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OAK ASSOCIATES FUNDS
Investment Adviser:
OAK ASSOCIATES, LTD.
Oak Associates Funds (the "Trust") provides a convenient and economical means of
investing in professionally managed portfolios of securities. This Prospectus
offers shares of the following mutual funds (each, a "Portfolio"), each of which
is a separate series of the Trust.
WHITE OAK GROWTH STOCK PORTFOLIO
PIN OAK AGGRESSIVE STOCK PORTFOLIO
This Prospectus sets forth concisely the information about the Trust and the
Portfolios that a prospective investor should know before investing. Investors
are advised to read this Prospectus and retain it for future reference. A
Statement of Additional Information dated February 27, 1998 has been filed with
the Securities and Exchange Commission and is available without charge by
calling 1-888-462-5386. The Statement of Additional Information is incorporated
into this Prospectus by reference. The Statement of Additional Information,
material incorporated by reference into this document, and other information
regarding the Trust is maintained electronically with the Securities and
Exchange Commission at its internet web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
February 27, 1998
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TABLE OF CONTENTS
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<S> <C>
Summary..................................................... 3
Expense Summary............................................. 5
Financial Highlights........................................ 6
The Trust and the Portfolios................................ 7
Investment Objectives and Policies.......................... 7
Risk Factors................................................ 8
Investment Limitations...................................... 8
The Adviser................................................. 9
The Administrator........................................... 9
The Transfer Agent.......................................... 10
The Distributor............................................. 10
Portfolio Transactions...................................... 10
Purchase and Redemption of Shares........................... 10
Performance................................................. 12
Taxes....................................................... 13
General Information......................................... 14
Description of Permitted Investments and Risk Factors....... 15
</TABLE>
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SUMMARY
The following summary provides basic information about the White Oak Growth
Stock Portfolio ("White Oak Portfolio") and Pin Oak Aggressive Stock Portfolio
("Pin Oak Portfolio"). The White Oak Portfolio and the Pin Oak Portfolio are
sometimes referred to individually as a "Portfolio" and collectively as the
"Portfolios." The Portfolios are two of the mutual funds comprising Oak
Associates Funds (the "Trust"). This summary is qualified in its entirety by
reference to the more detailed information provided elsewhere in this Prospectus
and in the Statement of Additional Information.
What are the Investment Objectives and Policies? Each Portfolio seeks
long-term capital growth by investing primarily in common stocks of companies
that, in the Adviser's opinion, have strong earnings potential and reasonable
market valuations relative to the market as a whole and common stocks of
companies in the same respective industry classifications. The White Oak
Portfolio invests primarily in established companies with large market
capitalization (in excess of $1 billion). The Pin Oak Portfolio invests
primarily in companies with small to medium market capitalization (between $100
million and $1 billion); such companies may be positioned in emerging growth
industries. There is no assurance that either Portfolio will achieve its
investment objective.
What are the Risks Involved with an Investment in the Portfolios? An
investment in each Portfolio entails certain risks and considerations of which
an investor should be aware. Each Portfolio invests in securities that fluctuate
in value, and investors should expect each Portfolio's net asset value per share
to fluctuate in value. The share value of the Pin Oak Portfolio may experience
greater volatility than the share value of the White Oak Portfolio because it
invests in less established, smaller capitalization companies.
For more information about each Portfolio, see "Investment Objectives and
Policies," "Risk Factors" and "Description of Permitted Investments and Risk
Factors."
Who is the Adviser? Oak Associates, Ltd. (the "Adviser") serves as the
investment adviser of each Portfolio. In addition to advising the Portfolios,
the Adviser provides advisory services to pension plans, religious and
educational endowments, corporations, 401(k) plans, profit sharing plans,
individual investors and trusts and estates. See "Expense Summary" and "The
Adviser."
Who is the Administrator? SEI Fund Resources (the "Administrator") serves as
the administrator and shareholder servicing agent of the Portfolios. See "The
Administrator."
Who is the Transfer Agent? DST Systems, Inc. (the "Transfer Agent") serves
as the transfer agent and dividend disbursing agent for the Portfolios. See "The
Transfer Agent."
Who is the Distributor? SEI Investments Distribution Co. (the "Distributor")
acts as the distributor of the Portfolios' shares. See "The Distributor."
Is There a Sales Load? No, shares of each Portfolio are offered on a no-load
basis.
Is There a Minimum Investment? Each Portfolio has a minimum initial
investment of $2,000, and requires subsequent purchases to be at least $50. The
Distributor may waive these minimums at its discretion.
How do I Purchase and Redeem Shares? Purchases and redemptions may be made
through the Transfer Agent on any day when the New York Stock Exchange is open
for business (a "Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent receives an
order and payment by check or with readily available funds prior to the time a
Portfolio calculates its net asset value (normally 4:00 p.m., Eastern time).
Redemption orders placed with the Transfer Agent prior to the time a Portfolio
calculates
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its net asset value (normally 4:00 p.m., Eastern time) on any Business Day will
be effective that day. The Trust has also authorized certain broker-dealers to
accept purchase orders and redemption requests up to the times mentioned above
on behalf of the Portfolios. The Portfolios also offer both a Systematic
Investment Plan and a Systematic Withdrawal Plan. The purchase and redemption
price for shares is the net asset value per share determined as of the end of
the day the order is effective. See "Purchase and Redemption of Shares."
How are Distributions Paid? Substantially all of the net investment income
(exclusive of capital gains) of each Portfolio is distributed in the form of
quarterly dividends. Any capital gain is distributed at least annually.
Distributions are paid in additional shares unless the shareholder elects to
take the payment in cash. See "Dividends and Distributions."
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EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
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WHITE OAK GROWTH STOCK PORTFOLIO
PIN OAK AGGRESSIVE STOCK PORTFOLIO
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<S> <C>
Sales Load Imposed on Purchases............................. None
Sales Load Imposed on Reinvested Dividends.................. None
Deferred Sales Load......................................... None
Redemption Fees(1).......................................... None
Exchange Fees............................................... None
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</TABLE>
(1) A wire redemption charge of $10.00 is deducted from the amount of a Federal
Reserve wire redemption payment made at the request of a shareholder.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
<TABLE>
<CAPTION>
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WHITE OAK PIN OAK AGGRESSIVE
GROWTH STOCK PORTFOLIO STOCK PORTFOLIO
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<S> <C> <C>
Advisory Fees (after fee waivers)(2).................. .59% .50%
12b-1 Fees............................................ None None
Other Expenses........................................ .39% .49%
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Total Operating Expenses (after fee waivers)(2)....... .98% .99%
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</TABLE>
(2) The Adviser has voluntarily agreed to waive all or a portion of its fee for
each Portfolio and to reimburse expenses of each Portfolio in order to limit
total operating expenses of that Portfolio to an annual rate of not more
than 1.00% of average daily net assets. The advisory fee waivers and expense
reimbursements are expected to be in effect at least through the current
fiscal year. However, the Adviser reserves the right, in its sole
discretion, to terminate its voluntary fee waivers and reimbursements at any
time. Absent such waivers the annual advisory fees for the White Oak Growth
Stock Portfolio and the Pin Oak Aggressive Stock Portfolio would be .74% and
.74%, respectively, and annual total operating expenses would be 1.14% and
1.23%, respectively, of average daily net assets. See "The Adviser."
EXAMPLE
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<CAPTION>
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
--- --- --- ----
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An investor in a Portfolio would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and
(2) redemption at the end of each time period.
White Oak Growth Stock Portfolio....................... $10 $31 $54 $120
Pin Oak Aggressive Stock Portfolio..................... $10 $32 $55 $121
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THE EXAMPLE IS BASED UPON ESTIMATED TOTAL OPERATING EXPENSES OF A PORTFOLIO
AFTER FEE WAIVERS AND EXPENSE REIMBURSEMENTS. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is to assist the
investor in understanding the various costs and expenses that may be directly or
indirectly borne by investors in a Portfolio. Additional information may be
found under "The Adviser" and "The Administrator."
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FINANCIAL HIGHLIGHTS
On February 27, 1998, the White Oak Growth Stock Portfolio acquired all of
the assets and liabilities of the White Oak Growth Stock Fund of The Advisors'
Inner Circle Fund (the "AIC White Oak Fund") and the Pin Oak Aggressive
Portfolio acquired all of the assets and liabilities of the Pin Oak Aggressive
Stock Fund of The Advisors' Inner Circle Fund (the "AIC Pin Oak Fund" and
together with the AIC White Oak Fund, the "AIC Oak Funds"). The information
prior to that date relates to the AIC Oak Funds. The financial statements of the
AIC Oak Funds were audited by Arthur Andersen LLP as indicated in their report
dated December 12, 1997 on the Advisors' Inner Circle Fund's financial
statements as of October 31, 1997. This table should be read in conjunction with
the Trust's financial statements and notes thereto. The AIC Oak Funds' financial
statements and additional performance information are included in the Trust's
Statement of Additional Information, which is available without charge by
calling 1-800-932-7781. All references herein to the White Oak Growth Stock
Portfolio and Pin Oak Aggressive Stock Portfolio shall be deemed to include the
AIC White Oak Fund and AIC Pin Oak Fund, respectively.
