SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 21 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 23 [X]
(Check appropriate box or boxes.)
C/Funds Group, Inc.
(Exact Name of Registrant as Specified in Charter)
P. O. Box 622, Venice, FL 34284-0622
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 800-338-9477
Roland G. Caldwell, Jr., 250 Tampa Ave. W., Venice, FL 34285
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective (check
appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
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 of 153,631 shares through December 31,
1998, for a total consideration, net of redemptions, of
$2,165,113, on which registration fees are full 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, 1998.
C/Funds Group, Inc.
February 28, 1998
The Series Funds
C/Fund
C/Growth Stock Fund
Adams Equity Fund
C/Government Fund
C/Community Association Reserve Fund
C/Funds Group, Inc. (the "Company") is a
diversified, open-end, regulated investment
company, incorporated in Florida and registered
under the Securities Act of 1940. It offers five
series Funds (the "Funds"), each with its own
purpose, investment objectives, and associated
risks as described in this Prospectus.
This Prospectus contains information, which you
should know about The Company and its Funds before
you invest. Please keep it for future reference.
NEITHER THE SECURITIES EXCHANGE COMMISSION
NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES
OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
C/Funds Group, Inc.
P. O. Box 622
Venice, Florida 34282-0622
Voice: 941-488-6772 Toll-Free: 800-338-9477 Fax: 941-496-4661
A No-Load Fund Group
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Table of Contents
C/Fund 1
Investment Objective, Strategy, and Risks 1
Fees and Expenses 2
Financial Highlights 3
C/Growth Stock Fund 5
Investment Objective, Strategy, and Risks 5
Fees and Expenses 6
Financial Highlights 7
Adams Equity Fund 9
Investment Objective, Strategy, and Risks 9
Fees and Expenses 10
Financial Highlights 11
C/Government Fund 13
Investment Objective, Strategy, and Risks 13
Fees and Expenses 14
Financial Highlights 14
C/Community Association Reserve Fund 17
Investment Objective, Strategy, and Risks 17
Fees and Expenses 18
Financial Highlights 19
Fund Performance Discussion 21
Management and Capital Structure 21
Investment Advisor 21
Capital Structure 22
Shareholder Information 22
Introduction 22
Pricing of Fund Shares 22
Purchasing Shares 23
Redeeming Shares 23
Dividends, Distributions, and Tax Consequences 24
IRA and Retirement Accounts 24
Financial Information 25
Highlights 25
Shareholder Reports 25
Custodian, Auditor, and Distributor 26
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C/Fund
Investment Objective
Total return through capital gains, both realized and unrealized plus
income earned from dividends and interest.
Investor Profile
A conservative investor who wants a fair current income plus potential
for appreciation.
Investment Strategy and Implementation
The C/Fund portfolio invests in stocks and fixed-income securities in
proportions designed to meet its investment objectives while
minimizing the risk of net asset value decline. The mix between
stocks and fixed investments changes at times in response to market
conditions while maintaining some balance within these two major
categories most of the time.
While equity markets appear favorable, the Fund buys and holds a
reasonably balanced percentage of its assets in:
o Regularly traded common stocks,
o convertible preferred stocks, and
o convertible bonds.
The Fund's primary policy is to invest most often in issues such as
those traded on the New York Stock Exchange and NASDAQ. However, to
take advantage of investment opportunities, it may still invest in
equities that may trade over the counter. The Fund also follows a
diversification policy to reduce risks.
When the market experiences major weakness, the Fund reduces equity
investments in favor of fixed-income investments to protect asset
value. At such times, it would most often invest in the fixed-income
investments of the highest quality and would select maturities meet
fund objectives under such conditions. These investment would
include:
o U.S. Government issues,
o Money market investments, and
o Other investments of similar quality.
At all times, the Fund invests some of its assets in fixed investments
like U.S. Government notes or bonds. Additionally, the fund may
invest in A-rated, or better, corporate fixed-income securities. It
may also acquire non-rated fixed-income issues, which it considers to
be of comparable quality. It does not intend to buy, sell, hold or
deal in options or warrants in the ordinary course of business.
However, because the Fund believes any severe restriction of
investment flexibility could be a detriment to shareholder interests
at times, it retains the right to invest and reinvest assets in issues
from time to time only as necessary to conform to the Investment
Company Act of 1940, and to qualify itself under Sub-Chapter M of the
Internal Revenue Code. (Please refer to the Tax Information section of
this Prospectus on page 24 for further details.)
For additional restrictions that the fund has imposed upon itself,
please see the appropriate section in the fund 's Statement of
Additional Information. It is on file with the Securities and
Exchange Commission and is available to you free at your request
placed to the telephone number or address shown on the cover of this
Prospectus.
Investment Risks
The Fund tries to match or exceed returns produced by the popular
market averages such as the Dow Jones Industrial Average and the
Standard and Poor's 500 Average by reducing risk of asset value
decline when the market is weak and earning average or better total
returns when the market is strong. While that is the Fund's
objective, it cannot assure you that it can achieve it. Correct
timing of movement from one type of investment to another is critical
and not always possible to achieve.
C/Fund (continued)
Investment Risks (continued)
You should understand that risk is inherent when investing in common
stocks including:
o The senior right of lenders ahead of the claims of common
shareholders on liquidation of the issuing company, and
o The risk that dividends may not be earned, declared or paid by its
directors which can cause significant fluctuations in a common
stock's market price.
Risk/Return Bar Chart and Table
The following bar chart and table provide an indication of the risks
of investing in C/Fund. The bar chart shows changes in the Fund's
performance from year to year over a 10-year period. The table shows
how the Fund's average annual returns for one, five, and ten years
compare to those of a broad-based securities market index. Remember
that how the Fund has performed in the past is not necessarily an
indication of how it will perform in the future.
[bar chart graphic]
During the period shown in the following bar chart, the highest return
for a quarter was 17.1% (quarter ending December 31, 1998) and the
lowest return for a quarter was -9.7% (quarter ending September 30,
1990).
Average Annual Total Returns Past Past Past
(for the periods ending 1 Year 5 Years 10 Years
December 31)
C/Fund 21.4% 16.3% 14.4%
S&P 500* 26.7% 21.4% 16.0%
* This is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
Fees and Expenses of the Fund
The following information will help you to compare the fees and
expenses charged by C/Fund with those of other mutual funds. All of
the Company's series are "NO LOAD" funds, which means that you pay no
sales commissions to buy shares. There are no charges for redeeming
shares and no other kind of deferred or any other type of charge. As
a result, 100% of everything you invest goes to work for you.
Shareholder Transaction Annual Fund Operating
Expenses Expenses
Sales Commissions to None Investment Advisor's Fee 1.00%
Purchase Shares 12b-1 Fees None
Commissions to None Other Operating Expenses .68%
Reinvest Dividends Total Operating Expenses 1.68%
Redemption Fees None
C/Fund (continued)
Fees and Expenses of the Fund (continued)
Examples:
Use the following information to help you understand the various costs
and expenses customarily charged by mutual funds. Assume you bought
shares of C/Fund on January 1 and paid $1,000, that the Fund achieves
a 5% annual return, and that you redeem all shares on December 31.
You would pay the following expenses over the specified periods:
1 year 3 years 5 years 10 years
$17 $53 $91 $199
Expenses shown in these examples do not represent actual
past or future expenses. Actual expenses may be more or
less than those shown. The assumed 5% return is
hypothetical, and is not a representation or prediction of
past or future returns, which may be more or less than 5%.
Financial Highlights
This table is intended to help you understand the Fund's financial
performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns represent
the rate you would have earned (or lost) on an investment in the Fund,
assuming reinvestment of all dividends and distributions.
1994 1995 1996 1997 1998
Net Asset Value Beginning $15.07 $13.95 $16.83 $17.71 $20.61
of Period
Net Investment Income (Loss) .34 .21 .19 .24 .28
Net Realized and Unrealized Gain
(Loss) on Investments (.55) 3.42 2.56 3.50 4.12
Total Income (Loss) From (.21) 3.63 2.75 3.74 4.40
Investment Income
Dividends From Net Investment (.36) (.21) (.19) (.26) (.72)
Income
Distributions from Net Realized (.49) (.54) (1.58) (.58) (.50)
Capital Gains
Returns of Capital (.06) -- (.10) -- --
Total Distributions (.91) (.75) (1.87) (.84) (1.22)
Net Asset Value at End of Period 13.95 16.83 17.71 20.61 23.79
Total Return(1) -1.10% 26.18% 16.15% 20.95% 21.39%
Net Assets at End of Period $3,806 $4,352 $5,423 $7,137 $8,860
(000s)
Ratio of Expenses to Average Net 1.83% 1.85% 1.90% 1.79% 1.68%
Assets
Ratio of Net Income to Average 2.53% 1.36% 1.05% 1.24% 1.27%
Net Assets
Portfolio Turnover Rate 23.84% 5.46% 11.38% 10.28% 17.58%
(1) See "Financial Information" on page 25 for more information on
Total Return.
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C/Growth Stock Fund
Investment Objective
Maximum principal appreciation with dividend income a secondary
consideration.
Investor Profile
The investor who wants potentially rapid principal value appreciation
and who is willing to assume a higher degree of risk and more net
asset value volatility.
Investment Strategy and Implementation
The C/Growth Stock Fund portfolio invests substantially all of its
assets, regardless of market conditions, in the common stocks or
equivalents (such as convertible preferreds or bonds) of more rapidly
growing companies. Substantially all of its assets are invested all
of the time.
Stock selections are made using a variety of research sources,
including proprietary analytical methodology that produces
quantitative, computer-generated analyses of corporate financial
information. These sources and analyses help identify companies whose
management appears to understand how to build shareholder wealth
regularly and systematically, and manages to that end. The advisor's
research indicates that understanding the importance of building
shareholder wealth ultimately creates a positive impact on the market
value of the targeted company's outstanding shares. The advisor
believes this is largely due to the company earning a return on
invested capital that is consistently higher than its "cost" of
invested capital. When this takes place, shareholder wealth increases
as a result of the rise in share price.
Investment Risks
Some fund assets are invested in large capitalization companies, but a
major portion are invested in medium to small capitalization
companies. The advisor makes investment selections by identifying
companies that have above average growth prospects, regardless of
capitalization or annual sales volume. This aggressive approach can
result in greater price volatility with attendant above average
fluctuations in net asset value per fund share.
The advisor does not consider portfolio turnover a constraint when
deciding to take profits or losses or to re-employ assets in
investments better suited to meeting fund objectives. Accordingly,
the fund can have higher turnover compared to funds with longer term
orientations. This can cause the fund to frequently realize capital
gains or losses, which it distributes to shareholders annually for
inclusion in their personal income tax return. (See the "Federal
Income Tax Status" section on page 24 for more information about
capital gains tax status.)
Risk/Return Bar Chart and Table
The following bar chart and table provide an indication of the risks
of investing in C/Growth Stock Fund. The bar chart shows changes in
the Fund's performance from year to year since inception. The table
shows how the Fund's average annual returns for one and five years and
since inception compare to those of a broad-based securities market
index. Note that performance for the partial period 07/92 through
12/92 has not been annualized. Remember that how the Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.
C/Growth Stock Fund (continued)
Risk/Return Bar Chart and Table (continued)
[bar chart graphic]
During the period shown in the bar chart, the highest return for a
quarter was 25.7% (quarter ending December 31, 1998) and the lowest
return for a quarter was -11.9% (quarter ending September 30, 1998).
Average Annual Total Returns Past Past Past
(for the periods ending 1 Year 5 Years 10 Years
December 31)
C/Growth Stock Fund 21.3% 15.5% 12.5%
S & P 500* 26.7% 21.4% 18.3%
* This is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
Fees and Expenses of the Fund
The following information will help you to compare the fees and
expenses charged by C/Growth Stock Fund with those of other mutual
funds. All of the Company's series are "NO LOAD" funds, which means
that you pay no sales commissions to buy shares. There are no charges
for redeeming shares and no other kind of deferred or any other type
of charge. As a result, 100% of everything you invest goes to work
for you.
Shareholder Transaction Annual Fund Operating
Expenses Expenses
Sales Commissions to None Investment Advisor's Fee 1.00%
Purchase Share 12b-1 Fees None
Commissions to Reinvest None Other Operating Expenses .68%
Dividends Total Operating Expenses 1.68%
Redemption Fees None
Examples
Use the following information to help you understand the various costs
and expenses customarily charged by mutual funds. Assume you bought
shares of C/Growth Stock Fund on January 1 and paid $1,000, that the
Fund achieves a 5% annual return, and that you redeem all shares on
December 31. You would pay the following expenses over the specified
periods:
1 year 3 years 5years 10 years
$17 $53 $91 $199
Expenses shown in these examples do not represent actual
past or future expenses. Actual expenses may be more or
less than those shown. The assumed 5% return in
hypothetical, and is not a representation or prediction of
past or future returns, which may be more or less than 5%.
C/Growth Stock Fund (continued)
Financial Highlights
This table is intended to help you understand the Fund's financial
performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns represent
the rate you would have earned (or lost) on an investment in the Fund,
assuming reinvestment of all dividends and distributions.
(1)1994 1995 1996 1997 1998
Net Asset Value Beginning of $10.27 $9.34 $11.28 $12.38 $13.65
Period
Net Investment Income (Loss) (.01) .02 (.05) (.10) (.06)
Net Realized and Unrealized Gain (.90) 2.13 2.24 3.20 2.96
(Loss) on Investments
Total Income (Loss) From (.91) 2.15 2.19 3.10 2.90
Investment Income
Dividends From Net Investment (.01) (.02) -- (.15) --
Income
Distributions from Net Realized -- (.19) (1.08) (1.68) (.71)
Capital Gains
Returns of Capital (.01) -- (.01) -- --
Total Distributions (.02) (.21) (1.09) (1.83) (.71)
Net Asset Value at End of Period 9.34 11.28 12.38 13.65 $15.84
Total Return(1) -8.59% 22.81% 20.30% 25.48% 21.25%
Net Assets at End of Period $1,379 $2,080 $2,212 $2,541 $3,082
(000s)
Ratio of Expenses to Average Net 1.87% 1.85% 1.90% 1.81% 1.68%
Assets
Ratio of Net Income to Average (.16%) .20% (.45%) (.68%) (.45%)
Net Assets
Portfolio Turnover Rate 37.23% 16.46% 4.26% 51.11% 88.47%
(1) See "Financial Information" on page 25 for more information on
Total Return.
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Adams Equity Fund
Investment Objective
Maximum capital appreciation with dividend and interest income of
secondary importance.
Investor Profile
The investor who wants high total returns and who considers current
income and capital gains tax consequences to be of secondary
importance
Investment Strategy and Implementation
This fund invests a minimum of 65% of total assets in equity
securities of small, medium, and large capitalization companies
without regard to size. Investments are selected using a proprietary
process developed by Mr. William Adams, the fund's sub-advisor. That
process involves a variety of inputs, including trading price momentum
for target company shares. It produces a present value for a targeted
company's shares by comparing earnings and earnings growth rate to the
rate of return on long government bonds. It then compares the
produced value to the current market to determine if the shares are
over or undervalued.
The fund invests in companies identified as undervalued which often
triggers buy and sell signals. These signals may or may not be acted
on, depending on many other present factors such as:
o The condition of the general economy,
o The existing or projected level of inflation, and
o All other financial information about a given company that the
advisor believes important.
Fund assets that are not invested in stocks are held in short-term
interest-bearing investments until stock issues are identified and
purchased. Other fixed-income investments are rarely acquired, and if
they are, they are most likely to be convertible or exchangeable into
a common stock of the issuing company.
Investment Risks
The common stock investments in this fund presently consist, in the
majority, of securities in small- and medium-sized companies. Even
though such companies have the potential for rapid growth, they may
have less management depth, and financial and competitive resources
than larger companies. In many cases, companies in the small to
medium-capitalization markets are under-followed making them less
efficiently priced than larger capitalization companies. Also,
smaller trading volume and frequency may cause greater price
fluctuations than is present in investments in larger companies.
The advisor does not consider portfolio turnover a constraint when
deciding to take profits or losses or to re-employ assets in
investments better suited to meeting fund objectives. Generally,
shareholders should expect the Fund's turnover not to exceed 150%.
Turnover exceeding 100% increases the likelihood of short term capital
gains and losses and increases brokerage expenses. The fund
distributes realized gains and losses to shareholders annually for
inclusion in their personal income tax return. (See the "Federal
Income Tax Status" section on page 24 for more information about
capital gains tax status.)
Risk/Return Bar Chart and Table
The following bar chart and table provide an indication of the risks
of investing in the Adams Equity Fund. The bar chart shows changes in
the Fund's performance from year to year since its inception. The
table shows how the Fund's average annual returns for one year and
since inception compare to those of a broad-based securities market
index. Note that performance for the partial period 10/95 through
12/95 has not been annualized. Remember that how the Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.
Adams Equity Fund (continued)
Risk/Return Bar Chart and Table (continued)
[bar chart graphic]
During the period shown in the bar chart, the highest return for a
quarter was 16.5% (quarter ending June 30, 1997) and the lowest return
for a quarter was -26.0% (quarter ending September 30, 1998).
Average Annual Total Return Past Since
(for the periods 1 Year Inception
ending December 31)
Adams Equity Fund -8.4% 9.6%
S&P 500* 26.7% 26.2%
* This is the Standard & Poor's Composite Index of 500 Stocks, a
widely recognized, unmanaged index of common stock prices.
Fees and Expenses of the Fund
The following information will help you to compare the fees and
expenses charged with those of other mutual funds. All of the
Company's series are "NO LOAD" funds, which means that you pay no
sales commissions to buy shares. There are no charges for redeeming
shares and no other kind of deferred or any other type of charge. As
a result, 100% of everything you invest goes to work for you.
