NOTICE OF SPECIAL MEETING
TO BE HELD OCTOBER XX, 2002
To the Shareholders of The O'Higgins Fund
NOTICE IS HEREBY GIVEN that a Special Meeting of The O'Higgins Fund will be
held at 1375 Anthony Wayne Drive, Wayne, PA. 19087 on October XX, 2002 at 7:30
PM for the following purposes.
1) To elect five (5) directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected and qualified.
2) To change the investment objectives and principal investment strategies
of the Fund.
3) To select a new Investment Adviser.
4) To change the name of the Fund to CAMCO Investors Fund.
5) To transact such other business as may properly come before the meeting or
any general adjournments thereof.
The Board of Directors has fixed the close of business on August 20, 2002 as
the record date for determination of the shareholders entitled to notice of,
and to vote at the meeting.
PLEASE FILL IN, SIGN AND RETURN THE ENCLOSED PROXY IF
YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON.
PROMPT RETURN OF YOUR PROXY WILL BE APPRECIATED.
THE O'HIGGINS FUND
1375 Anthony Wayne Dr. Wayne, PA. 19087 Tel. 1-800-548-1942
Enclosed herewith is notice of a Special Meeting of Shareholders of The
O'Higgins Fund (the "Fund") and a proxy form solicited by the Board of
Directors of the Fund. This material was first mailed to shareholders on
October XX, 2002.
The meeting has been called to change the investment objectives and principal
investment strategies of the Fund because the use of Mr. O'Higgins strategies
and objectives had not achieved sufficient assets under management to make it
worthwhile to either the shareholders or the investment adviser to continue
operation.
The Board has located a registered investment adviser, Cornerstone Asset Manage-
ment Corporation (CAMCO), that has been managing individual private investment
accounts since 1986 who would like to expand to a company available to the pub-
lic. This Proxy, if approved, would permit CANCO's investment strategies and
objectives to replace the ones currently in use, elect directors that expressed
an interest in directing this new operation and select CAMCO as the investment
adviser.
Exercised proxies may be revoked by you at any time either by mail notice to the
Fund, resubmittal at a later date or voting at the meeting. Please place your
instructions on the enclosed one, then sign, date and return. The Fund will pay
for soliciting this proxy.
The Fund has one class of capital stock of the Fund, all having equal voting
rights. On August 20, 2002, the date of record, there were 6,301.3509 shares
outstanding, held by one shareholder entitled to notice of and to vote at the
meeting. In all matters, each share has one vote.
A quorum must exist to hold a special meeting. It requires that more than fifty
percent of the outstanding shares be present or represented by proxy. Absten-
tions and broker accounts that do not vote are considered as being present
with negative votes. Sixty-seven percent of the votes cast or fifty percent of
the outstanding shares, whichever is less, will pass any proposal presented.
PROPOSAL #1: ELECTION OF DIRECTORS
The five individuals 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 current officers of the Fund are also
presented in the following table. Mr. Klawans has offered to serve on the new
board to ease transition of the move and will receive a fee for this service.
The other current directors approve of the move but feel that their presence on
the new board is not necessary.
- 1 -
Name, Address Position in Term of Office Principal # of Other
and Age the Fund and Length of Occupation Funds Direct-
Time Served Past Five in Fund orships
Years Complex Held
Overseen
by Director
Interested Directors & Officers
*Bernard B Klawans President Elected for One President of Two None
1375 Anthony Wayne and Year. Served O'Higgins &
Wayne PA Director Since Inception Valley Forge
81 Jan. 30, 1998 Funds
William A Texter Secretary Elected for One Retired Mgr. Two None
551 Red Coat Lane Year. Served PECO Energy
Phoenixville PA Since Philadelphia PA
55 Jan 30, 2001
Sandra K Texter Treasurer Elected for One System Analyst None None
551 Red Coat Lane Year. Served Lockeed Martin
Phoenixville PA Since Defense Contractor
51 Jan 30. 2001 King of Prussia PA
Independent Directors
Keith P Newman Director Elected for Realtor None None
9110 Glen Brook Rd One Year Fairfax Va
Fairfax Va
48
Malcolm R Uffelman Director Elected for Vice President None None
1808 Horseback Trail One Year Contact Inc
Vienna VA Winchester Va
66
Charles J Bailey Director Elected for Regional Mgr None None
11620 Gambrill Rd One Year Tollgrade Inc
Frederick MD Frederick MD
39
Col. Richard Bruss Director Elected for Retired None None
9507 Arnon Chapel Rd One Year USAF
Great Falls VA
73
* "Interested persons" as defined in the Investment Company Act of 1940. Mr.
Klawans is an "interested person" because of his position as the Fund's Invest-
ment Adviser.
