maximizing
portfolio returns with a minimum of risk taking is a universal
maxim within the investment community today. Accordingly, the
investment advisor formed and registered Caldwell Fund in 1985
(now C/Fund) with an express goal of seeking to maximize total
returns to its shareholders by adhering to a concept of
investing and reinvesting fund assets in varying proportions
in either fixed investments or equity investments according
to the adviser's view in respect to the immediate outlook for
each category ahead.
The basic outline of that strategy is contained in the following
paragraphs, and has some applicability to each Fund series in
some respects, constrained mainly by the limits of each Fund as
to the types of investments it is permitted to acquire and
hold. An edited and updated version of the original
description for C/Fund is provided here for reference and
information.
"The Fund and its adviser are of the opinion that
over time high total returns are mathematically
achievable if: (1) a portfolio is able to
minimize declines in the market value of its
investments during periods of sustained weakness in
stock prices (which prices inherently fluctuate in
value) by reinvesting a large percentage of its
investable assets and monies in fixed-income
investments during such periods; and (2) if it is
able to achieve average or better appreciation (as
measured against the popular market averages such as
the Dow-Jones Industrial Average and the Standard and
Poor's 500 Average), from a portfolio of common
stocks during periods when prices are rising. There
is, of course, no assurance that the investment
advisor will be able to achieve this objective.
"During periods when a portfolio is seeking
appreciation in the value of its investments versus
when it is seeking to protect asset value, it intends
to acquire securities of widely-held, well-known
companies with most of its assets, such securities to
consist primarily of shares of common stocks and
other securities that tend to increase or decrease in
price in reflection of their underlying value as a
security that is equivalent to or convertible into an
equity investment. During periods when protection of
asset values is deemed of paramount importance, the
investment advisor will most often acquire highest
quality investments, such as Treasury or Government
Agency issues, money market investments, and other
investments of similar quality, each having a duration
until maturity that has been selected to achieve then-
existing goals in that market environment. Because
market prices on fixed-income securities fluctuate
with changes in interest rates, with the percentage
change in market price being generally the greatest
the longer the maturity of the issue, opportunities
exist for investors to seek to make capital gains by
investing in fixed-income securities. Consistent
with an investment objective to seek to maximize total
return to shareholders, the investment advisor from
time to time may also choose to invest assets in
fixed-income securities in an attempt to achieve
appreciation in net asset value from capital gains
rather than primarily for the usual purposes of seeking
protection of asset values or to maximize current
income. If the investment advisor decides to acquire
fixed income investments it will confine its purchases
to bonds rated A or better by Standard & Poors (see
Appendix).
"Flexibility is a key requirement to achieving a
"total return" portfolio`s investment objective. One
of the advantages available to smaller investment
companies is being able to remove or add total
positions in the markets as it tries to achieve its
goal, without substantially or adversely influencing
the market value of individual issues being traded.
In modern day markets, the share position size that can
be bought or sold without disruptive consequences to
the market for such issues appears to be expanding.
Should this trend continue, as anticipated, constraints
that might today limit the size of the Fund's
portfolio because of its desire to retain trading
flexibility, will become less a factor. The Fund,
like all registered investment companies, reserves
the right to limit the size of its assets by
discontinuing sales of Fund shares at any time,
which its Board of Directors could decide to do at any
time if in their opinion they feel it would be
in the best interests of the Company and/or Fund
shareholders to do so in order to continue to adhere
to its stated objective, which requires that it have
an ability to sell and buy total security positions.
"Interest and dividend income is deemed by the
investment advisor to constitute a very important
portion of the total returns being sought from Fund
investments. Appreciation in share value
constitutes the other primary source of return that
is sought, and it is this portion of the return that is
viewed as a form of repayment for the risks of
price change that cannot be avoided when owning
securities, like common stocks, which constantly
change in price. The total return concept is
mindful of the important role that interest and
dividends must play if returns are to be enhanced.
Such recognition may at times require that shareholders
incur federal, state and/or local income taxes on a
significant portion of the annual distributions made
to them. It should be clear to shareholders that such
tax considerations will be secondary to its
objective of attempting to maximize total returns
when the investment advisor makes investment
decisions. This policy is partly based upon a belief
by the investment advisor that such taxes and tax rates
have only an indirect bearing on any single company's
attractiveness as an investment and partly because the
adviser is of the belief that tax rates in general are,
and should be, of declining importance to the
investment decision-making process, viewed in a widest
sense. Non-taxed portfolios, such as Individual
Retirement Accounts, Keogh and other pension plans,
are ideally suited for investing in one or more
Fund series of the Company for these and other
reasons."
Investment Restrictions
Under the terms of the By-laws of the Company and its
Registration Statement pursuant to the Investment Company
Act of 1940, the following investment restrictions were
adopted which cannot be fundamentally changed or amended except
by majority approval by vote of all outstanding shares of all
Funds, both individually and of the Company in total, as set
forth in Company By-laws and the Investment Company Act of
1940. Accordingly, no Fund of the Company will:
[A] Invest in the direct purchase and sale of real
estate.
[B] Invest in options, futures, commodities or
commodity contracts, restricted securities, mortgages,
or in oil, gas, mineral or other exploration or
development programs;
[C] Invest in foreign-based issuers that would
exceed 10% of the value of its net assets at market
value at the time of acquisition, except for issues
widely traded on exchanges or in markets domiciled
in the U.S., which may be held in any amount
permitted registered investment companies;
[D] Borrow money, except for temporary purposes, and
then only in amounts not to exceed in the aggregate 5%
of the market value of its total assets taken at the
time of such borrowing.
[E] Invest more of its assets than is permitted
under regulations in securities of other
registered investment companies, which restricts such
investments to a limit of 5% of the Company's
assets in any one registered investment company,
and 10% overall in all registered investment companies,
in no event to exceed 3% of the outstanding shares of
any single registered investment company.
