NOTICE OF ANNUAL MEETING
TO BE HELD JUNE 18, 2002
To the shareholders of The O'Higgins Fund
NOTICE IS HEREBY GIVEN that the Annual Meeting of The O'Higgins Fund will be
held at 1375 Anthony Wayne Drive, Wayne, Pennsylvania 19087 on June 18, 2002 at
7:30 PM for the following purposes.
1) To elect or reject six (6) directors to serve until the next Annual Meeting
of Shareholders or until their successors are elected and qualified.
2) To ratify or reject the selection of Sanville & Company, Certified Public
Accountants, as independent public accounts to audit and certify financial
statements o the Fund for the fiscal year ending December 31, 2002.
3) To ratify or reject proposed revision of the O'Higgins "Beating the Dow -
with Bonds" strategy by adding the ability to invest up to 20% of its assets
outside this strategy but within the limits of the Fund's current Investment
Restrictions in an attempt to be more responsive to changing world conditions.
4) To transact such other business as may properly come before the meeting or
any general adjournments thereof.
PLEASE FILL IN, SIGN & RETURN THE ENCLOSED PROXY IF
YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON
PROMPT RETURN OF YOUR PROXY WILL BE APPRECIATED
- 1 -
May 15 2002
Dear Shareholders:
The Federal Securities and Exchange Commission has adopted a ruling regarding
the "Privacy of Consumer Financial Information" known as Regulation S-P. This
ruling states that financial institutions such as your Fund must provide you
with this notice of our privacy policies and practices on an annual basis. We
are pleased to report that:
A. Information We Collect - Our application forms contain names, addresses,
phone numbers, W-9 statyus and social security or tax ID numbers for regular
accounts. Our IRA application forms also contain birth date and beneficiary
information. Of course, we also keep record of all of your security transact-
ions such as your account balances and transaction histories.
B. Our Disclosure Statement - We only disclose personal information about you
either while you are a shareholder or if you have left the Fund as required by
law. And, since we handle regular transactions internally, the number of
employees that even see your information is limited. However, funds cannot be
IRA trustees. We use Delaware Charter Guarantee & Trust Co. to provide this
service which requires that we disclose our IRA shareholder name and address
list to it on an annual basis. In this regard, we have forwarded a letter
requiring them to get permission from our IRA shareholders if they wish to use
the information we supply other than that required by law.
You may call 1-800-548-1942 if there are any questions about our Regulation S-P
status.
Respectfully submitted
Bernard B. Klawans
President
- 2 -
PROXY STATEMENT
THE O'HIGGINS FUND
1375 Anthony Wayne Dr.
Wayne, PA. 19087 Tel. 1-800-548-1942
Enclosed herewith is notice of an Annual Meeting of Shareholders of The
O'Higgins Fund (the "Fund") and a proxy form solicited by the Board of Directors
of the Fund. This proxy material was first mailed to shareholders on May 15,
2002.
The proxy may be revoked at any time before it is exercised either by mail
notice to the Fund or through resubmittal at a later date. Please place your
instructions on the enclosed one, then sign, date and return it. All costs of
soliciting this proxy will be borne by your Fund. You may also vote in person
at the meeting that would override all your previously filed proxies.
The Fund has one class of capital stock of the Fund, having equal voting rights.
On May 10, 2002, the date of record, there were 336,979 shares outstanding, held
by shareholders entitled to notice of and to vote at the meeting. In all mat-
ters, each share has one vote.
A quorum must exist to hold an annual meeting. It requires that more than fifty
percent of the outstanding shares be present or represented by proxy.
Abstentions and broker accounts that do not vote are considered as being present
with negative votes. Sixty-seven percent of the votes cast or 50% of the out-
standing shares, whichever is less, will pass any proposal presented.
PROPOSAL #1: ELECTION OF DIRECTORS
The six directors listed below have consented to serve as directors, if elected,
until the next Annual Meeting of Shareholders or until their successors are
elected and qualified. All officers of the Fund are also presented in the fol-
lowing table.
