<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 26, 1999
FILE NO. 811-08549
FILE NO. 333-42115
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 4 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 4 /X/
------------------------
OAK ASSOCIATES FUNDS
(Exact Name of Registrant as Specified in Charter)
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code: 1-888-462-5386
MARK E. NAGLE
c/o SEI Investments Company
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
COPIES TO:
Richard W. Grant, Esquire
John H. Grady, Jr., Esquire
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
------------------------
It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<C> <S>
/ / immediately upon filing pursuant to paragraph (b)
/X/ on February 27, 1999 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
OAK ASSOCIATES FUNDS
PROSPECTUS
MARCH 1, 1999
PIN OAK AGGRESSIVE STOCK FUND
RED OAK TECHNOLOGY SELECT FUND
WHITE OAK GROWTH STOCK FUND
INVESTMENT ADVISER:
OAK ASSOCIATES, LTD.
THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS
IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.
Page 1 of 22
<PAGE>
HOW TO READ THIS PROSPECTUS
Oak Associates Funds is a mutual fund family that offers shares in separate
investment portfolios (Funds). The Funds have individual investment goals and
strategies. This prospectus gives you important information about the Funds that
you should know before investing. Please read this prospectus and keep it for
future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED INFORMATION ABOUT
THE FUNDS, PLEASE SEE:
PAGE
PIN OAK AGGRESSIVE STOCK FUND 4
RED OAK TECHNOLOGY SELECT FUND 7
WHITE OAK GROWTH STOCK FUND 10
MORE INFORMATION ABOUT RISK 13
EACH FUND'S OTHER INVESTMENTS 13
THE INVESTMENT ADVISER AND FUND MANAGERS 13
PURCHASING, SELLING AND EXCHANGING FUND SHARES 15
DIVIDENDS, DISTRIBUTIONS AND TAXES 17
FINANCIAL HIGHLIGHTS 19
HOW TO OBTAIN MORE INFORMATION ABOUT THE
OAK ASSOCIATES FUNDS BACK COVER
Page 2 of 22
<PAGE>
INTRODUCTION - INFORMATION COMMON TO ALL FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment managers invest Fund assets in a way that they believe will help each
achieve its goal. Still, investing in each Fund involves risk and there is no
guarantee that a Fund will achieve its goal. An investment manager's judgments
about the markets, the economy, or companies may not anticipate actual market
movements, economic conditions or company performance, and these judgments may
affect the return on your investment. In fact, no matter how good a job an
investment manager does, you could lose money on your investment in a Fund, just
as you could with other investments.
The value of your investment in a Fund is based on the market value of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
estimated volatility, relative to the S&P 500 Index, for each Fund is set forth
in the Fund summaries that follow. The effect on a Fund of a change in the value
of a single security will depend on how widely the Fund diversifies its
holdings.
EQUITY RISK
The Funds principally invest (at least 65% of their assets) in equity
securities. Equity securities include public and privately issued equity
securities, common and preferred stocks, warrants, rights to subscribe to common
stock and convertible securities. Investments in equity securities and equity
derivatives in general 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 mutual fund invests
will cause a fund's net asset value to fluctuate. Historically, the equity
markets have moved in cycles, and the value of the Fund's equity securities may
fluctuate drastically from day-to-day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility which is the
principal risk of investing in a Fund. An investment in the Funds may be more
suitable for long-term investors who can bear the risk of these share price
fluctuations.
Page 3 of 22
<PAGE>
PIN OAK AGGRESSIVE STOCK FUND
FUND SUMMARY
Investment Goal Long-term capital growth
Investment Focus Common stock of small and mid-sized U.S.
companies
Share Price Volatility High
Principal Investment Strategy Investing in companies
that are key performers
within growing
industries.
Investor Profile Investors who
want capital
appreciation and who are
willing to bear the
risks of small cap
equity investing.
INVESTMENT STRATEGY OF THE PIN OAK AGGRESSIVE STOCK FUND
The Fund invests primarily in common stocks of U.S. companies with small to
medium market capitalizations (between $500 million and $5 billion). In
selecting investments for the Fund, the Adviser chooses stocks of companies that
it believes have above average growth potential at attractive prices. The
Adviser's investment process begins with a top-down analysis of industry sectors
that it considers to have the best potential for long-term growth based on an
overall analysis of the economy and interest rate trends. It then focuses in on
the key performers in those areas based on a highly qualitative, subjective
analysis of individual companies' fundamental values such as earnings growth
potential and the quality of corporate management. The Adviser generally will
not sell a company merely because it has grown above the market capitalization
range if the company has additional growth potential. The Adviser buys and holds
companies for the long-term, and seeks to keep portfolio turnover to a minimum.
PRINCIPAL RISKS OF INVESTING IN THE PIN OAK AGGRESSIVE STOCK FUND
Although the Fund is diversified, the Adviser's investment strategy often
involves overweighting the Fund's position in the industry sectors which it
believes hold the most growth potential. As a result, poor performance or
adverse economic events effecting one or more of these overweighted sectors
could have a greater impact on the Fund than it would on another mutual fund
with a broader range of investments.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
Page 4 of 22
<PAGE>
Investors are also subject to the risk that the Fund's market segment, small and
mid-cap growth stocks, may underperform other equity market segments or the
equity markets as a whole.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the Fund's performance from year to year.*
1993 1.76%
1994 0.00%
1995 37.22%
1996 10.78%
1997 1.30%
1998 49.20%
BEST QUARTER WORST QUARTER
44.12% (24.58%)
(12/31/98) (6/30/94)
*The performance information shown above is based on a calendar year.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P MIDCAP 400 INDEX.
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------- ---------------- -----------------
<S> <C> <C> <C>
Pin Oak Aggressive Stock Fund 49.20% 18.10% 17.40%*
S&P MidCap 400 Index 19.12% 18.84% 18.59%**
</TABLE>
* Since 8/3/92
** Since 7/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P MidCap 400 Index is a widely-recognized,
capitalization-weighted (companies with larger market capitalizations have more
influence than those with smaller market capitalizations) index of 400 domestic
mid-cap stocks chosen for market size, liquidity, and industry group
representation.
FUND FEES AND EXPENSES
Page 5 of 22
<PAGE>
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
- --------------------------------------------------------------------------------------- --------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None
EXCHANGE FEE None
MAXIMUM ACCOUNT FEE None
- --------------------------------------------------------------------------------------- --------------
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
- --------------------------------------------------------------------- ----------------------
<S> <C>
Investment Advisory Fees .74%
Other Expenses .34%
-----
Total Annual Fund Operating Expenses 1.08%
-----
Fee Waivers and Expense Reimbursements .08%
-----
Net Expenses 1.00%
</TABLE>
*THE FUND'S ADVISER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO REIMBURSE
EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00% FOR A
PERIOD OF ONE YEAR FROM THE DATE OF THIS PROSPECTUS. FOR MORE INFORMATION ABOUT
THESE FEES, SEE "INVESTMENT ADVISER."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$102 $336 $588 $1,310
</TABLE>
Page 6 of 22
<PAGE>
RED OAK TECHNOLOGY SELECT FUND
FUND SUMMARY
Investment Goal Long-term capital growth
Investment Focus U.S. common stocks
Share Price Volatility High
Principal Investment Strategy Investing in common stocks of a
small number of companies that
have strong potential to benefit
from technology.
Investor Profile Investors who want significant
growth, and who are willing to
bear the risks of a non-
diversified, industry concentrated
Fund.
INVESTMENT STRATEGY OF THE RED OAK TECHNOLOGY SELECT FUND
The Fund primarily invests in common stocks of a small number of companies which
rely extensively on technology in their product development or operations, or
which are expected to benefit from technological advances and improvements. The
Fund is concentrated (invests at least 25% of its total assets) in "technology
companies" which develop, produce or distribute products or services related to
computers, semi-conductors and electronics. The Adviser generally does not base
stock selections on a company's size, but rather on assessment of a company's
fundamental prospects for growth. As a result, the Fund may own stocks of
smaller capitalization companies. The Adviser buys and holds companies for the
long-term, and seeks to keep portfolio turnover to a minimum.
PRINCIPAL RISKS OF INVESTING IN THE RED OAK TECHNOLOGY SELECT FUND
The Fund is subject to the risk that the securities of the relatively few
issuers in the technology industry that the Fund purchases will underperform the
market as a whole. To the extent that the Fund's investments are concentrated in
issuers conducting business in the technology industry, the Fund is subject to
legislative or regulatory changes, adverse market conditions and/or increased
competition affecting that industry.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible than a
diversified Fund to a single adverse economic or regulatory occurrence affecting
one or more of these issuers, and may experience increased volatility due to its
investments in those securities.
The smaller capitalization companies the Fund invests in may be more vulnerable
to adverse business or economic events than larger, more established companies.
In particular, these small companies may have limited product lines, markets and
financial resources, and may depend upon a relatively small management group.
Therefore, small cap stocks may be more volatile than those of larger companies.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
Page 7 of 22
<PAGE>
Investors are also subject to the risk that the Fund's market segment, growth
stocks of technology companies, may underperform other equity market segments or
the equity markets as a whole.
PERFORMANCE INFORMATION
The Fund opened to investors on December 31, 1998 and did not have a full
calendar year of performance information at the time this prospectus was
printed.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENTS)
<TABLE>
- --------------------------------------------------------------------------------------- --------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None
EXCHANGE FEE None
MAXIMUM ACCOUNT FEE None
- --------------------------------------------------------------------------------------- --------------
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
- --------------------------------------------------------------------- ----------------------
<S> <C>
Investment Advisory Fees 0.74%
Other Expenses 0.48%
-----
Total Annual Fund Operating Expenses 1.22%
Fee Waivers and Expense Reimbursements 0.22%
-----
Net Expenses 1.00%
-----
</TABLE>
*THE FUND'S ADVISER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO REIMBURSE
EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00% FOR A
PERIOD OF ONE YEAR FROM THE DATE OF THIS PROSPECTUS. FOR MORE INFORMATION ABOUT
THESE FEES, SEE "INVESTMENT ADVISER."
Page 8 of 22
<PAGE>
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns might
be different, your estimated costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$102 $365
</TABLE>
Page 9 of 22
<PAGE>
WHITE OAK GROWTH STOCK FUND
FUND SUMMARY
Investment Goal Long-term capital growth
Investment Focus U.S. common stocks
Share Price Volatility High
Principal Investment Strategy Investing in common stocks of large
capitalization companies that are key
performers within growing industries.
Investor Profile Investors who want capital
appreciation and who are willing to
bear the risks of equity investing.
INVESTMENT STRATEGY OF THE WHITE OAK GROWTH STOCK FUND
The Fund invests primarily in common stocks of established U.S. companies with
large market capitalizations (in excess of $5 billion). In selecting investments
for the Fund, the Adviser chooses stocks of companies which it believes have
above average growth potential at attractive prices. The Adviser's investment
process begins with a top-down analysis of industry sectors that it believes
have the best potential for long-term growth based on an overall analysis of the
economy and interest rate trends. It then focuses in on the key performers in
those areas based on a highly qualitative, subjective analysis of individual
companies' fundamental values, such as earnings growth potential and the quality
of corporate management. The Adviser buys and holds companies for the long-term,
and seeks to keep portfolio turnover to a minimum.
PRINCIPAL RISKS OF INVESTING IN THE WHITE OAK GROWTH STOCK FUND
Although the Fund is diversified, its investment strategy often involves
overweighting the Fund's position in the industry sectors which it believes hold
the most growth potential. As a result, poor performance or adverse economic
events effecting one or more of these overweighted sectors could have a greater
impact on the Fund than it would on another mutual fund with a broader range of
investments.