Shareholder Transaction Annual Fund Operating
Expenses Expenses
Sales Commissions to None Investment Advisor's Fee 1.00%
Purchase Share 12b-1 Fees None
Commissions to Reinvest None Other Operating Expenses .70%
Dividends Total Operating Expenses 1.70%
Redemption Fees None
Examples:
Use the following information to help you understand the various costs
and expenses customarily charged by mutual funds. Assume you bought
shares of Adams Equity Fund on January 1 and paid $1,000, that the
Fund achieves a 5% annual return, and that you redeem all shares on
December. You would pay the following expenses over the specified
periods:
1 year 3 years 5 years 10 years
$17 $54 n/a n/a
Expenses shown in these examples do not represent actual
past or future expenses. Actual expenses may be more or
less than those shown. The assumed 5% return in
hypothetical, and is not a representation or prediction of
past or future returns, which may be more or less than 5%.
Adams Equity Fund (continued)
Financial Highlights
Use this table to help you understand the Fund's financial performance
for the past four years. Certain information reflects financial
results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions.
(1)1995 1996 1997 1998
Net Asset Value Beginning of $10.00 $9.82 $11.82 $13.90
Period
Net Investment Income (Loss) .03 .02 (.10) (.11)
Net Realized and Unrealized Gain (.19) 2.62 2.18 (1.05)
(Loss) on Investments
Total Income (Loss) From Investment (.16) 2.64 2.08 (1.16)
Income
Dividends From Net Investment (.02) -- -- --
Income
Distributions from Net Realized -- (.64) -- --
Capital Gains
Returns of Capital -- -- -- --
Total Distributions (.02) (.64) -- --
Net Asset Value at End of Period 9.82 11.82 13.90 12.75
Total Return(2) (3)-1.50% 26.32% 17.60% -8.35%
Net Assets at End of Period $147 $254 $1,277 $890
(000s)
Ratio of Expenses to Average Net 1.16% 1.36% 1.74% 1.70%
Assets
Ratio of Net Income to Average .32% .18% (.75%) (.79%)
Net Assets
Portfolio Turnover Rate -- 65.00% 48.17% 70.86%
(1) Fund started in October 1995. Ratio of operating expenses to
average net assets has been annualized.
(2) See "Financial Information" on page 25 for more information on
Total Return.
(3) Total return for the partial period of October through December
1995 has not been annualized.
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C/Government Fund
Investment Objective
High yield with minimum net asset value volatility and credit risk.
Investor Profile
The investor who wants income and principal safety with minimum net
asset value volatility, but who also seeks a higher return than that
which is available through money market or bank savings accounts.
Investment Strategy and Implementation
This fund invests substantially all of its assets in obligations of
the U.S. government or one or more of its agencies which offers the
opportunity to minimize price change and uses yield curve timing and
maturity step-laddering. It only seeks the higher yields available on
issues with maturities longer than a year when the attendant net asset
value fluctuations can be minimized.
The fund buys seasoned issues below or above par or face value and
step-ladders the portfolio so that issues usually mature in even
periods. While there are no restrictions on maturities or terms of
purchased issues, the advisor typically invests in issues with under
10 year maturities. Maturities may change from time to time according
to the fund advisor's views on future interest rate trends.
Typically, all available monies are invested in government issues to
the extent practical, economical, and warranted by the then-existing
interest rate climate as it relates to the fund's objectives. When
any monies are uninvested, they are automatically swept overnight into
a short term money market which the advisor considers a permanent
portfolio investment class or sector.
Investment Risks
The advisor tries to minimize net asset value changes by adjusting the
portfolio from time to time, and to reduce share price risk through
various portfolio management techniques. But, shareholders should
know that fluctuations will likely occur in line with any changes in
the government issues held. Longer maturities afford higher yields
but contribute to price fluctuation.
Risk/Return Bar Chart and Table
The following bar chart and table provide an indication of the risks
of investing in C/Government Fund. The bar chart shows changes in the
Fund's performance from year to year since inception. The table shows
how the Fund's average annual returns for one and five years and since
inception compare to those of a broad-based securities market index.
Remember that how the Fund has performed in the past is not
necessarily an indication of how it will perform in the future.
C/Government Fund (continued)
Risk/Return Bar Chart and Table (continued)
[bar chart graphic]
During the period shown in the bar chart, the highest return for a
quarter was 5.1% (quarter ending September 30, 1998) and the lowest
return for a quarter was -0.5%% (quarter ending March 31, 1997).
Average Annual Total Returns Past Past Since
(for the periods ending 1 Year 5 Years Inception
December 31)
C/Government Fund 7.9% 6.2% 6.4%
Merrill Lynch 1-10 Year 8.6% 6.5% 6.9%
Treasury Index
* This is a widely recognized index of U.S. Government securities
with maturities of 1 to 10 years.
Fees and Expenses of the Fund
Use the following information to help you compare the fees and
expenses charged by this series with those of other mutual funds. All
of the Company's series are "no load " funds, meaning that you pay no
sales commissions to buy shares. There are no redemption fees or any
other kind of charges.
Shareholder Transaction Annual Fund Operating
Expenses Expenses
Sales Commissions to None Investment Advisor's Fee .50%
Purchase Share 12b-1 Fees None
Commissions to Reivnest None Other Operating Expenses .46%
Dividends Total Operating Expenses .96%
Redemption Fees None
Examples
Use the following information to help you understand the various costs
and expenses customarily charged by mutual funds. Assume you bought
shares of C/Government Fund on January 1 and paid $1,000, that the
Fund achieves a 5% annual return, and that you redeem all shares on
December 31. You would pay the following expenses over the specified
periods:
1 year 3 years 5 years 10 years
$10 $31 $53 $118
Expenses shown in these examples do not represent actual
past or future expenses. Actual expenses may be more or
less than those shown. The assumed 5% return in
hypothetical, and is not a representation or prediction of
past or future returns, which may be more or less than 5%.
Financial Highlights
Use this table to help you understand the Fund's financial performance
for the past five years. Certain information reflects financial
results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions.
C/Government Fund (continued)
Financial Highlights (continued)
1994 1995 1996 1997 1998
Net Asset Value Beginning of $9.93 $9.44 $10.02 $9.87 $10.01
Period
Net Investment Income (Loss) .44 .54 .56 .57 .54
Net Realized and Unrealized Gain (.47) .58 (.15) .14 .22
(Loss) on Investments
Total Income (Loss) From (.03) 1.12 .41 .71 .76
Investment Income
Dividends From Net Investment (.44) (.54) (.56) (.57) (.55)
Income
Distributions from Net Realized -- -- -- -- --
Capital Gains
Returns of Capital (.02) -- -- -- --
Total Distributions (.46) (.54) (.56) (.57) (.55)
Net Asset Value at End of Period 9.44 10.02 9.87 10.01 $10.23
Total Return -0.27% 12.34% 4.12% 7.35% 7.89%
Net Assets at End of Period $5,230 $3,972 $4,737 $4,543 $9,983
(000s)
Ratio of Expenses to Average 1.15% .99% 1.02% 1.01% .96%
Net Assets
Ratio of Net Income to Average 5.75% 5.54% 5.60% 5.74% 5.55%
Net Assets Assets
Portfolio Turnover Rate 122.48% 124.70% 59.95% 22.05% .00%
(1) See "Financial Information" on page 25 for more information on
Total Return.
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C/Community Association Reserve Fund
Investment Objective
Higher yields with minimum net asset value volatility.
Investor Profile
"Community Associations" that want to invest reserve funds safely
while earning a higher return than is available on bank deposits or
money market accounts with minimum net asset value fluctuation. This
fund is solely for "Community Associations" located in Florida, which
are registered and operating under the regulation of the State of
Florida Bureau of Condominiums.
Investment Strategy and Implementation
Current Florida laws and regulations govern how community associations
invest reserve funds to ensure that those funds remain safeguarded and
available for their designated capital expenditures uses.
Associations commonly deposit such reserves in insured bank and thrift
accounts. However, this can be a problem when the balances of many
large associations exceed insurance limits. Also, such balances are
often long-term, which creates a mismatch of maturities if long term
balances are limited to investments in short term, non-fluctuating
deposit accounts in financial institutions.
This specialty fund is specifically designed and managed as a
repository for community association reserve funds with the goals of:
o A higher return than is available from other forms of eligible
investments, and
o Net asset value safety and stability.
The fund qualifies as an eligible investment for association reserve
funds under Florida law and invests solely in obligations of the U.S.
government or its agencies. It invests in short to intermediate term
issues, most often having an average maturity of under 5 years. While
fluctuations may be greater with maturities greater than one year, the
fund advisor manages the portfolio to meet its objectives while
seeking to minimize share price volatility.
Mathematical comparison of price risk potential to intermediate
duration yields information that the advisor uses to assess whether
investing in higher interest paying issues of longer maturity is
profitable enough to justify or offset the added risk of price
fluctuations. The advisor also uses portfolio management techniques,
which may include, among others, yield-curve timing and portfolio
maturity step-laddering to achieve fund goals.
Investment Risks
The advisor tries to minimize net asset value changes by adjusting the
portfolio from time to time, and to reduce share price risk through
various portfolio management techniques. Shareholders should know that
fluctuations will likely occur just as if they had bought and held
government issues directly. Longer maturities afford higher yields but
contributes to share price fluctuation.
Risk/Return Bar Chart and Table
The following bar chart and table provide an indication of the risks
of investing in C/Community Association Reserve Fund. The bar chart
shows changes in the Fund's performance from year to year since
inception. The table shows how the Fund's average annual returns for
one and five years and since inception compare to those of a broad-
based securities market index. Remember that how the Fund has
performed in the past is not necessarily an indication of how it will
perform in the future.
C/Community Association Reserve Fund (continued)
Risk/Return Bar Chart and Table (continued)
[bar chart graphic]
During the period shown in the bar chart, the highest return for a
quarter was 2.6% (quarter ending December 31, 1997) and the lowest
return for a quarter was .5% (quarter ending September 30, 1997).
Average Annual Total Returns Past Past Since
(for the periods ending 1 Year 5 Years Inception
December 31)
C/Community Association 5.7% 6.1% 5.8%
Reserve Fund
Merrill Lynch 1-10 Year 8.6% 6.5% 6.9%
Treasury Index
* This is a widely recognized index of U.S. Government securities
with maturities of 1 to 10 years.
Fees and Expenses of the Fund
Use the following information to help you compare the fees and
expenses charged by this series with those of other mutual funds. All
of the Company's series are "no load " funds, meaning that you pay no
sales commissions to buy shares. There are no redemption fees or any
other kind of charges.
Shareholder Transaction Annual Fund Operating
Expenses Expenses
Sales Commissions to None Investment Advisor's Fee .50%
Purchase Share 12b-1 Fees None
Commissions to Reinvest None Other Operating Expenses .46%
Dividends Total Operating Expenses .96%
Redemption Fees None
Examples:
Use the following information to help you understand the various costs
and expenses customarily charged by mutual funds. Assume you bought
shares of C/Community Association Reserve Fund on January 1 and paid
$1,000, that the Fund achieves a 5% annual return, and that you redeem
all shares on December 31. You would pay the following expenses over
the specified periods:
1 year 3 years 5 years 10 years
$10 $31 $53 $118
Expenses shown in these examples do not represent actual
past or future expenses. Actual expenses may be more or
less than those shown. The assumed 5% return in
hypothetical, and is not a representation or prediction of
past or future returns, which may be more or less than 5%.
C/Community Association Reserve Fund (continued)
Financial Highlights
Use this table to help you understand the Fund's financial performance
for the past five years. Certain information reflects financial
results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions.
1994 1995 1996 1997 1998
Net Asset Value Beginning of $10.00 $10.00 $10.00 $10.00 $10.00
Period
Net Investment Income (Loss)(1) .59 .60 .58 .56 .52
Net Realized and Unrealized -- -- -- .04 .03
Gain (Loss) on Investments
Total Income (Loss) From .59 .60 .58 .60 .55
Investment Income
Dividends From Net Investment (.59) (.60) (.58) (.60) (.52)
Income
Distributions from Net Realized -- -- -- -- --
Capital Gains
Returns of Capital -- -- -- -- --
Total Distributions (.59) (.60) (.58) (.60) (.52)
Net Asset Value at End of Period 10.00 10.00 10.00 10.00 $10.03
Total Return(1) 6.36% 6.29% 5.95% 6.08% 5.70%
Net Assets at End of Period $59 $430 $548 $854 $724
(000s)
Ratio of Expenses to Average Net -- -- -- .14% .96%
Assets
Ratio of Net Income to Average 8.76% 5.96% 5.83% 6.21% 5.28%
Net Assets
Portfolio Turnover Rate -- 41.35% 9.61% 52.64% 14.20%
(1) See Financial Statement Note I.
(2) See "Financial Information" on page 25 for more information on
Total Return.
This page left blank intentionally.
Fund Performance Discussion
Management's discussion of Fund performance is contained in the
Company's Annual Report and in the Investment Letters produced monthly
by its Custodian, Caldwell Trust Company and mailed to all
shareholders. Both the Annual Report and these Investment Letters are
made a part of this Prospectus by reference. To receive a free copy
of the Annual Report, call or write the Company at the telephone
number or address shown on both the front and back covers of this
Prospectus. To review or print the Annual Report and Investment
Letters via the internet, go to http://www.ctrust.com.
Management and Capital Structure
Investment Advisor
Omnivest Research Corporation
250 Tampa Ave. West
Venice, FL 34285
Voice: (941) 493-4295
Toll-Free: (800) 338-9477
Fax: (941) 496-4660
The Company's Funds retain Omnivest Research Corporation ("ORC") as
investment Advisor under annual contracts with each fund. ORC is
registered under the Investment Advisors Act of 1940 and with the
Florida Division of Securities, Tallahassee, Florida. As such, it
periodically files reports with both agencies, which are available for
public inspection.
ORC is a Florida corporation wholly owned by Trust Companies of
America, Inc., a holding company controlled by Roland G. Caldwell
and his family. It has provided services to, and has had experience
with, the management of investment companies since 1984. Its investment
management history, and that of its principal, Roland G. Caldwell,
includes serving as portfolio manager and/or investment advisor to
corporations, individuals, retirement accounts, charitable
foundations, and insurance companies. 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.
Roland G. Caldwell is ORC's primary investment professional and fund
manager within ORC. He has been active without interruption since
1958 in the field of investment research and portfolio management,
both privately and as an officer of large domestic and foreign trust
and banking institutions.
William Adams serves as an ORC sub-advisor, helping to analyze and
select specific investments for the Adams Equity Fund. He has worked
in the securities industry since 1975, primarily as an account
executive with several leading brokerage firms where he helped manage
both fixed and equity portfolios for individual investors. Although
he acted continually in this capacity throughout this period using his
proprietary model to make stock selections, his first experience in
mutual fund management began in October 1995 with the opening of the
Adams Equity Fund.
As Advisor to all Fund series, ORC receives the following fees:
o 1% per annum of the average daily market value of the net assets of
C/Fund, C/Growth Stock Fund, and Adams Equity Fund, and
o .5% per annum of the average daily market value of C/Government Fund
and C/Community Association Reserve Fund.
Although 1% of assets may be higher than fees paid by some other
equity mutual funds, the Advisor believes it to be comparable to those
charged by other advisors to funds with similar objectives. The fee
also takes into account that the Advisor pays the costs of administer-
ing the Company's fund series portfolios, including accounting record
maintenance and shareholder ledgers.
Management and Capital Structure (continued)
Investment Advisor (continued)
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. If actual expenses ever exceed the 2%
limitation, the Advisor reimburses the Fund for such excess expenses
and fully discloses to Fund shareholders in financial statements in
accordance with generally accepted accounting practices.
ORC has its registered offices at 250 Tampa Avenue West, Venice,
Florida, 34285. C/Funds Group, Inc., shares facilities, space and
staff with both its custodian and with ORC.
Presently, the Company leases mutual fund software from C/Data Systems
which is wholly-owned by Trust Companies of America, Inc. (For
additional details, please refer to the History of Investment Advisor
section in the Statement of Additional Information).
Capital Structure
Organized October 24, 1984, the Company and its entire capitalization
consists solely of 5 million shares of authorized common stock with a
par value of $.001 each. When issued, each full or fractional share
is fully paid, non-assessable, transferable and redeemable.
Shareholder Information
Introduction
As a shareholder, you vote your Fund series shares at each annual or
special meeting on any matters on which you are entitled to vote by
law or under provisions of the Company's articles of incorporation.
All shares are of the same class, and each full share has one vote.
Fractional shares (issued to three decimal places) have no voting
rights.
You also vote to elect corporate directors and on other matters that
affect all Fund series. As a holder of a particular Fund series, you
vote on matters that exclusively affect that Fund series. For
example, you would vote on an investment advisory agreement or
investment restriction relating to your Fund series alone.
As holders of a particular Fund series, you have distinctive rights
regarding dividends and redemption, which are more fully described,
later in this Prospectus and in the Statement of Additional
Information. The Board of Directors, at its discretion, declares
dividends for each Fund series as often as is required for the Company
to maintain qualification under Sub-Chapter M of the IRS code.
If the Company liquidates or dissolves, as a holder of a particular
Fund series you will receive pro-rata and subject to certain rights of
creditors:
o The proceeds of the sale of that Fund series' portfolio, less
o That series' liabilities attributable its portfolio.
On the Company's liquidation, any general corporate liabilities and
assets will be fairly allocated among each of the Fund series
portfolios based on their respective liquidation values.
Direct all shareholder inquiries to the Company at the address and
telephone number listed on the cover page of this Prospectus.
Pricing of Fund Shares
The Company calculates the NAV 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. It ordinarily values its
portfolio of securities based on market quotes. If quotations are not
available, it values securities or other assets by a method, which the
Board of Directors believes most accurately reflects fair value.
Shareholder Information (continued)
Pricing of Fund Shares (continued)
The formula for calculating the NAV per share is:
Total market value of all assets, cash and securities held, minus
Any liabilities, divided by
The total number of shares outstanding that day.