Name, Address Position Term of Office Principal Number of Other
and Age in the & Length of Occupation Funds in Direct-
Fund Time Served Past Fund Com- orships
5 Years plex Over- Held by
seen by Director
Interested Directors & Officers Director
*Bernard B. Klawans President Elected for One President of Two None
1375 Anthony Wayne Dr & Year. Served O'Higgins &
Wayne PA Director Since Inception Valley Forge
81 Jan, 30, 1998 Funds
*William A. Texter Secretary Elected for One Retired Two None
551 Red Coat Lane & Year. Served Manager
Phoenixville PA Director Since PECO Energy
55 Jan 30, 2001 Philadelphia PA
Other Officers
*Sandra K. Texter Treasurer Elected for One System Analyst Two None
551 Red Coat Lane Year. Served Lockeed Martin
Phoenixville PA Since Defense Contractor
51 Jan 30. 2001 King of Prussia PA
* Directors of the Fund who are "interested persons" as defined in the Invest-
ment Company Act of 1940. Mr. Klawans is an "inerested person" by virtue of
his position as the Fund's Investment Adviser. William and Sandra Texter, who
are man and wife, are "interested persons" because all officers of the Fund are
considered to be so.
- 3 -
Name, Address Position Term of Office Principal Number of Other
and Age in the & Length of Occupation Funds in Direct-
Fund Time Served Past Fund Com- orships
5 Years plex Over- Held by
seen by Director
Independent Directors Director
Victor J. Belanger Director Elected for One Chief Oper Off Two None
PO Box 96 Year. Served Linearizer Tech
Princeton Junction NJ Since Inception Microwave Comm Eq
60 Jan 30, 1998 Robbinsville NJ
Dr. Gerd H. Dahl Director Elected for One Retired Chemist Two None
679 Jefferson Road Year. Served Elf Atochem N A
Bryn Mawr PA Since Inception Petroleum Refiner
71 Jan 30, 1998 Philadelphia PA
Dr. James P. King Director Elected for One President Two None
904 Breezewood La Year. Served Desilube Tech
Lansdale PA Since Inception High Temp Lubricants
70 Jan. 30, 1998 Lansdale PA
Donald A. Peterson Director Elected for One Retired Prog Mgr Two None
3741 Worthington Rd Year. Served Lockeed Martin
Collegeville PA Since Inception Defense Contractor
61 Jan 30, 1998 King of Prussia PA
Shareholders have one vote for each share they own for each of six directors of
their choice. All proxies returned to the Fund, except those specifically mark-
ed to withhold authority will be cast for the nominees listed above. A majority
of the votes cast, when a quorum is present will elect each director. All nomi-
nees stood for election last year and were overwhelmingly reelected.
BOARD MEETINGS AND DIRECTOR DUTIES
Meetings: There were six Board of Directors meetings in 2001. Dr. Dahl attended
four and Messrs. Belanger and Peterson attended five. The remaining three
directors attended all six.
Director Duties: The Board of Directors select the officers to run the Fund,
propose all changes in operating procedures where approval of a majority of the
Independent Directors is required, pass on the Funds auditor on a yearly basis
and monitor Fund activties to insure to the best of their collective abilities
that the Fund Officers are meeting Fund commitments to their shareholders, the
Securities and Exchange Commission, the Internal Revenue Service and Blue Sky
arrangements with the various states where the Fund offers its shares.
FUND HOLDINGS OF THE OFFICERS AND DIRECTORS
Name Dollar Range of Equity Aggregate Dollar Range of Equity
Securities in the Fund Securities in All Registere
Investment Companies Overseen
by Director in Family of
Investment Companies
Bernard B. Klawans over $100,000 over $100,000
Sandra K. Texter none over $100,000
William A. Texter $1 to $10,000 $10,001 to $50,000
Victor J. Belanger $10,001 to $50,000 $50,001 to $100,000
DrGerd H. Dahl $1 to $10,000 $10,001 to $50,000
Dr. James P. King $1 to $10,000 $10,001 to $50,000
Donald A. Peterson $1 to $10,000 over $100,000
- 4 -
RENUMERATION OF DIRECTORS AND OFFICERS
The Fund pays $49.50 a month to Mr. Texter to cover his miscellaneous expenses
associated with services rendered as an officer of the Fund. In addition, all
directors except Mr. Texter & Mr. Klawans are paid $99 for expenses associated
with each Directors meeting they attend. The actual payments in the year 2001
were:
O'Higgins Fund Family of Funds
Name Compensation O'Higgins & Valley Forge
in 2001 Compensation in 2001
Bernard B. Klawans none* none*
William A. Texter $ 594 $ 1,188
Victor J. Belanger $ 495 $ 990
Dr, Gerd H. Dahl $ 594 $ 1,188
Dr. James P. King $ 594 $ 1,188
Donald A. Peterson $ 495 $ 990
* Mr. Klawans serves the Fund in many capacities but only receives compensa-
tion in the form of the Advisory Fee for invcestment advice paid to the
Management Company that he owns.