[F] Invest more than 5% of its total assets at the
time of purchase in securities of companies that
have been in business or been in continuous operation
less than 3 years, including the operations of any
predecessor, except for direct investments made in
custodian banking entities serving one or more of
the Company's Fund series;
[G] Invest or deal in securities which are not readily
marketable.
[H] Own more than 10% of the outstanding voting
securities of any one issuer or company, nor will it,
with at least 75% of any Fund's total assets, invest
more than 5% in any single issue, valued at the time
of purchase. This restriction shall not be applicable
for investments in U.S. government or agency
securities, which are permitted to constitute 100% of
the assets of any Fund of the Company at any time.
[I] Invest more than 25% of any Fund's net assets at
the time of purchase in any one industry or similar
group of companies, except U.S. government securities
and securities of the financial services industry in
the C/Financial Fund, which is a sector fund confined
solely to making investments in that industry and/or
sector.
[J] Maintain a margin account, nor purchase
investments on credit or margin, or leverage its
investments, except for normal transaction obligations
during settlement periods.
[K] Make any investment for the purpose of obtaining,
exercising or for planning to exercise voting control
of subject company.
[L] Sell securities short.
[M] Underwrite or deal in offerings of securities
of other issuers as a sponsor or underwriter in
any way. (Note: The Company may be deemed an
underwriter of securities in some jurisdictions when
it serves as distributor of its own shares for sale
to or purchase from its shareholders.)
[N] Purchase or retain any securities issued by an
issuer, if any officer, director, or interested party
of the Company or its investment advisor is in any
way affiliated with, controls or owns more than 1% of
any class of shares of such issuer, or if any such
described persons as a class beneficially own or
control more than 5% of any class of securities of
such issuer.
[O] Make loans to others or issue senior
securities. For these purposes the purchase of
publicly distributed indebtedness of any kind is
excluded and not considered to be making a loan.
In regard to the restriction marked as item [E] above, the
Company utilizes modern computerized cash management sweep
services offered by custodians, which services presently include
reinvesting overnight and short term cash balances in shares
of other registered investment companies, better known as
"money market funds", whose primary objective is safety of
principal and maximum current income from holding highly
liquid, short term, fixed investments, principally U.S.
government and agency issues. The Company will not be
acquiring such shares as permanent investments but rather
will be utilizing such services solely for convenience and
efficiency as it tries to keep short term monies invested at
interest only until such time as more permanent reinvestments
can practically be made in the ordinary course of business. In
any case, the Company shall not so invest a greater
percentage of any Fund's assets than is permitted by regulation,
which is presently 5% of its total assets in any single non-
government-only money market fund nor more than 10% of its
total assets in non-government-only money market funds overall.
All percentages listed above are calculated at the time of
purchase, excluding the borrowing policy.
Further, restriction [N] above does not apply to C/Growth Stock
Fund or Adams Equity Fund, which shall be free to buy and
invest in permitted percentages in shares of companies in which
a significant or majority ownership is owned or held by or for
the beneficial interest of an officer, director or interested
person of the Company or any of its Fund series. Neither
C/Growth Stock Fund nor the Adams Equity Fund has ever
purchased such shares nor do they intend to do so in the
foreseeable future.
History and Background of Investment Advisor
The investment advisor to the Company and its Funds is Omnivest
Research Corporation ("ORC"), (formerly Caldwell & Co). ORC
is a Florida corporation, presently registered and practicing
as an "Investment Advisor" under the Investment Advisors Act of
1940 with the Securities and Exchange Commission and with the
Florida Division of Securities. ORC is a wholly-owned subsidiary
of Trust Companies of America, Inc. ("TCA"), a privately held
company the majority ownership of which is controlled by Roland
G. Caldwell, Jr.'s family. He is principal officer and a
director of ORC. ORC was incorporated October, 1969, and has
been continuously offering investment advisory services
since the date of its formation. Since July, 1997, Roland G.
Caldwell, Jr. has been the Chief Executive Officer of ORC. The
principal activity of ORC until 1995 was to provide
investment advisory services, primarily under contract to the
Company, to banks and to other financial institutions and
to individual clients generally located in the service area
in and around Sarasota County, Florida. In mid-1995, ORC
ceased all advisory activities except to the Company, which
is now its sole advisory client. Roland G. Caldwell, Sr.
remains as ORC's principal investment professional and has been
actively employed and/or in practice as a securities analyst,
portfolio manager and investment advisor since 1958, mainly
managing trusteed accounts and similar type client portfolios
for bank trust clients. He has held key managerial investment
responsibilities at trust/banking companies with assets under
administration at each ranging in size from approximately $80
million to over $1 billion. These trust/banking companies
were located in both the U.S. and abroad. Mr. Caldwell was
born November 10, 1933, and is a graduate of Kent State
University, 1958, holding a Bachelor of Science Degree in
Business Administration/Accounting.
ORC, as investment advisor to all Fund series of the Company,
provides such services under contracts that provide for
payment to ORC of a fee, calculated daily and paid monthly, at
the rate specified in each contract, and which is based upon the
daily market value of the Fund's net assets. These contracts
are approved by shareholders as required and by the Board of
Directors and are terminable upon 30 days written notice,
one party to the other. For the calendar year ended
December 31, 1996, management fees paid to ORC by the Company
totaled $110,747.
Under the terms of the investment contract with the Company, ORC
voluntarily agreed to reimburse the Company for any expenses
incurred in excess of 2% of net asset value. In compliance
with standard accounting practices and rules and laws governing
regulated investment companies, investment research costs
and/or allowed expenses of the Company are included for
purposes of calculating the 2% limitation. Expenses of the
Company did not exceed 2% of net assets of the Company, and
no reimbursements were required or made by ORC to the Company
for any Fund series during its fiscal year ended December 31,
1996.