- 2 -
Shareholders have one vote for each share they own for each of eight directors
of their choice. All proxies returned to the Fund, except those specifically
marked 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 nominees are new to the Fund except Mr. Klawans who stood for election in
June of this year and was overwhelmingly reelected.
BOARD MEETINGS AND DIRECTORS DUTIES
Meetings: The proposed board is a new Board of Directors that may be voted into
office at this Special Meeting.
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 Fund's auditor on a yearly basis
and monitor Fund activities 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 PRESENT OFFICERS AND DIRECTORS
Name Dollar Range of Equity Aggregate Dollar Range of Equity
Securities in the Fund Securities in All Registered
Investment Companies Overseen
by Director in Family of
Investment Companies
Interested officers and directors
Bernard B. Klawans $10,000 to $50,000 over $100,000
Sandra K. Texter none over $100,000
William A. Texter none $10,001 to $ 50,000
Independent directors
Victor J. Belanger none $50,001 to $100,000
Dr. Gerd H. Dahl none $10,001 to $ 50,000
Dr. James P. King none $10,001 to $ 50,000
Donald A. Peterson none over $100,000
At present, the total assets of the Fund are about $48,000 that are deposited in
a bank savings account. There are no operating committees and all outstanding
shares are held by Mr. Klawans.
RENUMERATION OF CURRRENT DIRECTORS AND OFFICERS
The Fund has not paid salaries to Directors or Officers of the Fund. This
policy along with no payment of a management fee to the Investment Adviser will
be maintained until all items in this proxy statement have been reviewed by the
Securities and Exchange Commission in Washington and approved by the Fund
shareholders. Only Mr. Klawans, a current director, is running for Directorship
on the new board proposed at this special meeting.
- 3 -
O'Higgins Fund Family of Funds
Name Compensation O'Higgins & Valley Forge
in 2002 Compensation in 2002
Interested officers and directors
Bernard B. Klawans none* none*
Sandra K. Texter none none
William A. Texter $ 594 $1,188
Independent directors
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 receives no compensation
for his services. He receives compensation in the form of an advisory fee
for investment advice paid by the Valley Forge Fund to the Management Com-
pany that he owns. Mrs. Texter provides the services of Chief Financial
Officer with no compensation. All others on the above list receive compen-
sation for travel expenses to Directors Meetings that they attend.
PROPOSAL #2: CHANGE INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
Officers and Directors of the Fund have reviewed its status and have determined
that changing the Investment Objectives and the Principal Investment Strategies
is in the best interests of the current shareholder. An organization, The
Cornerstone Asset Managemewnt Corporation (CAMCO), has indicated an interest in
offering their principal investment strategies to the public using the Fund
as the instrument to do so.
O'HIGGINS FUND CURRENT INVESTMENT OBJECTIVES
The current O'higgins Fund investment objectives seek to provide capital
appreciation through application of a proprietary 28 year back tested asset
allocation model. Use of this model results in almost 100% investments either
in 20 of the lowest dollar priced securities of the highest yielding stocks in
the popular S&P Industrial Index or short-term US Treasury Notes or long-term US
Zero Coupon Bonds.
NEW INVESTMENT OBJECTIVES
The new Fund investment objectives seem to be more in tune with modern market
conditions in that they would seek to maximize total return to shareholders
through a combination of capital appreciation and income derived from dividends
and interest. It would invest in a diversified portfolio of equity instruments
(including common and preferred stocks and convertible issues) and debt securi-
ties. The Fund would not invest in companies that derive at least fifty percent
of their revenues from such activities as alcoholic beverages, gambling, tobac-
co, pornography or abortion.
O'HIGGINS FUND CURRENT INVESTMENT STRATEGIES
The current O'Higgins Fund principal investment strategies are inflexible in
that they follow the methodology described in detail in Mr. O'Higgins book
"Beating the Dow - With Bonds".
- 4 -
NEW PRINCIPAL INVESTMENT STRATEGIES
The new Fund principal investment strategies would be more flexible in that
securities believed to be selling at significant discounts to what they believe
their true or intrinsic value and generally exhibit one or more of the following
characteristics would be considered:
a) A low price to earnings ratio (PE)
b) A low price to book value (PBV)
c) A low price to cash flow ratio (PCF)
d) A low price to sales ratio (PS)
e) A low price earnings to growth (PGE)
f) An above average dividend yield
g) Has a low corporate debt
h) Insiders and/or the company itself are purchasing its stock
i) The stock selling price is signifigantly below its previous high
Investment in American Depository Receipts (ADR's), representing foreign
companies traded on American Stock Exchanges that meet one or more of the
above characteristics will also be considered.