Purchasing Shares
The Company requires no minimum to open an account or to make
subsequent investments. After opening an account, you can make
purchases in person, by mail, or by telephone if you make mutually
satisfactory telephone arrangements with the Company beforehand. In
telephone purchases, be aware that the Company cannot be held
responsible for acting on instructions it believes are received in
good faith.
To open an account:
o Complete and sign the application enclosed with each Prospectus,
o Return it personally or by mail to the Company at P. O. Box 622,
Venice, FL 34282-0622, along with a check payable to the name of
the Fund in which you are investing.
Your check for an initial or subsequent investment does not have to be
certified. If your check does not clear, the Company will cancel your
order(s) and you may be liable for losses or fees incurred, or both.
On the business day that your completed application and check are in
the Company's possession and it accepts your order, the Company
purchases shares for your account at the Net Asset Value ("NAV") per
share of the Fund you selected, as calculated that same day.
The Company opens a separate account for you for each Fund you
purchase. It credits each account with, and holds in it, all shares
that you purchase or that are issued to you, such as automatic
dividend reinvestments and capital gains distributions. The Company
allocates fractional shares for purchases (and redemptions), including
reinvested distributions. For example, if you purchase $1,000 at a
NAV of $11.76 per share, the Company will credit your account with
85.034 shares. Remember that for voting purposes, fractional shares
are disregarded.
If you want dividend or capital gains distributions in cash rather
than additional shares, or want share certificate issued, you can make
a written request containing all documentation that the Company
requires. Call the Company at 1-800-338-9477 or write to the address
shown on the front cover of this Prospectus to find out about the
documentation the company requires for such requests.
To accommodate IRA investments and IRA rollovers, which are often odd
amounts, the Company allows all IRA participants to invest or rollover
such IRA monies in Fund shares in any amount that is eligible or
allowed under current Internal Revenue Service rules.
The Company reserves the right to reject purchase applications or to
terminate the offering of shares made by this Prospectus if the Board
of Directors determines that such action is in the interest of
shareholders.
Redeeming Shares
The Company will redeem, with no redemption fee, all or any portion of
your shares in any Fund on any day that a NAV is calculated for that
Fund. The price paid to you will be the NAV per share next determined
after the Company receives your redemption request.
You must make redemption requests in writing unless you have made
prior telephone arrangements with the Company. You, and any other
owner of the affected account must sign the written request in the
exact same way that the shares are registered as shown on the original
application you submitted which the Company holds in its records.
Shareholder Information (continued
Redeeming Shares (continued)
You can make redemption requests by telephone only if you previously
deposited a validly signed and guaranteed stock power with the Company
and if no share certificates were issued to you. The signature(s) on
such stock powers must be guaranteed by an official of a commercial
bank, trust company, or member firm on the New York Stock Exchange.
If you hold a share certificate, to redeem it you must deposit it with
the Company along with all necessary legal documentation. That
documentation includes, but is not necessarily limited to, a written
and signed redemption request with the signature guaranteed as
described above for stock powers in telephone redemptions.
The Company normally pays for redeemed shares on the next business day
immediately following the redemption date. The Company reserves the
right, however, to withhold payment for up to five (5) business days
if necessary to protect the interests of the Company or its
shareholders. Redemption proceeds are mailed to the address to which
the Company registered the account.
If you purchase shares and then request redemption within 15 days, you
are not eligible to receive payment until the Company determines to
its satisfaction that the funds you used to make the purchase have
cleared and are available for payout.
If you make a small initial investment, you will be subject to a
mandatory redemption if you redeem a portion of the investment that
makes your remaining investment too small to justify the costs of
maintaining an open account, as the Company deems.
The Company reserves the right to refuse or discontinue share sales to
any investor who, in its opinion, is or may disrupt normal Company
operations or adversely affect the interests of the Company or Fund
shareholders by engaging in frequent or short-term purchase and
redemption practices or by other actions.
Share redemptions, whether voluntary or involuntary, may result in
your realizing a taxable capital gain or loss.
Dividends, Distributions, and Tax Consequences
The Company intends to remain a qualified "regulated investment
company" under Sub-Chapter M of the Internal Revenue Code and qualify
for the special tax treatment available by adhering to strict, self-
imposed restrictions.
Distributions to you as a shareholder of a particular Fund come from
interest and dividends that the Fund receives and net long-term
capital gains realized during the tax year. All such distributions
are normally considered as dividends taxable in most instances as
ordinary income when received, whether in cash or as additional
shares. Under tax rules, individual taxpayers must report 100% of all
income earned on shares owned with no deduction allowed for certain
fees and expenses incurred. In short, all distributions of dividends,
interest, and capital gains realized are normally subject to tax.
Early each calendar year, the Company will give you the information
you need to correctly report the amount and type of dividends and
distributions on your tax return. To avoid the Company having to
withhold a portion of your dividends, you must provide needed
information, including a valid, correct Social Security or Tax
Identification Number.
IRA and Retirement Accounts
If you are eligible to open and/or make deposits to an Individual
Retirement Account ("IRA") including a Roth IRA, or Self-Employed IRA
("SEP-IRA"), you can use the Company as custodian to hold Fund shares,
but no other form of investments, securities, or assets. You must use
a trust company or other eligible custodian to hold any non-Fund
related securities or investments. Caldwell Trust Company, the
Fund's custodian, is eligible to serve as custodian for such
purposes. It can and will serve as custodian for any Fund
shares on request. (For more information regarding such services
and fees, please call or write Caldwell Trust Company directly or
the Company at the address and telephone number shown on the front
page of this Prospectus).
Shareholder Information (continued)
IRA and Retirement Accounts (continued)
If you have or open an IRA or SEP-IRA account and want to invest all
or portion of your deposits in shares of any Fund series, you can do
so by opening a "Self-Directed" IRA or SEP-IRA account with the
Company. To obtain copies of the forms needed to open an account,
write or call the Company. Retirement plans 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.
You can also invest funds deposited into other types of profit-
sharing, pension or retirement plans, including Keogh accounts 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
help you establish 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 you retain professional counsel
for such purposes
Financial Information
Highlights
Financial highlights for each fund for the past five years, or since
inception if less, are included in the discussions of each fund. With
the exception of each fund's total return figures, this information
has been audited by Gregory, Sharer & Stuart whose report, along with
the Fund's financial statement, are available upon request.
To review this information for:
o C/Fund, go to page 3.
o C/Growth Stock Fund, go to page 7.
o Adams Equity Fund, go to page 11.
o C/Government Fund, go to page 14.
o C/Community Association Reserve Fund, go to page 19.
With the exception of each Fund's Total Return figure, this
information has been audited by Gregory, Sharer and Stuart whose
report, along with the Funds' financial statement, are included in the
Company's annual report which is available on request.
Shareholder Reports
The Company's latest annual financial statement is a part this
Prospectus by reference. If an interim financial statement with a
later date is available, it is incorporated by reference also. These
reports include:
o Statement of Assets and Liabilities,
o Statement of Operations,
o Statement of Changes in Net Assets,
o Schedule of Fund Investments,
o Per Share Tables,
o Notes to financial statements, and
o Any applicable supplementary information.
You receive the most recent annual statement and interim statement if
applicable, along with this Prospectus. Existing shareholders are the
exception, because they receive their statements earlier. You can
request a free copy of the most recent financial reports by contacting
the Company at the address on the cover of this Prospectus.
Custodian, Auditor, and Distributor
Custodian
Caldwell Trust Company, 201 Center Road, Venice, FL, 34292, serves as
custodian of the Funds' assets. Under an agreement as agent for the
Company, it is empowered to:
o Hold all assets, securities and cash for each separate series. It may
do so in the trust company's name or in its nominee name (or names). It
accounts to each fund regularly for these holdings.
p Accept instructions for the purchase, sale or reinvestment of all fund
assets from the Company's president or from the funds' investment
advisors.
o Disburse funds for authorized shareholder redemptions.
Auditor
Gregory, Sharer & Stuart, CPAs, 100 2nd Ave. S., St. Petersburg, FL
33701, Certified Public Accountants, serves 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 funds.
Distributor
The Company acts as distributor of all shares of its funds and
maintains its own shareholder register by fund, acting as transfer
agent for all common shares outstanding.
This page left blank intentionally.
The Statement of Additional Information for
C/Funds Group, Inc. contains more information
about the Company and its Funds. The Company's
Annual Report and its Semi-Annual Report if
applicable (which are incorporated into this
Prospectus by reference) also provide additional
information. In the Annual Report, you will find
a discussion of the Funds' performance during its
last fiscal year.
The Statement of Additional Information, Annual
Report, and Semi-Annual Report if applicable are
available to shareholders without charge. To
request a copy of any of these documents, call or
write C/Funds Group, Inc. at the telephone number
or address shown below.
Information about the Company and its Funds can be
reviewed and copied at the Securities and Exchange
Commission Public Reference Room in Washington,
DC. Information on the operation of the Public
Reference Room can be obtained by calling the
Commission at 1-800-SEC-0330. Reports and other
information about the Company and its Funds are
available on the Commission's internet site at
http://www.sec.gov and copies of this information
may be obtained, on payment of a duplicating fee,
by writing the Public Reference Section of the
Commission, Washington, DC 20549-6009.
C/Funds Group, Inc.
Investment Company Act File Number 811-04246
P. O. Box 622 Venice, Florida 34284-0622 941-488-6772 800-338-9477
http://www.ctrust.com/cfunds.htm
C/FUNDS GROUP, INC.
P. O. Box 622
Venice, Florida, 34284-0622
Voice: 941-488-6772 Toll-Free: 800-338-9477 Fax: 941-496-
4661
February 28, 1998
C/FUNDS GROUP, INC. ("the Company") is an open-end diversified
investment management company that operates a series of funds
in five portfolios ("the Funds") under the names C/FUND,
C/GROWTH STOCK FUND, ADAMS EQUITY FUND, C/GOVERNMENT FUND, AND
C/COMMUNITY ASSOCIATION RESERVE FUND.
This Statement of Additional Information is not a Prospectus.
You should read it in conjunction with the Prospectus dated the
same date. To receive a free copy of the Prospectus, write or
call the Company at the address or telephone numbers shown
above.
Table of Contents
Fund History 1
Date and Form of Organization 1
The Fund and Its Strategies and Risks 1
Classification 1
Investment Strategies and Risks 1
Fund Policies 5
Temporary Defensive Position 6
Portfolio Turnover 6
Management of the Fund 7
Board of Directors 7
Compensation 8
Control Persons and Principal Holders 9
Control Persons 9
Principal Holders 9
Management Ownership 9
Investment Advisory and Other Services 10
Investment Advisor 10
Services Provided by Advisor and Fund Expenses Paid 10
Service Agreements 11
Other Service Providers 11
Brokerage Allocation and Other Practices 11
Brokerage Transactions and Commissions 11
Brokerage Selection 12
Capital Stock 12
Purchase, Redemption, and Pricing of Shares 13
Purchase of Shares 13
Redemption of Shares 14
Pricing of Shares 14
Taxation of the Fund 15
Performance Calculation 16
Financial Information 16
Apppendix 17
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Fund History
Date and Form of Organization
C/Funds Group, Inc. was incorporated in the State of Florida on
October 24, 1984 under its original name, Caldwell Fund, Inc. In
1992, the corporation changed its name to C/Funds Group, Inc.
The Fund and Its Strategies and Risks
Classification
C/Funds Group, Inc. is a diversified, open-end, regulated investment
company registered under the Securities Acts of 1933 and 1934 and the
Investment Company Act of 1940.
Investment Strategies and Risks
Overview of the Funds and Their Objectives
Each Fund series has its own investment objective as briefly described
below.
o C/Fund is a "total return" fund that seeks growth and income. It buys
and owns both common stocks or equivalents, and fixed-income obliga-
tions in any proportion that its Adviser deems appropriate at any
given time.
o C/Growth Stock Fund invests substantially all of its assets in common
stocks or equivalents at all times as it seeks maximum growth of net
asset value with only minor concern for volatility.
o Adams Equity Fund buys and holds equities (common stocks or securities
convertible into common stocks) seeking growth in shareholder value
with current income yield of secondary importance;
o 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.
o C/Community Association Reserve Fund is a specialized fund offered
only to qualified community associations in the State of Florida for
investment of association reserve funds. It invests in U.S. Govern-
ment or Agency obligations for safety and income.
Total Return Concept
The Adviser believes that the "total return" concept is an all-
important, though not well understood, factor affecting all investors
and asset managers in contemporary times. The goal of maximizing
portfolio returns with a minimum of risk is now a universal maxim
within the investment community. The Adviser further believes that
most if not all asset managers either knowingly or unknowingly use the
concept in their attempts to maximize returns, regardless of the type
of investment used.
The risks of value loss due to price change or to a deterioration in
the issuer's financial health are vitally important influences in
selecting investment types and specific securities within each type.
Accordingly, the Adviser invests or reinvests fund assets in varying
proportions in either fixed investments or equity investments
according to the Adviser's view of the immediate outlook for each
category.
The Company's original fund, then called the Caldwell Fund, now called
C/Fund, was established with "total return" as its investment
objective. The basic outline of that strategy applies in some
respects to each Fund series, constrained mainly by the types of
investments each series 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 Strategies and Risks (continued)
Investment Strategies and Risks (continued)
Total Return Concept (continued)
The Fund and its Adviser think that high total returns are
mathematically achievable over time if a portfolio can:
o Minimize decline in investment value during periods of
sustained stock price weakness by reinvesting largely in
fixed-income investments; and
o Achieve average or better stock appreciation (as measured against
such popular market averages as the Dow-Jones Industrial and
Standard and Poor's 500 averages) during periods of rising prices.
There is, of course, no assurance that the Adviser can achieve
this objective.
When investment appreciation is the goal, the Adviser
invests most fund assets in securities of widely-held, well-
known companies. Such investments are mostly common stocks
and other securities, whose prices tend to rise or fall
similarly to stocks, that are equivalent to or convertible
into an equity investment. When asset value protection is
most important, the Adviser most often invests in highest
quality investments with maturities selected to achieve its
goals in such a market environment. Such investments would
include Treasury or Government Agency issues, money market
investments, and other investments of similar quality,
With fixed-income securities, market prices fluctuate with
changes in interest rates, generally the longer the maturity
the greater the percentage change. As such, investing in
fixed-income securities provides an opportunity to make
capital gains. To maximize total return, from time to time
the Adviser may also invest in fixed-income securities,
doing so for appreciation from capital gains rather than for
value protection or current income maximization. The
Adviser would confine its fixed-income investment purchases
to bonds rated A or better by Standard & Poors (see
Appendix).
Flexibility is key to achieving "total return" in a
portfolio. Smaller investment companies have the advantage
of being able to add or remove total positions without
substantially or adversely influencing the market value of
individual issues traded. In today's markets, the share
position size that can be traded without disrupting the
market for the issues involved 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. Its Board of Directors
could decide to do so at any time if they feel it would be
in the best interests of the Company and/or Fund
shareholders to maintain adherence to its objective which
requires that it be able to sell and buy total security
positions.
The Adviser deems the most important portions of a
portfolio's total returns to be income from interest and
dividends and appreciation in share value. Appreciation is
viewed as a form of repayment for the risks of price change
that cannot be avoided when owning securities such as common
stocks whose prices constantly change.
Recognizing that interest and dividends are important in
enhancing returns sometimes results in shareholders
incurring federal, state and/or local income taxes on a
significant portion of their annual distributions.
Shareholders should understand that such tax considerations
are secondary to maximizing the Fund's total returns when
the Adviser makes investment decisions.
The Fund and Its Strategies and Risks (continued)
Investment Strategies and Risks (continued)
Total Return Concept (continued)
This policy is partly based on the Adviser's belief 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 believes 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."
Common Stocks or Equivalents
These investments, "equities," represent either a residual share
ownership interest in a publicly-traded for-profit enterprise, or are
preferred shares or fixed-income obligations of an issuer that can be
converted into its common stock. In broad terms, the Adviser
categorizes for-profit enterprises into two basic groups: seasoned
large capitalization entities; and newer smaller capitalization
entities. The features that help determine which category best fits
any given enterprise are:
o Annual sales volume and the rate of growth being experienced in
sales;
o Market value of all shares outstanding;
o Amount of debt owed;
o Profitability of the enterprise;
o Length of time it has been successfully in business; and,
o Kind of business in which it specializes or is seeking to
participate.
Usually the applicable category for an enterprise is obvious. General
Motors, AT&T, IBM, General Electric, and American Home Products are
large, seasoned, widely-held enterprises with long records to analyze.
Conversely, an enterprise that has been in business only three to five
years when it first offers its shares publicly is clearly an
unseasoned enterprise, probably with relatively small annual sales
volumes and small market capitalization. Less obviously, 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, or have unseasoned
management, or offer a less well-defined or understood product or
service.
Because equities normally are not required to pay a dividend unless
declared and have no maturity date when repayment in full of an
initial investment is due, their market price tends to fluctuate with
the issuer's changing prospects and market conditions. This open-
ended nature makes equity investments more risky by definition and
accordingly inappropriate for some investment purposes.
Similarly, because common stocks have no fixed-income component
(convertible preferreds and fixed obligations excluded from this
definition because of their hybrid nature), investment value can
either advance or decline depending on the issuer's success. This
potential can attract those who are prepared to accept the risks in
exchange for the prospect of investment price appreciation and/or
dividend stream, as compared to other types of investments.
The Adviser believes equities or equivalents are the most attractive
type of investment available based on a superior long term equity
performance record, today's marketplace liquidity, and the favorable
longer term prospects for most enterprises in the current economic
environment. Accordingly, for those investors who can afford the
risk of price fluctuation or total investment loss in the most extreme
case, the Adviser expects that common stocks and equivalents will
continue to be the primary form of investment in Fund portfolios
allowing such investments.