Expenses of "interested" directors and Advisory Board members and
losses incurred by the Company as a direct result of any
purchase fails shall always remain the responsibility of the
investment advisor. ORC has been providing all administrative
and shareholder services to the Company since inception. Since
1987, the Company became responsible for lease payments for
software to operate the Company's fund series. Software lease
payments were paid to C/Data Systems (formerly C/Data Systems,
Inc.), a division of Trust Companies of America, Inc. ("TCA"), to
lease "C/MFAS", a mutual fund accounting system trademarked and
owned by C/Data Systems. TCA is controlled by the family of
Roland Caldwell. As of the date of this Prospectus, lease
payments being paid to C/Data Systems are at the rate of $500
per month under a contract approved by the Board of Directors of
the Company and of TCA, which contract is cancelable by the
Company on 30-days written notice.
All persons who perform duties for the Funds are employees of
TCA and not of ORC, which has no paid employees. The
investment advisory contracts between ORC and each Fund series
are non-assignable by ORC. Total direct operating costs of the
Company are voluntarily restricted to 2% of net assets of each
Fund, primarily because this is the maximum permissible
percentage permitted by some states. Expenses in excess of this
2% limitation are the responsibility of ORC.
Board of Directors
The names of Board of Directors of the Company, as elected by
shareholders at the latest Annual Meeting of Shareholders, and
their respective duties and affiliations are as follows:
Past Five Year
Position Business
Name and Address with Affiliations
the Company and Primary
Occupation
Roland G. Director and VP/Secretary Trust
Caldwell, Jr.1 President Companies of
250 Tampa Ave. America, Inc.;
West Secretary and Trust
Venice, FL 34285 Officer Caldwell
Trust Company;
President Omnivest
Research Corp.
William L. Chairman, Retired. Investments
Donovan Board of & Real Estate.
736 Brightside Directors Former VP Gately
Crescent Shops, Inc., Grosse
Venice, FL 34293 Pointe, MI.
Bruce Chittock Vice Industrial Engineer,
19625 Cats Den Chairman, Equipment for
Road Director Industry, Inc.,
Chagrin Falls, OH Cleveland, OH.
44023
Emmett Weber Director Capt.(ret.) USAir,
3411 Bayou Sound Pittsburgh, PA; Real
Longboat Key, FL Estate.
34228
Deborah C. Director and VP Care Vue
Pecheux1 Sister of Corporation; Former
1911 Oakhurst President Sr. Project Engineer
Parkway Ferranti, Intl.,
Houston, TX 77479 Houston, TX.
1 Interested persons as defined under the 1940 Act
Director's Compensation Table
The non-interested Directors of the Company are the only person
receiving compensation from the Company. The Company does not
have any retirement plan and the compensation paid as of fiscal
year end 1996 is as follows:
Aggregate Total Compensation
Compensation From Registrant
Director From and Fund
Registrant1 Complex Paid to
Directors
William L. Donovan 4,300.00 4,300.00
Keith W. Hallman 4,300.00 4,300.002
Emmett Weber 4,300.00 4,300.00
Roland G. Caldwell, 0.00 0.00
Jr.
Deborah C. Pecheux 0.00 0.00
1 Amount Shown is for an Entire Fiscal Year.
2 Deceased in 1997 and replaced by Bruce
Chittock.
Investment Advisory Board
The By-laws of the Company permit the appointment by the
President of up to 15 persons to serve until replaced on an
Advisory Board to assist, if and as requested by Directors and
officers of the Company, to formulate overall investment
policies. Members of this advisory board will either be
individuals of prominence or persons who, in the judgment of the
President of the Company, may be important to its success and
growth. The duties of members of the Advisory Board shall be
totally external to the daily operation of the Company itself
and such members shall serve totally at the pleasure of the
President. They will have no direct, active contact with the
Company, they will have no knowledge of its daily operations
nor are they to be considered control or access persons as
defined in the 1933 or 1940 Acts. They possess only advisory
responsibilities that will be sought by the President, the
Directors and by the Company from time to time as they alone
deem necessary or desirable.
It is intended, though not a contractual obligation or duty, that
one or more members of this Advisory Board will attend and
address the Annual Meeting of Shareholders, as arranged and that
each will be available to the President and to its Investment
Advisor from time to time by phone communication, to render
advice and counsel, in hopes that such advice and counsel will
lead to a more successful investment performance for the
Company and its shareholders. One or more members of the
Advisory Board are known presently to have clearly defined
views on economic and related matters that have come to be
known as and referred to as "supply-side" economics.
This is intentional and, in the view of the Company's
investment advisor, of considerable value to its shareholders,
due to the fact that their insights and advice have proven to the
satisfaction of the Company's investment advisor to have been
more accurately predictive in recent years than have insights
derived from other economic experts who either do not
espouse, understand, and/or comprehend the "supply-side"
thesis. The names of present advisory board members are
contained in the prospectus dated this same date.
Brokerage Allocations
It is policy of the Company to allocate brokerage business to
the best advantage and benefit of its shareholders. The
President of the Company and its Investment Advisor are
responsible for directing all transactions through brokerage
firms of its choice. Further to that policy, all securities
transactions are made so as to obtain the most efficient
execution at the lowest transaction cost. Nothing in this
policy, however, is to be construed to prohibit the Company or
its Investment Advisor from allocating transactions to firms
whose brokerage charges may include the cost of providing
investment or economic research or other lawfully allowed
services which the Company and its Investment Advisor deem
to be necessary and/or valuable to the successful management of
Company assets. Each buy or sell order will be placed
according to the type, size and kind of order involved and
as each condition may demand, so as to attempt to secure the
best result for the Company and its shareholders, all factors
considered. Since 1986 the Company has made all securities
transactions through large, non-retail brokerage firms
specializing in providing financial institutions and others
with: (1) low cost security transactions; (2) third-party
generated research services; and (3) certain specialized
services that are for the direct benefit of shareholders of
regulated investment companies. Aggregate commissions paid
during the last fiscal year to these firms approximated
$10,710. Transactions costs as a percentage of the value of the
securities bought or sold were believed to be lower than
would have been incurred if the trades had been placed
through normal retail brokerage firm offices, or through other
brokerage firms which provide similar low-cost brokerage
services at commission rates that include the cost of those
research services subscribed to and which are desired by and
deemed useful to the Company and its shareholders. Placing
transactions through these firms is not an obligation or
contractual arrangement but rather a practice that management
of the Company believes is in the best interests of all
shareholders. An important aspect and advantageous feature
available is superior execution capabilities. These firms have
undertaken extensive studies and kept transaction comparisons
in support of the contention that value to clients is both due
to its low commissions and its ability to execute trades on all
exchanges in all markets at prices that are consistently at
or below like trades by other firms at the same moment in
time. The investment advisor believes from experience that this
claim is valid and offers Company and Fund shareholders values
beyond just low cost commissions.