<TABLE>
<CAPTION>
REALIZED AND NET
NET ASSET NET UNREALIZED DISTRIBUTIONS ASSET NET ASSETS RATIO OF
VALUE INVESTMENT GAINS OR FROM NET DISTRIBUTIONS VALUE END OF EXPENSES TO
BEGINNING INCOME (LOSSES) ON INVESTMENT FROM CAPITAL END OF TOTAL PERIOD AVERAGE NET
OF PERIOD (LOSS) SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS
--------- ---------- ------------ ------------- ------------- ------ ------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PIN OAK AGGRESSIVE STOCK PORTFOLIO
1997 $17.08 (0.11) 2.49 -- -- $19.46 13.93 % $ 31,681 0.99%
1996 $17.32 (0.09) (0.15) -- -- $17.08 (1.39)% $ 23,738 0.96%
1995 $11.60 (0.08) 5.80 -- -- $17.32 49.31 % $ 15,652 0.98%
1994 $12.62 (0.06) (0.96) -- -- $11.60 (8.08)% $ 9,624 0.96%
1993 $10.28 (0.05) 2.39 -- -- $12.62 22.76 % $ 9,079 0.98%
1992(1) $10.00 -- 0.28 -- -- $10.28 11.57 % $ 4,127 1.00%*
WHITE OAK GROWTH STOCK PORTFOLIO
1997 $21.88 0.03 7.49 (0.04) (0.07) $29.29 34.46 % $362,404 0.98%
1996 $18.08 0.05 3.80 (0.05) -- $21.88 21.33 % $ 26,109 0.95%
1995 $11.92 0.04 6.15 (0.03) -- $18.08 52.07 % $ 10,495 0.97%
1994 $10.64 0.02 1.28 (0.02) -- $11.92 12.24 % $ 5,942 0.97%
1993 $10.33 0.05 0.32 (0.06) -- $10.64 3.59 % $ 5,539 0.97%
1992(1) $10.00 0.02 0.33 (0.02) -- $10.33 14.30 % $ 3,195 1.00%*
<CAPTION>
RATIO OF
NET RATIO OF RATIO OF NET
INCOME EXPENSES TO INCOME (LOSS) TO
(LOSS) AVERAGE NET AVERAGE NET
TO ASSETS ASSETS
AVERAGE (EXCLUDING (EXCLUDING PORTFOLIO AVERAGE
NET WAIVERS AND WAIVERS AND TURNOVER COMMISSION
ASSETS REIMBURSEMENTS) REIMBURSEMENTS) RATE RATE (2)
-------- --------------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C>
PIN OAK AGGRESSIVE STOCK PORTFOLIO
1997 (0.75)% 1.23% (0.99)% 17.30% $0.0560
1996 (0.62)% 1.47% (1.13)% 31.65% $0.0617
1995 (0.70)% 1.65% (1.37)% 49.28% --
1994 (0.62)% 1.74% (1.40)% 48.88% --
1993 (0.48)% 2.07% (1.57)% 68.32% --
1992(1) 0.03 %* 4.06%* (3.03)%* 4.00% --
WHITE OAK GROWTH STOCK PORTFOLIO
1997 0.06 % 1.14% (0.10)% 7.90% $0.0598
1996 0.23 % 1.50% (0.32)% 8.07% $0.0599
1995 0.29 % 2.06% (0.80)% 22.43% --
1994 0.19 % 2.24% (1.08)% 37.42% --
1993 0.54 % 2.71% (1.20)% 27.48% --
1992(1) 0.74 %* 4.78%* (3.04)%* -- --
</TABLE>
* Annualized
(1) The AIC Pin Oak Fund and AIC White Oak Fund each commenced operations on
August 3, 1992.
(2) Average commission rate paid per share for the security purchases and sales
made during the period. Presentation of the rate is required for fiscal
years beginning after September 1, 1995.
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THE TRUST AND THE PORTFOLIOS
Oak Associates Funds (the "Trust") offers shares of two separately-managed
mutual funds, each of which is a separate series ("portfolio") of the Trust.
Each share of each mutual fund represents an undivided, proportionate interest
in that mutual fund. This Prospectus offers shares of the Trust's White Oak
Growth Stock Portfolio ("White Oak Portfolio") and Pin Oak Aggressive Stock
Portfolio ("Pin Oak Portfolio") (the White Oak Portfolio and the Pin Oak
Portfolio are sometimes referred to individually as a "Portfolio" and
collectively as the "Portfolios"), each a diversified portfolio.
INVESTMENT OBJECTIVES AND POLICIES
WHITE OAK PORTFOLIO
The White Oak Portfolio seeks long-term capital growth. There can be no
assurance that the Portfolio will be able to achieve this investment objective.
The White Oak Portfolio will normally be as fully invested as practicable in
common stocks, but also may invest in warrants and rights to purchase common
stocks, debt securities and preferred stocks convertible into common stocks, and
American Depositary Receipts ("ADRs"). Under normal market conditions, the White
Oak Portfolio will invest at least 65% of its total assets in common stocks. The
Portfolio will purchase securities primarily of established companies with large
market capitalizations (an equity market capitalization in excess of $1
billion). The Portfolio may also purchase securities of smaller established
companies if its investment adviser, Oak Associates, Ltd. (the "Adviser"),
believes that such securities offer comparable investment opportunities.
PIN OAK PORTFOLIO
The Pin Oak Portfolio seeks long-term growth of capital. There can be no
assurance that the Portfolio will be able to achieve this investment objective.
The Pin Oak Portfolio will normally be as fully invested as practicable in
common stocks, but may also invest in warrants and rights to purchase common
stocks, debt securities and preferred stocks convertible into common stocks, and
ADRs. Under normal market conditions, the Pin Oak Portfolio will invest at least
65% of its total assets in common stocks. The Portfolio will purchase securities
primarily of companies with small to medium market capitalizations (an equity
market capitalization between $100 million and $1 billion). These companies may
be positioned in emerging growth industries, i.e., industries comprised largely
of companies that are early in their life cycle, but which, in the Adviser's
judgement, have the potential to become major enterprises. The Pin Oak Portfolio
may purchase the securities of larger companies if the Adviser believes that
they offer comparable investment opportunities or will stabilize the Portfolio's
net asset value.
IN GENERAL
Each Portfolio will purchase securities that the Adviser believes have strong
earnings potential and reasonable market valuations relative to the market as a
whole and common stocks of companies in the same respective industry
classifications. Each Portfolio will purchase only those securities that are
traded in the United States on registered exchanges or the over-the-counter
market.
Each Portfolio may invest in debt securities rated AAA by Standard & Poor's
Corporation ("S&P"). Debt rated AAA has the highest rating S&P assigns to a debt
obligation. Such a rating indicates an extremely strong capacity to pay
principal and interest.
Under normal conditions, each Portfolio may hold up to 15% of its total assets
in cash and investments in the money market instruments described below in order
to maintain liquidity or if the Adviser determines that securities meeting the
Portfolio's investment objective and policies are not otherwise readily
available for purchase.
The Adviser will enter into repurchase agreements on behalf of a Portfolio only
with financial institutions deemed to present minimal risk of bankruptcy during
the term of the agreement based on guidelines established and periodically
reviewed by the Trustees.
A Portfolio will not invest more than 15% of its net assets in illiquid
securities.
For temporary defensive purposes during periods when the Adviser determines that
conditions warrant, each Portfolio may invest up to 100% of its assets in money
market instruments (including securities issued or guaranteed by the U.S.
Government, its agencies
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or instrumentalities; certificates of deposit, time deposits and bankers'
acceptances issued by banks or savings & loan associations having net assets of
at least $500 million as of the end of their most recent fiscal year; commercial
paper rated at least A-1 by S&P or Prime-1 by Moody's Investors Service, Inc.;
repurchase agreements involving the foregoing securities; and, to the extent
permitted by applicable law, shares of other investment companies investing
solely in money market instruments) and in cash.
For a description of certain permitted investments, see "Description of
Permitted Investments and Risk Factors" and "Description of Permitted
Investments" in the Statement of Additional Information. For a description of
ratings, see the Appendix in the Statement of Additional Information.
RISK FACTORS
Investments in common stocks and other equity securities are subject to market
risks that may cause their prices to fluctuate over time. The value of
securities convertible into equity securities, such as warrants or convertible
debt, is also affected by prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value of equity securities in
which a Portfolio invests will cause the net asset value of that Portfolio to
fluctuate. An investment in either Portfolio may therefore be more suitable for
long-term investors who can bear the risk of short-term principal fluctuations.