Investors are also subject to the risk that the Fund's market segment, large cap
growth stocks, may underperform other equity market segments or the equity
markets as a whole.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
The bar chart shows changes in the Fund's performance from year to year.*
Page 10 of 22
<PAGE>
1993 ( 0.26%)
1994 6.29%
1995 52.70%
1996 32.28%
1997 24.30%
1998 39.51%
BEST QUARTER WORST QUARTER
37.53% (19.06%)
(12/31/98) (9/30/98)
*The performance information shown above is based on a calendar year.
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
White Oak Growth Stock Fund 39.51% 30.07% 24.89%*
S&P 500 Index 28.60% 24.05% 20.82%**
</TABLE>
* Since 8/3/92
** Since 7/31/92
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Index is a widely-recognized, market
value-weighted (higher market value stocks have more influence than lower market
value stocks) index of 500 stocks designed to mimic the overall equity market's
industry weightings.
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy or hold
Fund shares.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
- --------------------------------------------------------------------------------------- --------------
<S> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None
EXCHANGE FEE None
MAXIMUM ACCOUNT FEE None
- --------------------------------------------------------------------------------------- --------------
</TABLE>
Page 11 of 22
<PAGE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*
<TABLE>
- --------------------------------------------------------------------- ----------------------
<S> <C>
Investment Advisory Fees 0.74%
Other Expenses 0.28%
Total Annual Fund Operating Expenses 1.02%
Fee Waivers and Expense Reimbursements 0.02%
Net Expenses 1.00%
</TABLE>
*THE FUND'S ADVISER HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO REIMBURSE
EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING 1.00% FOR A
PERIOD OF ONE YEAR. FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT
ADVISER."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$102 $323 $561 $1,246
</TABLE>
Page 12 of 22
<PAGE>
MORE INFORMATION ABOUT RISK
YEAR 2000 RISK - The Funds depend on the smooth functioning of computer systems
in almost every aspect of their business. Like other mutual funds, businesses
and individuals around the world, the Funds could be adversely affected if the
computer systems used by their service providers do not properly process dates
on and after January 1, 2000, and distinguish between the year 2000 and the year
1900. The Funds have asked their service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and are seeking
assurances from each service provider that they are devoting significant
resources to prevent material adverse consequences to the Funds. While it is
likely that such assurances will be obtained, the Funds and their shareholders
may experience losses if these assurances prove to be incorrect or as a result
of year 2000 computer difficulties experienced by issuers of portfolio
securities or third parties, such as custodians, banks, broker-dealers or others
with which the Funds do business.
EACH FUND'S OTHER INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to 100%
of its assets in money market instruments that would not ordinarily be
consistent with a Fund's objectives. A Fund will do so only if the Adviser
believes that the risk of loss outweighs the opportunity for capital gains.
INVESTMENT ADVISER
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Board of Trustees of Oak Associates Funds supervises the Adviser and
establishes policies that the Adviser must follow in its management activities.
Page 13 of 22
<PAGE>
Oak Associates, Ltd. serves as the Adviser to the Funds. As of December 31,
1998, Oak Associates, Ltd. had approximately $11.4 billion in assets under
management. For the fiscal period ended October 31, 1998, Oak Associates, Ltd.
received advisory fees as a percentage of average daily net assets (after
waivers and reimbursements) of:
Pin Oak Aggressive Stock Fund .60%
White Oak Growth Stock Fund .67%
*FOR ITS ADVISORY SERVICES FOR THE RED OAK TECHNOLOGY SELECT FUND, THE ADVISER
IS ENTITLED TO AN ANNUAL FEE OF .74% BUT MAY RECEIVE LESS DUE TO CONTRACTUAL
WAIVERS AND REIMBURSEMENTS.
PORTFOLIO MANAGERS
James D. Oelschlager has served as President of Oak Associates, Ltd. and its
predecessor since 1985. He has managed the Pin Oak Aggressive Stock Fund and
White Oak Growth Stock Fund and co-managed the Red Oak Technology Select Fund
since inception. He has more than 30 years of investment experience. Prior to
founding Oak Associates, Ltd., Mr. Oelschlager served as Director of Pension
Investments/Assistant Treasurer for the Firestone Tire & Rubber Company.
Doug MacKay has served as a Research Analyst for Oak Associates, Ltd. since
1991. He has co-managed the Red Oak Technology Select Fund since its inception
and serves as Assistant Fund Manager for the Pin Oak Aggressive Stock Fund and
the White Oak Growth Stock Fund. He has more than 9 years of investment
experience. Prior to joining Oak Associates, Ltd., Mr. MacKay served as a credit
analyst with Pittsburgh National Bank.
Donna Barton has served as a securities trader for Oak Associates, Ltd. and
its predecessor since 1985. She serves as Assistant Fund Manager for the Pin
Oak Aggressive Stock Fund and the White Oak Growth Stock Fund. She has more
than 20 years of investment experience.
Page 14 of 22
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.
Shares of the Funds are for individual and institutional investors.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire, or
- - Automated Clearing House (ACH).
To purchase shares directly from us, please call 1-888-462-5386, or complete and
send in the enclosed application. Unless you arrange to pay by wire or through
ACH, write your check, payable in U.S. dollars, to "Oak Associates Funds" and
include the name of the appropriate Fund(s) on the check. A Fund cannot accept
third-party checks, credit cards, credit card checks or cash.
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing directly.
Your institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your correspondence
or questions regarding a Fund to your institution.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day). Shares can not be purchased by Federal Reserve
wire on days that either the New York Stock Exchange or the Federal Reserve
is closed.
The Fund may reject any purchase order if it determines that accepting the order
would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order.
Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 p.m.
Eastern time). So, for you to receive the current Business Day's NAV, generally
a Fund must receive your purchase order before 4:00 p.m. Eastern time.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.
Page 15 of 22
<PAGE>
In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
MINIMUM PURCHASES
To purchase shares for the first time, you must invest at least $2,000 in any
Fund. Your subsequent investments in any Fund must be made in amounts of at
least $50.
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a bank, you may purchase shares
of any Fund automatically through regular deductions from your account in
amounts of at least $25 per month.
HOW TO SELL YOUR FUND SHARES
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.
If you own your shares directly, you may sell your shares on any Business Day by
contacting the Fund directly by mail or telephone at 1-888-462-5386.
If you would like to close your account or have your sale proceeds sent to a
third party or an address other than your own, please notify the Fund in writing
and include a signature guarantee by a bank or other financial institution (a
notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $25,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account (subject to a $10
fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK,
REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY
TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
Page 16 of 22
<PAGE>
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.
INVOLUNTARY REDEMPTIONS OF YOUR SHARES
If your account balance drops below $2,000 because of redemptions, the Fund may
redeem your shares. But, we will always give you at least 60 days' written
notice to give you time to add to your account and avoid the redemption of your
shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.
You may also exchange shares through your financial institution by mail or
telephone.
IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
DAYS). This exchange privilege may be changed or canceled at any time upon 60
days' written notice.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund distributes its income annually and each Fund makes distributions of
capital gains, if any, at least annually. If you own Fund shares on a Fund's
record date, you will be entitled to receive the distribution.
Page 17 of 22
<PAGE>
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable as ordinary income or capital gains whether
or not you reinvest them or receive them in cash. EACH SALE OR EXCHANGE OF FUND
SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 18 of 22
<PAGE>
FINANCIAL HIGHLIGHTS
The tables that follow presents performance information about each Fund. This
information is intended to help you understand each Fund's financial performance
for the past five years, or, if shorter, the period of the Fund's operations.
Some of this information reflects financial information for a single Fund share.
The total returns in the tables represent the rate that you would have earned
(or lost) on an investment in a Fund, assuming you reinvested all of your
dividends and distributions. This information has been audited by Arthur
Andersen, LLP, independent public accountants. Their report, along with each
Fund's financial statements, appears in the annual report that accompanies our
Statement of Additional Information. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-888-462-5386.
Page 19 of 22
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED OCTOBER 31,
<TABLE>
<CAPTION>
REALIZED
AND RATIO OF
UNREALIZED EXPENSES
NET ASSET GAINS OR DISTRIBUTIONS NET ASSETS TO
VALUE NET (LOSSES) FROM NET DISTRIBUTIONS NET ASSET END OF AVERAGE
BEGINNING OF INVESTMENT ON INVESTMENT FROM CAPITAL VALUE END PERIOD NET
PERIOD INCOME (LOSS) SECURITIES INCOME GAINS OF PERIOD TOTAL RETURN (000) ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
PIN OAK AGGRESSIVE STOCK FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(1) $19.46 (0.15) 2.65 $21.96 12.85 % $41,444 1.00%
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(2) $10.00 -- 0.28 - - $10.28 11.57 % $4,127 1.00%*
WHITE OAK GROWTH STOCK FUND
1998(1) $29.29 (0.05) 4.86 - (0.06) $34.04 16.48 % $830,219 1.00%
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(2) $10.00 0.02 0.33 (0.02) - $10.33 14.30 % $3,195 1.00%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
RATIO OF EXPENSES TO INCOME (LOSS)
NET INCOME AVERAGE NET TO AVERAGE NET
(LOSS) TO ASSETS ASSETS PORTFOLIO
AVERAGE NET (EXCLUDING (EXCLUDING TURNOVER
ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------
<S> <C> <C> <C>
(0.79)% 1.14% (0.93)% 10.04%
(0.75)% 1.23% (0.99)% 17.30%
(0.62)% 1.47% (1.13)% 31.65%
(0.70)% 1.65% (1.37)% 49.28%
(0.62)% 1.74% (1.40)% 48.88%
(0.48)% 2.07% (1.57)% 68.32%
0.03 %* 4.06%* (3.03)%* 4.00%
(0.22)% 1.07% (0.29)% 6.16%
0.06 % 1.14% (0.10)% 7.90%
0.23 % 1.50% (0.32)% 8.07%
0.29 % 2.06% (0.80)% 22.43%
0.19 % 2.24% (1.08)% 37.42%
0.54 % 2.71% (1.20)% 27.48%
0.74 %* 4.78%* (3.04)%* -
</TABLE>
* ANNUALIZED
(1) THE INFORMATION SET FORTH IN THIS TABLE FOR THE PERIOD PRIOR TO
FEBRUARY 27, 1998 IS THE FINANCIAL DATA OF THE PIN OAK AGGRESSIVE STOCK
FUND AND THE WHITE OAK GROWTH STOCK FUND, RESPECTIVELY, EACH A SERIES OF
THE ADVISORS' INNER CIRCLE FUND.
(2) THE PIN OAK AGGRESSIVE STOCK FUND AND THE WHITE OAK GROWTH STOCK
FUND COMMENCED OPERATIONS ON AUGUST 3, 1992.
Page 20 of 22
<PAGE>
OAK ASSOCIATES FUNDS
INVESTMENT ADVISER
Oak Associates, Ltd.
3875 Embassy Parkway
Suite 250
Akron, Ohio 44333
DISTRIBUTOR
SEI Investment Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, NW
Washington, DC 20036
More information about Oak Associates Funds is available without charge through
the following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated March 1, 1999, includes detailed information about Oak Associates
Funds. The SAI is on file with the SEC and is incorporated by reference into
this prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds. The reports also contain detailed financial
information about the Funds.
TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-888-462-5386
BY MAIL: Write to us
Oak Associates Funds
P.O. Box 419441
Page 21 of 22
<PAGE>
Kansas City, Missouri 64141-6441
BY INTERNET: www.oakassociates.com
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-annual reports,
as well as other information about Oak Associates Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for information call 1-800-SEC-0330). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-6009. Oak Associates Funds' Investment Company Act
registration number is 811-8549.