Net Asset Value Calculation
The net asset value per share is computed by dividing the
aggregate market value of the net assets of each Fund of the
Company, less that Fund's liabilities if any, by the number of
that Fund's shares outstanding. Portfolio securities are valued
and net asset value per share is determined as of the last known
trade price on or after the 4:00 p.m. close (NY time) of
business on the New York Stock Exchange ("NYSE"), on each
day the New York Stock Exchange is open and on any other day
in which there is a sufficient degree of trading in portfolio
securities that the current net asset value per share might
be materially affected by changes in portfolio securities values.
NYSE trading is closed weekends and holidays, which are listed
as New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas.
Portfolio securities listed on an organized exchange are valued
on the basis of the last sale on the date the valuation is made.
Securities that are not traded on that day, and for which market
quotations are otherwise readily available, and over-the-
counter securities for which market quotations are readily
available, are valued on the basis of the bid price at the close
of business on that date. Securities and other assets for
which market quotations may not be readily available or which
might not actively trade shall be valued at fair value as
determined by procedures that will be established by the Board
of Directors. It is the belief of the Board that such procedures
result in price determinations that more closely reflect the
fair value of such securities, particularly for tax-exempt fixed
income securities, which often have only limited trading
activity. Money market instruments are valued at cost which
approximates market value unless the Board of Directors
determines that such is not a fair value. The sale of common
shares of the Company will be suspended during periods when the
determination of its net asset value is suspended pursuant to
rules or orders of the Securities and Exchange Commission, or
when the Board of Directors in its sole judgment believes it is
in the best interest of shareholders to do so.
Purchase of Shares
Initial Purchases: All those wishing to purchase common shares
of the Company for the first time may do so with no minimum
investment required, by filling out an application form and
signing it correctly, then delivering it by mail or in person to
the Company's principal office in Venice, Florida. A sample
copy of the application form is inserted as a part of the
Prospectus and is available to prospective investors upon
request to the Company, which is the sole distributor of Fund
shares. The offering price of such purchases will be at the
Fund's net asset value per share next determined after receipt
by the Company of a valid purchase order. The date on which the
application is accepted by the Company and the net asset value
determination at the close of business on that date shall
determine the purchase price and shall normally be the purchase
date for shares. Payment for shares purchased shall be by
check or receipt of good funds by the Company, which reserves
the right to withhold or reject requests for purchases for any
reason, including uncollectable funds. In the event of a
cancellation of any purchase due to uncollectable funds,
purchaser shall be liable for all administrative costs
incurred and for all other losses or charges for such invalid
transfer and/or purchase. Certified checks are not necessary
to purchase Fund shares. There shall be no sales charge for
purchase of shares of common stock of the Company. IRA accounts
and other pension accounts may purchase shares of the Company at
any time for any eligible amount.
Subsequent Purchases: Purchases of shares made subsequent to
an initial purchase or purchases by a registered shareholder
may be made by mail or telephone to the Company at its current
address and/or telephone number. All subsequent individual
and other non-IRA purchases may be made in any amount with
no minimum required. Such amounts shall be due and payable in
good funds to the Company on the purchase date. No sales
charge shall be made for subsequent purchases. Purchasers
should be aware that telephone orders to purchase shares may be
recorded to protect both the Company and the purchasers but
the Company will not and cannot be held liable for the
authenticity of purchaser's telephone instructions.
Reinvestments: the Company will automatically reinvest all
dividend distributions to shareholders in additional shares of
the Company at net asset value as next determined as of the close
of business on the payment date of such dividend distribution,
unless otherwise instructed by the shareholder in writing prior
to the record date for such distributions.
Fractional Shares: When share purchases or redemptions are made
or when cash is requested by a shareholder, shares will be
issued or redeemed accordingly, in fractions of a share,
calculated to the third decimal place. (Example: $1,000
invested in shares at a net asset value of $11.76 per share will
purchase 85.034 shares.)
Issuance of Share Certificates: No share certificates will be
issued to shareholders unless specifically requested in writing
by the registered shareholder. All written requests to have
share certificates issued must be signed in the exact same way
as the share registration appears on the shareholder register
kept by the Company as its own Registrar and Transfer Agent.
Signatures on all share certificates to be redeemed must
contain a valid signature guarantee endorsed by an officer of
a national or state bank, a trust company, federal savings and
loan association; and/or a member firm of the New York,
American, Boston, Mid-West, or Pacific Stock Exchanges. Any
such guarantee must be acceptable to the Company and its
transfer agent before any such request will be honored.
Signatures guaranteed by a Notary Public shall not be accepted by
the Company.
Redemption of Shares
Shareholders may sell back all or a portion of their shares to
the Company on any day the Fund's NAV is calculated and such
redemptions will be made in the manner as described in detail
in the Prospectus dated this same date. All share redemptions
are subject to the terms and conditions as set forth therein
and are made by the Company at the next calculation of the net
asset value per share after which such redemption request is
received and accepted by the Company. Although the Company
may withhold payment for shares redeemed until it is reasonably
satisfied that all funds for purchases, if any, have been
collected, payment for shares redeemed will normally be made
the next business day immediately following redemption date.