The Pin Oak Portfolio will invest primarily in securities of issuers with small
to medium market capitalizations. Investing in smaller capitalization companies
involves greater risk than is customarily associated with investments in larger,
more established companies. This increased risk may be due to the greater
business risks of smaller size, limited markets and financial resources, narrow
product lines and frequent lack of depth of management. The securities of
smaller companies are often traded in the over-the-counter market and even if
listed on a national securities exchange may not be traded in volumes typical
for that exchange. Consequently, the securities of smaller companies are less
likely to be liquid, may have limited market stability, and may be subject to
more abrupt or erratic market movements than securities of larger, more
established growth companies or the market averages in general. As a result, the
value of the shares of the Pin Oak Portfolio can be expected to fluctuate more
than the value of shares of an investment company investing solely in larger,
more established companies.
SECURITIES OF FOREIGN ISSUERS -- Investments in the securities of foreign
issuers may subject a Portfolio to investment risks that differ in some respects
from those related to investments in securities of U.S. issuers. Such risks
include future adverse political and economic developments, possible imposition
of withholding taxes on income, possible seizure, nationalization or
expropriation of foreign deposits, possible establishment of exchange controls
or taxation at the source or greater fluctuation in value due to changes in
exchange rates. Foreign issuers of securities often engage in business practices
different from those of domestic issuers of similar securities, and there may be
less information publicly available about foreign issuers. In addition, foreign
issuers are, generally speaking, subject to less government supervision and
regulation and different accounting treatment than are those in the United
States.
INVESTMENT LIMITATIONS
The investment objective of each Portfolio and the investment limitations set
forth here and in the Statement of Additional Information are fundamental
policies of that Portfolio. Fundamental policies cannot be changed with respect
to a Portfolio without the consent of the holders of a majority of that
Portfolio's outstanding shares.
NO PORTFOLIO MAY:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of
the Portfolio would be invested in the securities of such issuer. This
restriction applies to 75% of the Portfolio's total assets.
2. Purchase any securities which would cause 25% or more of the total assets of
a Portfolio to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities
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and repurchase agreements involving such securities. For purposes of this
limitation, (i) utility companies will be divided according to their services,
for example, gas distribution, gas transmission, electric and telephone will
each be considered a separate industry, and (ii) financial service companies
will be classified according to the end users of their services, for example,
automobile finance, bank finance and diversified finance will each be considered
a separate industry.
3. Issue any class of senior security or sell any senior security of which it is
the issuer, except that a Portfolio may borrow from any bank, provided that
immediately after any such borrowing there is asset coverage of at least 300%
for all borrowings of the Portfolio, and further provided that, to the extent
that such borrowings exceed 5% of the Portfolio's total assets, all borrowings
shall be repaid before the Portfolio makes additional investments. The term
"senior security" shall not include any temporary borrowings that do not exceed
5% of the value of a Portfolio's total assets at the time the Portfolio makes
such temporary borrowing. In addition, investment strategies that either
obligate a Portfolio to purchase securities or require the Portfolio to
segregate assets will not be considered borrowings or senior securities. This
investment limitation shall not preclude a Portfolio from issuing multiple
classes of shares in reliance on SEC rules or orders.
The foregoing percentages will apply at the time of the purchase of a security.
THE ADVISER
Oak Associates, Ltd. (the "Adviser") is a professional investment management
firm and registered investment adviser formed in December 1995 by James D.
Oelschlager to continue the business of Oak Associates, a sole proprietorship
founded in 1985. As of October 31, 1997, the Adviser had discretionary
management authority with respect to approximately $6.5 billion of assets under
management. The principal business address of the Adviser is 3875 Embassy
Parkway, Suite 250, Akron, Ohio 44333.
The Adviser serves as the investment adviser for each Portfolio under an
investment advisory agreement (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser makes the investment decisions for the assets of the
Portfolios and continuously reviews, supervises and administers the investment
program of each Portfolio, subject to the supervision of, and policies
established by, the Trustees of the Trust. In addition to advising the
Portfolios, the Adviser provides advisory services to pension plans, religious
and educational endowments, corporations, 401(k) plans, profit sharing plans,
individual investors and trusts and estates.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .74% of the average daily net assets of
the White Oak Portfolio and .74% of the average daily net assets of the Pin Oak
Portfolio, respectively. The Adviser has voluntarily agreed to waive all or a
portion of its fee for each Portfolio and to reimburse expenses of each
Portfolio in order to limit total operating expenses of that Portfolio to an
annual rate of not more than 1.00% of average daily net assets. The Adviser
reserves the right, in its sole discretion, to terminate its voluntary fee
waivers and reimbursements at any time. For the fiscal year ended October 31,
1997, the Adviser performed advisory services to each fund's predecessor
portfolios and received advisory fees of .59% and .50%, respectively, of the AIC
White Oak and AIC Pin Oak Funds' average daily net assets. The Adviser may,
from its own resources, compensate broker-dealers whose clients purchase shares
of the Portfolios.
James D. Oelschlager, President of the Adviser and its predecessor since 1985,
has managed the portfolios of the White Oak Portfolio and the Pin Oak Portfolio
(and their predecessor funds) since their inception, with both Donna Barton and
Doug MacKay serving as assistant portfolio managers during this period. Ms.
Barton has been a trader for the Adviser and its predecessor since 1985. Mr.
MacKay has been a research analyst for the Adviser and its predecessor since
1990.
THE ADMINISTRATOR
SEI Fund Resources (the "Administrator") serves as the Administrator of the
Trust. The Administrator provides the Trust with administrative services,
including regulatory reporting and all necessary office space, equipment,
personnel and facilities. For these administrative services, the Administrator
is entitled to a fee from each Portfolio, which fee is calculated daily and paid
monthly, at an annual rate of .15% on the first
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$250 million of average daily net assets; .12% on the next $200 million; .10% on
the next $200 million; and .08% on average daily net assets over $650 million.
However, each Portfolio pays the Administrator a minimum annual fee of $50,000.
The Administrator also serves as the shareholder servicing agent for each
Portfolio under a shareholder servicing agreement with the Trust.
THE TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent for
the Trust under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), Oaks, Pennsylvania 19456,
a wholly-owned subsidiary of SEI Investments Company, serves as the Trust's
distributor pursuant to a distribution agreement (the "Distribution Agreement").
No compensation is paid to the Distributor for distribution services for the
shares of either Portfolio.
PORTFOLIO TRANSACTIONS
The Advisory Agreement authorizes the Adviser to select broker-dealers that will
execute the purchase or sale of investment securities for each Portfolio. The
Advisory Agreement also directs the Adviser to seek to obtain the best net
results, i.e., the selection that the Adviser determines is most beneficial to
the Portfolio after taking into account various factors, including price,
commission, if any, size of the transactions and difficulty of execution, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved.
Each Portfolio may execute brokerage or other agency transactions through the
Distributor for which the Distributor may receive usual and customary
compensation.
Because shares of the Portfolios are not marketed through intermediary
broker-dealers, it is not a Portfolio's practice to allocate brokerage or effect
principal transactions with broker-dealers on the basis of sales of shares that
may be made through such firms. However, the Adviser may place orders for a
Portfolio with qualified broker-dealers who refer clients to that Portfolio.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on each day
that the New York Stock Exchange is open for business (a "Business Day").
Investors may purchase and redeem shares of either Portfolio directly through
the Transfer Agent at: Oak Associates Funds, P.O. Box 419441, Kansas City,
Missouri 64141-6441 by mail or wire transfer. All shareholders are automatically
entitled to place wire transfer orders, and exchange and redemption orders, by
telephone; when market conditions are extremely busy, it is possible that
investors may experience difficulties placing orders by telephone and may wish
to place orders by mail. Purchases and redemptions of shares of each Portfolio
may be made on any Business Day. Shares of the Portfolios are offered only to
residents of states in which such shares are eligible for purchase. Certain
broker-dealers assist their clients in the purchase or redemptions of shares
from the Distributor and charge a fee for this service in addition to a
Portfolio's public offering price. In addition, the Trust has authorized certain
broker-dealers and other financial intermediaries (collectively, "Authorized
Broker-Dealers") to act as the Portfolios' agent for the purposes of accepting
purchase orders and redemption requests. A Portfolio will be deemed to have
received a purchase order or redemption request upon receipt of the order or
request by an Authorized Broker-Dealer.
The minimum initial investment in the Portfolio is $2,000, and subsequent
purchases must be at least $50. The Distributor may waive these minimums at its
discretion. No minimum applies to subsequent purchases effected by dividend
reinvestment. As described below, subsequent purchases through the Portfolios'
Systematic Investment Plan must be at least $25.
PURCHASES BY MAIL
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the appropriate Portfolio) for $2,000 or more, together
with a completed Account Application to the Transfer Agent at: Oak Associates
Funds, P.O. Box 419441, Kansas City, Missouri 64141-6441. Third-party
10
<PAGE>
checks, credit cards, credit card checks and cash will not be accepted.