O'HIGGINS FUND PRINCIPAL INVESTMENT RISKS
Risks associated with the Fund's performance will be those due to broad market
declines and business risks from difficulties that occur to paticular companies
while in the Fund's portfolio or the effect of interest rates on its debt secu-
rity holdings. The Fund's approach of either being in stocks or short-term US
Treasury Notes or long-term US Zero Coupon Bonds could impact total returns or
principal by being in the wrong type of security at the wrong time. Also, the
methodology used that had worked well in theory in past markets is untried in
future markets. It, therefore, must be realized that there is no assurance the
method will be successful. Loss of money is a risk of investing in the Fund.
RISKS INCURRED THROUGH USE OF THE PROPOSED INVESTMENT STRATEGIES
As with any investment, the Fund as proposed will increase and/or decrease in
value. In plain english, this means that investors in this Fund as proposed may
lose money. The planned Fund's risks of investment are explained in the
following paragraphs.
Common Stock Risks: It should be realized that all securities (good and bad) go
down as well as up For example, there are items that affect stocks prices in
general, such as changing economic conditions at home and abroad, wars, and in-
terest rates that may preclude the realization of stocks seeking their true
worth. In addition, although the Investment Adviser has managed individual in-
vestor accounts under varying market conditions since 1986, it has not offered
investment advice to a publicly offered mutual fund. Investors should be aware
that this effort is new and may not provide acceptable results.
Bond Market Risks: The risk involved with bonds held to maturity will be limited
somewhat by purchasing bonds considered to be Investment Grade as indicated by
Standard & Poors BBB ratings or better. Bonds that are not held to maturity are
subjet to changes in value due to changes in interest rates that are magnified
the further the bond is from its maturity date. In addition, individual
companies that issue bonds may have unforseen problems that affect their value
including such things as country of origin and bankrupcy. The inexperience of
the Investment Adviser in offering investment advice to a mutual fund whose
shares are offered to the public may also not produce acceptable results here.
- 5 -
PROPOSAL #3: SELECTION OF A NEW INVESTMENT ADVISER
The proposed adviser is Cornerstone Asset Management Inc. (CAMCO). CAMCO was
incorporated in Virginia on December 16, 1986. Its location and mailing address
is 297 Herndon Parkway, Suite 302, Herndon, VA.
CAMCO is registered under the Investment Company Act of 1940 and the individual
state securities agencies where the Adviser does business. It has had sixteen
years of experience in providing investment advice based on the principal
investment strategies presented under Proposal #2 above to individuals, retire-
ment plans, corporations and non-profit organizations. With this experience
it now seeks to expand its services to include observation of compliance with
the securities laws by the Securities & Exchange Commission in Washington and
public access to the continuing financial status and performance of their
efforts.
PROPOSAL #4: RENAME THE FUND
The first three proposals replace the Directors, Investment Objectives and Prin-
cipal Investment Strategies, and the Investment Adviser if selected by current
shareholders. It is therefore requested that the name of the Fund be changed to
"CAMCO Investors Fund" by voting for this Proposal. However, even if this
Proposal is approved the first three Proposals must also be approved to allow
appropriate action to actually change the name.
SHAREHOLDER PROPOSALS
The Fund tentatively expects to hold its next annual meeting in August 2003.
Shareholder proposals may be presented at that meeting provided they are recei-
ved by the Fund not later than January 4, 2003 in accordance with Rule 14a-8
under the Securities & Exchange Act of 1934 which sets forth certain require-
ments.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the meeting
other than those mentioned above. Should other business come before the meeting,
the proxies will be voted in accordance with the view of the Board of Directors.
- 6 -
PROXY - SOLICITED BY THE BOARD OF DIRECTORS
AN O'HIGGINS FUND SPECIAL MEETING OF SHAREHOLDERS OCTOBER XX, 2002
The special meeting of THE O'HIGGINS FUND will be held October XX, 2002 at
1375 Anthony Wayne Dr. 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
therof, with all powers the undersigned would possess if personally 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 Charles J. Bailey Richard Bruss
Keith P. Newman Malcolm R. Uffelman
2. Proposal to change the Investment Objectives and Principal Investment Strat-
egies of the Fund.
___ ___ ___
l___l FOR l___l AGAINST l___l ABSTAIN
3. Proposal to select a new Investment Adviser
___ ___ ___
l___l FOR l___l AGAINST l___l ABSTAIN
4. Proposal to change the name of the Fund to "CAMCO Investors Fund"
___ ___ ___
l___l FOR l___l AGAINST l___l ABSTAIN
Please mark, date, sign and return the proxy promptly in the enclosed envelope.
For joint registrations, both parties should sign.
Dated ___________________, 2002 _______________________
Shareholder's Signature
_______________________
Shareholder's Signature
You should review your address and note corrections below.