The Company reserves the right however, to hold payment up
to 5 business days if necessary to protect the interests of
the Company and its shareholders.
In the event the New York Stock Exchange is closed for any
reason other than normal weekend or holiday closings or if
trading is halted or restricted for any reason, or in the event
of any emergency circumstances determined by the Securities
and Exchange Commission, the Board of Directors of the Company
shall have the authority and may suspend redemptions or postpone
payment dates.
Under circumstances as determined by the Board of Directors it
may, like most other mutual funds, elect to make payments in
securities or other assets of the Company rather than in cash,
if they deem at the time that such method of payment would be in
the best interest of the shareholders of the Company. Such
payment in kind, if ever necessary, would involve payment
of brokerage commissions by the shareholder if and when
securities so received are ever sold.
No minimum amount is necessary to keep an account open, except
that the Company reserves the right to request small accounts
be redeemed and closed if activity in the accounts is
unjustified costwise. The Company will provide notice
beforehand of not less than 60 days to shareholders prior to
closing an account as an opportunity for additional funds to be
invested. No automatic redemptions will be made in accounts
solely due to the amount of money invested. IRA and pension
accounts may retain a balance in their accounts without regard to
any minimums.
All share redemptions, regardless of the reason, give rise to
a "completed sale" for tax purposes when made and
shareholders will normally realize a gain or loss at that time.
Such gain or loss is customarily determined by, and is
usually equal to, the difference between the original
purchase price of redeemed shares compared to the dollar
amount received upon redemption of the same shares.
Shareholders are entitled to have share certificates issued, if
desired. Due to the additional work involved with issuing
certificates and the added costs, however, shareholders are
encouraged to have all shares held in an account maintained
by the Company itself, as is rapidly becoming the custom
within the mutual fund industry. If share certificates are
issued, however, and are held by a shareholder wishing to sell
shares, it is required that such share certificates first be
delivered in person or by mail to the Company in good form for
transfer, signed and containing a proper signature guarantee
by an official of a commercial bank or a New York Stock
Exchange member firm, before redemption can take place or
payment made to any redeeming shareholder. The Company shall
have the right to refuse payment to any registered shareholder
until all legal documentation necessary for a complete and
lawful transfer is in its or its agent's possession, to the
complete satisfaction of the Company and its Board of
Directors. Because of the requirement that share
certificates, if issued, be in the possession of the Company
before redemption can occur, no telephone redemptions can be
made to shareholders who have been certificated.
Federal Tax Status
The Company has qualified for and has elected the special
treatment afforded a "regulated investment" company under
Subchapter M of the Internal Revenue Code. In any year in which
it so qualifies and distributes substantially all of its taxable
net income, the Company (but not its shareholders) is
required to pay Federal income taxes only on that portion of its
investment income that is undistributed. Dividends paid to
its shareholders are in effect distributions of its net
investment income which are taxable to shareholders when
received, and all dividends received by shareholders,
regardless of whether a shareholder receives them in cash or as
additional shares, are normally subject to tax. Distributions
by the Company to its shareholders of capital gains realized, if
any, are also presently taxable under existing tax laws at
ordinary income tax rates whether distributed to shareholders
in cash or whether distributed in additional shares. From the
standpoint of the shareholder who sells shares back to the
Company as a redemption, the tax treatment will depend upon
whether or not the investment is considered a capital asset in
the hands of the shareholder. In most cases this would be
true, and in that event, a sale by a shareholder of shares will
be treated as a capital transaction to be taxed depending upon
the tax treatment afforded such transactions by tax laws
existing at the time of sale. Advice from shareholder's own
tax counsel is recommended regarding the taxability of
distributions. For tax purposes the Company shall endeavor to
notify all shareholders as soon as practicable after the close
of the calendar year of all amounts and types of dividends and
distributions paid out during the year just ended, generally in
accordance with tax laws in place at the time of payment.
APPENDIX
Bond Rating Categories as Defined by Standard & Poor's are
quoted in part and inserted herein for the information of
potential investors in the Company as a reference as follows:
A S&P's corporate or municipal debt rating is a current
assessment of the creditworthiness of an obligor with
respect to a specific obligation. This assessment may take
into consideration obligors such as guarantors, insurers or
lessees.
The debt rating is not a recommendation to purchase, sell or
hold a security inasmuch as it does not comment as to market
price or suitability for a particular investor.
The ratings are based on current information furnished by
the issuer or obtained by S&P's from other sources it
considers reliable. S&P's does not perform any audit in
connection with any rating and may, on occasion, rely on
unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in,
or availability of, such information, or for other
circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment
of principal in accordance with the terms of the
obligation;
II. Nature of and provisions of the obligor;
III. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or
other arrangement under the laws of bankruptcy and other
laws affecting creditors rights.
AAA. Debt rated AAA has the highest rating assigned by S&P's.
Capacity to pay interest and repay principal is extremely
strong.
AA. Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the highest rated
issues only in small degree.
A. Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories.
BBB. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than
in higher rated categories.
BB,B,CCC,CC,C. Debt rated BB,B,CCC,CC, and C is regarded, on
balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance
with the terms of the obligation. BB indicates the lowest
degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions.
CI. The rating is reserved for income bonds on which no interest
is being paid.
D. Debt rated D is in default, and repayment of interest and/or
repayment of principal are in arrears.
NR. Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that
S&P does not rate a particular type of obligation as a
matter of policy."
PART C
RE REGISTRATION OF C/FUNDS GROUP, INC.
September 15, 1997
Item 24. (a) Financial Statements Included in Part B
6 1. Audited Financial Statements and Accompanying
Notes, Fiscal Year Ended 12/31/96,
Including:
-- Letter to Shareholders
-- Statement of Assets and Liabilities
-- Statement of Operations
-- Statement of Changes in Net Assets
-- Notes to Financial Statements
-- Schedule of Investments
-- Per Share Tables
7 2. Unaudited Semiannual Report for Period Ending
6/30/97
-- Statement of Assets and Liabilities
-- Statement of Operations
-- Statement of Changes in Net Assets
-- Schedule of Investments
(b) Exhibits.