Subsequent investments may also be mailed directly to the Transfer Agent.
PURCHASES BY WIRE TRANSFER
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of either Portfolio by requesting
their bank to transmit funds by wire to: United Missouri Bank of Kansas, N.A.;
ABA #10-10-00695; for Account Number 98-7091-244-9; Further Credit: either White
Oak Growth Stock Portfolio or Pin Oak Aggressive Stock Portfolio. The
shareholder's name and account number must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor
must first telephone 1-888-462-5386 to be assigned an account number. The
investor's name, account number, taxpayer identification number or Social
Security number, and address must be specified in the wire. In addition, an
Account Application should be promptly forwarded to the Transfer Agent at: Oak
Associates Funds, P.O. Box 419441, Kansas City, Missouri 64141-6441.
Subsequent Purchases: Additional investments may be made at any time through
the wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
GENERAL INFORMATION REGARDING PURCHASES
A purchase order will be effective as of the day received by the Transfer Agent
(or an Authorized Broker-Dealer) if the Transfer Agent (or an Authorized
Broker-Dealer) receives the order and payment before a Portfolio calculates its
net asset value (normally 4:00 p.m., Eastern time) in order for shares to be
purchased at that day's price. Payment may be made by check or readily available
funds. The purchase price of shares of a Portfolio is the net asset value per
share next determined after a purchase order is effective. Purchases will be
made in full and fractional shares of a Portfolio calculated to three decimal
places. The Trust will not issue certificates representing shares of the
Portfolios.
If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Trust reserves the right to reject a purchase order when the Trust
determines that it is not in the best interest of the Trust or its shareholders
to accept such order.
SYSTEMATIC INVESTMENT PLAN -- A shareholder may also arrange for periodic
additional investments in the Portfolios through automatic deductions by
Automated Clearing House ("ACH") transfers from a checking or savings account by
completing the appropriate section of the Account Application form. This
Systematic Investment Plan is subject to account minimum initial purchase
amounts and a minimum pre-authorized investment amount of $25 per month. An
Account Application form may be obtained by calling 1-888-462-5386.
EXCHANGES
Shareholders of either Portfolio may exchange their shares for shares of the
other Portfolio. Exchanges are made at net asset value. An exchange is
considered a sale of shares and will result in a capital gain or loss for
federal income tax purposes. The shareholder must have received a current
prospectus for the new Portfolio before any exchange will be effected, and the
exchange privilege may be exercised only in those states where shares of the new
Portfolio may legally be sold. If the Transfer Agent receives exchange
instructions in writing or by telephone (an "Exchange Request") in good order by
4:00 p.m., Eastern time on any Business Day, the exchange will be effected that
day. The liability of the Trust or the Transfer Agent for fraudulent or
unauthorized telephone instructions may be limited as described below. The Trust
reserves the right to modify or terminate this exchange offer on 60 days'
notice.
REDEMPTIONS
Redemption orders received by the Transfer Agent (or an Authorized
Broker-Dealer) prior to the time a Portfolio calculates its net asset value
(normally 4:00 p.m., Eastern time) on any Business Day will be effective that
day. The redemption price of shares is the net asset value per share of the
Portfolio next determined after the redemption order is effective. Payment on
redemption will be made as promptly as possible and, generally, within seven
days after the redemption order is received. However, in order to protect the
Trust and its shareholders from fraud,
11
<PAGE>
redemption proceeds will not be forwarded until the investment being redeemed
has been in the account for 15 days. Shareholders may not close their accounts
by telephone.
Shareholders may receive redemption payments in the form of a check or by
Federal Reserve wire transfer or ACH wire transfer. There is no charge for
having a check for redemption proceeds mailed. The custodian will deduct a wire
charge, currently $10.00, from the amount of a Federal Reserve wire redemption
payment made at the request of a shareholder. Shareholders cannot redeem shares
of a Portfolio by Federal Reserve wire on federal holidays restricting wire
transfers. The Trust does not charge for ACH wire transfers; however, such
transactions will not be posted to a shareholder's bank account until the second
Business Day following the transaction.
SYSTEMATIC WITHDRAWAL PLAN -- Each Portfolio offers a Systematic Withdrawal Plan
("SWP") for shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$25,000 or more. Shareholders may elect to receive automatic payments via ACH
wire transfers of $100 or more on a monthly, quarterly, semi-annual or annual
basis. An application form for SWP may be obtained by calling 1-888-462-5386.
Shareholders should realize that if withdrawals exceed income dividends, their
invested principal in the account will be depleted. Thus, depending on the
frequency and amounts of the withdrawal payments and/or any fluctuations in the
net asset value per share, their original investment could be exhausted
entirely. To participate in the SWP, shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent.
ADDITIONAL REDEMPTION AND EXCHANGE INFORMATION
Neither the Trust nor the Transfer Agent will be responsible for the
authenticity of exchange, wire transfer, or redemption instructions received by
telephone if it reasonably believes those instructions to be genuine. The Trust
and the Transfer Agent will each employ reasonable procedures to confirm that
telephone instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone transactions if it does not employ those
procedures. Such procedures may include taping of telephone conversations.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.
CALCULATION OF NET ASSET VALUE
The net asset value per share of each Portfolio is determined by dividing the
total market value of that Portfolio's investments and other assets, less any
liabilities, by the total outstanding shares of that Portfolio. Net asset value
per share is determined as of the regularly-scheduled close of normal trading on
the New York Stock Exchange (normally, 4:00 p.m. Eastern Time) on each Business
Day. Purchase or redemption orders received by a Portfolio after its net asset
value has been calculated will be priced at the next Business Day's net asset
value.
PERFORMANCE
From time to time, each Portfolio may advertise its total return.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made regarding actual
future returns.
The total return of a Portfolio refers to the average compounded rate of return
on a hypothetical investment, for designated time periods (including but not
limited to the period from which the Portfolio commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period and assuming the reinvestment of all dividend and capital gain
distributions.
A Portfolio may periodically compare its performance to that of other mutual
funds tracked by mutual fund rating services (such as Lipper Analytical
Services, Inc.), or by financial and business publications and periodicals, of
broad groups of comparable mutual
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<PAGE>
funds and unmanaged indices. The performance of unmanaged indices may assume
investment of dividends but generally do not reflect deductions for
administrative and management costs, or other investment alternatives. A
Portfolio may quote Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. A Portfolio may quote Ibbotson Associates of
Chicago, Illinois, which provides historical returns of the capital markets
in the U.S. The Portfolios may use long term performance of these capital
markets to demonstrate general long-term risk versus reward scenarios and could
include the value of a hypothetical investment in any of the capital markets.
The Portfolios may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy, and
investment techniques.
A Portfolio may quote various measures of volatility and benchmark correlation
in advertising and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
TAXES
The following summary of certain federal income tax consequences is based on
current tax laws and regulations, which may be changed by legislative, judicial
or administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of a Portfolio or its shareholders.
Accordingly, shareholders are urged to consult their tax advisors regarding
specific questions as to federal, state and local income taxes.
TAX STATUS OF THE PORTFOLIOS:
Each Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other portfolios. Each Portfolio intends to
qualify or to continue to qualify for the special tax treatment afforded
regulated investment companies as defined under Subchapter M of the Internal
Revenue Code of 1986, as amended. So long as a Portfolio qualifies for this
special tax treatment, it will be relieved of federal income tax on that part of
its net investment income and net capital gain (the excess of net long-term
capital gain over net short-term capital loss) which it distributes to
shareholders.
TAX STATUS OF DISTRIBUTIONS:
Each Portfolio will distribute all of its net investment income (including, for
this purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations. It can be expected that only certain dividends of
each Portfolio will qualify for that deduction. Any net capital gains will be
distributed annually and will be taxed to shareholders as gain from the sale of
a capital asset held for more than one year, regardless of how long the
shareholder has held shares. Each Portfolio will make annual reports to
shareholders of the federal income tax status of all distributions, including
the amount of dividends eligible for the dividends-received deduction.
Certain securities purchased by a Portfolio (such as STRIPS) are sold with
original issue discount and thus generally do not make periodic cash interest
payments. For a further description of such securities, see "Description of
Permitted Investments and Risk Factors" below. Each Portfolio will be required
to include as part of its current income the accrued discount on such
obligations even though the Portfolio has not received any interest payments on
such obligations during that period. Because each Portfolio distributes all of
its net investment income to its shareholders, a Portfolio may have to sell
portfolio securities to distribute such accrued income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.
Income received on direct U.S. obligations is exempt from income tax at the
state level when received directly and may be exempt, depending on the state,
when received by a shareholder from a Portfolio provided certain state-specific
conditions are satisfied. The Portfolios will inform shareholders annually of
the percentage of income and distributions derived from
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<PAGE>
direct U.S. obligations. Shareholders should consult their tax advisers to
determine whether any portion of the income dividends received from a Portfolio
is considered tax exempt in their particular state.