Footnote: Mr. Klawans received $2,000 and Mrs. Texter received $1,000 in
rental fees for lease of their computer equipment to the Family of Funds.
BROKERAGE
The Fund requires all brokers to effect transactions in portfolio securities in
such a manner as to get prompt execution of orders at the most favorable price.
Where consistent with best price and execution and in light of its limited
resources, the Fund will deal with primary market makers in placing over-the-
counter portfolio orders. The Fund places all orders for purchase and sale of
its securities through its president who is answerable to the Board of Direct-
ors. The President may select brokers who, in addition to meeting the primary
requirements of execution and price, have furnished statistical or other factual
information and services, which, in the opinion of management, are helpful or
necessary to the Fund's normal operations. Those services may include economic
or industry studies, security analysis & reports, sales literature and statisti-
cal services furnished either directly to the Fund or to the Adviser. No effort
is made in any given circumstance to determine the value of these services or
the amount they might have reduced Adviser expenses.
Other than as set forth above, the Fund has no fixed policy, formula, method or
criteria used in allocating brokerage business to brokers furnishing these
materials and services. In its most recently completed year, 2001, the Fund
paid $0 in brokerage commissions. Brokerage commissions were $50 in 2000 and
$0 in 1999 largely because all US zero Coupon Bonds were purchased flat. The
Board of Directors evaluates and reviews annually the reasonableness of broker-
age commissions paid.
PROPOSAL #2: RATIFICATION OR REJECTION OF SELECTION OF AUDITORS
Your Board of Directors recommends, subject to shareholder approval, Sanville &
Company, Certified Public Accountants ("S&C") to audit and certify financial
statements of the Fund for the year 2002 since they performed our 2001 audit in
an exemplary fashion at competitive prices.
Audit Fees: The annual audit fee
charged for the 2001 audit by Sanville & Co. was $4,000. The fee for the year
2002 is expected to be the same. This fee includes charges for the certified
audit along with checking the Funds securities three times a year as required
since the Fund acts as self custodian and reporting its findings to the Securi-
ties and Exchange Commission and the Fund's Board of Directors.
- 5 -
All Other Fees: None
Financial Information System Design and Implementation Fees: None
The Board of Directors has adopted procedures to pre-approve the types of pro-
fessional services for which the Fund may retain such auditors. As part of the
approval process, the Board of Directors considers whether the performance of
each professional service is likely to affect the independence of S&C. Neither
S&C nor any of its partners have any direct or material indirect financial
nterest in the Fund and will provide no non-auditing services. A representative
of Sanville & Co. will not be present at the meeting unless requested by a
shareholder (either in writing or by telephone) in advance of the meeting. Such
requests should be directed to the Secretary of the Fund.
PROPOSAL #3: REVISION OF THE FUNDS INVESTMENT STRATEGIES
The O'Higgins Fund was established to follow investment strategies presented in
Mr. O'Higgins second book, "Beating the Dow - With Bonds" (Harper Collins 1999).
These strategies result in almost 100% investments either in 20 of the lowest
dollar priced securities of the 100 highest yielding stocks in the S&P Indust-
rial Index or short-term US Treasury Notes or long-term US Zero Coupon Bonds.
Strict adherence to these strategies has produced positive results on average
since inception in early 1998.
However conditions in the financial markets have changed and Mr. O'Higgins be-
lieves that the Fund could benefit from the ability to deviate slightly from the
current strategy by investing in securities that are:
a: Principally involved in mining gold.
b: Stocks traded in the United States operated by foreign nationals throughout
the world including emerging countries.
c: Index options that move inversely with the major US stock indicies.