The Fund and Its Strategies and Risks (continued)
Investment Strategies and Risks (continued)
Common Stocks or Equivalents (continued)
In making investment decisions, the Adviser considers all of these
criteria as well as commonly accepted financial data like per share
figures, return rates on capital, etc. Further, the Adviser uses
computer-generated data which provides information that helps to
determine whether the management team of an enterprise, regardless of
size, understands the need to add to shareholder wealth and knows how
to do it on a regular and sustained basis. This computerized analysis
uses inputs that are proprietary to the Adviser and its sources
including an enterprise's "cost of capital" and its rate of return on
invested capital. The Adviser believes that shareholder wealth is
created when return on investment exceeds cost of capital. Both
current and past experience are important indicators of whether an
enterprise is succeeding on this basis, which in turn the Adviser sees
as evidence of its management's capabilities in this important regard.
Fixed-Income Obligations
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 has unique characteristics and terms which are complex and
awkward to describe in detail individually. Before making a fixed-
income investment purchase, the Adviser examines all known relevant
data regarding term, rate of interest, call features, conditions of
repayment, collateral, guarantees, etc.
In the current environment, U. S. Government obligations dominate the
fixed-income market and interest rates on most fixed-income
obligations are related or pegged in some way to rates on similar
government obligations. In such an environment, the Adviser believes
there is less need to invest in non-government related fixed-income
investments.
Further, investors in general have become more risk-averse in recent
years creating a favor for fixed-income investments that have some
form of insurance or government guarantee or backing. Because the
borrowing needs of the U. S. Treasury and other U. S. Government
Agencies have created substantial growth in the size of the government-
related securities market, interest rates being paid on such issues
are no longer significantly lower than the rates on high quality
privately-issued fixed-income obligations.
Strategies in Practice in the Funds
Generally, the Investment Adviser to the Company's Funds invests
C/Fund assets mostly in shares of larger, more seasoned enterprises;
C/Growth Stock Fund mostly in shares of smaller, less seasoned
enterprises; and Adams Equity Fund in stocks of companies of all
sizes, large, medium and small. When the Adviser or sub-Adviser
believes an enterprise is an appropriate investment for a Fund, it
makes a purchase decision regardless of how others in the investment
field might categorize the enterprise as a 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 have faster growth prospects, regardless of
size, in the more aggressive funds.
The manager of the Adams Equity Fund relies heavily on a proprietary
valuation process. This dynamic process considers a company's growth
rate and rate of return on assets in concert with the changing
interest rate levels on long term U.S. Government bonds. This helps
identify under- and over-valued securities which generates buy and
sell signals that the manager may choose to act on. General market and
economic conditions are also considered 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
equity candidates are found for investment.
Because of the factors discussed above at "Fixed-Income Obligations"
and for other reasons, the Adviser favors purchasing government-
related obligations, mostly Notes and Bonds, for all funds, most
particularly those in which principal safety and income are primary
objectives such as C/Government Fund and C/Community Association
Reserve Fund. Although acquiring corporate fixed-income obligations
in C/Fund as part of its fixed-income component from time to time is
not prohibited, the Adviser favors and intends to continue to favor
government-related issues, which are more marketable than all other
forms of fixed-income securities. (See the Appendix for a further
definition of quality as defined by a major fixed-income rating
agency.)
The Fund and Its Strategies and Risks (continued)
Investment Strategies and Risks (continued)
Fund Policies
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. These restrictions
can only be fundamentally changed or amended 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, all Fund of the Company will not:
A. Invest in the direct purchase and sale of real estate.
B. nvest 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 25% or more of its total assets in a single industry or
similar group of industries, except U.S. government securities.
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.)
The Fund and Its Strategies and Risks (continued)
Fund Policies (continued)
N. Purchase or retain any securities issued by an issuer, if any officer,
director, or interested party of the Company or its Investment Adviser
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.
Regarding Item E above, the Company uses computerized cash management
sweep services offered by custodians. These services presently
include reinvesting overnight and short term cash balances in shares
of a money market whose primary objective is principal safety and
maximum current income from holding highly liquid, short-term, fixed
investments, principally U. S. Government and Agency issues. The
Company only invests in such funds temporarily for convenience and
efficiency as it tries to keep short term monies invested at interest
only it can make more permanent reinvestments in the ordinary course
of business.
Further, Item N above does not apply to C/Growth Stock Fund or Adams
Equity Fund, which is 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.
Temporary Defensive Position
Each fund series seeks to achieve its objectives by adhering to its
investment approach as outlined in the Prospectus. When equities are
the principal investment sector, each fund manager maintains short
term money market balances in order to earn interest on all cash
balances until stocks are selected and purchased. Likewise, fixed
income funds retain all cash in short term money market balances until
security selections are determined. In view of the modern investment
environment of low inflation and low interest rates, all fund managers
now consider money market balances as a permanent investment sector
when avoidance of price change on fixed investments is considered
consistent with fund objectives. As a total return fund, carrying
large money market balances at any given time for any length of time
is fully consistent with the objective of the C/Fund series.
Portfolio Turnover
The Company's policy is to limit each Fund's portfolio turnover to
transactions necessary to carry out its investment policies and/or to
obtain cash for share redemptions. Portfolio turnover rates, which
vary from period to period depending on market conditions, are
computed as:
The lesser of either total purchases or total sales, on an
annualized basis, divided by
The average total market value of the assets held.
For equity Funds, the portfolio turnover rate tends to be higher than
normal during formative years. Afterward, 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 Fund's investment
objectives. For government securities purchases and sales, turnover
is calculated if the securities mature beyond 1 year from date of
purchase. This tends to increase the portfolio turnover percentages,
which are reported for each Fund series in the financial statements
incorporated into this Statement of Additional Information by
reference.
Turnover rate differences from 1997 to 1998 were not significant for
C/Fund, C/Growth Stock Fund, and Adams Equity Fund given their
investment objectives and market conditions during the period. Drops
in turnover rate in the C/Government Fund and C/Community Association
Reserve reflect response to declining market interest rates. It is
anticipated that in the upcoming year changes in turnover rates for
the various funds will fluctuate driven by the same investment
objectives as they are pursued in the market environment that occurs.
Management of the Fund
Board of Directors
Under the By-Laws of the Company, the Board of Directors have control
and management of the business of the Company. Also, subject to the
laws of the State of Florida and the Company's Certificate of
Incorporation, they may do all those things and exercise all those
powers that are not required by law or by the Certificate of
Incorporation to be done or exercised by the shareholders.
The members of the Board of Directors have the power to appoint and
remove officers or employees, determine their duties, fix and change
their compensation, and, in an officer's absence, to grant his or her
powers to another officer. They may also fix and change any
compensation paid to members of the Board. By resolution, they may
designate committees that can exercise the powers of the Board in
management of the business and affairs of the Company..
Officers and Board of Directors
Following are the names, duties, and affiliations of the Officers of
the Company and the members of the Company's Board of Directors, as
elected by shareholders at the latest Annual Meeting of Shareholders.
Position Past Five Year Business
Name, Address, with Affiliations Age
and Age the Company and Primary Occupation
31
Roland G. Director VP/Secretary Trust Companies
Caldwell, Jr.* and of America, Inc.; Secretary
3320 Hardee President and Trust Officer Caldwell
Drive Trust Company; President
Venice, FL Omnivest Research Corp.
34292
William L. Chairman, Retired. Investments & Real 79
Donovan Board of Estate. Former VP Gately
736 Brightside Directors Shops, Inc., Grosse Pointe,
Crescent MI.
Venice, FL
34293
D. Bruce Vice Industrial Engineer, 64
Chittock Chairman, Equipment for Industry,
19625 Cats Den Board of Inc., Cleveland, OH.
Road Directors
Chagrin Falls,
OH 44023
Emmett V. Weber Director Capt.(ret.) USAir, 67
3411 Bayou Pittsburgh, PA; Real Estate.
Sound
Longboat Key,
FL 34228
Deborah C. Director VP CareVu Corporation; 42
Pecheux* and Sister Former Sr. Project Engineer
1911 Oakhurst of Ferranti, Intl., Houston,
Parkway President TX.
Houston, TX
77479
Lyn B. Braswell Secretary C/Funds Group, Inc.; Former 47
542 Silk Oak and Fund commercial banking
Venice, FL Administrat professional.
34293-4311 or
* Interested persons as defined under the 1940 Act
Investment Advisory Board
The Company's By-laws permit the President to appoint up to 15 persons
to serve on an Advisory Board until replaced, to help formulate
overall investment policies, if, and as requested by, the Company's
Directors and officers. This board's members will either be prominent
individuals or persons who may be important to the Company's success
and growth in the President's judgment.
The member's duties are totally external to the Company's daily
operation and they serve completely at the President's pleasure. They
have no direct, active contact with the Company, no knowledge of its
daily operations, and are not to be considered control or access
persons as defined in the 1933 or 1940 Acts. They possess only
advisory responsibilities that the President, Directors, Company and
Investment Advisor (ORC) may seek from time to time as they alone deem
necessary or desirable.
Management of the Fund (continued)
Investment Advisory Board (continued)
The people listed below currently serve on the Company's Advisory
Board, and will continue to serve until the President appoints a
successor.
Name, Address Affiliations and Occupations Age
Arthur B. Laffer, Former Distinguished Professor Pepperdine 58
Ph.D. University, California. Credited as one
Regents Square 1 of the architects of "supply-side"
4275 Executive Sq., economics. Professor Laffer was the
Suite 330 Chas. B. Thornton Professor of Business
La Jolla, CA 92037 at the University of 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.
Alan Reynolds Head of Economic Research, Hudson 56
P. O. Box 26-919 Institute Indianapolis, Indiana; former
Indianapolis, IN OMB Transition Member, Reagan
46226 Administration, Washington, DC.
Alvin Moscow Writer and author of numerous books, 73
3249 Manor Ridge including "Collision Course," "The
Gainesville, GA Rockefeller Inheritance," and others. Co-
30506 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 and 93
988 Blvd. of Arts Director Asolo State Theatre (Florida);
Sarasota, FL 33577 Trustee, New College; President, MVA,
Inc.
Willett J. Worthy, Vigneron, President and founder , Grand 66
Jr. River Wine Company, Madison, Ohio.
2150 Old Mill Road Former member on the investment staff at
Madison, OH 44057 the Cleveland Trust Company, Cleveland,
OH.
Manuel Johnson, Economist, Johnson Smick International. 50
Ph.D. Former Vice Chairman of the Federal
1133 Connecticut Reserve Board
Ave. NW
Washington DC 20036
Charles G. Callard Founder and Chairman of Callard Madden 75
11 S. Lasalle St., Associates, an investment research firm
Suite 820 in operation since 1968. Former
Chicago, IL 60603 instructor of economics at Miami
University.
Christopher J. Principal of Brazos Research, developer 44
Pecheux of computer models used in quantitative
1911 Oakhurst research of historical return
Parkway relationships for equities to help
Sugarland, TX formulate portfolio strategies.
77479 President of CareVu Corporation which
provides database software solutions to
the health care industry.
Compensation
All persons who hold positions with the Company and perform duties for
the Funds are employees of Trust Companies of America, Inc. ("TCA")
and are compensated by TCA. Expenses of "interested" directors and
Advisory Board members are and will always remain the responsibility
of the Investment Adviser to the Company and its Funds, Omnivest
Research Corporation ("ORC").
The non-interested Directors of the Company are the only persons
receiving compensation from the Company which has no retirement plan.
Compensation paid by the Company to non-interested Directors as of
fiscal year end 1998 is as follows:
Management of the Fund (continued)
Compensation (continued)
Name of Aggregate Pension or Estimated Total
Non- Compensat Retirement Annual Compensation
Interested ion Benefits Benefits from Company
Director From Fund Accrued As on and
Part of Fund Retirement Funds Paid to
Expenses Directors
William L. $4,300.00 $0.00 $0.00 $0.00
Donovan
D. Bruce $4,300.00 $0.00 $0.00 $0.00
Chittock
Emmett V. $4,300.00 $0.00 $0.00 $0.00
Weber
Control Persons and Principal Holders
Control Persons
Omnivest Research Corporation (ORC), the Investment Advisor to the
Company and its Funds, is a wholly owned subsidiary of Trust Companies
of America, Inc. (TCA). Shares of TCA, a corporation registered in
the State of Florida, are owned by approximately 140 shareholders.
Voting control of TCA is held by the Caldwell family.
Neither ORC nor TCA has control over the voting rights of Fund series
shareholders. No shareholder holds a controlling interest (more than
25%) of the total assets of the Funds.
Principal Holders
No individual shareholder either directly or beneficially owns 5% or
more of the shares of C/Fund, C/Growth Stock Fund, and C/Government
Fund. Following is principal holder information for Adams Equity Fund
and C/Community Association Reserve Fund.
Adams Equity Fund:
Owner Percentage
William L. Adams, Jr. 14.06%
7339 Hawkins Road
Sarasota, FL 34241
C/Community Association Reserve Fund:
Owner Percentage
Oyster Creek MHP Condo 5.30%
Assn.
South Creek Owners 7.12%
Assn., Inc.
Beach Manor Villas 7.93%
South, Inc.
Fiddlers Green Condo 15.39%
Assn.
Holiday Travel Park, 17.40%
Inc.
Mission Lakes of 25.80%
Venice Condo Assn.
Each of these community associations uses their association management
company's address as their mailing address: Keys-Caldwell, Inc., 250
Tampa Ave. W., Venice, FL 34285
Management Ownership
The officers, directors, and advisory board members as a group own 2%
of the total assets of the Funds.
Investment Advisory and Other Services
Investment Advisors
The Investment Adviser 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 whose majority
ownership is controlled by the Roland G. Caldwell family. TCA was
formed mid-1995 to serve as parent to all operating subsidiaries and
divisions, each of which provides a specific trust or financial
service to the general public under its own identity.
ORC was incorporated October, 1969, and has been continuously offering
investment advisory services since the date of its formation. Until
1995, ORC's principal activity was to provide investment advisory
services, primarily under contract to the Company, to banks and 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. In July, 1997, Roland G. Caldwell, Jr., who
is President of the Company, was elected President of ORC.
Roland G. Caldwell serves as director of ORC and its principal
investment professional. He has been actively employed and/or in
practice as a securities analyst, portfolio manager and Investment
Adviser since 1958, mainly managing trusteed accounts and similar
types of 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 provides services to the Company and all its Funds under contracts
which are non-assignable by ORC. Those contracts provide for payment
of a fee, calculated daily and paid monthly, at the rate specified in
each contract and based on the daily market value of the Fund's net
assets. For C/Fund, C/Growth Stock Fund, and Adams Equity Fund, that
rate is 1%. For the C/Government Fund and C/Community Association
Reserve Fund, that rate is .5%. These contracts, which shareholders
and the Board of Directors approve as required, are terminable upon 30
days written notice, one party to the other.
Management fees paid to ORC by the Company for the last three fiscal
years is shown below.
Year Amount
Ended
1998 $176,602
1997 $139,453
1996 $110,747
Services Provided by Advisor and Fund Expenses Paid
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 under the
terms of the investment contract with the Company. 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.
During its fiscal year ended December 31, 1998, 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. The Company does not expect the expenses of any Fund
series to exceed 2% of net asset value in any fiscal year.
Investment Advisory and Other Services (continued)
Services Provided by Advisor and Fund Expenses Paid (continued)
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
Adviser. ORC and its parent company TCA have been providing
administrative and shareholder services to the Company since
inception.
No part of the expenses of the Company or its Funds is paid by any
other party.
Service Agreements
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 G. Caldwell.
As of the date of this Statement of Additional Information, 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.
Other Service Providers
Transfer agent
C/Funds Group, Inc. serves as its own Transfer Agent under the
Securities Act of 1934 and as its own dividend paying agent. The
Company makes no charge to any of the Fund series for these services.
Custodian
The custodian for the Company and all its Fund series is Caldwell
Trust Company, 201 Center Road, Venice, Florida 34292. Caldwell Trust
Company ("CTC") is an independent trust company chartered in the state
of Florida and is a wholly-owned subsidiary of Trust Companies of
America, Inc. ("TCA"). TCA is a privately held company whose majority
ownership is controlled by the Roland G. Caldwell family.
The custodian performs customary custodial services under its Custody
Agreement with each of the Company's Funds. Among those services are
handling the purchase and sale of investments and manages securities
deliveries through the custodian's relationship with the Depository
Trust Company. The custodian also collects income on the property it
holds under its custodial agreements, pays expenses and remittances,
and reinvests income as instructed by the Company. The Company
compensates the custodian as they mutually agree from time to time.
Currently the fee paid to CTC by the Funds is calculated as .3% of the
market value per year for each fund.
Accountant
The independent accounts for the Company and all its Fund series is
Gregory, Sharer & Stuart, City Center, Suite 600, 100 Second Avenue
South, St. Petersburg, Florida 33701-4383.
Brokerage Allocation and Other Practices
Brokerage Transactions and Commissions
Orders to purchase and sell portfolio securities are 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 with the best execution obtainable. Buy and sell orders
are placed according to the type, size and kind of order involved and
as each condition may demand, to secure the best result for the
Company and its shareholders, all factors considered.
Brokerage Allocation and Other Practices (continued)
Brokerage Transactions and Commissions (continued)
The Company is permitted to and does use broker-dealer firms that:
(1) charge low commission rates; (2) have demonstrated superior
execution capabilities; and (3) provide economic, corporate and
investment research services. In the opinion of the Advisor, the
Company, and its Board of Directors, selections based on such criteria
serve the best interests of the Company and Fund shareholders.
Commissions paid to firms supplying such research include the cost of
research services.
Following are the aggregate commissions paid to these firms during the
last three fiscal years. The increases from year to year are normal
and consistent with normal fund growth and low portfolio turnover.
Year Amount
Ended
1998 $40,957
1997 $22,140
1996 $10,710
Brokerage Selection
The Company's policy is 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. All securities
transactions are made so as to obtain the most efficient execution at
the lowest transaction cost. However, nothing in this policy is to be
construed as prohibiting the Company or its Advisor from allocating
transactions to firms whose brokerage charges may include the cost of
providing investment or economic research, or other lawfully allowed
services, that are deemed necessary and/or valuable to the successful
management of Company assets.