Dividends declared by a Portfolio in October, November or December of any year
and payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Portfolio and received by the shareholders on
December 31 of that year, if paid by the Portfolio at any time during the
following January.
Each Portfolio intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
A sale, exchange or redemption of a Portfolio's shares is a taxable event to the
shareholder.
Income derived by a Portfolio from securities of foreign issuers may be subject
to foreign withholding taxes. A Portfolio will not be able to elect to treat
shareholders as having paid their proportionate share of such foreign taxes.
GENERAL INFORMATION
THE TRUST
The Trust, an open-end investment management company, was organized under
Massachusetts law as a business trust under a Declaration of Trust dated
November 6, 1997. The Declaration of Trust permits the Trust to offer separate
series ("portfolios") of shares. All consideration received by the Trust for
shares of any portfolio and all assets of such portfolio belong to that
portfolio and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional portfolios.
The Trust pays its (i) operating expenses, including fees of its service
providers, expenses of preparing prospectuses, proxy solicitation material and
reports to shareholders, costs of custodial services and registering its shares
under federal and state securities laws, pricing and insurance expenses,
brokerage costs, interest charges, taxes and organization expenses and (ii) pro
rata share of the Trust's other expenses, including audit and legal expenses.
Expenses not attributable to a specific portfolio are allocated across all of
the portfolios on the basis of relative net assets.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote for each dollar
invested. In other words, each shareholder of record is entitled to one vote for
each dollar of net asset value of the shares held on the record date for the
meeting. Each Portfolio will vote separately on matters relating solely to it.
As a Massachusetts business trust, the Trust is not required, and does not
intend, to hold annual meetings of shareholders. Shareholders approval will be
sought, however, for certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances.
In addition, a Trustee may be removed by the remaining Trustees or by
shareholders at a special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the shareholders requesting the meeting. As of February 2, 1998,
Charles Schwab & Co. Inc. owned a controlling interest in the AIC White Oak Fund
defined by the Investment Company Act of 1940.
REPORTING
The Trust issues unaudited financial information semi-annually and audited
financial statements annually for each Portfolio. The Trust also furnishes
periodic reports and, as necessary, proxy statements to shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to Oak Associates Funds, P.O. Box
419441, Kansas City, Missouri 64141-6441 or by calling 1-888-462-5386.
Purchases, redemptions and exchanges of shares should be made through the
Transfer Agent by calling the above telephone number.
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Substantially all of the net investment income (exclusive of capital gain) of
each Portfolio is distributed in the form of quarterly dividends. Shareholders
of record on the next to last Business Day of each quarter will be entitled to
receive the quarterly dividend distribution, which is generally paid within 10
Business Days after the end of the quarter. If any capital gain is realized,
substantially all of it will be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the distribution.
Shareholders may receive payments for cash distributions in the form of a check
or by Federal Reserve wire transfer or ACH wire transfers.
Dividends and other distributions of a Portfolio are paid on a per share basis.
The value of each share will be reduced by the amount of the payment. If shares
are purchased shortly before the record date for a distribution of ordinary
income or capital gains, a shareholder will pay the full price for the shares
and receive some portion of the price back as a taxable dividend or
distribution.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 acts as the custodian (the "Custodian") of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of certain of the permitted investments for each
Portfolio:
AMERICAN DEPOSITARY RECEIPTS ("ADRS") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
BANKERS' ACCEPTANCE -- Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.
CERTIFICATE OF DEPOSIT -- Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entities. Maturities on these issues vary from a few to 270 days.
CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics of both fixed income and
equity securities. Because of the conversion feature, the market value of a
convertible security tends to move with the market value of the underlying
stock. The value of a convertible security is also affected by prevailing
interest rates, the credit quality of the issuer and any call provisions.
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<PAGE>
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on a Portfolio's books. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with a remaining
term to maturity in excess of seven days.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which the
Portfolio obtains a security and simultaneously commits to return the security
to the seller at an agreed upon price on an agreed upon date within a number of
days from the date of purchase. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears a risk of loss in
the event the other party defaults on its obligations and the Portfolio is
delayed or prevented from exercising its right to dispose of the collateral or
if the Portfolio realizes a loss on the sale of the collateral. The Portfolio
will enter into repurchase agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act.
TIME DEPOSITS -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty or that
mature in more than seven days are considered to be illiquid securities.
U.S. GOVERNMENT AGENCIES -- Obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage Corporation, the Federal
Land Banks and the U.S. Postal Service. Some of these securities are supported
by the full faith and credit of the U.S. Treasury, others are supported by the
right of the issuer to borrow from the Treasury, while still others are
supported only by the credit of the instrumentality. Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be a guarantee of
payment at the maturity of the obligation so that in the event of a default
prior to maturity there might not be a market and thus no means of realizing on
the obligation prior to maturity. Guarantees as to the timely payment of
principal and interest do not extend to the value or yield of these securities
nor to the value of the Portfolio's shares.
U.S. GOVERNMENT DIRECT OBLIGATIONS -- U.S. Treasury obligations consist of
bills, notes and bonds issued by the U.S. Treasury and separately traded
interest and principal component parts of such obligations that are transferable
through the federal book-entry system known as Separately Traded Registered
Interest and Principal Securities ("STRIPS").
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<PAGE>
[LOGO] OAK
ASSOCIATES
FUNDS
P.O. Box 419441
Kansas City, MO 64141-6441
Portfolios:
WHITE OAK GROWTH STOCK PORTFOLIO
PIN OAK AGGRESSIVE STOCK PORTFOLIO
Distributor:
SEI Investments Distribution Co.
Investment Adviser:
OAK ASSOCIATES, ltd.
To open an account,
receive account information,
make inquiries or request
an investment kit:
Call Toll Free
1-888-4OAK-FUND
(1-888-462-5386)
www.oakassociates.com
OAK-F-010-08
PROSPECTUS
February 27, 1998
[LOGO] OAK
ASSOCIATES
FUNDS
WHITE OAK GROWTH
PIN OAK AGGRESSIVE
Advised by OAK ASSOCIATES, ltd.
www.oakassociates.com
<PAGE>
TRUST:
OAK ASSOCIATES FUNDS
FUNDS:
WHITE OAK GROWTH STOCK PORTFOLIO
PIN OAK AGGRESSIVE STOCK PORTFOLIO
INVESTMENT ADVISER:
OAK ASSOCIATES LTD.
This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus and relates only
to the White Oak Growth Stock Portfolio (the "White Oak Portfolio") and Pin
Oak Aggressive Stock Portfolio (the "Pin Oak Portfolio")(each a "Portfolio"
and collectively, the "Portfolios"). It is intended to provide additional
information regarding the activities and operations of Oak Associates Funds
(the "Trust") and the Portfolios and should be read in conjunction with the
Portfolios' Prospectus dated February 27, 1998. The Prospectus for the
Portfolios may be obtained by calling 1-888-462-5386.
TABLE OF CONTENTS
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . S - 2
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . S - 3
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 5
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 6
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S - 7
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . S - 7
COMPUTATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . .S - 11
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . .S - 12
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . .S - 13
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 13
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . .S - 14
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . .S - 17
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . .S - 18
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . .S - 18
5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 18
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .S - 19
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .S - 19
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A - 1
February 27, 1998
OAK-F-011-07
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the White Oak Growth
Stock Portfolio (the "White Oak Portfolio") and Pin Oak Aggressive Stock
Portfolio (the "Pin Oak Portfolio") (each a "Portfolio"). Each Portfolio is
a separate series of Oak Associates Funds (the "Trust"), an open-end
investment management company established under Massachusetts law as a
Massachusetts business trust under a Declaration of Trust dated November 6,
1997. The Declaration of Trust permits the Trust to offer separate series
("portfolios") of shares of beneficial interest ("shares"). Each portfolio
is a separate mutual fund, and each share of each portfolio represents an
equal proportionate interest in that portfolio. On February 27, 1998, the
White Oak Portfolio and Pin Oak Portfolio acquired substantially all of the
assets and liabilities of the White Oak Growth Stock Fund and Pin Oak
Aggressive Stock Fund (the "AIC White Oak Fund" and the "AIC Pin Oak Fund",
respectively, and collectively the "Predecessor Funds") of the Advisors'
Inner Circle Fund. See "Description of Shares." No investment in shares of
a portfolio should be made without first reading that portfolio's prospectus.
Capitalized terms not defined herein are defined in the Prospectus offering
shares of the Portfolios.