These securities while not eligible for purchase under the "Beating the Dow"
strategy do fall well within the limits of the Fund's Investment Restrictions as
stated in its Statement of Additional Information. They also are intended to
compliment the Fund's overall investment objective of capital appreciation.
Your Board of Directors desire shareholder approval for allowing your Fund to be
able to invest up to 20% of its assets at the time of purchase to seek capital
gains through the purchase of securities such as those mentioned in the above
paragraph when they are expected to perform well in the market environment that
Mr. O'Higgins foresees.
Gold securities will increase risk because they are affected by rates of infla-
tion and actions of entities that hold, purchase and sell large quantities of
the metal. Foreign company securities carry additional risk because they are
subject to social and/or political issues unique to the nation of residence
along with changing foreign currency exchange rates and inadequate or incorrect
available financial information. Options that move inversely with the major US
stock indicies may be chosen at the wrong times or may actually move with the
major ones. This proposed modified policy will also be accompanied by higher
volatility and increase risk because management may misjudge or miss-time future
world conditions. The Investment Adviser, Mr. Klawans, has examined the
effects expected and agrees with Mr. O'Higins suggestions. The Board of Direct-
ors has considered the risk involved, the combined 55 years investment practice
of Messrs O'Higgins and Klawans and the actual recommendations. They urge you
to vote for the modification.
- 6 -
SHAREHOLDER PROPOSALS
Your Fund tentatively expects to hold its next annual meeting in August 2003.
Shareholder proposals may be presented at that meeting provided they are re-
ceived by the Fund not later than January 4, 2003 in accordance with Rule 14a-8
under the Securities & Exchange Act of 1934 that set forth certain requirements.
OTHER MATTERS
The Board of Directors knows of no matters to be presented at the meeting other
than those mentioned above. Should other business come before the meeting,
proxies will be voted in accordance with the view of the Board of Directors.
- 7 -
PROXY- SOLICITED BY THE BOARD OF DIRECTORS
THE O'HIGGINS FUND ANNUALMEETING OF SHAREHOLDERS JUNE 18, 2002
The annual meeting of The O'HIGGINS FUND will be held June 18, 2002 at 1375
Anthony Wayne Dr., Wayne, PA. at 7:30 P.M. The undersigned hereby appoints
Bernard B. Klawans and or William A. Texter as proxies to represent and to vote
all shares of the undersigned at the annual meeting of shareholders and all
adjournments thereof, with all powers the undersigned would possess if personal-
ly present, upon the matters specified below.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED: IF NO DIRECTION
IS INDICATED AS TO A PROPOSAL, THE PROXIES SHALL VOTE FOR SUCH PROPOSAL. THE
PROXIES MAY VOTE AT THEIR DISCRETION ON ANY OTHER MATTER WHICH MAY PROPERLY
COME BEFORE THE MEETING.
The Board of Directors recommends that you vote FOR on all items.
1. Election of Directors
___
l___l FOR all nominees except as marked to the contrary below.
___
l___l WITHHOLD AUTHORITY to vote for all nominees.
Instructions: To withhold authority to vote for nominees, strike a line
through his/their name(s) in the following list.
Bernard B Klawans William A. Texter Victor J Belanger
Dr. Gerd H. Dahl Dr. James P King Donald A. Peterson
2. Proposal to ratify or reject the selection of Sanville & Co. by the Board of
Directors as independent public accountants to audit and certify financial
statements of the Fund for the fiscal year ending December 31, 2002.
___ ___ ___
l___l FOR l___l AGAINST l___l ABSTAIN
3. Proposal to ratify or reject revision of the O'Higgins "Beating the Dow -
with Bonds" strategy by adding the ability to invest up to 20 percent of its
assets outside this strategy but within the limits of the Funds current Invest-
ment Restrictions in an attempt to be more responsive to changing world condi-
tions.
___ ___
l___l FOR l___l AGAINST
4. To transact such other business as may properly come before the meeting or
any general adjournments thereof.
Please mark, date, sign & return the proxy promptly in the enclosed envelope.
For joint registrations, both parties should sign.
Dated ___________________, 2002
_________________________
Shareholder's Signature
You should review your address and note corrections below.
_________________________
Shareholder's Signature