Page 22 of 22
<PAGE>
TRUST: OAK ASSOCIATES FUNDS
Funds:
White Oak Growth Stock Fund
Pin Oak Aggressive Stock Fund
Red Oak Technology Select Fund
March 1, 1999
Investment Adviser:
Oak Associates, Ltd.
This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. It is intended
to provide additional information regarding the activities and operations of Oak
Associates Funds (the "Trust") and should be read in conjunction with the
Trust's prospectus dated March 1, 1999. This Statement of Additional Information
is incorporated by reference into the Trust's Prospectus. Prospectuses may be
obtained by writing to the Trust or calling toll-free 1-888-462-5386.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust................................................................. S-2
Additional Information About Investment Objectives and Policies........... S-2
Description of Permitted Investments...................................... S-4
Investment Limitations.................................................... S-7
The Adviser............................................................... S-8
The Administrator......................................................... S-9
The Distributor........................................................... S-10
The Transfer Agent........................................................ S-10
The Custodian............................................................. S-10
Independent Public Accountants............................................ S-10
Legal Counsel............................................................. S-10
Trustees and Officers of the Trust........................................ S-11
Calculation of Total Return............................................... S-13
Purchasing Shares......................................................... S-14
Redeeming Shares.......................................................... S-14
Determination of Net Asset Value.......................................... S-14
Taxes..................................................................... S-14
Fund Transactions......................................................... S-16
Description of Shares..................................................... S-18
Shareholder Liability..................................................... S-18
Limitation of Trustees' Liability......................................... S-18
5% and 25% Shareholders................................................... S-19
Experts................................................................... S-20
Financial Statements...................................................... S-20
Appendix.................................................................. A-1
</TABLE>
<PAGE>
THE TRUST
This Statement of Additional Information relates to the White Oak Growth
Stock Fund (the "White Oak Fund"), Pin Oak Aggressive Stock Fund (the "Pin Oak
Fund") and Red Oak Technology Select Fund (the "Red Oak Fund") (each a "Fund"
and collectively, the "Funds"). Each Fund 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 ("funds") of shares of beneficial interest ("shares"). Each fund
is a separate mutual fund, and each share of each fund represents an equal
proportionate interest in that fund. On February 27, 1998, the White Oak Fund
and Pin Oak Fund 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 fund should be made without first reading
that fund's prospectus. Capitalized terms not defined herein are defined in the
Prospectus offering shares of the Funds.
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 ("funds") of shares. All consideration received by the Trust for shares
of any fund and all assets of such fund belong to that fund and would be subject
to liabilities related thereto. The Trust reserves the right to create and issue
shares of additional funds.
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 fund are allocated across all of the
funds on the basis of relative net assets.
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 fund 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.
ADDITIONAL INFORMATION ABOUT INVESTMENT OBJECTIVES AND POLICIES
WHITE OAK GROWTH STOCK FUND
The White Oak Fund seeks long-term capital growth. This investment objective
is fundamental and can not be changed without the consent of shareholders. There
can be no assurance that the Fund will be able to achieve this investment
objective.
The White Oak Fund 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 Fund will invest at least 65% if its total assets in common stocks. The Fund
will purchase
S-2
<PAGE>
securities primarily of established companies with large market capitalizations
(an equity market capitalization in excess of $5 billion). The Fund 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 AGGRESSIVE STOCK FUND
The Pin Oak Fund seeks long-term growth of capital. This investment
objective is fundamental and can not be changed without the consent of
shareholders. There can be no assurance that the Fund will be able to achieve
this investment objective.
The Pin Oak Fund 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 Fund will invest at least 65% of its
total assets in common stocks. The Fund will purchase securities primarily of
companies with small to medium market capitalizations (an equity market
capitalization between $500 million and $5 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 Fund may
purchase the securities of larger companies if the Adviser believes that they
offer comparable investment opportunities or will stabilize the Fund's net asset
value.
RED OAK TECHNOLOGY SELECT FUND
The Red Oak Fund, a non-diversified portfolio, seeks long-term capital
growth. This investment objective is fundamental and can not be changed without
the consent of shareholders. Current income is incidental to the Red Oak Fund's
objective.
Under normal market conditions, the Red Oak Fund will invest primarily in
companies which rely extensively on technology in their product development or
operations, or which are expected to benefit from technological advances and
improvements, and that may be experiencing growth in sales and earnings driven
by technology related products and services. The Portfolio will concentrate its
investments (I.E., invest at least 25% of its total assets) in companies
operating directly in the "technology industry," which generally consists of
companies which develop, produce or distribute products or services related to
computers, semi-conductors and electronics ("Technology Companies"). As a result
of this focus, the Red Oak Fund offers investors the significant growth
potential of companies that may be responsible for breakthrough products or
technologies or that are positioned to take advantage of cutting-edge
developments.
IN GENERAL
Each Fund will invest primarily (at least 65% of its total assets) in the
securities which are described in the prospectus. In addition to each Fund's
principal investments, each Fund may also invest in other securities which are
not part of its respective principal investment strategy.
Each Fund 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 Fund will purchase only those securities that are traded
in the United States on registered exchanges or the over-the-counter market.
Each Fund 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.
S-3
<PAGE>
Under normal conditions, each Fund 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
Fund's investment objective and policies are not otherwise readily available for
purchase.
The Adviser will enter into repurchase agreements on behalf of a Fund 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 Fund 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 Fund may invest up to 100% of its assets in money
market instruments (including securities issued or guaranteed by the U.S.
Government, its agencies 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" in this Statement of Additional Information. For a
description of ratings, see the Appendix in this Statement of Additional
Information.
DESCRIPTION OF PERMITTED INVESTMENTS
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
S-4
<PAGE>
convertible security is also affected by prevailing interest rates, the credit
quality of the issuer and any call provisions.
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 Fund'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.
INVESTMENT COMPANY SHARES
Each Fund 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 Fund. A Fund'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 Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund 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 Fund'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
Fund. See also "Investment Limitations."
It is the position of the staff of the Securities and Exchange Commission
("SEC") that certain non-governmental issuers of collateralized mortgage
obligations ("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 Funds not to write or purchase PUTS, CALLS,
OPTIONS or combinations thereof.
REPURCHASE AGREEMENTS are agreements by which a person (E.G., a Fund)
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 Fund for purposes of
its investment limitations. The repurchase agreements entered into by a Fund
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 Fund, the custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund 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 Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
S-5
<PAGE>
SECURITIES OF FOREIGN ISSUERS
Investments in the securities of foreign issuers may subject a Fund 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.
SECURITIES OF SMALL- AND MID-CAPITALIZATION ISSUERS
The Pin Oak Fund 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 Fund can be expected to fluctuate more than
the value of shares of an investment company investing solely in larger, more
established companies.
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 Fund'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").
WARRANTS AND RIGHTS
A Fund may invest in warrants and rights in accordance with the Prospectus.
S-6
<PAGE>
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of each Fund
that cannot be changed with respect to a Fund without the consent of the holders
of a majority of that Fund's outstanding shares. The phrase "majority of the
outstanding shares" means the vote of (i) 67% or more of a Fund's shares present
at a meeting, if more than 50% of the outstanding shares of a Fund are present
or represented by proxy, or (ii) more than 50% of a Fund's outstanding shares,
whichever is less.
No Fund 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 Fund would be invested in the securities of such issuer.
This restriction applies to 75% of the Fund's total assets. This limitation
does not apply to the Red Oak Fund.
2. Purchase any securities which would cause 25% or more of the total assets of
a Fund 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 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. This limitation does not apply to the Red
Oak Fund which will invest at least 25% of its total assets in companies
which develop, produce or distribute products or services related to
computers, semi-conductors and electronics.
3. Acquire more than 10% of the voting securities of any one issuer.
4. Invest in companies for the purpose of exercising control.
5. Issue any class of senior security or sell any senior security of which it
is the issuer, except that the Fund 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 Fund, and further provided that, to the
extent that such borrowings exceed 5% of the Fund's total assets, all
borrowings shall be repaid before the Fund makes additional investments. The
term "senior security" shall not include any temporary borrowings that do
not exceed 5% of the value of the Fund's total assets at the time the Fund
makes such temporary borrowing. In addition, investment strategies that
either obligate the Fund to purchase securities or require the Fund to
segregate assets will not be considered borrowings or senior securities.
This investment limitation shall not preclude the Fund from issuing multiple
classes of shares in reliance on SEC rules or orders.
6. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that the Fund 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.
7. Purchase or sell real estate, real estate limited partnership interests,
physical commodities or commodities contracts except that the Fund may
purchase commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.
8. Make short sales of securities, maintain a short position or purchase
securities on margin, except that a Fund may obtain short-term credits as
necessary for the clearance of security transactions and sell securities
short "against the box."
S-7
<PAGE>
9. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling the Fund security.
10. 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.
NON-FUNDAMENTAL POLICIES
The following investment limitation of each Fund is non-fundamental and may
be changed by the Trust's Board of Trustees without shareholder approval:
1. A Fund may not invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of the Fund's net assets.
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 December 31, 1998, the Adviser had discretionary
management authority with respect to approximately $11.4 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 Fund under an
investment advisory agreement (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser makes the investment decisions for the assets of the
Funds and continuously reviews, supervises and administers the investment
program of each Fund, subject to the supervision of, and policies established
by, the Trustees of the Trust. In addition to advising the Funds, 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 Fund, .74% of the average daily net assets of the Pin
Oak Fund and .74% of the average daily net assets of the Red Oak Fund,
respectively. The Adviser has voluntarily agreed to waive all or a portion of
its fee for each Fund and to reimburse expenses of each Fund in order to limit
total operating expenses of that Fund 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, 1998, the Adviser each received
advisory fees of .67% and .60%, respectively, of the White Oak and Pin Oak
Funds' average daily net assets. The Adviser may, from its own resources,
compensate broker-dealers whose clients purchase shares of the Funds.
James D. Oelschlager, President of the Adviser and its predecessor since
1985, has managed the portfolios of the White Oak Fund and the Pin Oak Fund (and
their predecessor funds) since their inception, with both Donna Barton and Doug
MacKay serving as assistant portfolio managers during this period and co-managed
the Red Oak Fund since its inception. Ms. Barton has been a trader for the
Adviser and its predecessor since 1985.
Mr. MacKay is Assistant Fund Manager/Research Analyst for the White Oak
Growth Stock Fund and the Pin Oak Aggressive Stock Fund and co-manages the Red
Oak Fund with Mr. Oelschlager. He has been with Oak Associates, Ltd. since 1991.
Previously, he was a credit analyst with the Pittsburgh National Bank. In 1990,
he received a B.S. in Finance from Miami University in Oxford, Ohio. In 1994,
Mr. MacKay earned his MBA from Case Western Reserve University in Cleveland,
Ohio. In 1998, he earned the designation of Chartered Financial Analyst and has
8 years of investment experience.
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
S-8
<PAGE>
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, 1996, 1997 and 1998, the Funds and
the Predecessor Funds paid the Adviser the following advisory fees:
<TABLE>
<CAPTION>
FEES PAID FEES WAIVED FEES REIMBURSED
----------------------------- --------------------------- ------------------
1996 1997 1998 1996 1997 1998 1996 1997 1998
------- -------- ---------- ------- -------- -------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
White Oak Fund.......... $29,362 $929,875 $4,049,439 $88,667 $242,259 $410,452 $0 $0 $ 0
Pin Oak Fund............ $44,515 $148,297 $ 210,838 $98,194 $ 72,975 $ 49,316 $0 $0 $ 0
</TABLE>
The fees paid for the period's prior to February 27, 1998 represent advisory
fees paid by the AIC White Oak Fund and the AIC Pin Oak Fund, respectively. For
the fiscal year ended October 31, 1998, the Red Oak Fund had not commenced
operations and therefore did not pay advisory fees.