DESCRIPTION OF PERMITTED INVESTMENTS
REPURCHASE AGREEMENTS are agreements by which a person (e.g., a Portfolio)
obtains a security and simultaneously commits to return the security to the
seller (a member bank of the Federal Reserve System or primary securities dealer
as recognized by the Federal Reserve Bank of New York) at an agreed upon price
(including principal and interest) on an agreed upon date within a number of
days (usually not more than seven) from the date of purchase. The resale price
reflects the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or maturity of the underlying security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
security.
Repurchase agreements are considered to be loans by a Portfolio for purposes of
its investment limitations. The repurchase agreements entered into by a
Portfolio will provide that the underlying security at all times shall have a
value at least equal to 102% of the resale price stated in the agreement (the
Adviser monitors compliance with this requirement). Under all repurchase
agreements entered into by a Portfolio, the custodian or its agent must take
possession of the underlying collateral. However, if the seller defaults, the
Portfolio could realize a loss on the sale of the underlying security to the
extent that the proceeds of the sale, including accrued interest, are less than
the resale price provided in the agreement including interest. In addition,
even though the Bankruptcy Code provides protection for most repurchase
agreements, if the seller should be involved in bankruptcy or insolvency
proceedings, a Portfolio may
S-2
<PAGE>
incur delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Portfolio is treated as an unsecured creditor and
is required to return the underlying security to the seller's estate.
INVESTMENT COMPANY SHARES
Each Portfolio may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Portfolio. A Portfolio's purchase of such investment
company securities results in the layering of expenses, such that shareholders
would indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Portfolio
expenses. Under applicable regulations, a Portfolio is prohibited from
acquiring the securities of another investment company if, as a result of such
acquisition: (1) the Portfolio owns more than 3% of the total voting stock of
the other company; (2) securities issued by any one investment company represent
more than 5% of the Portfolio's total assets; or (3) securities (other than
treasury stock) issued by all investment companies represent more than 10% of
the total assets of the Portfolio. See also "Investment Limitations."
It is the position of the staff of the Securities and Exchange Commission
("SEC") that certain non-governmental issuers of CMOs constitute investment
companies pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"), and either (a) investments in such instruments are subject to the
limitations set forth above or (b) the issuers of such instruments have received
orders from the SEC exempting such instruments from the definition of investment
company.
OPTIONS
It is an operating policy of the Portfolios not to write or purchase PUTS,
CALLS, OPTIONS or combinations thereof.
WARRANTS
A Portfolio may invest in WARRANTS in accordance with the Prospectus.
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of each
Portfolio that cannot be changed with respect to a Portfolio without the
consent of the holders of a majority of that Portfolio's outstanding shares.
The phrase "majority of the outstanding shares" means the vote of (i) 67% or
more of a Portfolio's shares
S-3
<PAGE>
present at a meeting, if more than 50% of the outstanding shares of a Portfolio
are present or represented by proxy, or (ii) more than 50% of a Portfolio's
outstanding shares, whichever is less.
No Portfolio may:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
3. Issue any class of senior security or sell any senior security of
which it is the issuer, except that the Portfolio may borrow from any
bank, provided that immediately after any such borrowing there is
asset coverage of at least 300% for all borrowings of the Portfolio,
and further provided that, to the extent that such borrowings exceed
5% of the Portfolio's total assets, all borrowings shall be repaid
before the Portfolio makes additional investments. The term "senior
security" shall not include any temporary borrowings that do not
exceed 5% of the value of the Portfolio's total assets at the time the
Portfolio makes such temporary borrowing. In addition, investment
strategies that either obligate the Portfolio to purchase securities
or require the Portfolio to segregate assets will not be considered
borrowings or senior securities. This investment limitation shall not
preclude the Portfolio from issuing multiple classes of shares in
reliance on SEC rules or orders.
4. Make loans if, as a result, more than 33 1/3% of its total assets
would be lent to other parties, except that the Portfolio may (i)
purchase or hold debt instruments in accordance with its investment
objective and policies; (ii) enter into repurchase agreements; and
(iii) lend its securities.
5. Purchase or sell real estate, real estate limited partnership
interests, physical commodities or commodities contracts except that
the Portfolio may purchase commodities contracts relating to financial
instruments, such as financial futures contracts and options on such
contracts.
6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that a Portfolio may obtain short-term
credits as necessary for the clearance of security transactions and
sell securities short "against the box."
7. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling the Portfolio security.
8. Purchase securities of other investment companies except as permitted
by the Investment Company Act of 1940, as amended (the "1940 Act"),
the rules and regulations thereunder or pursuant to an exemption
therefrom.
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<PAGE>
NON-FUNDAMENTAL POLICIES
The following investment limitation of each Portfolio is non-fundamental and may
be changed by the Trust's Board of Trustees without shareholder approval:
1. A Portfolio may not invest in illiquid securities in an amount
exceeding, in the aggregate, 15% of the Portfolio's net assets.
THE ADVISER
The Trust and Oak Associates Ltd. (the "Adviser") have entered into an advisory
agreement (the "Advisory Agreement"). The Advisory Agreement provides that the
Adviser shall not be protected against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.
For the fiscal years ended October 31, 1995, 1996 and 1997, the Predecessor
Funds paid the Adviser the following advisory fees:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Fees Paid Fees Waived Fees Reimbursed
--------------------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997 1995 1996 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AIC White $0 $29,362 $929,875 $53,199 $88,667 $242,259 $25,326 $0 $0
Oak Fund
- ----------------------------------------------------------------------------------------------------
AIC Pin $7,803 $44,515 $148,297 $77,724 $98,194 $72,975 $0 $0 $0
Oak Fund
- ----------------------------------------------------------------------------------------------------
</TABLE>
The continuance of the Advisory Agreement as to any Portfolio must be
specifically approved at least annually (i) by the vote of the Trustees or by a
vote of the shareholders of the Portfolio and (ii) by the vote of a majority of
the Trustees who are not parties to the Advisory Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory Agreement will terminate
automatically in the event of its assignment, and is terminable at any time
without penalty by the Trustees of the Trust or, with respect to any Portfolio,
by a majority of the outstanding shares of that Portfolio, on not less than 30
days' nor more than 60 days' written notice to the Adviser, or by the Adviser on
90 days' written notice to the Trust.
S-5
<PAGE>
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Administration Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder. The Administration Agreement shall
remain in effect for a period of five years after the effective date of the
agreement and shall continue in effect for successive periods of two years
unless terminated by either party on not less than 90 days' prior written notice
to the other party.
For the fiscal years ended October 31, 1995, 1996 and 1997, the Predecessor
Funds paid the following administrative fees to the administrator:
- --------------------------------------------------------------
Administrative Fees Paid
---------------------------------------
1995 1996 1997
- --------------------------------------------------------------
AIC White Oak Fund $50,001 $50,030 $274,845
- --------------------------------------------------------------
AIC Pin Oak Fund $50,001 $50,030 $56,068
- --------------------------------------------------------------
The Trust and the Administrator have also entered into a shareholder servicing
agreement pursuant to which the Administrator provides certain shareholder
services in addition to those set forth in the Administration Agreement.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Administrator and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Bishop Street Funds, Boston 1784 Funds-Registered Trademark-,CoreFunds,
Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First
American Funds, Inc., First American Investment Funds, Inc.,
S-6
<PAGE>
First American Strategy Funds, Inc., HighMark Funds, Marquis Funds-Registered
Trademark-, Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, Profit Funds
Investment Trust, Rembrandt Funds-Registered Trademark-, Santa Barbara Group of
Mutual Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds, STI Classic Variable Trust, TIP Funds and TIP
Institutional Funds.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a wholly owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). The Distributor will not receive compensation for
distribution of shares of any Portfolio.
The Distribution Agreement is renewable annually. The Distribution Agreement
may be terminated by the Distributor, by a majority vote of the Trustees who are
not interested persons and have no financial interest in the Distribution
Agreement or by a majority vote of the outstanding securities of the Trust upon
not more than 60 days' written notice by either party or upon assignment by the
Distributor.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trust pays the fees for
unaffiliated Trustees.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during
that period. Unless otherwise noted, the business address of each Trustee
and each Executive Officer is SEI Investments Company, Oaks, Pennsylvania
19456. Certain officers of the Trust also serve as officers of some or all
of the following: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The
Expedition Funds, FMB Funds, Inc., First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds,
Marquis Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc.,The
Pillar Funds, Profit Funds Investment Trust, Rembrandt Funds-Registered
Trademark-, Santa Barbara Group of Mutual Funds, Inc., SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI International Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, TIP Funds and TIP Institutional Funds, open-end management investment
companies, which are managed by SEI Fund Resources or its
S-7
<PAGE>
affiliates and, except for Profit Funds Investment Trust, Rembrandt
Funds-Registered Trademark-, and Santa Barbara Group of Mutual Funds, Inc., are
distributed by SEI Investments Distribution Co.
ROBERT A. NESHER (DOB 08/17/46) -- Chairman of the Board of Trustees* --
Currently performs various services on behalf of SEI Investments for which Mr.