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.
Placing transactions through these firms is not an obligation or
contractual arrangement but rather a practice that the Company
believes is in the best interests of all shareholders. Their studies
and transaction comparisons support the contention that value to
clients is due both to low commissions and the ability to execute
trades on all exchanges and in all markets at prices consistently at
or below like trades by other firms. Aggregate commissions paid to
such firms is stated above at "Brokerage Transactions and
Commissions."
The Advisor believes from experience that this claim to superior
execution capabilities is valid and that these firms offer Fund
shareholders values beyond low commissions. It is possible that a
trade made through such a firm could cost more than one made through a
regular retail broker or one whose rates include receive research
service costs. However, the Company believes that transaction costs
as a percentage of the value of the securities bought or sold as
currently practiced are lower than they would be if placed through
retail brokers.
The Company believes that transactions costs as a percentage of the
value of securities bought or sold are lower than if they were made
through regular retail or discount brokerage firms that provide the
research services the Company subscribes to and deems useful.
Capital Stock
The only securities authorized by the Company are 5,000,000 capital
shares at $.01 par value.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Initial Purchases
Investors can purchase common shares of the Company with no required
minimum investment and no sales charge by filling out an application
form, signing it correctly, and delivering it by mail or in person to
the Company's principal office in Venice, Florida. A copy of the
application is inserted as a part of the Prospectus and is available
to by request to the Company, which is the sole distributor of Fund
shares.
The purchase price will be at the next net asset value per share that
the Company determines after receiving a valid purchase order. The
date on which the Company accepts the application and the net asset
value that is calculated at the close of business on that date
determines the purchase price and will normally be the purchase date
for shares. Payment for shares purchased must be by check, which need
not be a certified check, or receipt of good funds by the Company.
The Company reserves the right to withhold or reject requests for
purchases for any reason, including uncollectable funds. If a
purchase is canceled purchase due to uncollectable funds, the
purchaser is liable for all administrative costs incurred and for all
other losses or charges for the invalid transfer and/or purchase.
IRA accounts and other pension accounts can purchase shares of the
Company at any time for any eligible amount.
Subsequent Purchases
Subsequent purchases of shares by a registered shareholder can 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 can be made in any amount with no minimum required and with
no sales charge. Such amounts are due and payable to the Company in
good funds on the purchase date. Purchasers should be aware that
telephone purchase orders 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 automatically reinvests all dividend distributions to
shareholders in additional shares of the Company at the net asset
value determined as of the close of business on the dividend
distribution payment date, unless the shareholder instructs otherwise
in writing before the distribution record date.
Fractional Shares
When share purchases or redemptions are made or when a shareholder
requests cash, 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
The Company does not issue share certificates to registered
shareholders unless they specifically request issuance in writing to
the Company. All such requests must be signed exactly as the share
registration appears on the shareholder register kept by the Company
as its own Registrar and Transfer Agent. However, due to the
additional work involved with issuing certificates and the added
costs, 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.
Purchase, Redemption, and Pricing of Shares (continued)
Redemption of Shares
Shareholders can sell back all or a portion of their shares to the
Company on any day that the Fund's net asset value ("NAV") is
calculated, Such share redemptions will be made as described in
detail in the Prospectus dated this same date and are subject to the
terms and conditions stated in this document. The Company makes
redemptions at the next NAV calculation after it receives and accepts
the redemption request. Although the Company can withhold payment for
redeemed shares until it is reasonably satisfied that all funds for
any purchases have been collected, payment will normally be made the
next business day immediately following redemption date. However, the
Company reserves the right to hold payment up to five (5) business
days if necessary to protect the interests of the Company and its
shareholders.
If the New York Stock Exchange is closed for any reason other than
normal weekend or holiday closings, if trading is halted or restricted
for any reason, or if any emergency circumstances are determined by
the Securities and Exchange Commission, the Company's Board of
Directors of have the authority and may suspend redemptions or
postpone payment dates.
Under circumstances the Board of Directors may determine, it may, like
most other mutual funds, elect to make payments in securities or other
Company assets rather than in cash, if they deem at the time that such
payment method 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 that small accounts be
redeemed and closed if the cost of activity in the accounts is
unjustified. The Company will provide prior notice of not less than
60 days to shareholders before 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 who hold share certificates and want to redeem their
shares must deliver those certificates to the Company in person or by
mail in good form for transfer before redemption can occur.
Signatures on all certificates to be redeemed must be guaranteed 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
redemption request will be honored. The Company will not accept
signatures guaranteed by a Notary Public.
The Company has 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.
Pricing of Shares
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 NYSE is open, and on any other day in which enough
trading in portfolio securities occurs so that value changes might
materially affect the current net asset value. 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.
Purchase, Redemption, and Pricing of Shares (continued)
Pricing of Shares (continued)
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 will 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.
Taxation of the Fund
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 qualifies and
distributes substantially all of its taxable net investment income
(NII), the Company (but not its shareholders) is required to pay
Federal income taxes only on that portion of its investment income
that is undistributed. Otherwise, the Company would be taxed at
ordinary corporate federal and state income tax rates on any NII not
distributed to shareholders at least annually.
The Company intends to remain qualified under Sub-Chapter M of the
Internal Revenue Code by:
o Distributing to each shareholder at least 90% of the aggregate
NII of each Fund at least annually,
o Investing and reinvesting so that no more than 30% of aggregate
Fund NII is derived from gains on the sale of securities held
less than three months; and
o Investing its portfolios so that 50% or more of Fund assets are
invested in stock issues, no one of which exceeds 5% of the value
of Fund aggregate assets at purchase price.
Dividends paid to shareholders are in effect distributions of the
Company's NII which are normally taxable to shareholders when received
whether in cash or as additional shares. Distributions to
shareholders of any realized capital gains are also taxable under
existing tax laws at ordinary income tax rates, whether distributed in
cash or as additional shares.
For a shareholder who sells shares back to the Company as a
redemption, the tax treatment will depend on 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 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 will 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.
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.
Performance Calculation
The Company does not advertise performance of any of its Fund series.
Each month a report of the NAV history f each fund is provided to
shareholders in graphic form without reference to any percentage
change in NAV performance year-to-date or for any other partial year
period. Each year a report is made public to provide performance of
each Fund series for a full calendar year as computed in conformity
with AIMR standards.
Financial Information
The Company's audited Annual Report, and its Semi-Annual Report if
applicable, are incorporated into this Statement of Additional
Information by reference. Investors may request a free copy by
calling or writing the Company at the telephone number or address
shown on the cover page of this document.
For financial highlights for each Fund series, see the section of the
Prospectus describing each Fund. For information regarding the
compensation of Company officers and directors, see the "Compensation"
topic in this Statement of Additional information on page 9.
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.
February 28, 1999
Item 23. Exhibits
(a)Articles of Incorporation
Enclosed with Prior Filing Dated April 30, 1992
(b)By-Laws (including Indemnification Clause)
Enclosed with Prior Filing Dated April 30, 1992
(c)Instruments Defining Rights of Security Holders
(Included in Prospectus and By-Laws)
By-Laws Enclosed with Prior Filing Dated April 30, 1992
Prospectus Filed Herewith
(d)Investment Advisory Contract Extension Addenda
Enclosed Herewith.
(e)Underwriting Contracts
Not Applicable.
(f)Bonus or Profit Sharing Contracts
Not Applicable.
(g)Custodian Agreement Extension Addenda
Enclosed Herewith.
(h)Other Material Contracts
Not Applicable.
(i)Legal Opinion
Enclosed Herewith.
(j)Other Opinions:
1. Auditors Consent To Publish Financial Statements
Enclosed Herewith.
2. Auditors Internal Control Letter
Enclosed Herewith.
(k)Financial Statements
Enclosed Herewith
(l)Initial Capital Agreements (Specimen Subscription Form
and List of Original Investor Subscribers to Shares in
the Fund).
Enclosed with Prior Filing Dated June 12, 1985.
(m)Rule 12b-1 Plan
Not Applicable.
(n)Financial Data Schedules
Enclosed Herewith.
(o)Rule 18f-3 Plan
Not Applicable.
(p)Other
1. Code of Ethics
Enclosed with Prior Filing Dated October 15, 1995.
2. Updated Charter of Incorporation, State of Florida
Enclosed with Prior Filing Dated February 28, 1994.
3. Specimen Share Certificate
Enclosed with Prior Filing Dated September 15, 1997.
4. IRA Specimen Custody Account Opening Form
Enclosed with Prior Filing Dated April 30, 1992.
Item 24. Persons Controlled by or Under Common Control with the
Fund
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 G. Caldwell, Jr. is President of
Registrant and serves as President of ORC.
Item 25. Indemnification (By-Laws Article XI, Indemnification of
Officers and Directors)
Included by Reference to Registration Statement Filed
February 28, 1985, As Thereafter Amended.
Item 26. 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 President of ORC.
Item 27. Principal Underwriters.
Not Applicable
Item 28. Location of Accounts and Records.
Registered Office of Registrant
250 Tampa Avenue West
Venice, FL 34285
Books & Records Also Maintained At:
201 Center Road, Suite 2
Venice, FL 34292
Records Used and Kept By:
Roland G. Caldwell, Jr., President
Item 29. 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. 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 30. Undertakings.
None.
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(b) 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 28th day of February, 1999.
Registrant:
C/FUNDS GROUP, INC.
By: By:
/signature/ /signature/
____________________________ ____________________________
Roland G. Caldwell, Jr. William L. Donovan
Director/President Director
By: By:
/signature/ /signature/
____________________________ ____________________________
Deborah C. Pecheux Lyn B. Braswell
Director Secretary
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<AVERAGE-NET-ASSETS> 6825589
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .64
<PER-SHARE-GAIN-APPREC> .22
<PER-SHARE-DIVIDEND> .55
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 10.23
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> C/TAX-FREE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 336885
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 66829
<OTHER-INCOME> 0
<EXPENSES-NET> 12396
<NET-INVESTMENT-INCOME> 54433
<REALIZED-GAINS-CURRENT> (18681)
<APPREC-INCREASE-CURRENT> (53037)
<NET-CHANGE-FROM-OPS> (17285)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 54245
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6747
<NUMBER-OF-SHARES-REDEEMED> 347985
<SHARES-REINVESTED> 4353
<NET-CHANGE-IN-ASSETS> (3318545)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6199
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 12396
<AVERAGE-NET-ASSETS> 1071861
<PER-SHARE-NAV-BEGIN> 9.85
<PER-SHARE-NII> .55
<PER-SHARE-GAIN-APPREC> (.55)
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 9.31
<PER-SHARE-NAV-END> .00
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> C/COMMUNITY ASSOCIATION RESERVE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 711271
<INVESTMENTS-AT-VALUE> 714966
<RECEIVABLES> 9529
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 724495
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 263
<TOTAL-LIABILITIES> 263
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 72179
<SHARES-COMMON-PRIOR> 85402
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 724232
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 51105
<OTHER-INCOME> 0
<EXPENSES-NET> 7897
<NET-INVESTMENT-INCOME> 43208
<REALIZED-GAINS-CURRENT> 437
<APPREC-INCREASE-CURRENT> (354)
<NET-CHANGE-FROM-OPS> 43291
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 43207
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 47089
<NUMBER-OF-SHARES-REDEEMED> 64616
<SHARES-REINVESTED> 4304
<NET-CHANGE-IN-ASSETS> (129602)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4120
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7897
<AVERAGE-NET-ASSETS> 750498
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .62
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> .52
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 10.03
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> ADAMS EQUITY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 834294
<INVESTMENTS-AT-VALUE> 880717
<RECEIVABLES> 555
<ASSETS-OTHER> 8778
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 890050
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 492
<TOTAL-LIABILITIES> 492
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 69830
<SHARES-COMMON-PRIOR> 91852
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 889558
<DIVIDEND-INCOME> 8593
<INTEREST-INCOME> 2250
<OTHER-INCOME> 0
<EXPENSES-NET> 20340
<NET-INVESTMENT-INCOME> (9497)
<REALIZED-GAINS-CURRENT> (12064)
<APPREC-INCREASE-CURRENT> (144540)
<NET-CHANGE-FROM-OPS> (166101)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11757
<NUMBER-OF-SHARES-REDEEMED> 33779
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 387084
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (12358)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12214
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20340
<AVERAGE-NET-ASSETS> 1154768
<PER-SHARE-NAV-BEGIN> 13.90
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> (1.05)
<PER-SHARE-DIVIDEND> .00
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> .00
<PER-SHARE-NAV-END> 12.74
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> BEEBE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 31538
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 16647
<INTEREST-INCOME> 2023
<OTHER-INCOME> 0
<EXPENSES-NET> 14357
<NET-INVESTMENT-INCOME> 4313
<REALIZED-GAINS-CURRENT> (115332)
<APPREC-INCREASE-CURRENT> (5553)
<NET-CHANGE-FROM-OPS> (116572)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 120203
<NUMBER-OF-SHARES-REDEEMED> 151741
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (320987)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 59
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9086
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14357
<AVERAGE-NET-ASSETS> 811301
<PER-SHARE-NAV-BEGIN> 10.18
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> (1.35)
<PER-SHARE-DIVIDEND> .00
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 8.88
<PER-SHARE-NAV-END> .00
<EXPENSE-RATIO> .26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
REPORT ON INTERNAL ACCOUNTING CONTROL
To the Board of Directors
C/FUNDS Group, Inc.
Venice, Florida
In planning and performing our audit of the financial statements
the C/Fund, C/Growth Stock Fund, C/Government Fund, C/Community
Association Reserve Fund, and Adams Equity Fund (five of the
portfolios constituting the C/FUNDS Group, Inc.) for the year
ended December 31, 1998, we considered its internal control,
including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply
with the requirements of Form N-SAR, not to provide assurance on
internal control.
The management of C/FUNDS Group, Inc. is responsible for
establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in internal control, error or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that it may become inadequate because of changes in
conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving
internal control, including controls for safeguarding securities,
that we consider to be material weaknesses as defined above as of
December 31, 1998.
This report is intended solely for the information and use of
management, the board of directors of C/FUNDS Group, Inc., and
the Securities and Exchange Commission.
GREGORY, SHARER & STUART
St. Petersburg, Florida
January 22, 1999
REPORT ON INTERNAL ACCOUNTING CONTROL
To the Board of Directors
C/FUNDS Group, Inc.
Venice, Florida
In planning and performing our audit of the financial statements
the C/Tax Free Fund and Beebe Fund (two of the portfolios
constituting the C/FUNDS Group, Inc.) for the periods ended
December 3, 1998 and December 30, 1998, respectively, we
considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form
N-SAR, not to provide assurance on internal control.
The management of C/FUNDS Group, Inc. is responsible for
establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those
controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in internal control, error or
fraud may occur and not be detected. Also, projection of any
evaluation of internal control to future periods is subject to
the risk that it may become inadequate because of changes in
conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily
disclose all matters in internal control that might be material
weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a
condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving
internal control, including controls for safeguarding securities,
that we consider to be material weaknesses as defined above as of
December 3, 1998 and December 30, 1998, respectively.
This report is intended solely for the information and use of
management, the board of directors of C/FUNDS Group, Inc., and
the Securities and Exchange Commission.
GREGORY, SHARER & STUART
St. Petersburg, Florida
January 22, 1999
ADDENDUM TO CONTRACT
Investment Advisory Contract
Contract dated November 1, 1993, between the C/Fund
Series of C/Funds Group, Inc. and Omnivest Research Company
setting forth the terms under which Omnivest will serve as
Investment Advisor for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Omnivest Research Corporation
C/Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President Investment Principal
ADDENDUM TO CONTRACT
Investment Advisory Contract
Contract dated November 1, 1993, between the C/Growth
Stock Fund Series of C/Funds Group, Inc. and Omnivest
Research Company setting forth the terms under which
Omnivest will serve as Investment Advisor for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Omnivest Research Corporation
C/Growth Stock Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President Investment Principal
ADDENDUM TO CONTRACT
Investment Advisory Contract
Contract dated November 1, 1993, between the
C/Government Fund Series of C/Funds Group, Inc. and Omnivest
Research Company setting forth the terms under which
Omnivest will serve as Investment Advisor for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Omnivest Research Corporation
C/Government Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President Investment Principal
ADDENDUM TO CONTRACT
Investment Advisory Contract
Contract dated November 1, 1993, between the
C/Community Association Reserve Fund Series of C/Funds
Group, Inc. and Omnivest Research Company setting forth the
terms under which Omnivest will serve as Investment Advisor
for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Omnivest Research Corporation
C/Community Association
Reserve Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President Investment Principal
ADDENDUM TO CONTRACT
Investment Advisory Contract
Contract dated October 12, 1995, between the Adams
Equity Fund Series of C/Funds Group, Inc. and Omnivest
Research Company setting forth the terms under which
Omnivest will serve as Investment Advisor for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Omnivest Research Corporation
Adams Equity Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President Investment Principal
ADDENDUM TO CONTRACT
Custody Agreement
Contract dated November 1, 1993, between the C/Fund
Series of C/Funds Group, Inc. and Caldwell Trust Company
setting forth the terms under which Caldwell Trust Company
will serve as Custodian for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Caldwell Trust Company
C/Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President President and Chief Executive
Officer
ADDENDUM TO CONTRACT
Custody Agreement
Contract dated November 1, 1993, between the C/Growth
Stock Fund Series of C/Funds Group, Inc. and Caldwell Trust
Company setting forth the terms under which Caldwell Trust
Company will serve as Custodian for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Caldwell Trust Company
C/Growth Stock Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President President and Chief Executive
Officer
ADDENDUM TO CONTRACT
Custody Agreement
Contract dated November 1, 1993, between the
C/Government Fund Series of C/Funds Group, Inc. and Caldwell
Trust Company setting forth the terms under which Caldwell
Trust Company will serve as Custodian for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Caldwell Trust Company
C/Government Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President President and Chief Executive
Officer
ADDENDUM TO CONTRACT
Custody Agreement
Contract dated November 1, 1993, between the
C/Community Association Reserve Fund Series of C/Funds
Group, Inc. and Caldwell Trust Company setting forth the
terms under which Caldwell Trust Company will serve as
Custodian for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Caldwell Trust Company
C/Community Association
Reserve Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President President and Chief Executive
Officer
ADDENDUM TO CONTRACT
Custody Agreement
Contract dated July 10, 1995, between the Adams Equity
Fund Series of C/Funds Group, Inc. and Caldwell Trust
Company setting forth the terms under which Caldwell Trust
Company will serve as Custodian for the Series.