The continuance of the Advisory Agreement as to any Fund must be
specifically approved at least annually (i) by the vote of the Trustees or by a
vote of the shareholders of the Fund 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 Fund, by a majority of the
outstanding shares of that Fund, 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.
THE ADMINISTRATOR
SEI Investments Mutual Funds Services (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, Armada Funds,
Bishop Street Funds, Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc.,
CUFUND, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Funds, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Inter-national Trust,
SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, TIP Funds and TIP Institutional Funds.
The Trust and the Administrator have entered into an administration
agreement (the "Administration Agreement"). Under the Administration Agreement,
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 Fund, which is calculated daily and paid monthly, at an annual
rate of 0.15% on the first $250 million of average daily net assets; 0.12% on
the next $200 million; 0.10% on the next $200 million; and 0.08% on average
daily net assets over $650 million. However, each Fund pays the Administrator a
minimum annual fee of $50,000. The Administrator also serves as the shareholder
servicing agent for each Fund under a shareholder servicing agreement with the
Trust.
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
S-9
<PAGE>
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, 1996, 1997 and 1998, the Funds and
the Predecessor Funds paid the following administrative fees to the
administrator:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEES PAID
---------------------------------
1996 1997 1998
--------- ---------- ----------
<S> <C> <C> <C>
White Oak Fund....................................................... $ 50,030 $ 274,845 $ 755,435
Pin Oak Fund......................................................... $ 50,030 $ 56,068 $ 53,768
</TABLE>
The fees paid for the period's prior to February 27, 1998 represent
administrative fees paid by the AIC White Oak Fund and the AIC Pin Oak Fund,
respectively. For the fiscal year ended October 31, 1998, the Red Oak Fund had
not commenced operations and therefore did not pay fees to the Administrator.
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 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 Fund.
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.
THE TRANSFER AGENT
DST Systems, Inc., Kansas City, Missouri, serves as the transfer agent and
dividend disbursing agent for the Trust under a transfer agency agreement with
the Trust.
THE CUSTODIAN
First Union Bank, N.A., Philadelphia, Pennsylvania, acts as 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").
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP serves as the independent public accountants of the
Trust.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
S-10
<PAGE>
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, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG Advisor Funds,
Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and Alpha Select Funds, each of which is an open-end
management investment company managed by SEI Investments Mutual Funds Services
or its affiliates and, except for PBHG Advisor Funds, Inc., 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, Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust and SEI Tax Exempt
Trust.
JOHN T. COONEY (DOB 01/20/27)--Trustee**--Vice Chairman of Ameritrust Texas
N.A., 1989-1992, and MTrust Corp., 1985-1989. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund and The Expedition Funds.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--1701 Market Street, Philadelphia,
PA 19103-2901. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the
Trust, SEI Investments, the Administrator and the Distributor. Director and
Secretary of SEI Investments and Secretary of the Administrator and the
Distributor. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust and SEI Tax Exempt
Trust.
ROBERT A. PATTERSON (DOB 11/05/27)--Trustee**--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 and The Expedition Funds.
EUGENE B. PETERS (DOB 06/03/29)--Trustee**--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 Brewing Company before 1978. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund and The Expedition 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
S-11
<PAGE>
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust and SEI Tax Exempt
Trust.
GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc. since
1991; Trustee, Navigator Securities Lending Trust, since 1995. Trustee of SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid
Asset Trust, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, and SEI Tax Exempt Trust.
MARK E. NAGLE (DOB 10/20/59)--President and Chief Executive Officer--Vice
President of Fund Accounting and Administration for SEI Investments Mutual Funds
Services and Vice President of the Administrator since 1996. Vice President of
the Distributor since December 1997. Vice President, 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.
LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.
KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments since 1997; Assistant Controller of SEI
Investments since 1995; Vice President of SEI Investments since 1991; Director
of Taxes of SEI Investments, 1987 to 1991. Tax Manager, Arthur Anderson LLP
prior to 1987.
JOSEPH M. O'DONNELL (DOB 11/13/54)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of 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.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant
Secretary--Secretary of the Distributor since 1998; Vice President of the
Distributor since 1988. Vice President and Assistant Secretary of the Manager
since 1988. Assistant Secretary of the Distributor from 1988 to 1998.
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Administrator and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Administrator since 1994. Vice
President, General Counsel and Assistant Secretary of the Administrator and the
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1988-1992.
LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.,
1997-1998. Partner, Groom and Nordberg, Chartered, 1996-1997. Associate General
Counsel, Riggs Bank, N.A., 1991-1995.
WILLIAM E. WHITE (DOB 03/09/65)--Assistant Secretary--Mutual Fund Product
Manager of Oak Associates, Ltd., the Adviser, since 1997. Accounts Director, SEI
Investments, 1994-1997. Lieutenant, United States Navy, 1987-1994.
ROBERT DELLACROCE (DOB 12/17/63)--Controller and Chief Financial
Officer--Director, Funds Administration and Accounting of SEI Investments since
1994. Senior Audit Manager, Arthur Andersen LLP, 1986 - 1994.
S-12
<PAGE>
JOHN H. GRADY, JR. (DOB 06/01/61)--Secretary--1701 Market Street,
Philadelphia, PA 19103-6993, Partner since 1995, Morgan, Lewis & Bockius LLP
(law firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor.
- ------------------------
* 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, Patterson, Peters, Storey and Sullivan serve as members of
the Audit Committee of the Trust.
The Trustees and officers of the Trust as a group 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
FOR THE FISCAL YEAR
NAME OF PERSON, POSITION ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------- -----------------------
<S> <C>
John T. Cooney, Trustee.............................................. $ 1,799
Frank E. Morris, Trustee............................................. $ 1,799
Robert Patterson, Trustee............................................ $ 1,873
Eugene B. Peters, Trustee............................................ $ 1,873
James M. Storey, Esq., Trustee....................................... $ 1,873
William M. Doran, Esq., Trustee...................................... $ 0
Robert A. Nesher, Chairman of the Board.............................. $ 0
</TABLE>
- ------------------------
* SEI Investments compensates Mr. Nesher for services he provides to SEI
Investments.
** Mr. Morris retired as of Decemeber 30, 1998.
CALCULATION OF TOTAL RETURN
From time to time the Trust may advertise total return of the Funds. These
figures will be based on historical earnings and are not intended to indicate
future performance.
The total return of a Fund 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 Fund 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.
S-13
<PAGE>
For the fiscal year ended October 31, 1998 and for the period from August 3,
1992 (commencement of operations) through October 31, 1998, the average annual
return for the Funds was as follows:
<TABLE>
<CAPTION>
FUND ONE YEAR FIVE YEAR SINCE INCEPTION
- ------------------------------------------------------------------ ----------- ----------- ---------------
<S> <C> <C> <C>
White Oak Fund.................................................... 16.48% 26.53% 22.08%
Pin Oak Fund...................................................... 12.85% 11.72% 13.43%
</TABLE>
- ------------------------
* The AIC White Oak Fund and the AIC Pin Oak Fund each commenced operations on
August 3, 1992. The Red Oak Fund had not commenced operations as of October
31, 1998.
PURCHASING SHARES
Purchases may be made through the Transfer Agent on any day the New York
Stock Exchange is open for business. Shares of each Fund 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.
REDEEMING SHARES
Redemptions may be made through the Transfer Agent on any day the New York
Stock Exchange is open for business. Shares of each Fund 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 Fund 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 Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of any Fund 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 Funds 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 additional federal income tax
considerations generally affecting the Fund and its shareholders that are not
described in the Fund's prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or its shareholders, and the
S-14
<PAGE>
discussion here and in the Fund's prospectus 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 TREATMENT OF DIVIDENDS AND DISTRIBUTIONS
The following general discussion of certain federal income tax consequences
is based on the Internal Revenue Code of 1986, as amended (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.
QUALIFICATIONS AS A REGULATED INVESTMENT COMPANY
Each Fund intends to qualify and elects to be treated as a "regulated
investment company" ("RIC") under Subchapter M of the Code. By following such a
policy, each Fund expects to eliminate or reduce to a nominal amount the federal
taxes to which it may be subject.
In order to qualify as a RIC, the Fund must distribute at least 90% of its
net investment income (generally, includes dividends, taxable interest, and the
excess of net short-term capital gains over net long-term capital losses less
operating expenses) and at least 90% of its net tax exempt interest income, for
each tax year, if any, to its shareholders and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Fund'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 Fund's taxable year, at least 50% of the value of its
total assets must 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 Fund'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 Fund'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 that the Fund controls or that are engaged in the same, similar or
related trades or business.
Although the Fund intends to distribute substantially all of its net
investment income and may distribute its capital gains for any taxable year, the
Fund will be subject to federal income taxation to the extent any such income or
gains are not distributed.
If the Fund fails to qualify for any taxable year as a RIC, all of its
taxable income will be subject to tax at regular corporate income tax rates
without any deduction for distributions to shareholders and such distributions
generally will be taxable to shareholders as ordinary dividends to the extent of
the Fund's current and accumulated earnings and profits. In this event,
distributions generally will be eligible for the dividends-received deduction
for corporate shareholders.
In certain cases, a Fund 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 Fund that such shareholder is not subject to backup withholding.
FEDERAL EXCISE TAX
If the Fund fails to distribute in a calendar year at least 98% of its
ordinary income for the 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 October 31 of that year (and any retained amount
from the
S-15
<PAGE>
prior calendar year), the Fund will be subject to a nondeductible 4% Federal
excise tax on the undistributed amounts. The Fund intends to make sufficient
distributions to avoid imposition of this tax, or to retain, at most its net
capital gains and pay tax thereon.
STATE TAXES
No Fund is liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by any Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.
FUND TRANSACTIONS
The Adviser is authorized to select brokers and dealers to effect securities
transactions for each Fund. Each Fund 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 Fund will not necessarily be paying the lowest spread
or commission available. The Adviser seeks to select brokers or dealers that
offer a Fund best price and execution or other services which are of benefit to
the Fund.
The Adviser may, consistent with the interests of the Fund, 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 Fund 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 Fund 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 Fund.
For the fiscal years ended October 31, 1998, the Funds paid no directed
brokerage.
It is expected that a Fund 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 compensation for effecting
portfolio transactions for a Fund on an exchange if a written contract is in
effect between the Distributor and the Fund expressly permitting the Distributor
to receive and retain such compensation. These rules further require that
commissions paid to the Distributor by a Fund 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 Fund, have adopted procedures for evaluating the reasonableness of
commissions paid to the Distributor and will review these procedures
periodically.
S-16
<PAGE>
For the fiscal year ended October 31, 1998, the following commissions were
paid on brokerage transactions, pursuant to an agreement or understanding, to
brokers because of research services provided by the brokers (The Red Oak Fund
was not operational as of the fiscal year ended October 31, 1998):
<TABLE>
<CAPTION>
TOTAL DOLLAR AMOUNT OF TRANSACTIONS
TOTAL DOLLAR AMOUNT OF BROKERAGE INVOLVING DIRECTED BROKERAGE
FUND COMMISSIONS FOR RESEARCH SERVICES COMMISSIONS FOR RESEARCH SERVICES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
White Oak Fund...................... $ 256,724 $ 259,334,974
Pin Oak Fund........................ $ 9,381 $ 4,722,189
</TABLE>
The fees paid for the period's prior to February 27, 1998 represent
commissions paid by the AIC White Oak Fund and the AIC Pin Oak Fund,
respectively. For the fiscal year ended October 31, 1998, the Red Oak Fund had
not commenced operations and therefore did not pay commissions.