Nesher is compensated. Executive Vice President of SEI Investments, 1986-1994.
Director and Executive Vice President of the Administrator and the Distributor,
1981-1994. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, Boston
1784 Funds-Registered Trademark-, The Expedition Funds, Marquis Funds-Registered
Trademark-, Oak Associates Funds, Pillar Funds, Rembrandt Funds-Registered
Trademark-, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds,
SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- 569 N. Post Oak Lane, Houston, TX
77024. Retired since 1992. Formerly Vice Chairman of Ameritrust Texas N.A.,
1989-1992, and MTrust Corp., 1985-1989. Trustee of The Advisors' Inner Circle
Fund, The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-
and Oak Associates Funds.
WILLIAM M. DORAN (DOB 05/26/40) -- Trustee* -- 2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm),
counsel to the Trust, Administrator and Distributor, Director and Secretary of
SEI Investments. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund,
The Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
FRANK E. MORRIS (DOB 12/30/23) -- Trustee** -- 105 Walpole Street, Dover, MA
02030. Retired since 1990. Peter Drucker Professor of Management, Boston
College, 1989-1990. President, Federal Reserve Bank of Boston, 1968-1988.
Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition
Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI International Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust.
ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- 208 Old Main, University
Park, PA 16802. Pennsylvania State University, Senior Vice President, Treasurer
(Emeritus). Financial and Investment Consultant, Professor of Transportation
(1984-present). Vice President-Investments, Treasurer, Senior Vice President
(Emeritus) (1982-1984). Director, Pennsylvania Research Corp.; Member and
Treasurer, Board of Trustees of Grove City College. Trustee of The Advisors'
Inner Circle Fund, The Arbor Fund, The Expedition Funds, Marquis
Funds-Registered Trademark- and Oak Associates Funds.
EUGENE B. PETERS (DOB 06/03/29) -- Trustee** -- 943 Oblong Road,
Williamstown, MA 01267. Private investor from 1987 to present. Vice
President and Chief Financial Officer, Western Company of North America
(petroleum service company) (1980-1986). President of Gene Peters and
Associates (import company) (1978-1980). President and Chief Executive
Officer of Jos. Schlitz
S-8
<PAGE>
Brewing Company before 1978. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark- and Oak
Associates Funds.
JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price & Rhoads,
from September 1987 - December 1993; Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
DAVID G. LEE (DOB 04/16/52) -- President and Chief Executive Officer -- Senior
Vice President of the Administrator and Distributor since 1993. Vice President
of the Administrator and Distributor, 1991-1993. President, GW Sierra Trust
Funds before 1991.
SANDRA K. ORLOW (DOB 10/18/53) -- Vice President and Assistant Secretary -- Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
KEVIN P. ROBINS (DOB 04/15/61) -- Vice President and Assistant Secretary --
Senior Vice President, General Counsel and Assistant Secretary of SEI
Investments, Senior Vice President, General Counsel and Secretary of the
Administrator and Distributor since 1994. Vice President and Assistant
Secretary of SEI Investments, the Administrator and Distributor, 1992-1994.
Associate, Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
RICHARD W. GRANT (DOB 10/25/45) -- Secretary -- 2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Administrator and Distributor.
KATHRYN L. STANTON (DOB 11/19/58) -- Vice President and Assistant Secretary--
Deputy General Counsel of SEI Investments, Vice President and Assistant
Secretary of the Administrator and Distributor since 1994. Associate, Morgan,
Lewis & Bockius LLP (law firm), 1989-1994.
MARK E. NAGLE (DOB 10/20/59) -- Controller and Chief Financial Officer -- Vice
President of Fund Accounting and Administration of SEI Fund Resources since
November 1996. Vice President of Fund Accounting, BISYS Fund Services,
September 1995 to November 1996. Senior Vice President and Site Manager,
Fidelity Investments, 1981 to September 1995.
TODD B. CIPPERMAN (DOB 02/14/66) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of SEI Investments, the Administrator and
the Distributor since 1995. Associate, Dewey Ballantine (law firm) (1994-1995).
Associate, Winston & Strawn (law firm) (1991-1994).
S-9
<PAGE>
JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President & Assistant Secretary --
Vice President and Assistant Secretary of SEI Investments, the Administrator
and the Distributor since 1998. Vice President and General Counsel, FPS
Services; Inc., 1993-1997. Staff Counsel and Secretary, Provident Mutual
Family of Funds, 1990-1993.
- ----------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Trust as that term is defined in the 1940 Act.
**Messrs. Cooney, Morris, Patterson, Peters and Storey serve as members of the
Audit Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
The following table exhibits anticipated Trustee compensation for the fiscal
year ended October 31, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Aggregate Compensation From Registrant Pension or Retirement Benefits
Name of Person, Position for the Fiscal Year Ended October 31, 1998 Accrued as Part of Trust Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John T. Cooney, Trustee $ 8,154 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Frank E. Morris, Trustee $ 8,154 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Patterson, Trustee $ 8,154 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Eugene B. Peters, Trustee $ 8,154 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Storey, Esq., Trustee $ 8,154 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
William M. Doran, Esq., Trustee $0 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher, Chairman of the Board $0 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEI Investments compensates Mr. Nesher for services he provides to
SEI Investments.
COMPUTATION OF TOTAL RETURN
From time to time the Trust may advertise total return of the Portfolios.
These figures will be based on historical earnings and are not intended to
indicate future performance.
S-10
<PAGE>
The total return of a Portfolio refers to the average annual compounded rate
of return to a hypothetical investment for designated time periods (including
but not limited to, the period from which that Portfolio commenced operations
through the specified date), assuming that the entire investment is redeemed
at the end of each period. In particular, total return will be calculated
according to the following formula: P (1 + T) TO THE POWER OF n = ERV, where
P = a hypothetical initial payment of $1,000; T = average annual total
return; n = number of years; and ERV = ending redeemable value, as of the end
of the designated time period, of a hypothetical $1,000 payment made at the
beginning of the designated time period.
For the fiscal year ended October 31, 1997 and for the period from August 3,
1992 (commencement of operations) through October 31, 1997, the total return for
the Portfolios was 34.46% and 23.18% for the AIC White Oak Fund, and 13.93% and
13.54% for the AIC Pin Oak Fund, respectively.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on any day the
New York Stock Exchange is open for business. Shares of each Portfolio are
offered on a continuous basis. Currently, the Trust is closed for business when
the following holidays are observed: New Year's Day, Martin Luther King Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by a Portfolio in
lieu of cash. Shareholders may incur brokerage charges on the sale of any such
securities so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of a Portfolio's securities is not reasonably practicable,
or for such other periods as the SEC has by order
S-11
<PAGE>
permitted. The Trust also reserves the right to suspend sales of shares of any
Portfolio for any period during which the New York Stock Exchange, the Adviser,
the Administrator, the Transfer Agent and/or the custodian are not open for
business.
DETERMINATION OF NET ASSET VALUE
The securities of the Portfolios are valued by the Administrator. The
Administrator will use an independent pricing service to obtain valuations of
securities. The pricing service relies primarily on prices of actual market
transactions as well as trade quotations. However, the service may also use a
matrix system to determine valuations of certain securities, which system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities. The procedures of the
pricing service and its valuations are reviewed by the officers of the Trust
under the general supervision of the Trustees.
TAXES
The following is only a summary of certain federal income tax considerations
generally affecting the Portfolios and their shareholders, and is not
intended as a substitute for careful tax planning. Shareholders are urged to
consult their tax advisors with specific reference to their own tax
situations, including their state and local tax liabilities.
FEDERAL INCOME TAX
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986 (the "Code") and the regulations issued
thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated
herein.
Each Portfolio intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each
Portfolio expects to eliminate or reduce to a nominal amount the federal taxes
to which it may be subject.
In order to qualify for treatment as a RIC under the Code, each Portfolio must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
a Portfolio's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock or securities, or certain other income; (ii) at the
close of each quarter of each Portfolio's taxable year, at least 50% of the
value of its total assets must
S-12
<PAGE>
be represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not exceed 5% of the value of the
Portfolio's assets and that does not represent more than 10% of the outstanding
voting securities of such issuer; and (iii) at the close of each quarter of each
Portfolio's taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the securities
of other RICs) of any one issuer or of two or more issuers which the Portfolio
controls or which are engaged in the same, similar or related trades or
business.
Notwithstanding the Distribution Requirement described above, which requires
only that a Portfolio distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss),
each Portfolio will be subject to a nondeductible 4% federal excise tax to the
extent it fails to distribute by the end of any calendar year 98% of its
ordinary income for that year and 98% of its capital gain net income (the excess
of short- and long-term capital gains over short- and long-term capital losses)
for the one-year period ending on October 31 of that year, plus certain other
amounts.