It is agreed that the contract shall be extended until
December 31st, 1999. All other terms and conditions of the
original contract shall remain the same.
AGREED:
C/Funds Group, Inc. Caldwell Trust Company
Adams Equity Fund Series
[signature] [signature]
By: Roland G. Caldwell, Jr Roland G. Caldwell
President President and Chief Executive
Officer
Law Office
Andrew J. Britton, P. A.
Suite A
245 N Tamiami Trail
Venice, Florida 34285
February 18, 1999
Mr. Roland Caldwell
C/Funds Group, Inc.
250 W. Tampa Avenue
Venice, Florida 34285
RE: C/Funds Group, Inc. Registration
Dear Roland:
Pursuant to your request, I am furnishing you with the
following legal opinion based on copies of documents and
information provided to me from you.
I have assumed the authenticity and completeness of all
documents submitted as originals, the conformity to the
originals of all documents submitted as copies, and the
authenticity and completeness of the originals of all
documents submitted as copies. I have also assumed the
genuineness of the signatures of persons signing all
documents in connection with which this opinion is rendered
and the authority of such persons signing. Further, I have
assumed that no originals or copies submitted to me have
been amended or modified since the date they were submitted
to me.
It is my opinion that the C/Funds Group, Inc. is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida and that its
Articles of Incorporation provide that when its shares of
common stock are sold, they will be legally issued, fully
paid and non-assessable. No opinion is being rendered with
respect to laws of any other state or of the federal
government.
Very truly yours,
Andrew J. Britton
AJB/bk
a:misc.lt\cfunds.lt
[100% NO-LOAD COUNCIL LOGO]
C/FUNDS GROUP, INC.
[C/FUNDS LOGO]
o C/Fund
o C/Growth Stock Fund
o Adams Equity Fund
o C/Government Fund
o C/C.A.R. Fund
1998 Annual Report
Table of Contents
Letter to Shareholders 1
Comparative Performance 2
Portfolios of Investments 4
Audited Financial Statements 10
Notes to Financial Statements 14
Report of Independent Certified
Public Accounts 16
LETTER TO SHAREHOLDERS
Despite three consecutive years of above-average increases in stock
prices, 1998 again surprised both professionals and average investors with
another calendar year of total returns in excess of 20%. And again, the
managers of C/Funds Group portfolios feel obliged to caution all investors
that increases at these rates are not sustainable over an extended period
of years.
Our explanation is fairly simple for this excellent experience, i.e.,
the rise of stock prices since 1994 probably represents a one-time up-
valuation that reflects two major factors that greatly influence investor
behavior in general. One is the drop in inflation from the 6%+ level to at
or below 1% per year currently. The other factor is the stabilization of
tax rates at all levels of government. It is important to remind investors
that while tax rates can indeed go lower in this climate of government
budget surpluses, a further decline in inflation is now out of the
question. Thus absent a major reform of our tax system that significantly
lowers the tax burdens of individuals, businesses, and investors, another
major one-time adjustment in share prices seems increasingly remote. This
being so, it would be our expectation that stock prices will henceforth
move upward at a more normal average pace nearer the historic 8-12% annual
rate, albeit also likely that this kind of experience seems to us to be now
more sustainable and predictable than in the past.
The year was also notable for C/Funds Group in that its shareholders
approved the liquidation of two of its fund series, namely the C/Tax Free
Fund series, and the Beebe Fund series. These liquidations have been
completed and regulatory requirements have been met. The decisions that
led to the closing of these two funds were for different reasons. In the
first instance, the managers concluded that tax-frees as a class now
offered investors a relatively poor return versus the market risks looming;
and in the case of the Beebe Fund, it was because of the untimely and
unanticipated early death of Mr. Beebe, for which we all send heartfelt
thoughts to his family and friends.
Consistent with the excellent year in the stock markets, the C/Fund
and C/Growth Stock Fund both again achieved above 20% total returns for
shareholders. The Government Bond Fund and the Community Association
Reserve Fund likewise had good years of NAV per share stability, while
paying shareholders a monthly yield at or in excess of investments similar
to the government securities in which they both invest. The Adams Equity
Fund, which follows a different style of investing, after its stellar 1997
performance, was unable to achieve a favorable result in 1998.
While the customary detailed performance data and other company and
fund portfolio financials are provided to shareholders on the following
pages, we wish to point out one actual, historical experience which we
believe is more revealing than all the statistics put together. In March,
1985, Mr. Howard Sievers of Venice, Florida invested $5,000 in the then
Caldwell Fund, which today is called the C/Fund. He neither added to, nor
withdrew any money or dividends from, the account from that date through
December 31, 1998. His statement as of February 3, 1999 showed the total
value of his $5,000 investment to be $29,074.35! Need we tell anyone that
this is just under six times the value of his original investment? Enough
said for buying and holding through all markets, good and bad.
Congratulations, Howard, and we are pleased to give you a great big public
thank you for allowing us to tell your story and for your confidence in
what we do.
As always, we wish to thank all staff members, shareholders, directors
and officers for their contribution to the company's success this past
year.
Respectfully Submitted:
R. G. "Kelly" Caldwell, Jr.
President
February 25, 1999
C/Fund
Illustration of a $10,000 Investment
[graphic]
C/Growth Stock Fund
Illustration of a $10,000 Investment
[graphic]
Adams Equity Fund
Illustration of a $10,000 Investment
[graphic]
C/Government Fund
Illustration of a $10,000 Investment
[graphic]
C/Community Association Reserve Fund
Illustration of a $10,000 Investment
[graphic]
Performance Summary
As of December 31, 1998
Since
1 Year 5 Year 10 Year Inception
C/Fund 21.39% 16.31% 14.39% 13.63%
C/Growth Stock Fund 21.25% 23.35% n/a 12.54%
Adams Equity Fund -8.35% n/a n/a 9.57%
C/Government Fund 7.89% 6.22% n/a 6.35%
C/C.A.R. Fund 5.70% 6.08% n/a 5.75%
C/FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
Shares Value
EQUITIES 77.4%
Automotive(2.7%)
Ford Motor Company 2,000 $117,500
General Motors 2,000 140,625
Sector Total 258,125
Building Supplies(1.9%)
Home Depot 3,000 183,562
Chemicals(12.3% )
American Home Products 4,000 225,500
Bristol Myer Squibb 2,000 266,125
Colgate Palmolive 2,000 186,875
Dow Chemical 1,000 91,000
DuPont 1,500 84,562
Merck 1,000 147,688
Proctor & Gamble 1,500 138,469
Union Carbide Corp. 875 37,406
Sector Total 1,177,625
Communications (0.8%)
AT&T 1,000 76,375
Computer/Office Equipment (3.95)
IBM 2,000 370,625
Diversified Investment Trust (10.6%)
Diamonds Trust Series 1 11,000 1,014,750
Diversified Manufacturing (1.5%)
Minnesota Mining & 2,000 147,875
Manufacturing
Eating & Drinking Places (0.7%)
McDonald's 875 67,922
Electronics (4.5%)
General Electric 1,500 152,719
Hewlett Packard 875 60,047
Lucent Technologies 2,000 220,875
Sector Total 433,641
Financial (2.6%)
American Express 875 90,563
Citigroup Inc. 1,312 65,600
J. P. Morgan 875 92,750
Sector Total 248,913
Food (7.8%)
Archer-Daniels-Midland 8,244 139,118
Coca Cola Co. 1,225 81,922
Lancaster Colony Corp. 3,000 96,000
PepsiCo 4,000 163,000
Philip Morris 5,000 269,687
Sector Total 749,727
Food Stores (2.0%)
Albertsons 3,000 191,250
Health Care (1.8%)
Johnson & Johnson 875 73,500
Gillette 2,000 96,750
Sector Total $170,250
C/FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1998
Shares Value
Industrial Machinery (3.5%)
Black & Decker 3,000 $170,625
Caterpillar, Inc. 1,500 70,875
Parker Hannefin Corp. 3,000 97,125
Sector Total 338,625
Instruments (2.8%)
Eastman Kodak 2,000 145,125
Emerson Electric 2,000 124,875
Sector Total 270,000
Leisure/Entertainment (0.8%)
Walt Disney Co. 2,625 78,914
Metal (0.7%)
ALCOA 875 65,461
Paper (1.5%)
International Paper Co. 875 39,320
Kimberly-Clark 2,000 108,750
Sector Total 148,070
Petroleum & Coal (5.05)
Amoco 2,000 116,000
Chevron Corp. 875 72,625
Exxon Corp. 4,000 293,750
Sector Total 482,375
Railroad (1.4%)
CSX Corp. 1,000 41,500
Union Pacific 2,000 90,500
Sector Total 132,000
Retail (4.3%)
Sears. Roebuck 2,000 85,500
Wal-Mart 4,000 325,750
Sector Total 411,250
Rubber & Plastics (0.55)
Goodyear Tire & Rubber 875 44,133
Transportaiton Equipment (2.2%)
Allied Signal 1,500 66,750
Boeing Co. 1,500 49,312
United Technologies 825 90,183
Sector Total 206,245
Transportation Services (1.65)
GATX Corp. 4,000 152,000
TOTAL EQUITIES (77.4%) 7,419,713
GOVERNMENTS (13.5%)
U. S. Treasury Notes 8% 1,200,000 1,289,250
due 05/15/2001
CASH AND EQUIVALENTS (9.1%) 874,911
TOTAL INVESTMENTS (100%) $9,583,874
C/GROWTH STOCK FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
Shares Value
EQUITIES 83.4%
Apparel & Textiles (0.6%)
Abercrombie & Fitch A 200 $14,175
Buckle & Co, Inc. 200 4,775
Sector Total 18,950
Automotive (1.1%)
Autozone, Inc. 1,000 33,000
Building Supplies (3.9%)
Home Depot 2,000 122,375
Business Services (7.3%)
America Online 400 58,700
H B O & Co. 200 5,750
Keane Inc. 200 8,000
Metris Companies 1,000 49,875
Omnicom Group, Inc. 500 28,875
Robert Half, International, Inc. 500 22,313
Triad Guaranty Inc. 2,100 46,331
Excite Inc. 200 8,537
Sector Total 228,381
Chemicals (2.5%)
Biogen 200 16,463
Centocor Inc. 200 9,025
Medco Research 2,000 52,250
Sector Total 77,738
Communication (0.5%)
Airtouch Communications 200 14,513
Computer & Networking Euqipment (18.85)
Ascend Communications 200 13,088
3COM Corp 200 9,025
Cisco Systems 1,500 139,313
Compaq Computer 3,200 135,600
Crystal Systems Solutions 4,400 45,100
Dell Computer 200 14,613
Gateway 200 10,250
International Business Machines 800 148,250
Legato Systems 200 13,275
Lucent 200 22,087
Lexmark International 200 19,662
Sun Microsystems 200 17,212
Sector Total 587,475
Eating & Drinking Places (0.3%)
Papa John's International 200 8,825
Electronics (8.3%)
American Power Conversion 3,000 145,313
ADC Telecommunications 2000 7,000
DSP Communications 3,000 45,000
Radica Games Ltd. 3,000 41,625
Sanmina 200 12,412
Vitessa Semiconductor 200 9,050
Sector Total 260,400
Financial (5.9%)
Americredit Corp. 3,400 46,113
Commercial Bankshares 3,150 72,450
Countrywide Credit 1,300 65,406
Sector Total $183,969
C/GROWTH STOCK FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1998
Shares Value
Food Stores (1.7%)
Food Lion 5,000 $52,812
Furniture (3.0%)
Hillenbrand Industries 1,500 85,313
Bed, Bath & Beyond 200 6,875
Sector Total 92,188
Industrial Machinery & Equipment (0.5%)
EMC Corporation 200 17,000
Instruments (6.25)
Guidant Corp. 400 43,775
Genentech Inc Spl Com 200 15,937
Sofamor/Danek Group 200 24,350
Stryker Corp. 2,000 110,125
Sector Total 194,187
Insurance (3.0%)
American International Group 300 28,913
Express Scripts "A" 200 13,100
Medical Assurance 200 6,625
Prepaid Legal Services 1,400 46,112
Sector Total 94,750
Leisure/Entertainment (4.6%)
Carnival Corp Class 'A' 2,000 96,125
Steiner Leisure LTD 1,500 47,812
Sector Total 143,937
Metal (1.6%)
Omniquip International 3,400 51,000
Retail (2.3%)
C D W Computer Centers 200 19,450
Kohls Corp. 200 12,287
Wal-Mart Stores 500 40,719
Sector Total 72,456
Software (9.6%)
BMC Software 200 8,900
Computer Associates 1,500 64,031
Check Point Software 1,100 50,050
Compuware Corp. 200 15,625
Citrix Systems 200 19,475
Microsoft 200 27,825
Neomagic Corp. 2,000 44,125
PeopleSoft 200 3,788
Summit Design, Inc. 5,200 47,450
Tech Data Corp. 200 8,200
Veritas Software 200 12,000
Sector Total 301,469
Special Trade Contractor (1.7%)
Cal Dive International 2,600 53,950
TOTAL EQUITIES (83.4%) 2,609,375
CASH AND EQUIVALENTS (16.6%) 518,256
TOTAL INVESTMENTS (100%) $3,127,631
ADAMS EQUITY FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
Shares Value
EQUITIES 98.5%
Automotive (15.1%)
Daimler Chrysler Benz 500 $47,969
Kellstrom Industries 3,000 84,750
Sector Total 132,719
Building Contractors (6.4%)
Standard Pacific Corp 4,000 56,500
Business Services (10.8%)
Barra, Inc. 1,500 35,062
Investors Financial Service 1,000 60,625
Sector Total 95,687
Computers & Technology (2.1%)
Trans-Lux 2,000 18,250
Diversified Manufacturing (2.5%)
Leggett & Platt Inc 1,000 21,750
Electronics (14.8%)
C and D Technologies 2,700 70,200
Del Global Technologies 4,000 46,000
Porta Systems Inc. 7,000 14,000
Sector Total 130,200
Financial (6.9%)
Conseco, Inc. 2,000 61,125
Industrial Machinery (9.4%)
DT Industries 2,000 31,500
Gleason Corp 500 9,063
Nortek Inc. 1,500 42,562
Sector Total 83,125
Metal (9.0%)
Amcast 2,500 47,813
Wyman Gordon 3,000 31,312
Sector Total 79,125
Paper (10.3%)
Drypers Corp 9,000 29,250
Shorwood Packaging Co. 3,000 61,313
Sector Total 90,563
Rubber & Plastics (7.5%)
Wynn's International Inc. 3,000 66,000
Transportation Equipment (3.7%)
R&B Inc. 4,000 32,750
TOTAL EQUITIES (98.5%) 867,794
CASH AND EQUIVALENTS (1.5%) 12,923
TOTAL INVESTMENTS (100%) $880,717
C/GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
Par Value Value
GOVERNMENTS (92.7%)
U.S. Treasury Notes 11.75% 500,000 $570,781
due 02/15/2001
U.S. Treasury Notes 5.875% 500,000 506,406
due 02/15/2000
U.S. Treasury Notes 5.875% 1,000,000 1,055,000
due 02/15/2004
U.S. Treasury Notes 6.25% 1,000,000 1,057,188
due 02/15/2003
U.S. Treasury Notes 6.25% 1,000,000 1,050,938
due 08/31/2002
U.S. Treasury Notes 6.5% 1,000,000 1,109,375
due 10/15/2006
U.S. Treasury Notes 6.5% 1,000,000 1,095,625
due 05/15/2005
U.S. Treasury Notes 6.75% 500,000 505,156
due 06/1999
U.S. Treasury Notes 7.625% 1,000,000 1,080,625
due 02/15/2007
U.S. Treasury Notes 8% due 1,000,000 1,074,375
05/15/2001
TOTAL GOVERNMENTS (92.7%) 9,105,469
CASH AND EQUIVALENTS (7.3%) 717,478
TOTAL INVESTMENTS (100%) $9,822,947
C/COMMUNITY ASSOCIATION RESERVE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1998
Par Value Value
GOVERNMENTS (93.0%)
U.S. Treasury Notes 5.875% 50,000 $50,156
due 03/31/1999
U.S. Treasury Notes 6.00% 150,000 151,500
due 10/15/1999
U.S. Treasury Notes 6.875% 200,000 205,188
due 03/31/2000
U.S. Treasury Notes 7.00% 150,000 150,984
due 04/15/1999
U.S. Treasury Notes 8.00% 100,000 107,438
due 05/15/2001
TOTAL GOVERNMENTS (93.0%) 665,266
CASH AND EQUIVALENTS (7.0%) 49,700
TOTAL INVESTMENTS (100%) $714,966
C/FUNDS GROUP, INC.
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
Securities at Cost $6,337,453 $2,095,215 $9,547,012 $711,271 $834,294
ASSETS
Securities value $9,583,875 $3,127,631 $9,822,947 $714,966 $880,717
Receivables
Dividends & interest 20,449 2,703 163,301 9,529 555
Investment securities
sold 0 22 0 0 8,778
9,604,323 3,130,356 9,986,248 724,495 890,050
LIABILITES
Advisor fee & other
payables 5,103 1,716 3,693 263 492
Investment securities
purchased 739,150 46,910 0 0 0
744,253 48,626 3,693 263 492
NET ASSETS APPLICABLE TO OUTSTANDING SHARES
$8,860,070 $3,081,730 $9,982,555 $724,232 $889,558
CAPITAL SHARES 372,377 194,538 975,821 72,179 69,830
NET ASSET VALUE PER SHARE $23.79 $15.84 $10.23 $10.03 $12.74
C/FUNDS GROUP, INC.