For the fiscal years ended October 31, 1996, 1997 and 1998, the Funds and
the Predecessor Funds paid the following brokerage commissions (the Red Oak Fund
was not operational as of the fiscal year ended October 31, 1998):
<TABLE>
<CAPTION>
TOTAL BROKERAGE AMOUNT PAID TO SEI
COMMISSIONS INVESTMENTS(1)
-------------------------- -------------------
FUND 1996 1997 1998 1996 1997 1998
- ---------------------------------------- ------ -------- -------- ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
White Oak Fund.......................... $9,810 $146,575 $256,724 $0 $4,963 $0
Pin Oak Fund............................ $5,004 $ 3,006 $ 9,381 $0 $ 341 $0
</TABLE>
- ------------------------
(1) The amounts paid to SEI Investments reflect fees paid in connection with
repurchase agreement transactions.
The fees paid for the period's prior to February 27, 1998 represent
brokerage commissions paid by the AIC White Oak Fund and the AIC Pin Oak Fund,
respectively. For the fiscal year ended October 31, 1998, the Red Oak Fund had
not commenced operations and therefore did not pay brokerage commissions.
For the fiscal years indicated, the Funds paid the following brokerage
commissions (the Red Oak Fund was not operational as of the fiscal year ended
October 31, 1998):
<TABLE>
<CAPTION>
% OF TOTAL
% OF TOTAL BROKERAGE
TOTAL $ AMOUNT OF BROKERAGE TRANSACTIONS
BROKERAGE COMMISSIONS EFFECTED
COMMISSIONS PAID PAID TO THE THROUGH
TOTAL $ AMOUNT OF TO AFFILIATED AFFILIATED AFFILIATED
BROKERAGE COMMISSIONS PAID BROKERS BROKERS BROKERS
-------------------------- ------------------ ----------- ------------
FUND 1996 1997 1998 1996 1997 1998 1998 1998
- ---------------------------------------- ------ -------- -------- ---- ---- ---- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
White Oak Fund.......................... $9,810 $146,575 $256,724 $0 $0 $0 N/A N/A
Pin Oak Fund............................ $5,004 $ 3,006 9,381 $0 $0 $0 N/A N/A
</TABLE>
The fees paid for the period's prior to February 27, 1998 represent
brokerage commissions paid by the AIC White Oak Fund and the AIC Pin Oak Fund,
respectively. For the fiscal year ended October 31, 1998, the Red Oak Fund had
not commenced operations and therefore did not pay brokerage commissions.
Because the Funds do not market their shares through intermediary brokers or
dealers, it is not the Funds' 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 Fund'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 Funds are required to identify any securities of its "regular brokers
and dealers" (as such term is defined in the 1940 Act) which the Funds have
acquired during their most recent fiscal year. As of October 31, 1998, the White
Oak Fund held $40,286,000 of equity securities of Morgan Stanley Group.
S-17
<PAGE>
For the fiscal years ended October 31, 1997 and 1998, the Fund turnover rate
for each of the Funds and Predecessor Funds was as follows (the Red Oak Fund was
not operational as of the fiscal year ended October 31, 1998):
<TABLE>
<CAPTION>
TURNOVER RATE
--------------
FUND 1998 1997
- ---------------------------------------- ------ ------
<S> <C> <C>
White Oak Fund.......................... 6.16% 7.90%
Pin Oak Fund............................ 10.04% 17.30%
</TABLE>
For the period prior to February 27, 1998, the above percentages represent
the turnover rate for the AIC White Oak Fund and the AIC Pin Oak Fund,
respectively.
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 Fund 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 liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
S-18
<PAGE>
5% AND 25% SHAREHOLDERS
<TABLE>
<CAPTION>
WHITE OAK GROWTH STOCK PORTFOLIO.
SHAREHOLDER NUMBER OF SHARES %
- --------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. 12,801,489 41.16%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
National Financial Services Corp. 5,522,787 17.76%
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
<CAPTION>
PIN OAK AGGRESSIVE STOCK PORTFOLIO.
SHAREHOLDER NUMBER OF SHARES %
- --------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. 358,9509 16.90%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
National Financial Services Corp. 156,656 7.17%
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
FTC & Co. 122,512 5.61%
Attn: Datalynx House Corp.
PO Box 173736
Denver, CO 80217-3736
<CAPTION>
RED OAK TECHNOLOGY SELECT PORTFOLIO.
SHAREHOLDER NUMBER OF SHARES %
- --------------------------------------------------------------- ----------------- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. 968,267 20.95%
Attn: Mutual Funds/Team S
4500 Cherry Creek Dr. S Fl 3
Denver, CO 80209
National Financial Services Corp. 804,305 17.406%
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
</TABLE>
S-19
<PAGE>
EXPERTS
The financial statements of the Oak Associates Funds 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 White Oak Fund, Pin Oak Fund
and Red Oak Technology Fund, for the fiscal year ended October 31, 1998,
including notes thereto and the report of Arthur Andersen LLP thereon, are
herein incorporated by reference. A copy of the Oak Associates Funds 1998 Annual
Report to Shareholders, with respect to the White Oak Fund and the Pin Oak Fund,
must accompany the delivery of this Statement of Additional Information.
S-20
<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.
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.
A-1
<PAGE>
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
<PAGE>
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS:
<TABLE>
<S> <C>
(a) Registrant's Agreement and Declaration of Trust is incorporated herein
by reference to Registrant's Registration Statement on Form N-1A (File
No. 333-42115) filed with the Securities and Exchange Commission
("SEC") on December 12, 1997.
(b) Registrant's By-Laws are incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on December 12, 1997.
(c) Not Applicable.
(d)(1) Investment Advisory Agreement between Registrant and Oak Associates,
Ltd. with respect to White Oak Growth Stock Portfolio and Pin Oak
Aggressive Stock Portfolio is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on September 24, 1998.
(d)(2) Schedule A to the Investment Advisory Agreement between Oak Associates
Funds and Oak Associates, Ltd. is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on September 24, 1998.
(e) Distribution Agreement between Registrant and SEI Investments
Distribution Company is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on September 24, 1998.
(f) Not Applicable.
(g) Custodian Agreement between Registrant and CoreStates Bank N.A. is
incorporated herein by reference to Registrant's Registration
Statement on Form N-1A (File No. 333-42115) filed with the SEC on
December 29, 1998.
(h)(1) Administration Agreement between Registrant and SEI Financial Fund
Resources, including schedules relating to the White Oak Growth Stock
Portfolio and Pin Oak Aggressive Stock Portfolio is incorporated
herein by reference to Registrant's Registration Statement on Form
N-1A (File No. 333-42115) filed with the SEC on September 24, 1998.
(h)(2) Transfer Agency Agreement between Registrant and DST Systems, Inc. is
filed herewith.
(h)(3) Sub-Transfer Agency Agreement between the Registrant and Norwest Bank
Minnesota, N.A. is incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 333-42115) filed with
the SEC on September 24, 1998.
(h)(4) Schedule A to the Administration Agreement between the Registrant and
SEI Fund Resources is incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 333-42115) filed with
the SEC on September 24, 1998.
(i) Opinion and Consent of Counsel is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on December 12, 1997.
(j) Consent of Independent Public Accountants (Arthur Andersen LLP) is filed
herewith.
(k) Not Applicable.
(l) Not Applicable.
(m) Form of Distribution Plan is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the SEC on December 12, 1997.
(n) Financial Data Schedules are filed herewith.
(o) Not Applicable.
(p) Powers of Attorney for Mark E. Nagle, John T. Cooney, William M. Doran,
Frank E. Morris, Robert A. Nesher, Eugene B. Peters, Robert A.
Patterson and James M. Storey are incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115)
filed with the Securities and Exchange Commission ("SEC") on September
24, 1998.
</TABLE>
C-1
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
See the Statement of Additional Information regarding the control
relationships of Oak Associates Funds (the "Trust"). SEI Investments Management
Corporation, a wholly-owned subsidiary of SEI Investments Company ("SEI"), is
the owner of all beneficial interest in SEI Investments Mutual Funds Services
("the Administrator"). SEI 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.
ITEM 25. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR:
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the Advisor is or has been, at
any time during the last two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee are as follows:
OAK ASSOCIATES, LTD.
Oak Associates, Ltd. is the investment adviser for the White Oak Growth
Stock Portfolio, Pin Oak Aggressive Stock Portfolio and the Red Oak Technology
Select Portfolio. The principal address of Oak Associates, Ltd. is 3875 Embassy
Parkway, Suite 250, Akron, OH 44333.
The list required by this Item 28 of general partners of Oak Associates,
Ltd., together with information as to any other business profession, vocation,
or employment of a substantial nature engaged in by such general partners during
the past two years is incorporated by reference to Schedules B and D of Form ADV
filed by Oak Associates under the Advisers Act of 1940 (SEC File No. 801-23632).
ITEM 27. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
advisor.
C-2
<PAGE>
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
The Nevis Funds June 29, 1998
The Parkstone Group of Funds September 14, 1998
The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the principal business
address of each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President &
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President &
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President &
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President President
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President &
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-I (d), the required books and records are maintained
at the offices of Registrant's Custodian:
First Union National Bank
Broad & Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1 (b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
SEI Investments Mutual Funds Services
Oaks, PA 19456
(c) With respect to Rules 31a-1 (b)(5), (6), (9) and (10) and 31a-1 (f),
the required books and records are maintained at the offices of the
Registrant's Advisors:
Oak Associates, Ltd.
3875 Embassy Parkway
Suite 250
Akron, OH 44333-8334
ITEM 29. MANAGEMENT SERVICES:
None.
ITEM 30. UNDERTAKINGS:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with shareholders of the Trust,
the Trustees will inform such shareholders as to the approximate number of
C-5
<PAGE>
shareholders of record and the approximate costs of mailing or afford said
shareholders access to a list of shareholders.
Registrant hereby undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to assist in communications with
other shareholders as required by the provisions of Section 16(c) of the
Investment Company Act of 1940.
Registrant hereby undertakes to furnish each prospective person to whom a
prospectus for any series of the Registrant is delivered with a copy of the
Registrant's latest annual report to shareholders for such series, when such
annual report is issued containing information called for by Item 5A of Form
N-1A, upon request and without charge.
NOTICE
A copy of the Agreement and Declaration of Trust for Oak Associates Funds is
on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Registration Statement has been executed on
behalf of the Trust by an officer of the Trust as an officer and by its Trustees
as trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property of
the Trust.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 4 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Oaks, Commonwealth of Pennsylvania on
the 26th day of February, 1999.
OAK ASSOCIATES FUNDS
By: /s/ MARK E. NAGLE
-----------------------------------------
Mark E. Nagle
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity on the dates indicated.
*
- ------------------------------ Trustee February 26, 1999
John T. Cooney
*
- ------------------------------ Trustee February 26, 1999
William M. Doran
*
- ------------------------------ Trustee February 26, 1999
Frank E. Morris
*
- ------------------------------ Trustee February 26, 1999
Robert A. Nesher
*
- ------------------------------ Trustee February 26, 1999
Robert A. Patterson
*
- ------------------------------ Trustee February 26, 1999
Eugene Peters
*
- ------------------------------ Trustee February 26, 1999
James M. Storey
/s/ MARK E. NAGLE
- ------------------------------ President February 26, 1999
Mark E. Nagle
/s/ ROBERT J. DELLACROCE
- ------------------------------ Controller & Chief February 26, 1999
Robert J. DellaCroce Financial Officer
*By: /s/ MARK E. NAGLE
-------------------------
Mark E. Nagle
ATTORNEY-IN-FACT
C-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- ---------------------------------------------------------------------------------------------
<S> <C>
EX-99.A Registrant's Agreement and Declaration of Trust is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 333-42115) filed with the
Securities and Exchange Commission ("SEC") on December 12, 1997.