Any gain or loss recognized on a sale or redemption of shares of a Portfolio by
a non-exempt shareholder who is not a dealer in securities generally will be
treated as a long-term capital gain or loss if the shares have been held for
more than eighteen months, will be treated as a mid-term capital gain if the
shares have been held for more than twelve, but not more than eighteen months
and otherwise generally will be treated as a short-term capital gain or loss.
If shares of a Portfolio on which a net capital gain distribution has been
received are subsequently sold or redeemed and such shares have been held for
six months or less, any loss recognized will be treated as a long-term
capital loss to the extent of the long-term capital gain distribution.
In certain cases, a Portfolio will be required to withhold, and remit to the
United States Treasury, 31% of any distributions paid to a shareholder who (1)
has failed to provide a correct taxpayer identification number, (2) is subject
to backup withholding by the Internal Revenue Service, or (3) has not certified
to that Portfolio that such shareholder is not subject to backup withholding.
If any Portfolio fails to qualify as a RIC for any taxable year, it will be
taxable at regular corporate rates. In such an event, all distributions
(including capital gains distributions) will be taxable as ordinary dividends to
the extent of the Portfolio's current and accumulated earnings and profits and
such distributions will generally be eligible for the corporate
dividends-received deduction.
S-13
<PAGE>
STATE TAXES
No Portfolio is liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by any
Portfolio to shareholders and the ownership of shares may be subject to state
and local taxes.
PORTFOLIO TRANSACTIONS
The Adviser is authorized to select brokers and dealers to effect securities
transactions for each Portfolio. Each Portfolio will seek to obtain the most
favorable net results by taking into account various factors, including price,
commission, if any, size of the transactions and difficulty of executions, the
firm's general execution and operational facilities and the firm's risk in
positioning the securities involved. While the Adviser generally seeks
reasonably competitive spreads or commissions, a Portfolio will not necessarily
be paying the lowest spread or commission available. The Adviser seeks to
select brokers or dealers that offer a Portfolio best price and execution or
other services which are of benefit to the Portfolio.
The Adviser may, consistent with the interests of the Portfolio, select brokers
on the basis of the research services they provide to the Adviser. Such
services may include analyses of the business or prospects of a company,
industry or economic sector, or statistical and pricing services. Information
so received by the Adviser will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreement.
If, in the judgment of the Adviser, a Portfolio or other accounts managed by the
Adviser will be benefitted by supplemental research services, the Adviser is
authorized to pay brokerage commissions to a broker furnishing such services
which are in excess of commissions which another broker may have charged for
effecting the same transaction. These research services include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses of
the Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information, such services may not be used exclusively with respect
to the Portfolio or account generating the brokerage, and there can be no
guarantee that the Adviser will find all of such services of value in advising
that Portfolio. For the fiscal year ended October 31, 1997, the Portfolios
paid no directed brokerage.
It is expected that a Portfolio may execute brokerage or other agency
transactions through the Distributor, which is a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules promulgated by the SEC. Under these provisions, the
Distributor is permitted to receive and retain
S-14
<PAGE>
compensation for effecting portfolio transactions for a Portfolio on an exchange
if a written contract is in effect between the Distributor and the Portfolio
expressly permitting the Distributor to receive and retain such compensation.
These rules further require that commissions paid to the Distributor by a
Portfolio for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." The Trustees,
including those who are not "interested persons" of the Portfolio, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
For the fiscal year ended October 31, 1997, the following commissions were paid
on brokerage transactions, pursuant to an agreement or understanding, to brokers
because of research services provided by the brokers:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Total Dollar Amount of
Predecessor Fund Total Dollar Amount of Transactions Involving
Brokerage Commissions for Directed Brokerage
Research Services Commissions for Research
Services
- -----------------------------------------------------------------------------
<S> <C> <C>
AIC White Oak Fund $0 $0
- -----------------------------------------------------------------------------
AIC Pin Oak Fund $0 $0
- -----------------------------------------------------------------------------
</TABLE>
For the fiscal years ended October 31, 1995, 1996 and 1997, the Predecessor
Funds paid the following brokerage commissions:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Predecessor Fund Total Brokerage Commissions Amount Paid to SEI Investments(1)
-------------------------------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIC White Oak Fund $3,966 $9,810 $146,575 $0 $0 $4,963
- -----------------------------------------------------------------------------------------------------------------------------
AIC Pin Oak Fund $6,075 $5,004 $ 3,006 $0 $0 $ 341
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.
For the fiscal years indicated, the Funds paid the following brokerage
commissions:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
% of Total Brokerage % of Total Brokerage
Total $ Amount of Commissions Paid to Transactions Effected
Predecessor Fund Total $ Amount of Brokerage Brokerage Commissions Paid the Affiliated Through Affiliated Brokers
Commissions Paid to Affiliated Brokers Brokers
-----------------------------------------------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997 1997 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AIC White Oak Fund $3,966 $9,810 $146,575 $0 $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
AIC Pin Oak Fund $6,075 $5,004 $ 3,006 $0 $0 $0 $0 $0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Because neither Portfolio markets its shares through intermediary brokers or
dealers, it is not either Portfolio's practice to allocate brokerage or
principal business on the basis of sales of its shares which may be made through
such firms. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend a Portfolio's shares to clients, and may, when a
number of brokers and dealers can provide best net results on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker-dealers.
The Portfolios are required to identify any securities of its "regular brokers
and dealers" (as such term is defined in the 1940 Act) which the Portfolios have
acquired during their most recent fiscal year. As of October 31, 1997, the AIC
White Oak Fund held $14,836,000 of equity securities of Morgan Stanley Group.
S-15
<PAGE>
For the fiscal years ended October 31, 1996 and 1997, the portfolio turnover
rate for each of the Predecessor Funds was as follows:
- ---------------------------------------------------------------------
TURNOVER RATE
--------------------------
1997 1996
- ---------------------------------------------------------------------
AIC White Oak Fund 7.90% 8.07%
- ---------------------------------------------------------------------
AIC Pin Oak Fund 17.30% 31.65%
- ---------------------------------------------------------------------
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal proportionate interest in that portfolio with each other share. Shares
are entitled upon liquidation to a pro rata share in the net assets of the
portfolio. Shareholders have no preemptive rights. All consideration received
by the Portfolio for shares of any portfolio and all assets in which such
consideration is invested would belong to that portfolio and would be subject to
the liabilities related thereto. Share certificates representing shares will
not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his or
her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any
S-16
<PAGE>
liability for his or her willful misfeasance, bad faith, gross negligence or
reckless disregard of his or her duties.
5% SHAREHOLDERS
As of February 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Predecessor Funds.
AIC WHITE OAK FUND.
Shareholder Number of Shares %
- ----------- ---------------- -
Charles Schwab & Co. Inc. 5,009,618.2630 35.41%
Attn: Mutual Funds / Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
National Financial Services Corp. 2,708,990.8010 19.15%
For the Exclusive Benefit
of our Customers
Attn: Teri Louie -- Omnibus -- Fl 5
200 Liberty St. 1 World Fin. Ctr.
New York, NY 10281-1003
AIC PIN OAK FUND.
Shareholder Number of Shares %
- ----------- ---------------- -
Charles Schwab & Co. Inc. 190,081.6710 11.44%
Attn: Mutual Funds / Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
The Trust believes that most of the shares referred to above were held by the
above persons in accounts for their fiduciary, agency or custodial customers.
EXPERTS
The financial statements of The Advisors' Inner Circle Fund have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference hereto in
reliance upon the authority of said firm as experts in giving said report.
FINANCIAL STATEMENTS
The financial statements, with respect to the AIC White Oak and Pin Oak Fund,
for the fiscal year ended October 31, 1997, including notes thereto and the
report of Arthur Andersen LLP thereon, are herein incorporated by reference. A
copy of The Advisors' Inner Circle Fund 1997 Annual Report to Shareholders, with
respect to the AIC White Oak Fund and AIC Pin Oak Fund, must accompany the
delivery of this Statement of Additional Information.
S-17
<PAGE>
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of corporate bond ratings have been published by
Standard & Poor's Corporation ("S&P") and Moody's Investors Service, Inc.
("Moody's"), respectively.
Debt rated AAA has the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Debt rated AA also qualities as high-quality debt. Capacity to pay principal
and interest is very strong, and differs from AAA issues only in small degree.
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.
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.
Debt rated BB, B, CCC, CC and C is regarded as having predominately speculative
characteristics with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the least 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 of major risk exposures to adverse conditions.
The rating CI is reserved for income bonds on which no interest is being paid.
Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
A-1
<PAGE>
Bonds rated Baa are considered as medium grade obligations (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Bonds which are rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
The following descriptions of commercial paper ratings have been published by
S&P and Moody's, respectively.
A-1 - This is S&P's highest category and indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
PRIME-1 - Issues rated Prime-1 (or supporting institutions) by Moody's have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 - Issuers rated Prime-2 (or supporting institutions) by Moody's have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, may be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
A-2