5 1. Code of Ethics
4 2. Updated Charter of Incorporation, State of
Florida
3 3. Corp Articles of Incorporation
3 4. Corp By-Laws, incl Indemnification Clause
1 5. Specimen Share Certificate
1 6. Investment Advisory Contract
1 7. Custody Agreement with Custodian
6 8. Legal Opinion re Corp In Good Standing
2 9. Specimen Subscription Form and List of
Original Investor Subscribers To Shares In
The Fund
3 10. IRA Specimen Custody Account Opening Form
6 11. Auditors Consent To Publish Financial
Statements
6 12. Auditors Internal Control Letter
Note:
1 Enclosed Herewith for C/Financial Fund Series
Only.
All other series previously submitted with
filings.
2 Enclosed with Prior Filing Dated June 12, 1985.
3 Enclosed with Prior Filing Dated April 30, 1992.
4 Enclosed with Prior Filing Dated February 28,
1994.
5 Enclosed with Prior Filing Dated October 15,
1995.
6 Enclosed with Prior Filing Dated February 28,
1997.
7 Enclosed with Prior Filing Dated September 9,
1997.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
Trust Companies of America, Inc. ("TCA"), a private
Florida corporation is controlled by Roland G.
Caldwell and other family members. TCA owns 100% of
Omnivest Research Corporation ("ORC"), the
Registrant's Investment Advisor. ORC Owns A
Controlling Interest In Caldwell Trust Company ("CTC"),
the Registrant's Custodian. CTC is a Florida
Chartered Trust Company Regulated By The Florida
Department Of Banking And Finance and Was
Chartered November 1, 1993. Roland Caldwell, Jr.
is President of Registrant and serves as President of
ORC.
Item 26. Number of Holders of Securities at June 30, 1997:
Title of Class Number of Record Holders
Common Stock
- C/Fund Series 474
- C/Growth Stock Series 178
- C/Government Series 104
- C/Tax-Free Series 66
- C/C.A.R. Series 21
- Adams Equity Series 96
TOTAL ALL SERIES 939
Item 27. By-Laws Article XI, Indemnification of Officers and
Directors:
(Included by Reference to Registration Statement Filed
February 28, 1985, As Thereafter Amended
Item 28. Business and Other Connections of Investment Advisor.
Trust Companies of America, Inc. ("TCA"), a private
Florida corporation is controlled by Roland G.
Caldwell and other family members. TCA owns 100% of
Omnivest Research Corporation ("ORC"), the
Registrant's Investment Advisor. TCA Owns A
Controlling Interest In Caldwell Trust Company ("CTC"),
the Registrant's Custodian. CTC is a Florida
Chartered Trust Company Regulated By The Florida
Department Of Banking And Finance and Was
Chartered November 1, 1993. Roland Caldwell, Jr.
President of Registrant, serves as Chief Executive
Officer of ORC.
Item 29. Principal Underwriters.
None. Not Applicable
Item 30. Location of Accounts and Records.
Registered Office of 250 Tampa Avenue
Registrant: West
Venice, FL 34285
Books & Records Also 201 Center Road,
Maintained At: Suite 2
Venice, FL 34292
Records Used and Kept By:
Roland G. Caldwell, Jr.,
President
Item 31. Management Services.
Registrant's books and financial ledgers are kept on
"C/MFAS", a computer program leased from C/Data
Systems, a division of TCA, which is controlled by
Roland Caldwell and other family members,
including the Secretary of the registrant.
C/MFAS is leased to Registrant under terms that call
for the payment by registrant, as lessee, of a
monthly fee of $500 to C/Data Systems. The lease is
cancelable at any time by Registrant on 30 days
written notice to lessor.
Item 32. Undertakings.
(a) Not Applicable.
(b) Registrant hereby undertakes to file a post-
effective amendment, using financial statements for
the C/FINANCIAL FUND series which need not be
certified, within 4 to 6 months from effective date of
registrant's 1933 Act registration statement.
(c) Additional Undertaking: Registrant hereby
undertakes to require that the Investment Advisory
Contract for the C/FINANCIAL FUND series be approved by
shareholders at a Special Meeting of Shareholders of
the C/FINANCIAL FUND series.
(d) Additional Undertaking: Registrant hereby
undertakes that the selection of certified public
accountants for the C/FINANCIAL FUND series shall be
approved by shareholders at a Special Meeting of
Shareholders of the C/FINANCIAL FUND series.
(e) Additional Undertaking: Registrant hereby
undertakes that the ratification of Directors by
shareholders at a Special Meeting of Shareholders
of the C/FINANCIAL FUND series.
(f) Additional Undertaking: Registrant hereby
undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's
latest annual report to shareholders, upon request and
without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940 the Registrant, C/Funds
Group, Inc., certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule
485(a) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Venice,
and the State of Florida, on this the 15th day of September,
1997.
Registrant:
C/FUNDS GROUP, INC.
By: __________________________ By: ___________________________
Roland G. Caldwell, Jr. William Donovan
Director/President Director
By: __________________________ By: ___________________________
Deborah C. Pecheux Lyn B. Braswell
Director Secretary
************************************************************************
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
C/FUNDS GROUP, INC.
C/Financial Fund
The named Corporation is authorized to issue 5,000,000 Shares
Par Value $.001 Each.