EX-99.B Registrant's By-Laws are incorporated herein by reference to Registrant's Registration
Statement on Form N-1A (File No. 333-42115) filed with the SEC on December 12, 1997.
EX-99.C Not Applicable.
EX-99.D(1) Investment Advisory Agreement between Registrant and Oak Associates, Ltd. with respect to
White Oak Growth Stock Portfolio and Pin Oak Aggressive Stock Portfolio is incorporated
herein by reference to Registrant's Registration Statement on Form N-1A (File No.
333-42115) filed with the Securities and Exchange Commission ("SEC") on September 24, 1998.
EX-99.D(2) Schedule A to the Investment Advisory Agreement between Oak Associates Funds and Oak
Associates, Ltd. is incorporated herein by reference to Registrant's Registration Statement
on Form N-1A (File No. 333-42115) filed with the Securities and Exchange Commission ("SEC")
on September 24, 1998.
EX-99.E Distribution Agreement between Registrant and SEI Investments Distribution Company is
incorporated herein by reference to Registrant's Registration Statement on Form N-1A (File
No. 333-42115) filed with the Securities and Exchange Commission ("SEC") on September 24,
1998.
EX-99.F Not Applicable.
EX-99.G Custodian Agreement between Registrant and CoreStates Bank N.A. is incorporated herein by
reference to Registrant's Registration Statement on Form N-1A (File No. 333-42115) filed
with the SEC on December 29, 1998.
EX-99.H(1) Administration Agreement between Registrant and SEI Financial Fund Resources, including
schedules relating to the White Oak Growth Stock Portfolio and Pin Oak Aggressive Stock
Portfolio incorporated herein by reference to Registrant's Registration Statement on Form
N-1A (File No. 333-42115) filed with the Securities and Exchange Commission ("SEC") on
September 24, 1998.
EX-99.H(2) Transfer Agency Agreement between Registrant and DST Systems, Inc. is filed herewith.
EX-99.H(3) Sub-Transfer Agency Agreement between the Registrant and Norwest Bank Minnesota, N.A. is
incorporated herein by reference to Registrant's Registration Statement on Form N-1A (File
No. 333-42115) filed with the Securities and Exchange Commission ("SEC") on September 24,
1998.
EX-99.H(4) Schedule A to the Administration Agreement between the Registrant and SEI Fund Resources is
incorporated herein by reference to Registrant's Registration Statement on Form N-1A (File
No. 333-42115) filed with the Securities and Exchange Commission ("SEC") on September 24,
1998.
EX-99.I Opinion and Consent of Counsel is incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 333-42115) filed with the SEC on December 12,
1997.
EX-99.J Consent of Independent Public Accountants (Arthur Andersen LLP) is filed herewith.
EX-99.K Not Applicable.
EX-99.L Not Applicable.
EX-99.M Form of Distribution Plan is incorporated herein by reference to Registrant's Registration
Statement on Form N-1A (File No. 333-42115) filed with the SEC on December 12, 1997.
EX-99.O Not Applicable.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- ---------------------------------------------------------------------------------------------
<S> <C>
EX-99.P Powers of Attorney for David G. Lee, Mark E. Nagle, John T. Cooney, William M. Doran, Frank
E. Morris, Robert A. Nesher, Eugene B. Peters, Robert A. Patterson and James M. Storey are
incorporated herein by reference to Registrant's Registration Statement on Form N-1A (File
No. 333-42115) filed with the Securities and Exchange Commission ("SEC") on September 24,
1998.
EX-99.B27 Financial Data Schedules are filed herewith.
</TABLE>
<PAGE>
AGENCY AGREEMENT
THIS AGREEMENT made the 27th day of February, 1998, by and between OAK
ASSOCIATES FUNDS, a business trust existing under the laws of the Commonwealth
of Massachusetts, having its principal place of business at One Freedom Valley
Road, Oaks, Pennsylvania 19456 (the "Fund"), and DST SYSTEMS, INC., a
corporation existing under the laws of the State of Delaware, having its
principal place of business at 333 West 11th Street, 5th Floor, Kansas City,
Missouri 64105 ("DST"):
WITNESSETH:
WHEREAS, the Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. DOCUMENTS TO BE FILED WITH APPOINTMENT.
In connection with the appointment of DST as Transfer Agent and Dividend
Disbursing Agent for the Fund, there will be filed with DST the
following documents:
A. A certified copy of the resolutions of the Board of Directors of
the Fund (which term when used herein shall include any Board of
Trustees, or other governing body of the Fund, however styled)
appointing DST as Transfer Agent and Dividend Disbursing Agent,
approving the form of this Agreement, and designating certain
persons to sign stock certificates, if any, and give written
instructions and requests on behalf of the Fund;
B. A certified copy of the Articles of Incorporation (which term as
used herein shall include, where relevant, the Declaration of
Trust, or other basic instrument establishing the existence and
nature of the Fund) of the Fund and all amendments thereto;
C. A certified copy of the Bylaws of the Fund;
D. Copies of Registration Statements and amendments thereto, filed
with the Securities and Exchange Commission.
<PAGE>
E. Specimens of all forms of outstanding stock certificates, in the
forms approved by the Board of Directors of the Fund, with a
certificate of the Secretary of the Fund, as to such approval;
F. Specimens of the signatures of the officers of the Fund authorized
to sign stock certificates and individuals authorized to sign
written instructions and requests;
G. An opinion of counsel for the Fund, as such opinion(s) have been
filed with the Fund's Registration Statement or notices required
under Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act"), with respect to:
(1) The Fund's organization and existence under the laws of its
state of organization, and
(2) That all issued shares are validly issued, fully paid and
nonassessable.
2. CERTAIN REPRESENTATIONS AND WARRANTIES OF DST.
DST represents and warrants to the Fund that:
A. It is a corporation duly organized and existing and in good
standing under the laws of Delaware.
B. It is duly qualified to carry on its business in the State of
Missouri.
C. It is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform the services
contemplated in this Agreement.
D. It is registered as a transfer agent to the extent required under
the Securities Exchange Act of 1934 (the "1934 Act").
E. All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
F. It has and will continue to have and maintain the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
G. It is in compliance with Securities and Exchange Commission ("SEC")
regulations and is not subject to restrictions under Rule 17Ad.
H. Copies of DST's Rule 17Ad-13 reports will be provided to the Fund
annually as and to the extent required under Rule 17Ad-13 under the
1934 Act.
I. Its fidelity bonding and minimum capital meet the transfer agency
requirements of the New York Stock Exchange and the American Stock
Exchange.
3. CERTAIN REPRESENTATIONS AND WARRANTIES OF THE FUND.
2
<PAGE>
The Fund represents and warrants to DST that:
A. It is a business trust duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
B. It is an open-end management investment company registered under
the 1940 Act, as amended, the portfolios of which may be
diversified or non-diversified.
C. A registration statement under the Securities Act of 1933 has been
filed and will be effective with respect to all shares of the Fund
being offered for sale.
D. All requisite steps have been and will continue to be taken to
register the Fund's shares for sale in all applicable states and
such registration will be effective at all times shares are offered
for sale in such state.
E. The Fund is empowered under applicable laws and by its charter and
Bylaws to enter into and perform this Agreement.
4. SCOPE OF APPOINTMENT.
A. Subject to the conditions set forth in this Agreement, the Fund
hereby appoints DST as Transfer Agent and Dividend Disbursing Agent.
B. DST hereby accepts such appointment and agrees that it will act as
the Fund's Transfer Agent and Dividend Disbursing Agent. DST
agrees that it will also act as agent in connection with the Fund's
periodic withdrawal payment accounts and other open accounts or
similar plans for shareholders, if any.
C. The Fund agrees to use its reasonable efforts to deliver to DST in
Kansas City, Missouri, as soon as they are available, all of its
shareholder account records.
D. DST, utilizing TA2000-Registered Trademark-, DST's computerized
data processing system for securityholder accounting (the
"TA2000-Registered Trademark- System"), will perform the following
services as transfer and dividend disbursing agent for the Fund,
and as agent of the Fund for shareholder accounts thereof, in a
timely manner: issuing (including countersigning), transferring
and canceling share certificates, if any; maintaining all
shareholder accounts; providing transaction journals; as requested
by the Fund and subject to payment by the Fund of an additional
fee, preparing shareholder meeting lists for use in connection with
any annual or special meeting and arrange for an affiliate to
print, mail and receive back proxies and to certify the shareholder
votes of the Fund of any portfolios thereof; mailing shareholder
3
<PAGE>
reports and prospectuses; withholding, as required by federal law,
taxes on shareholder accounts, disbursing income dividends and
capital gains distributions to shareholders, preparing, filing and
mailing U.S. Treasury Department Forms 1099, 1042, and 1042S and
performing and paying backup withholding as required for all
shareholders; preparing and mailing confirmation forms to
shareholders and dealers, as instructed, for all purchases and
liquidations of shares of the Fund and other confirmable
transactions in shareholders' accounts; recording reinvestment of
dividends and distributions in shares of the Fund; providing or
making available on-line daily and monthly reports as provided by
the TA2000 System and as requested by the Fund or its management
company; maintaining those records necessary to carry out DST's
duties hereunder, including all information reasonably required by
the Fund to account for all transactions in the Fund shares,
calculating the appropriate sales charge with respect to each
purchase of the Fund shares as set forth in the prospectus for the
Fund, determining the portion of each sales charge payable to the
dealer participating in a sale in accordance with schedules
delivered to DST by the Fund's principal underwriter or distributor
(hereinafter "principal underwriter") from time to time, disbursing
dealer commissions collected to such dealers, determining the
portion of each sales charge payable to such principal underwriter
and disbursing such commissions to the principal underwriter;
receiving correspondence pertaining to any former, existing or new
shareholder account, processing such correspondence for proper
recordkeeping, and responding promptly to shareholder
correspondence; mailing to dealers confirmations of wire order
trades; mailing copies of shareholder statements to shareholders
and registered representatives of dealers in accordance with the
Fund's instructions; interfacing with, accepting and effectuating
order for transactions and registration and maintenance
information, all on an automated basis, from, and providing advices
to the Fund's custodian bank and to the Fund's settlement bank in
connection with the settling of such transactions, with, the
National Securities Clearing Corporation ("NSCC") pertaining to
NSCC's Fund/SERV and Networking programs; and processing, generally
on the date of receipt, purchases
4
<PAGE>
or redemptions or instructions to settle any mail or wire order
purchases or redemptions received in proper order as set forth in
the prospectus, rejecting promptly any requests not received in
proper order (as defined by the Fund or its agents), and causing
exchanges of shares to be executed in accordance with the Fund's
instructions and prospectus and the general exchange privilege
applicable.
E. DST shall use reasonable efforts to provide, reasonably promptly
under the circumstances, the same transfer agent services with
respect to any new, additional functions or features or any changes
or improvements to existing functions or features as provided for
in the Fund's instructions, prospectus or application as amended
from time to time, for the Fund provided (i) DST is advised in
advance by the Fund of any changes therein and (ii) the TA2000
System and the mode of operations utilized by DST as then
constituted supports such additional functions and features. If
any addition to, improvement of or change in the features and
functions currently provided by the TA2000 System or the operations
as requested by the Fund requires an enhancement or modification to
the TA2000 System or to operations as then conducted by DST, DST
shall not be liable therefore until such modification or
enhancement is installed on the TA2000 System or new mode of
operation is instituted. If any new, additional function or
feature or change or improvement to existing functions or features
or new service or mode of operation measurably increases DST's cost
of performing the services required hereunder at the current level
of service, DST shall advise the Fund of the amount of such
increase and if the Fund elects to utilize such function, feature
or service, DST shall be entitled to increase its fees by the
amount of the increase in costs. In no event shall DST be
responsible for or liable to provide any additional function,
feature, improvement or change in method of operation until it has
consented thereto in writing.