STATEMENTS OF OPERATIONS
For the Year Ending December 31, 1998
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
INVESTMENT INCOME
Dividends $103,611 $14,858 $0 $0 $8,593
Interest 130,451 18,647 489,519 51,105 2,250
234,062 33,505 489,519 51,105 10,843
OPERATING EXPENSES
Investment advisory fee 79,410 27,174 38,399 4,120 12,214
Professional fees 13,966 4,177 3,998 776 2,033
Registration fees 2,778 810 728 77 380
Custodian fees 27,069 9,845 26,070 2,518 3,922
Directors fees 6,484 2,166 1,692 215 1,091
Printing 684 522 492 86 235
Miscellaneous 2,958 1,039 939 105 465
133,349 45,733 72,318 7,897 20,340
NET INVESTMENT INCOME (LOSS) 100,713 (12,228) 417,201 43,208 (9,497)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Change in unrealized appreciation (depreciation) in value of investments
for the year 1,108,922 414,834 222,195 (354) (144,540)
Net realized gain (loss) on investments
335,753 132,755 0 437 (12,064)
NET GAIN (LOSS) ON INVESTMENTS
1,444,675 547,589 222,195 83 (156,604)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FORM OPERATIONS
$1,545,888 $535,361 $639,396 $43,291 ($166,101)
C/FUNDS GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ending December 31, 1998
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income (loss)
$100,713 ($12,228) $417,201 $43,208 ($9,497)
Net realized gain (loss) on investments
335,753 132,755 0 437 (12,064)
Unrealized appreciation (depreciation) in value of investments for the year
1,108,922 414,834 222,195 (354) (144,540)
Net increase (decrease) in net assets from operations
1,545,388 535,361 639,396 43,291 (166,101)
DISTRIBUTIONS TO SHAREHOLDERS
Investment income - net (99,926) 0 (417,200) (43,207) 0
Net realized gain on investments
(334,943) (132,387) 0 0 0
(434,869) (132,387) (417,200) (43,207) 0
CAPITAL SHARE TRANSACTIONS
Shares sold 1,814,668 328,020 8,532,493 475,625 164,405
Reinvested distributions 416,606 127,950 363,296 43,207 0
Shares redeemed (1,619,121) (318,564)(3,678,135) (648,518) (385,388)
612,153 137,406 5,217,654 (129,686) (220,983)
Net increase (decrease) in net assets
$1,722,672 $540,380 $5,439,850 ($129,602) ($387,084)
NET ASSETS
Beginning of year 7,137,398 2,541,350 4,542,705 853,834 1,276,642
End of year $8,860,070 $3,081,730 $9,982,555 $724,232 $889,558
UNDISTRIBUTED INVESTMENT GAIN (LOSS)
$2,755 $358 ($163,912) $180 ($16,601)
C/FUNDS GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ending December 31, 1997
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income (loss)
$77,409 ($15,997) $254,823 $43,474 ($8,178)
Net realized gain (loss) on investments
190,158 326,059 3 486 (4,536)
Unrealized appreciation (depreciation) in value of investments for the year
882,869 206,979 60,849 (288) 156,438
Net increase in net assets from operations
1,150,436 517,041 315,675 43,672 143,724
DISTRIBUTIONS TO SHAREHOLDERS
Investment income - net (82,342) (25,711) (254,824) (43,818) 0
Net realized gain on investments
(185,102) (284,311) 0 0 0
(267,444) (310,022) (254,824) (43,818) 0
CAPITAL SHARE TRANSACTIONS
Shares sold 1,360,777 140,465 3,195,844 641,261 972,475
Reinvested distributions 258,335 295,689 221,437 43,818 0
Shares redeemed (786,612) (313,644) (3,672,863) (379,259) 93,349)
832,500 122,510 (255,582) 305,820 879,126
Net increase (decrease) in net assets
$1,715,492 $329,529 ($194,731) $305,674 $1,022,850
NET ASSETS
Beginning of year 5,421,906 2,211,821 4,737,436 548,160 253,792
End of year $7,137,398 $2,541,350 $4,542,705 $853,834 $1,276,642
UNDISTRIBUTED INVESTMENT GAIN (LOSS)
$1,159 $41 ($163,912) $0 ($4,536)
C/FUNDS GROUP, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS (1)
For the Periods Ended December 31, 1998, 1997, 1996, 1995, and 1994
Net Dis
Rea tribu
lised tions
Dis and from Net
tribu Unrea Net Dis Asset
tions lized Rea tribu Value Net
Net from Gain lized tions at Asset
Opera Invest Net (Loss) Gains from Begin Value
Invest ting ment Invest on on Return Total ning End
ment Expe Income ment Invest Invest of Cap Net of of
Income nses (Loss) Income ments ments ital Change Period Period
C/Fund
1998 .66 (.38) .28 (.72) 4.12 (.50) .00 3.18 $20.61 $23.79
1997 .60 (.36) .24 (.26) 3.50 (.58) .00 2.90 17.71 20.61
1996 .53 (.34) .19 (.19) 2.56 (1.58) (6)(.10) .88 16.83 17.71
1995 .50 (.29) .21 (.21) 3.42 (.54) .00 2.88 13.95 16.83
1994 .59 (.25) .34 (.36) (.55) (.49) (6)(.06) (1.12) 15.07 13.95
C/Growth Stock Fund
1998 .18 (.24) (.06) .00 2.96 (.71) .00 2.19 $13.65 $15.84
1997 .16 (.26) (.10) (.15) 3.20 (1.68) .00 1.27 12.38 13.65
1996 .18 (.23) (.05) .00 2.24 (1.08) (6)(.01) 1.10 11.28 12.38
1995 .22 (.20) .02 (.02) 2.13 (.19) .00 1.94 9.34 11.28
1994(4) .18 (.19) (.01) (.01) (.90) 0 (6)(.01) (.93) 10.27 9.34
C/Government Fund
1998 .64 (.10) .54 (.55) .22 .00 .00 .22 $10.01 $10.23
1997 .67 (.10) .57 (.57) .14 .00 .00 .14 9.87 10.01
1996 .66 (.10) .56 (.56) (.15) .00 .00 (.15) 10.02 9.87
1995 .64 (.10) .54 (.54) .58 .00 .00 .58 9.44 10.02
1994 .53 (.09) .44 (.44) (.47) .00 (6)(.02) (.49) 9.93 9.44
C/Community Association Reserve Fund(5)
1998 .62 (.10) .52 (.52) .03 .00 .00 .03 $10.00 $10.03
1997 .61 (.05) .56 (.60) .04 .00 .00 .00 10.00 10.00
1996 .58 .00 .58 (.58) .00 .00 .00 .00 10.00 10.00
1995 .60 .00 .60 (.60) .00 .00 .00 .00 10.00 10.00
1994 .59 .00 .59 (.59) .00 .00 .00 .00 10.00 10.00
Adams Equity Fund
1998 .12 (.23) (.11) .00 (1.05) .00 .00 (1.16) $13.90 $12.74
1997 .13 (.23) (.10) .00 2.18 .00 .00 2.08 11.82 13.90
1996 .17 (.15) .02 .00 2.62 (.64) .00 2.00 9.82 11.82
1995(2)(3).06(.03) .03 (.02) (.19) .00 .00 (.18) 10.00 9.82
(1)Selected data for a share of capital stock outstanding throughout the year.
(2)Inception of fund is October, 1995.
(3)Ratio of operating expenses to average net assets has been annualized.
(4)Adjusted to reflect elimination of expense reimbursement from Advisor.
(5)See Footnote I.
(6)Fund paid dividend by return of principal.
C/FUNDS GROUP, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS (1)
For the Periods Ended December 31, 1998, 1997, 1996, 1995, and 1994
Net
Operating Investment Shares
Expenses Income to Portfolio Outstanding
to Average Average Turnover at End of
Net ASsets Net Assets Rate Period
C/Fund
1998 1.68% 1.27% 17.58% 372,377
1997 1.79% 1.24% 10.28% 346,376
1996 1.90% 1.05% 11.38% 306,141
1995 1.85% 1.36% 5.46% 258,646
1994 1.83% 2.53% 23.84% 272,891
C/Growth Stock Fund
1998 1.68% (.45%) 88.47% 194,538
1997 1.81% (.68%) 51.11% 186,130
1996 1.90% (.45%) 4.26% 178,680
1995 1.85% .20% 16.46% 184,398
1994(4) 1.87% (.16%) 37.23% 147,699
C/Government Fund
1998 .96% 5.55% .00% 975,821
1997 1.01% 5.74% 22.05% 453,930
1996 1.02% 5.60% 59.95% 479,954
1995 .99% 5.54% 124.70% 396,280
1994 1.15% 5.75% 122.48% 554,009
C/Community Association Reserve Fund(5)
1998 .96% 5.28% 14.20% 72,179
1997 .14% 6.21% 52.64% 85,402
1996 .00% 5.83% 9.61% 54,820
1995 .00% 5.96% 41.35% 42,960
1994 .00% 8.76% .00% 5,875
Adams Equity Fund
1998 1.70% (.79%) 70.86% 69,830
1997 1.74% (.75%) 48.17% 91,852
1996 1.36% .18% 65.00% 21,468
1995(2)(3) 1.16% .32% .00% 14,935
(1)Selected data for a share of capital stock outstanding throughout the year.
(2)Inception of fund is October, 1995.
(3)Ratio of operating expenses to average net assets has been annualized.
(4)Adjusted to reflect elimination of expense reimbursement from Advisor.
(5)See Footnote I.
C/FUNDS GROUP, INC.
C/FUND, C/GROWTH STOCK FUND, C/GOVERNMENT FUND,
C/COMMUNITY ASSOCIATION RESERVE FUND, AND ADAMS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A - ORGANIZATION
C/FUNDS Group, Inc. (the Company), formerly Caldwell Fund, Inc., is
registered under the Investment Company Act of 1940, as amended, as an open-
end diversified investment company. Effective July 2, 1985, C/FUNDS Group,
Inc., shares were registered under Section 8(a) of the Securities Act of
1933. The Caldwell Fund was the only fund offered by the Company through
June, 1992. Effective July, 1992, four new funds were made available and
the Caldwell Fund was renamed C/Fund. The Adams Equity Fund was made
available in October, 1995. Effective December, 1997, an additional fund,
the Beebe Fund, was made available. In December, 1998, the C/Tax-Free Fund
and the Beebe Fund were closed. A separate Financial Statement is available
for these closed funds. The primary investments of the five open funds are
listed as follows:
FUNDS PRIMARY INVESTMENTS
C/Fund Stocks and Fixed Income
formerly Caldwell Fund Securities
C/Growth Stock Fund Common Stocks or Equivalents
formerly Caldwell Growth Stock Fund
C/Government Fund Obligations of the U.S.
formerly Caldwell Government Fund Government
C/Community Association Reserve Fund Obligations of the U.S.
formerly Caldwell Community Government
Association Reserve Fund
Adams Equity Fund Stocks
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in accordance with
accounting policies generally accepted in the investment company industry.
Security Valuation - Investments in securities traded on a national
exchange are stated at the last reported sales price on the day of
valuation; other securities traded in over-the-counter market and listed
securities for which no sale was reported on that date are stated at the
last quoted bid price. Restricted securities and other securities for which
quotations are not readily available are valued at fair value as determined
by the Board of Directors.
Investment Income - Dividend income is recorded as of the ex-dividend date.
Interest income is recognized on the accrual basis. Discounts and
premiums on securities purchased are not amortized over the life of the
respective security. Realized gains and losses are determined on the
identified cost basis.
Distributions to shareholders - Dividends to shareholders are recorded on
the ex-dividend date.
Income Tax Status - No provision for income taxes is included in the
accompanying financial statements as the Company regularly distributes to
shareholders its taxable investment income and realized gains under
provision of the Internal Revenue Code applicable to regulated investment
companies.
Security Transactions - The Company follows industry practice and records
security transactions on the trade date.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
NOTE C - INVESTMENT ADVISORY AGREEMENT
Each fund has a written agreement (the "Agreements") for management and
investment advisory services with Omnivest Research Corporation (the
"Advisor") which is owned 100% by Trust Companies of America, Inc. (TCA),
which is controlled by its President and his family. The Agreements provide
for advisor fees to be computed on the average daily net asset value. Under
terms of the agreements, each Fund's total expenses cannot exceed 2% of the
Fund's average daily net asset value in any one year. Expenses in excess of
2% shall be paid by the Advisor. Annual percentage rates provided by the
Agreements in computing investment advisory fees and the fees incurred in
1998 are as follows:
ANNUAL INVESTMENT
FUND % RATE ADVISORY FEES
C/Fund 1.0 $79,410
C/Growth Stock Fund 1.0 27,174
C/Government Fund .5 38,399
C/Community Association Reserve Fund .5 4,120
Adams Equity Fund 1.0 12,214
C/FUNDS GROUP, INC.
C/FUND, C/GROWTH STOCK FUND, C/GOVERNMENT FUND,
C/COMMUNITY ASSOCIATION RESERVE FUND, AND ADAMS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE D - FUND SHARE TANSACTONS AND DISTRIBUTIONS
As of December 31, 1998 and 1997 there were 5,000,000 shares of .01 par
value capital shares authorized. Transactions of the Funds were as
follows:
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
Period ended December 31, 1998
Shares sold 80,660 22,220 849,231 47,089 11,757
Reinvested distributions 17,565 8,078 35,803 4,304 0
Shares redeemed (72,224) (21,890) (363,143) (64,616) (33,779)
Net increase (decrease) 26,001 8,408 521,891 (13,223) (22,022)
Period ended December 31, 1997
Shares sold 67,712 10,049 323,575 64,126 76,975
Reinvested distributions 12,551 21,662 22,449 4,382 0
Shares redeemed (40,028) (24,261) (372,048) (37,926) (6,591)
Net increase (decrease) 40,235 7,450 (26,024) 30,582 70,384
NOTE E - INVESTMENT TRANSACTIONS
Purchases and sales of investment securities and the accumulated unrealized
gain (loss) of the funds were as follows for 1998:
C/Comm
unity
Associa
C/Growth C/Govern tion Adams
Stock ment Reserve Equity
C/Fund Fund Fund Fund Fund
Common Stocks
Purchases $2,220,935 $2,067,972 $0 $0 $818,287
Sales 756,412 2,155,650 0 0 1,063,314
Municipal Bonds
Purchases 0 0 0 0 0
Sales 0 0 0 0 0
U.S. Government Obligations
Purchases 0 0 5,219,524 106,548 0
Sales 586,340 0 0 250,194 0
Unrealized appreciation (depreciation) of securities
$3,246,421 $1,032,416 $275,935 $3,695 $46,423
NOTE F - TRANSACTIONS WITH AFFILIATES
In addition to the investment advisory fees discussed in NOTE C, the Funds
pay fees to other related entities, all of which are 100% owned by TCA,
primarily for custodianship of assets and computer processing and
programming. Total fees paid to TCA subsidiaries for services other than
investment advising aggregated approximately $73,600 for 1998.
The number of shares held by the President of the Company, employees of the
Advisor, and other affiliated persons at December 31, 1998 are as follows:
SHARES VALUE
C/Fund 39,218 $933,000
C/Growth Stock Fund 7,359 $116,569
C/Government Fund 23,770 $243,165
Adams Equity Fund 15,818 $201,517
NOTE G - MARKET RISK
The Fund is exposed to credit risk on the amount invested in marketable
securities. The maximum amount of loss the Fund would incur is limited to
the amount recorded in the 1998 financial statements. The Fund does not
hold any collateral on the marketable securities. This exposure to risk is
customary for all entities which have invested in financial instruments.
NOTE H - BROKER ALLOCATIONS
The placement of orders for the purchase and sale of portfolio securities
is made under the control of the Advisor, subject to the overall
supervision of the Board of Directors. The Advisor is permitted to and does
select broker-dealer firms, which provide economic, corporate, and
investment research service. Commissions paid to firms supplying such
research include the cost of such services. The value of such services,
for the Company, aggregated $40,957 for the year ended December 31, 1998.
NOTE I - C/COMMUNITY ASSOCIATION RESERVE FUND
Through 1997, the investment advisor absorbed substantially all investment
expenses of the C/C.A.R. Fund, including their advisory fees. In addition,
the advisor guaranteed a $10 per share value. Since inception, an asset or
liability to the investment advisor was accrued by the C/C.A.R. Fund to the
extent necessary to maintain the $10 per share value. At December 31, 1997
the fund reflected a $3,732 liability to the investment advisor. Effective
February 13, 1998 the Fund began calculating its NAV at actual and the
Fund's liability to the investment advisor was forgiven. Appropriate
adjustments were made to net assets and to shareholder accounts.
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To The Shareholders and Board of Directors
C/FUNDS Group, Inc.
Venice, Florida
We have audited the statements of assets and liabilities, including the
portfolio of investments, of the C/Fund, C/Growth Stock Fund, C/Government
Fund, C/Community Association Reserve Fund, and Adams Equity Fund (five of
the portfolios constituting the C/FUNDS Group, Inc.) as of December 31,
1998, and the related statements of operations for the period then ended,
the statements of changes in net assets for each of the two periods in the
period then ended, and the selected per share data and ratios for each of
the five periods in the period then ended. These financial statements and
per share data and ratios are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and per
share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1998, by correspondence with the
custodian, and examination of supporting documentation for unsettled
security purchases. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of the C/Fund, C/Growth Stock Fund, C/Government Fund,
C/Community Association Reserve Fund, and Adams Equity Fund portfolios of
the C/FUNDS Group, Inc. as of December 31, 1998, the results of their
operations for the period then ended, the changes in their net assets for
each of the two periods in the period then ended, and the selected per
share data and ratios for each of the five periods in the period then
ended, in conformity with generally accepted accounting principles.