This certifies that ___________________________________________________
is the owner of ______________________________________________ fully paid and
non-assessable Shares in the C/FINANCIAL FUND Series of the above Corporation
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed. The Corporation will furnish the Shareholder, upon request
and without charge, the designations, objectives and limitations of each
Series.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated________________________________________
******************************************************************************
INVESTMENT ADVISORY
CONTRACT
Omnivest Research Corporation
250 Tampa Avenue West
Venice, Florida 34285
INVESTMENT ADVISORY CONTRACT
THIS AGREEMENT, made by and between the C/FINANCIAL FUND
FUND series of C/Funds Group, Inc., a Florida
Corporation, ("the Fund"), and Omnivest Research Corpora-
tion, a Florida Corporation ("ORC"):
WITNESSETH:
WHEREAS, The Fund engages in the business of investing
and reinvesting its assets and property in various types
of securities, and
WHEREAS, ORC engages in the business of providing
investment advisory services and is licensed to engage in
such business;
NOW THEREFORE, in consideration of the mutual covenants
herein contained, each of the parties hereto intending to
be legally bound, it is agreed as follows:
First, The Fund hereby employs ORC for a period and on
the terms as set forth in this Agreement, to render
investment advisory services to the Fund, subject to the
supervision and direction of the Board of Directors of
C/Funds Group, Inc. ORC hereby accepts such employment
and agrees, during such period, to render the services
and assume the obligations and be paid compensation, as
set forth and agreed herein. ORC, its directors,
officers, employees and agents shall, for all purposes
herein, be deemed to be providing services as an
independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to
act for, represent, or in any way be deemed an agent of
the Fund.
Second, As compensation for services to be rendered to
the Fund by ORC under the provisions of this Agreement,
the Fund shall pay to ORC a fee equal in amount to
one/three hundred and sixty fifth of one percent daily
(equivalent to 1% per annum), calculated as a percent of
the total Fund's market closing value each day and based
upon the net assets, securities and cash held by the Fund
as of that time each day, such fee to be accumulated and
such accumulated amount to be due and payable to ORC on
the first day of each month as payment in full for
managing the Fund's assets for the previous monthly
period ending on the 15th day of the month prior to pay
date.
Third, it is expressly understood and agreed that the
services to be rendered by the investment advisor to the
Fund under the provisions of this Agreement are not to be
deemed to be exclusive, and that ORC shall be free to
render similar or different investment services to others
so long as its ability to render the services provided
for in this Agreement shall not be impaired thereby.
Fourth, it is understood and agreed that directors,
officers, employees, agents, and shareholders of the Fund
or of C/Funds Group, Inc., may be directors, officers,
employees, agents and/or shareholders of ORC, and that
directors, officers, employees, agents and shareholders
of ORC may be interested in the Fund in the same way, and
that ORC itself as an entity may be interested in the
Fund as a shareholder. Specifically, it is understood
and agreed that directors, officers, employees, agents
and shareholders of ORC may continue as directors,
officers, employees, agents and shareholders of the Fund;
that ORC, its directors, officers, employees, agents and
shareholders may engage in other businesses, may render
investment advisory services to other Funds or investment
companies, or to any other corporation, association, firm
or individual, and that ORC may render other services of
any kind to any other investment company, corporation,
association, firm or individual.
Fifth, it is agreed hereby between the parties to this
Agreement that all expenses incurred for normal operating
costs of the Fund, including fidelity bonding costs and
charges made by the independent public accounting firm,
shall be borne in full by the Fund. ORC or any of its
affiliated businesses or companies shall be permitted
hereunder to charge the Fund fees for services such as
but not limited to: the cost of maintaining Fund books,
records and procedures; dealing with its shareholders;
the payment of dividends; transfers of stock; reports or
notices mailed to shareholders; expenses of annual
stockholders meetings; custodian fees; and all regulatory
and registration fees; taxes; legal fees; officer
remuneration; office expenses; and postage; provided,
that in no event shall remuneration or payments of any
kind to any provider, including to ORC, its affiliated
companies or businesses or its interested directors,
employees, officers, or agents in one calendar year, be
in an amount in excess of 2% of the average daily market
value of the assets of the Fund. Officers, directors,
employees and agents of ORC who are, or may in the future
be, directors, officers, employees, agents or advisory
board members of the Fund or C/Funds Group, Inc., shall
receive no compensation from the Fund for acting in such
capacities for the Fund. In the conduct of the
respective businesses of the parties hereto and in the
performance of this Agreement, the Fund and ORC may share
common facilities and personnel common to eachother and
it is agreed hereunder that costs, as and when applicable
and subject to the limitations herein provided, for
shared facilities are to be shared fairly and equitably.
Sixth, it is agreed hereunder that ORC shall give the
Fund the benefit of its best judgment and efforts in
rendering these services, and the Fund agrees as an
inducement to undertake these services that ORC shall not
be held liable hereunder for any mistake in judgment or
any event whatsoever, provided that nothing herein shall
be construed to protect ORC against any liability to the
Fund or to its shareholders for ORC's wilfull
misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of
reckless disregard of its obligations hereunder.
Seventh, it is mutually agreed by the parties hereto that
this Agreement shall continue in force and effect until
and so long as the Board of Directors and Shareholders of
the Fund vote to keep it in force, it being understood
and agreed that this Agreeement or any other similar
Agreement as amended, must be approved by vote of
Shareholders at least once annually. Such approval by
the Board of Directors shall be by a majority of those
directors who are not interested directors of the Fund or
parties to this Agreement by virtue of their affiliation
with ORC and by a shareholder vote of a majority of
shares outstanding at the time.
Eighth, it shall be agreed that this Agreement may be
terminated at any time upon 30 days written notice,
without payment of any penalty, by the Fund's Board of
Directors or by a vote of a majority of the outstanding
voting shares of the Fund. This contract will
automatically terminate in the event of its assignment
(within the meaning of the Investment Company Act of
1940), which shall be deemed to include a transfer of
control of ORC. Upon the termination of this Agreement,
the obligations of the parties hereto shall cease and
terminate as of the date of such termination, except for
any obligation to respond for a breach of this Agreement
committed prior to such termination and except for the
obligation of the Fund to pay to ORC the fee provided
herein, prorated to the date of termination.