F. The Fund shall have the right to add new series to the TA2000
System upon at least thirty (30) days' prior written notice to DST
provided that the requirements of the new series are generally
consistent with services then being provided by DST under this
Agreement. Rates or charges for additional series shall be as set
forth in Exhibit A, as hereinafter defined, for the remainder of
the contract term
5
<PAGE>
except as such series use functions, features or
characteristics for which DST has imposed an additional charge as
part of its standard pricing schedule. In the latter event, rates
and charges shall be in accordance with DST's then-standard pricing
schedule.
5. LIMIT OF AUTHORITY.
Unless otherwise expressly limited by the resolution of appointment or
by subsequent action by the Fund, the appointment of DST as Transfer
Agent will be construed to cover the full amount of authorized stock of
the class or classes for which DST is appointed as the same will, from
time to time, be constituted, and any subsequent increases in such
authorized amount.
In case of such increase the Fund will file with DST:
A. If the appointment of DST was theretofore expressly limited, a
certified copy of a resolution of the Board of Directors of the
Fund increasing the authority of DST;
B. A certified copy of the amendment to the Articles of Incorporation
of the Fund authorizing the increase of stock;
C. A certified copy of the order or consent of each governmental or
regulatory authority required by law to consent to the issuance of
the increased stock, and an opinion of counsel that the order or
consent of no other governmental or regulatory authority is
required;
D. Opinion of counsel for the Fund, as such opinion(s) have been filed
with the Fund's Registration Statement or notices required under
Rule 24f-2 under the 1940 Act, stating:
(1) The status of the additional shares of stock of the Fund under
the Securities Act of 1933, as amended, and any other
applicable federal or state statute; and
(2) That the additional shares are validly issued, fully paid and
nonassessable.
6. COMPENSATION AND EXPENSES.
A. In consideration for its services hereunder as Transfer Agent and
Dividend Disbursing Agent, the Fund will pay to DST from time to
time a reasonable compensation for all services rendered as Agent,
and also, all its reasonable billable expenses, charges, counsel
fees, and other disbursements ("Compensation
6
<PAGE>
and Expenses") incurred in connection with the agency. Such
compensation is set forth in a separate schedule to be agreed to
by the Fund and DST, a copy of which is attached hereto as Exhibit
A. If the Fund has not paid such Compensation and Expenses to DST
within a reasonable time, DST may charge against any monies held
under this Agreement, the amount of any Compensation and/or
Expenses for which it shall be entitled to reimbursement under
this Agreement.
B. The Fund also agrees promptly to reimburse DST for all reasonable
billable expenses or disbursements incurred by DST in connection
with the performance of services under this Agreement including,
but not limited to, expenses for postage, express delivery
services, freight charges, envelopes, checks, drafts, forms
(continuous or otherwise), specially requested reports and
statements, telephone calls, telegraphs, stationery supplies,
counsel fees, outside printing and mailing firms (including Output
Technology, Inc. and Support Resources, Inc.), magnetic tapes,
reels or cartridges (if sent to the Fund or to a third party at the
Fund's request) and magnetic tape handling charges, off-site record
storage, media for storage of records (e.g., microfilm, microfiche,
optical platters, computer tapes), computer equipment installed at
the Fund's request at the Fund's or a third party's premises,
telecommunications equipment, telephone/telecommunication lines
between the Fund and its agents, on one hand, and DST on the other,
proxy soliciting, processing and/or tabulating costs, second-site
backup computer facility, transmission of statement data for remote
printing or processing, and National Securities Clearing
Corporation ("NSCC") transaction fees to the extent any of the
foregoing are paid by DST. The Fund agrees to pay postage expenses
at least one day in advance if so requested. In addition, any
other expenses incurred by DST at the request or with the consent
of the Fund will be promptly reimbursed by the Fund.
C. Amounts due hereunder shall be due and paid on or before the
thirtieth (30th) business day after receipt of the statement
therefor by the Fund (the "Due Date"). The Fund is aware that its
failure to pay all amounts in a timely fashion so that they will be
received by DST on or before the Due Date will give rise to costs
to DST not contemplated by this Agreement, including but not
limited to carrying,
7
<PAGE>
processing and accounting charges. Accordingly, subject to Section
6.D. hereof, in the event that any amounts due hereunder are not
received by DST by the Due Date, the Fund shall pay a late charge
equal to the lesser of the maximum amount permitted by applicable
law or the product of one and one-half percent (1 1/2 %) times the
amount overdue, times the number of whole or partial months
between the Due Date and the day on which payment is received by
DST. The parties hereby agree that such late charge represents a
fair and reasonable computation of the costs incurred by reason of
late payment or payment of amounts not properly due. Acceptance
of such late charge shall in no event constitute a waiver of the
Fund's or DST's default or prevent the non-defaulting party from
exercising any other rights and remedies available to it.
D. In the event that any charges are disputed, the Fund shall, on or
before the Due Date, pay all undisputed amounts due hereunder and
notify DST in writing of any disputed charges for billable expenses
which it is disputing in good faith. Payment for such disputed
charges shall be due on or before the close of the fifth (5th)
business day after the day on which DST provides to the Fund
documentation which an objective observer would agree reasonably
supports the disputed charges (the "Revised Due Date"). Late
charges shall not begin to accrue as to charges disputed in good
faith until the first business day after the Revised Due Date.
E. The fees and charges set forth on Exhibit A shall increase or may
be increased as follows:
(1) On the first day of each new term, but only in accordance with
the "Fee Increases" provision in Exhibit A;
(2) DST may increase the fees and charges set forth on Exhibit A
upon at least ninety (90) days prior written notice, if
changes in existing laws, rules or regulations: (i) require
substantial system modifications or (ii) materially increase
cost of performance hereunder; and
(3) Upon at least ninety (90) days prior written notice, DST may
impose a reasonable charge for additional features of TA2000
used by the Fund which features are not consistent with the
Fund's current processing requirements.
8
<PAGE>
If DST notifies the Fund of an increase in fees or charges pursuant
to subparagraph (2) of this Section 6.E., the parties shall confer,
diligently and in good faith and agree upon a new fee to cover the amount
necessary, but not more than such amount, to reimburse DST for the Fund's
aliquot portion of the cost of developing the new software to comply with
regulatory charges and for the increased cost of operation.
If DST notifies the Fund of an increase in fees or charges under
subparagraph (3) of this Section 6.E., the parties shall confer,
diligently and in good faith, and agree upon a new fee to cover such new
fund feature.
7. OPERATION OF DST SYSTEM.
In connection with the performance of its services under this Agreement,
DST is responsible for such items as:
A. That entries in DST's records, and in the Fund's records on the
TA2000 System created by DST, accurately reflect the orders,
instructions, and other information received by DST from the Fund,
the Fund's distributor, manager or principal underwriter, the
Fund's investment adviser, or the Fund's administrator (each an
"Authorized Person"), broker-dealers and/or shareholders;
B. That shareholder lists, shareholder account verifications,
confirmations and other shareholder account information to be
produced from its records or data be available and accurately
reflect the data in the Fund's records on the TA2000 System;
C. The accurate and timely issuance of dividend and distribution
checks in accordance with instructions received from the Fund and
the data in the Fund's records on the TA2000 System;
D. That redemption transactions and payments be effected timely, under
normal circumstances on the day of receipt, and accurately in
accordance with redemption instructions received by DST from
Authorized Persons, broker-dealers or shareholders and the data in
the Fund's records on the TA2000 System;
E. The deposit daily in the Fund's appropriate bank account of all
checks and payments received by DST from NSCC, broker-dealers or
shareholders for investment in shares;
9
<PAGE>
F. Notwithstanding anything herein to the contrary, with respect to
"as of" adjustments, DST will not assume one hundred percent (100%)
responsibility for losses resulting from "as ofs" due to clerical
errors or misinterpretations of shareholder instructions, but DST
will discuss with the Fund DST's accepting liability for an "as of"
on a case-by-case basis and may accept financial responsibility for
a particular situation resulting in a financial loss to the Fund
where DST in its discretion deems that to be appropriate;
G. The requiring of proper forms of instructions, signatures and
signature guarantees(1) and any necessary documents supporting the
opening of shareholder accounts, transfers, redemptions and other
shareholder account transactions, all in conformance with DST's
present procedures as set forth in its Legal Manual, Third Party
Check Procedures, Checkwriting Draft Procedures, and Signature
Guarantee Procedures (collectively the "Procedures") with such
changes or deviations therefrom as may be from time to time
required or approved by the Fund, its investment adviser or
principal underwriter, or its or DST's counsel and the rejection
of orders or instructions not in good order in accordance with the
applicable prospectus or the Procedures;
H. The maintenance of customary records in connection with its agency,
and particularly those records required to be maintained pursuant
to subparagraph (2)(iv) of paragraph (b) of Rule 31a-1 under the
Investment Company Act of 1940, if any; and
I. The maintenance of a current, duplicate set of the Fund's essential
records at a secure separate location, in a form available and
usable forthwith in the event of any breakdown or disaster
disrupting its main operation.
- ---------------------------
(1) DST shall ascertain that what reasonably purports to be an
appropriate signature guarantee is present if a signature
guarantee is required, but DST shall have no responsibility for
verifying the authenticity thereof or the authority of the person
executing the signature guarantee.
10
<PAGE>
8. INDEMNIFICATION.
A. DST shall not be responsible for, and the Fund shall on behalf of
the applicable Portfolio indemnify and hold DST harmless from and
against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability ("Adverse Consequences") arising
out of or attributable to:
(1) All actions of DST or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or
willful misconduct.
(2) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation
or warranty of the Fund hereunder.
(3) The reliance on or use by DST or its agents or subcontractors
of information, records, documents or services which (i) are
received by DST or its agents or subcontractors, and (ii) have
been prepared, maintained or performed by the Fund or any
other person or firm on behalf of the Fund including but not
limited to any previous transfer agent or registrar.
(4) The reliance on, or the carrying out by DST or its agents or
subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio.
(5) The offer or sale of shares of the Fund or any applicable
Portfolio in violation of any requirement under the federal
securities laws or regulations or the securities laws or
regulations of any state relating to the registration, the
sale, or the manner of sale of such shares or in violation of
any stop order or other determination or ruling by any federal
agency or any state with respect to the offer, the sale or the
manner of sale of such shares in such state.
(6) The negotiation and processing by DST and the applicable bank
on which such check or draft is drawn of checks not made
payable to the order of DST, the Fund, the Fund's management
company, transfer agent or distributor or the retirement
account custodian or trustee for a
11
<PAGE>
plan account investing in shares, which checks are tendered
to DST for the purchase of shares (i.e., checks made payable
to prospective or existing Shareholders, such checks are
commonly known as "third party checks").
B. At any time DST may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed
by DST under this Agreement, and DST and its agents or
subcontractors shall not be liable and shall be indemnified by the
Fund on behalf of the applicable Portfolio for any action taken or
omitted by it in reliance upon such instructions or upon the
opinion of such counsel. DST, its agents and subcontractors shall
be protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or
upon any instruction, information, data, records or documents
provided DST or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof
from the Fund. DST, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Fund, and the proper
countersignature of any former transfer agent or former registrar,
or of a co-transfer agent or co-registrar.
C. In order that the indemnification provisions contained in this
Section 8 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify DST, DST shall promptly notify
the Fund of such assertion, and shall keep the Fund advised with
respect to all developments concerning such claim. The Fund shall
have the option to participate with DST in the defense of such
claim or to defend against said claim in its own name or in the
name of DST. DST shall in no case confess any claim or make any
compromise in any case in which the Fund may be required to
indemnify DST except with the Fund's prior written consent.