GREGORY, SHARER & STUART
St. Petersburg, Florida
January 22, 1999
Investment Advisor
Omnivest Research Corporation
250 Tampa Avenue West
Venice, FL 34285
(941) 493-4295
Custodian
Caldwell Trust Company
201 Center Road Suite 2
Venice, FL 34292
(941) 493-3600
Auditors
Gregory Sharer & Stuart
Certified Public Accountants
100 Second Avenue South
St. Petersburg, FL 33701-4383
(813) 821-6161
Investment Advisory Board
Arthur B. Laffer, Ph.D., Economist
Alan Reynolds, Economist
Alvin Moscow, Author
Ted C. Van Antwerp, Philanthropist
Willet J. Worthy, Jr., Vintner
Manuel Johnson, Ph.D., Economist
Charles G. Callard, Research Analyst
Christopher J. Pecheux, Research Analyst
This report has been prepared for the information of shareholders of
the Funds and is not authorized for distribution to Investors unless
preceded or accompanied by an effective Prospectus which includes
information regarding the Funds' objectives, policies, management,
records, and other information.
[100% NO-LOAD COUNCIL LOGO]
C/FUNDS GROUP, INC.
[C/FUNDS LOGO]
Funds Closed in 1998
Beebe Fund
C/Tax-Free Fund
Final Accounting
December, 1998
Table of Contents
Excerpt From Letter to Shareholders 1
Audited Financial Statements 2
Notes to Financial Statements 5
Report of Independent Certified
Public Accountants 7
LETTER TO SHAREHOLDERS
Despite three consecutive years of above-average increases in stock
prices, 1998 again surprised both professionals and average investors with
another calendar year of total returns in excess of 20%. And again, the
managers of C/Funds Group portfolios feel obliged to caution all investors
that increases at these rates are not sustainable over an extended period
of years.
Our explanation is fairly simple for this excellent experience, i.e.,
the rise of stock prices since 1994 probably represents a one-time up-
valuation that reflects two major factors that greatly influence investor
behavior in general. One is the drop in inflation from the 6%+ level to at
or below 1% per year currently. The other factor is the stabilization of
tax rates at all levels of government. It is important to remind investors
that while tax rates can indeed go lower in this climate of government
budget surpluses, a further decline in inflation is now out of the
question. Thus absent a major reform of our tax system that significantly
lowers the tax burdens of individuals, businesses, and investors, another
major one-time adjustment in share prices seems increasingly remote. This
being so, it would be our expectation that stock prices will henceforth
move upward at a more normal average pace nearer the historic 8-12% annual
rate, albeit also likely that this kind of experience seems to us to be now
more sustainable and predictable than in the past.
The year was also notable for C/Funds Group in that its shareholders
approved the liquidation of two of its fund series, namely the C/Tax Free
Fund series, and the Beebe Fund series. These liquidations have been
completed and regulatory requirements have been met. The decisions that
led to the closing of these two funds were for different reasons. In the
first instance, the managers concluded that tax-frees as a class now
offered investors a relatively poor return versus the market risks looming;
and in the case of the Beebe Fund, it was because of the untimely and
unanticipated early death of Mr. Beebe, for which we all send heartfelt
thoughts to his family and friends.
Consistent with the excellent year in the stock markets, the C/Fund
and C/Growth Stock Fund both again achieved above 20% total returns for
shareholders. The Government Bond Fund and the Community Association
Reserve Fund likewise had good years of NAV per share stability, while
paying shareholders a monthly yield at or in excess of investments similar
to the government securities in which they both invest. The Adams Equity
Fund, which follows a different style of investing, after its stellar 1997
performance, was unable to achieve a favorable result in 1998.
While the customary detailed performance data and other company and
fund portfolio financials are provided to shareholders on the following
pages, we wish to point out one actual, historical experience which we
believe is more revealing than all the statistics put together. In March,
1985, Mr. Howard Sievers of Venice, Florida invested $5,000 in the then
Caldwell Fund, which today is called the C/Fund. He neither added to, nor
withdrew any money or dividends from, the account from that date through
December 31, 1998. His statement as of February 3, 1999 showed the total
value of his $5,000 investment to be $29,074.35! Need we tell anyone that
this is just under six times the value of his original investment? Enough
said for buying and holding through all markets, good and bad.
Congratulations, Howard, and we are pleased to give you a great big public
thank you for allowing us to tell your story and for your confidence in
what we do.
As always, we wish to thank all staff members, shareholders, directors
and officers for their contribution to the company's success this past
year.
Respectfully Submitted:
R. G. "Kelly" Caldwell, Jr.
President
February 25, 1999
C/FUNDS GROUP, INC.
STATEMENTS OF ASSETS & LIABILITIES
Period Period
Ending Ending
12/03/98 12/30/98
C/Tax-Free Beebe
Fund Fund
Securities at Cost $0 $0
ASSETS
Securities value $0 $0
Receivables
Dividends & interest 0 0
Investment securities sold 0 0
0 0
LIABILITES
Advisor fee & other payables 0 0
Investment securities purchased 0 0
0 0
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES $0 $0
CAPITAL SHARES 0 0
NET ASSET VALUE PER SHARE $0.00 $0.00
C/FUNDS GROUP, INC.
STATEMENTS OF OPERATIONS
Period Period
Ending Ending
12/03/98 12/30/98
C/Tax-Free Beebe
Fund Fund
INVESTMENT INCOME
Dividends $0 $16,647
Interest 66,829 2,023
66,829 18,670
OPERATING EXPENSES
Investment advisory fee 6,199 9,086
Professional fees 1,249 989
Registration fees 13 380
Custodian fees 4,251 2,429
Directors fees 431 1,023
Printing 83 108
Miscellaneous 170 342
12,396 14,357
NET INVESTMENT INCOME 54,433 4,313
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Change in unrealized depreciation
in value of investment for
the period (53,037) (5,553)
Net realized loss on investments (18,681) (115,332)
NET LOSS ON INVESTMENTS (71,718) (120,885)
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ($17,285) ($116,572)
C/FUNDS GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Period Period
Ending Ending
12/03/98 12/30/98
C/Tax-Free Beebe
Fund Fund
INCREASE (DECREASE) IN NET ASSETS
NET ASSETS
From Operations:
Net investment income $54,433 $4,313
Net realized loss on investments (18,681) (115,332)
Unrealized depreciation in value of
investments for the year (53,037) (5,553)
Net decrease in net assets from
operations (17,285) (116,572)
DISTRIBUTIONS TO SHAREHOLDERS
Investment income - net (54,245) 0
Net realized gain on investments 0 0
(54,245) 0
CAPITAL SHARE TRANSACTIONS
Shares sold 66,353 1,252,330
Reinvested distributions 42,727 0
Shares redeemed (3,356,095) (1,456,745)
(3,247,015) (204,415)
Net decrease in net assets ($3,318,545) ($320,987)
NET ASSETS
Beginning of year 3,318,545 320,987
End of year $0 $0
UNDISTRIBUTED INVESTMENT GAIN $0 $0
C/FUNDS GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Year Period
Ending Ending
12/31/97 12/31/97
C/Tax-Free Beebe
Fund Fund
INCREASE (DECREASE) IN NET ASSETS
From Operations:
Net investment income $169,199 $374
Net realized loss on investments (19,822) 0
Unrealized appreciation in value of
investments for the year 33,450 5,553
Net increase in net assets
from operations 182,827 5,927
DISTRIBUTIONS TO SHAREHOLDERS
Investment income - net (172,265) (315)
Net realized gain on investments 0 0
(172,265) (315)
CAPITAL SHARE TRANSACTIONS
Shares sold 1,814,679 315,060
Reinvested distributions 164,083 315
Shares redeemed (2,456,341) 0
(477,579) 315,375
Net (decrease) increase in
net assets ($467,017) $320,987
NET ASSETS
Beginning of year 3,785,562 0
End of year $3,318,545 $320,987
UNDISTRIBUTED INVESTMENT
(LOSS) GAIN ($35,529) $59
C/FUNDS GROUP, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS (1)
For the Periods Ended December 3, 1998 and
December 31, 1997, 1996, 1995, and 1994
Net Dis
Rea tribu
lised tions
Dis and from Net
tribu Unrea Net Dis Asset
tions lized Rea tribu Value Net
Net from Gain lized tions at Asset
Opera Invest Net (Loss) Gains from Begin Value
Invest ting ment Invest on on Return Total ning End
ment Expe Income ment Invest Invest of Cap Net of of
Income nses (Loss) Income ments ments ital Change Period Period
C/Tax-Free Fund(2)
1998 .51 (.09) .42 (.41) (.55) .00 (3)(9.31) (9.85) $9.85 $0.00
1997 .55 (.10) .45 (.46) .05 .00 .00 .04 9.81 9.85
1996 .55 (.10) .45 (.45) (.10) .00 .00 (.10) 9.91 9.81
1995 .54 (.10) .44 (.44) .52 .00 .00 .52 9.39 9.91
1994 .47 (.09) .38 (.37) (.56) .00 (4)(.02) (.57) 9.96 9.39
Net
Operating Investment Shares
Expenses Income to Portfolio Outstanding
to Average Average Turnover at End of
Net ASsets Net Assets Rate Period
C/Tax-Free Fund(2)
1998 1.06% 4.64% .00% 0
1997 1.01% 4.58% 10.78% 336,885
1996 1.03% 4.57% .00% 386,027
1995 1.01% 4.53% 22.91% 322,401
1994 1.15% 4.70% 2.76% 328,873
(1)Selected data for a share of capital stock outstanding throughout the year.
(2)Fund was closed in December, 1998.
(3)Net assets of fund were distributed when fund closed.
(4)Fund paid dividend by return of principal.
C/FUNDS GROUP, INC.
SUPPLEMENTARY INFORMATION - SELECTED PER SHARE DATA AND RATIOS (1)
For the Periods Ended December 30, 1998 and December 31, 1997
Net Dis
Rea tribu
lised tions
Dis and from Net
tribu Unrea Net Dis Asset
tions lized Rea tribu Value Net
Net from Gain lized tions at Asset
Opera Invest Net (Loss) Gains from Begin Value
Invest ting ment Invest on on Return Total ning End
ment Expe Income ment Invest Invest of Cap Net of of
Income nses (Loss) Income ments ments ital Change Period Period
Beebe Fund(2)(3)
1998 .21 (.16) .05 .00 (1.35) .00 (4)(8.88) (10.18) $10.18 $0.00
1997 .00 .00 .00 .00 .18 .00 .00 .18 $10.00 $10.18
Net
Operating Investment Shares
Expenses Income to Portfolio Outstanding
to Average Average Turnover at End of
Net ASsets Net Assets Rate Period
Beebe Fund(2)(3)
1998 .26% .08% 185.33% 0
1997 .09% .23% .00% 31,538
(1)Selected data for a share of capital stock outstanding throughout the year.
(2)Inception of fund is December, 1997.
(3)Fund was closed in December, 1998.
(4)Net assets of fund were distributed when fund closed.
C/FUNDS GROUP, INC.
C/TAX-FREE FUND AND BEEBE FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A - ORGANIZATION
C/FUNDS Group, Inc. (the Company), formerly Caldwell Fund, Inc., is
registered under the Investment Company Act of 1940, as amended, as an open-
end diversified investment company. Effective July 2, 1985, C/FUNDS Group,
Inc., shares were registered under Section 8(a) of the Securities Act of
1933. The Caldwell Fund was the only fund offered by the Company through
June, 1992. Effective July, 1992, four new funds were made available and
the Caldwell Fund was renamed C/Fund. The Adams Equity Fund was made
available in October, 1995. Effective December, 1997, an additional fund,
the Beebe Fund, was made available. In December, 1998, the C/Tax-Free Fund
and the Beebe Fund were closed. A separate Financial Statement is available
for the funds that remain open. The primary investments of the two closed
funds are listed as follows:
FUNDS PRIMARY INVESTMENTS
C/Tax-Free Fund Investment Grade Municipal Securites
formerly Caldwell Tax-Free Fund
Beebe Fund Equity Securities of Financial
Services Companies
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are in accordance with
accounting policies generally accepted in the investment company industry.
Security Valuation - Investments in securities traded on a national
exchange are stated at the last reported sales price on the day of
valuation; other securities traded in over-the-counter market and listed
securities for which no sale was reported on that date are stated at the
last quoted bid price. Restricted securities and other securities for which
quotations are not readily available are valued at fair value as determined
by the Board of Directors.
Investment Income - Dividend income is recorded as of the ex-dividend date.
Interest income is recognized on the accrual basis. Realized gains and
losses are determined on the identified cost basis.
Distributions to shareholders - Dividends to shareholders are recorded on
the ex-dividend date.
Income Tax Status - No provision for income taxes is included in the
accompanying financial statements as the Company regularly distributes to
shareholders its taxable investment income and realized gains under
provision of the Internal Revenue Code applicable to regulated investment
companies.
Security Transactions - The Company follows industry practice and records
security transactions on the trade date.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
NOTE C - INVESTMENT ADVISORY AGREEMENT
Each fund had a written agreement (the "Agreements") for management and
investment advisory services with Omnivest Research Corporation (the
"Advisor") which is owned 100% by Trust Companies of America, Inc. (TCA),
which is controlled by its President and his family. The Agreements
provided for advisor fees to be computed on the average daily net asset
value. Annual percentage rates provided by the Agreements in computing
investment advisory fees and the fees incurred in 1998 were as follows:
ANNUAL INVESTMENT
FUND % RATE ADVISORY FEES
C/Tax-Free Fund .5 $6,199
Beebe Fund 1.0 $9,086
C/FUNDS GROUP, INC.
C/TAX-FREE FUND AND BEEBE FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE D - FUND SHARE TANSACTONS AND DISTRIBUTIONS
As of December 31, 1998 and 1997 there were 5,000,000 shares of .01 par
value capital shares authorized for the Company. Transactions of the Funds
were as follows:
Period Ending Period Ending
12/03/98 12/30/98
C/Tax-Free Beebe
Fund Fund
Shares sold 6,747 120,203
Reinvested distribution 4,353 0
Shares redeemed (347,985) (151,741)
Net decrease (336,885) (31,538)
Year Ending Period Ending
12/31/97 12/31/97
C/Tax-Free Beebe
Fund Fund
Shares sold 185,103 31,507
Reinvested distributions 16,785 31
Shares redeemed (251,030) 0
Net (decrease) increase (49,142) 31,538
NOTE E - INVESTMENT TRANSACTIONS
Purchases and sales of investment securities of the funds were as
follows for 1998.
C/Tax-Free Beebe
Fund Fund
Common Stocks
Purchases $0 $1,503,582
Sales 0 1,672,254
Municipal Bonds
Purchases 0 0
Sales 3,160,812 0
U.S. Government Obligations
Purchases 0 0
Sales 0 0
Unrealized depreciation of
securities ($53,037) ($5,553)
NOTE F - TRANSACTIONS WITH AFFILIATES
In addition to the investment advisory fees discussed in NOTE C, the Funds
pay fees to other related entities, all of which are 100% owned by TCA,
primarily for custodianship of assets and computer processing and
programming. Total fees paid to TCA subidiaries for services other than
investment advising aggregated approximately $8,400 during 1998.
NOTE G - BROKER ALLOCATIONS
The placement of orders for the purchase and sale of portfolio securities
is made under the control of the Advisor, subject to the overall
supervision of the Board of Directors. The Advisor is permitted to and does
select broker-dealer firms, which provide economic, corporate, and
investment research service. Commissions paid to firms supplying such
research include the cost of such services. The value of such services,
for the Company, aggregated $40,957 for the year ended December 31, 1998.
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors
C/FUNDS Group, Inc.
Venice, Florida
We have audited the statements of assets and liabilities, including the
portfolio of investments, of the C/Tax Free Fund and Beebe Fund portfolios
(two of the portfolios constituting the C/FUNDS Group, Inc.) as of December
3, 1998 and December 30, 1998, respectively, and the related statements of
operations for the periods then ended, the statements of changes in net
assets for each of the two periods in the periods then ended, and the
selected per share data and ratios for each of the five periods in the
periods then ended. These financial statements and per share data and
ratios are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
per share data and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and per
share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 3, 1998 and December 30, 1998,
respectively, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and selected per share data and
ratios referred to above present fairly, in all material respects, the
financial position of the C/Tax Free Fund and Beebe Fund portfolios of the
C/FUNDS Group, Inc. as of December 3, 1998 and December 30, 1998,
respectively, the results of their operations for the periods then ended,
the changes in their net assets for each of the two periods in the periods
then ended, and the selected per share data and ratios for each of the five
periods in the periods then ended, in conformity with generally accepted
accounting principles.
GREGORY, SHARER & STUART
St. Petersburg, Florida
January 22, 1999
Investment Advisor
Omnivest Research Corporation
250 Tampa Avenue West
Venice, FL 34285
(941) 493-4295
Custodian
Caldwell Trust Company
201 Center Road Suite 2
Venice, FL 34292
(941) 493-3600
Auditors
Gregory Sharer & Stuart
Certified Public Accountants
100 Second Avenue South
St. Petersburg, FL 33701-4383
(813) 821-6161
Investment Advisory Board
Arthur B. Laffer, Ph.D., Economist
Alan Reynolds, Economist
Alvin Moscow, Author
Ted C. Van Antwerp, Philanthropist
Willet J. Worthy, Jr., Vintner
Manuel Johnson, Ph.D., Economist
Charles G. Callard, Research Analyst
Christopher J. Pecheux, Research Analyst
This report has been prepared for the information of shareholders of
the Funds and is not authorized for distribution to Investors unless
preceded or accompanied by an effective Prospectus which includes
information regarding the Funds' objectives, policies, management,
records, and other information.