IN WITNESS WHEREOF, the parties hereto have caused their
corporate seals to be affixed and duly attested and their
presents to be signed by their duly authorized officers
this ______ day of ______________, 1997.
C/FINANCIAL FUND Series
C/Funds Group, Inc.
(SEAL)
Attest: ____________________ By:____________________
OMNIVEST RESEARCH CORPORATION
(SEAL)
Attest: ____________________ By:_____________________
C/Data Systems Form #042992
ws/cfi/contract.cff
CUSTODY AGREEMENT
For
C/FUND GROUP, INC.
C/Financial Fund Series
Caldwell Trust Company
Venice, Florida 34292
CUSTODY AGREEMENT
THIS AGREEMENT is made between the parties named below as
follows:
CUSTOMER: C/Financial Fund Portfolio Series of
C/FUND GROUP, INC.
CUSTODIAN: CALDWELL TRUST COMPANY, 201 Center Road,
Venice, FL 34292
FIRST - Appointment and Delivery and Ownership of
Property. The CUSTOMER hereby appoints the CUSTODIAN to
provide custodial and related services to CUSTOMER, which
will deliver from time to time property acceptable to
CUSTODIAN to be held in accordance with the terms of this
agreement. The CUSTOMER is the owner of all property held
hereunder and CUSTODIAN is acting solely as an agent of
the CUSTOMER for the purposes set forth herein.
SECOND - Investments. CUSTODIAN is hereby empowered to
invest, sell and/or reinvest CUSTOMER's assets,
securities or properties and to take delivery or to
deliver or to arrange for deliveries and receipts of such
assets securities or properties in the normal course of
performing all necessary duties hereunder, only upon
instructions from authorized representatives or agents of
OMNIVEST RESEARCH CORPORATION as the investment advisor
to this fund series. Instructions from authorized
representatives or agents of the CUSTOMER's investment
advisor in regard to purchase, sale or delivery of
assets, securities or properties may, but need not be, in
writing and CUSTOMER assumes all risks resulting from
action taken by CUSTODIAN in good faith as a result of
having taken such instructions. CUSTODIAN shall not be
required to comply with any direction to purchase
securities unless or until there is sufficient cash or
equivalents available for such purpose, or with any
direction to sell securities unless such securities are
held in or to the order of the Account at the time in a
form satisfactory to CUSTODIAN. Expenses incurred in
effecting any of the foregoing transactions shall be
charged to the Account unless the CUSTOMER makes
provisions or gives instructions otherwise. CUSTODIAN
shall undertake the collection of any item held as the
same matures.
THIRD - Income. CUSTODIAN shall collect income on the
property held hereunder, pay expenses and make
remittances as directed, authorized or agreed, and/or
reinvest income as CUSTOMER instructs.
1 of 3
FOURTH - Statements. Periodically as mutually agreed,
CUSTODIAN shall furnish to CUSTOMER or to CUSTOMER's
Investment Advisor, daily cash balances, statements of
assets and statements of all receipts and disbursements
and shall furnish annually data for the preceding year to
assist the CUSTOMER in preparing returns for income tax
purposes on the property held hereunder.
FIFTH - Nominee. CUSTODIAN may register all or any part
of the property either in the name of CUSTODIAN, or in
any name or nominee, or may retain them unregistered and
in bearer form.
SIXTH - Payment of Taxes. The CUSTOMER is responsible
for the payment of all taxes assessed on or with respect
to any property held hereunder and income collected
thereon and agrees to hold CUSTODIAN harmless therefore.
SEVENTH - Compensation. The compensation of Agent shall
be as mutually agreed from time to time between Agent and
CUSTOMER. Current Rate Structure is attached in Schedule
A.
EIGHTH - Withdrawal of Property and Termination of
Agreement. The CUSTOMER may withdraw any and all property
held hereunder only upon presentation to CUSTODIAN of
documentation satisfactory to CUSTODIAN, authorizing such
withdrawal or termination, it being clearly established
herein that it is the intent of this provision to mean
that any such withdrawal of assets, securities or
properties by CUSTOMER in kind or in cash is to made by
CUSTOMER's authorized officer or agent only upon
presentation of a resolution of CUSTOMER's Board of
Directors, signed by all directors of the CUSTOMER, with
signatures attested to by the Secretary of C/Funds Group,
Inc., and signed under seal, with the language in the
resolution to explicitly authorize such specific
withdrawal or termination. The final withdrawal of all
property held hereunder shall terminate this agreement.
CUSTODIAN shall have the right to terminate this
agreement at any time upon giving the CUSTOMER written
notice. CUSTODIAN shall deliver the property as soon as
practicable upon either a withdrawal or termination, but
prior to delivery may require re-registration of any
property held in its nominee form.
NINTH - Authority of CUSTOMER. CUSTOMER certifies that
it has legal authority to enter into this agreement. A
certified copy of a resolution authorizing the opening of
the account and stating the names of the officers duly
authorized to act on behalf of CUSTOMER is attached
hereto, and Agent shall be authorized to accept
instructions, as may be permitted in this Agreement, from
such named person or persons until receipt by it of a
certified copy of a new resolution conferring authority
upon another person or persons to act similarly.
2 of 3
TENTH - Law Governing. The laws of the State of Florida
shall govern the interpretation of this agreement.
ELEVENTH - General. CUSTOMER's tax identification number
is ___________________.
This agreement shall bind the respective successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the CUSTOMER and CUSTODIAN have
executed this agreement in duplicate on the _____ day of
______________________, 1997.
CUSTOMER:
ATTEST: C/Financial Fund Series
C/Funds Group, Inc.
___________________________ By: ___________________________
Roland G. Caldwell, Jr.
President
CUSTODIAN:
ATTEST: Caldwell Trust Company
___________________________ By ____________________________
Roland G. Caldwell
Chief Executive Officer
3 of 3
ws/cfi/custagr.cff
Fee Schedule
as of September 1, 1997
Fee Schedule 0.3% of Market Value Per Year
7