12
<PAGE>
D. Standard of Care: DST shall at all times act in good faith and
agrees to use its best efforts within reasonable limits to insure
the accuracy of all services performed under this Agreement, but
assumes no responsibility and shall not be liable for loss or
damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its
employees.
E. EXCEPT FOR VIOLATIONS OF SECTION 23, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY
PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY
THEREOF.
9. CERTAIN COVENANTS OF DST AND THE FUND.
A. All requisite steps will be taken by the Fund from time to time
when and as necessary to register the Fund's shares for sale in all
states in which the Fund's shares shall at the time be offered for
sale and require registration. If at any time the Fund receives
notice of any stop order or other proceeding in any such state
affecting such registration or the sale of the Fund's shares, or of
any stop order or other proceeding under the federal securities
laws affecting the sale of the Fund's shares, the Fund will give
prompt notice thereof to DST.
B. DST hereby agrees to perform such transfer agency functions as are
set forth in Section 4.D. above and establish and maintain
facilities and procedures reasonably acceptable to the Fund for
safekeeping of stock certificates, check forms, and facsimile
signature imprinting devices, if any; and for the preparation or
use, and for keeping account of, such certificates, forms and
devices, and to carry such insurance as it considers adequate and
reasonably available.
C. To the extent required by Section 31 of the Investment Company Act
of 1940 as amended and Rules thereunder, DST agrees that all
records maintained by DST relating to the services to be performed
by DST under this Agreement are the property of the Fund and will
be preserved and will be surrendered promptly to the Fund on
request.
13
<PAGE>
D. DST agrees to furnish the Fund annual reports of its financial
condition, consisting of a balance sheet, earnings statement and
any other publicly available financial information reasonably
requested by the Fund and a copy of the report issued by its
certified public accountants pursuant to Rule 17Ad-13 under the
1934 Act as filed with the SEC. The annual financial statements
will be certified by DST's certified public accountants and may be
included in DST's publicly distributed Annual Report.
E. DST represents and agrees that it will use its reasonable efforts
to keep current on the trends of the investment company industry
relating to shareholder services and will use its reasonable
efforts to continue to modernize and improve.
F. DST will permit the Fund and its authorized representatives to make
periodic inspections of its operations as such would involve the
Fund at reasonable times during business hours.
G. DST will provide in Kansas City at the Fund's request and expense
training for the Fund's personnel in connection with use and
operation of the TA2000 System. All travel and reimbursable
expenses incurred by the Fund's personnel in connection with and
during training at DST's Facility shall be borne by the Fund. At
the Fund's option and expense, DST also agrees to use its
reasonable efforts to provide two (2) man weeks of training at the
Fund's facility for the Fund's personnel in connection with the
continued operation of the TA2000 System. Reasonable travel, per
diem and reimbursable expenses incurred by DST personnel in
connection with and during training at the Fund's facility or in
connection with the conversion shall be borne by the Fund.
10. RECAPITALIZATION OR READJUSTMENT.
In case of any recapitalization, readjustment or other change in the
capital structure of the Fund requiring a change in the form of stock
certificates, DST will issue or register certificates in the new form in
exchange for, or in transfer of, the outstanding certificates in the old
form, upon receiving:
A. Written instructions from an officer of the Fund;
B. Certified copy of the amendment to the Articles of Incorporation or
other document effecting the change;
14
<PAGE>
C. Certified copy of the order or consent of each governmental or
regulatory authority, required by law to the issuance of the stock
in the new form, and an opinion of counsel that the order or
consent of no other government or regulatory authority is required;
D. Specimens of the new certificates in the form approved by the Board
of Directors of the Fund, with a certificate of the Secretary of
the Fund as to such approval;
E. Opinion of counsel for the Fund stating:
(1) The status of the shares of stock of the Fund in the new form
under the Securities Act of 1933, as amended and any other
applicable federal or state statute; and
(2) That the issued shares in the new form are, and all unissued
shares will be, when issued, validly issued, fully paid and
nonassessable.
11. RESERVED.
12. DEATH, RESIGNATION OR REMOVAL OF SIGNING OFFICER.
The Fund will file promptly with DST written notice of any change in the
officers authorized to sign written requests or instructions to give
requests or instructions, together with two signature cards bearing the
specimen signature of each newly authorized officer.
13. FUTURE AMENDMENTS OF CHARTER AND BYLAWS.
The Fund will promptly file with DST copies of all material amendments
to its Articles of Incorporation or Bylaws made after the date of this
Agreement.
14. INSTRUCTIONS, OPINION OF COUNSEL AND SIGNATURES.
At any time DST may apply to any person authorized by the Fund to give
instructions to DST, and may with the approval of a Fund officer and at
the expense of the Fund, either consult with legal counsel for the Fund
or consult with counsel chosen by DST and acceptable to the Fund, with
respect to any matter arising in connection with the agency and it will
not be liable for any action taken or omitted by it in good faith in
reliance upon such instructions or upon the opinion of such counsel. For
purposes hereof, DST's internal counsel and attorneys employed by
Sonnenschein Nath & Rosenthal, DST's primary outside counsel, are
acceptable to the Fund. DST will be protected in acting upon any paper
or document reasonably believed by it to be genuine and to have been
signed
15
<PAGE>
by the proper person or persons and will not be held to have
notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. It will also be protected in
recognizing stock certificates which it reasonably believes to bear the
proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former Transfer Agent or Registrar,
or of a co-Transfer Agent or co-Registrar.
15. FORCE MAJEURE AND DISASTER RECOVERY PLANS.
A. DST shall not be responsible or liable for its failure or delay in
performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its
reasonable control, including, without limitation: any
interruption, loss or malfunction or any utility, transportation,
computer hardware, provided such equipment has been reasonably
maintained, or third party software or communication service;
inability to obtain labor, material, equipment or transportation,
or a delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike, riot,
emergency, civil disturbance, terrorism, vandalism, explosions,
labor disputes, freezes, floods, fires, tornadoes, acts of God or
public enemy, revolutions, or insurrection; or any other cause,
contingency, circumstance or delay not subject to DST's reasonable
control which prevents or hinders DST's performance hereunder.
B. DST currently maintains an agreement with a third party whereby DST
is to be permitted to use on a "shared use" basis a "hot site" (the
"Recovery Facility") maintained by such party in event of a
disaster rendering the DST Facilities inoperable. DST has
developed and is continually revising a business contingency plan
(the "Business Contingency Plan") detailing which, how, when, and
by whom data maintained by DST at the DST Facilities will be
installed and operated at the Recovery Facility. Provided the Fund
is paying its pro rata portion of the charge therefor, DST will, in
the event of a disaster rendering the DST Facilities inoperable,
use reasonable efforts to convert the TA2000 System containing the
designated Fund data to the computers at the Recovery Facility in
accordance with the then current Business Contingency Plan.
16
<PAGE>
C. DST also currently maintains, separate from the area in which the
operations which provides the services to the Fund hereunder are
located, a Crisis Management Center consisting of phones, computers
and the other equipment necessary to operate a full service
transfer agency business in the event one of its operations areas
is rendered inoperable. The transfer of operations to other
operating areas or to the Crisis Management Center is also covered
in DST's Business Contingency Plan.
16. CERTIFICATION OF DOCUMENTS.
The required copy of the Articles of Incorporation of the Fund and
copies of all amendments thereto will be certified by the Secretary of
State (or other appropriate official) of the State of Incorporation, and
if such Articles of Incorporation and amendments are required by law to
be also filed with a county, city or other officer of official body, a
certificate of such filing will appear on the certified copy submitted
to DST. A copy of the order or consent of each governmental or
regulatory authority required by law to the issuance of the stock will
be certified by the Secretary or Clerk of such governmental or
regulatory authority, under proper seal of such authority. The copy of
the Bylaws and copies of all amendments thereto, and copies of
resolutions of the Board of Directors of the Fund, will be certified by
the Secretary or an Assistant Secretary of the Fund under the Fund's
seal.
17. RECORDS.
DST will maintain customary records in connection with its agency, and
particularly will maintain those records required to be maintained
pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under
the Investment Company Act of 1940, if any.
18. DISPOSITION OF BOOKS, RECORDS AND CANCELED CERTIFICATES.
DST may send periodically to the Fund, or to where designated by the
Secretary or an Assistant Secretary of the Fund, all books, documents,
and all records no longer deemed needed for current purposes and stock
certificates which have been canceled in transfer or in exchange, upon
the understanding that such books, documents, records, and stock
certificates will be maintained by the Fund under and in accordance with
the requirements of Section 17Ad-7 adopted under the Securities Exchange
Act of 1934. Such materials
17
<PAGE>
will not be destroyed by the Fund without the consent of DST (which
consent will not be unreasonably withheld), but will be safely stored
for possible future reference.
19. PROVISIONS RELATING TO DST AS TRANSFER AGENT.
A. Instructions for the transfer, exchange or redemption of shares of
the Fund will be accepted, the registration, redemption or transfer
of the shares be effected and, where applicable, funds remitted
therefor. Upon surrender of the old certificates in form or receipt
by DST of instructions deemed by DST properly endorsed for
transfer, exchange or redemption, accompanied by such documents as
DST may deem necessary to evidence the authority of the person
making the transfer, exchange or redemption, the transfer, exchange
or redemption of the shares reflected by such certificates be
effected and any sums due in connection therewith be remitted, in
accordance with the instructions contained herein. DST reserves
the right to refuse to transfer or redeem shares until it is
satisfied that the endorsement or signature on the instruction or
any other document is valid and genuine, and for that purpose it
may require a guaranty of signature in accordance with the
Signature Guarantee Procedures. DST also reserves the right to
refuse to transfer, exchange or redeem shares until it is satisfied
that the requested transfer, exchange or redemption is legally
authorized, and DST will incur no liability for the refusal in good
faith to make transfers or redemptions which, in its judgment, are
improper or unauthorized. DST may, in effecting transfers,
exchanges or redemptions, rely upon DST's Procedures and
Simplification Acts, UNIFORM COMMERCIAL CODE or other statutes
which protect it and the Fund in not requiring complete fiduciary
documentation. In cases in which DST is not directed or otherwise
required to maintain the consolidated records of shareholder's
accounts, DST will not be liable for any loss which may arise by
reason of not having such records.
B. DST will, at the expense of the Fund, issue and mail subscription
warrants, effectuate stock dividends, exchanges or split ups, or
act as Conversion Agent upon receiving written instructions from
any officer of the Fund and such other documents as DST deems
necessary.
18
<PAGE>
C. DST will, at the expense of the Fund, supply a shareholder's list
to the Fund for its annual meeting upon receiving a request from an
officer of the Fund. It will also, at the expense of the Fund,
supply lists at such other times as may be requested by an officer
of the Fund.
D. Upon receipt of written instructions of an officer of the Fund, DST
will, at the expense of the Fund, address and mail notices to
shareholders.
E. In case of any request or demand for the inspection of the stock
books of the Fund or any other books in the possession of DST, DST
will endeavor to notify the Fund and to secure instructions as to
permitting or refusing such inspection. DST reserves the right,
however, to exhibit the stock books or other books to any person in
case it is advised by its counsel that it may be held responsible
for the failure to exhibit the stock books or other books to such
person.
20. PROVISIONS RELATING TO DIVIDEND DISBURSING AGENCY.
A. DST will, at the expense of the Fund, provide a special form of
check containing the imprint of any device or other matter desired
by the Fund. Said checks must, however, be of a form and size
convenient for use by DST.
B. If the Fund desires to include additional printed matter, financial
statements, etc., with the dividend checks, the same will be
furnished DST within a reasonable time prior to the date of mailing
of the dividend checks, at the expense of the Fund.
C. If the Fund desires its distributions mailed in any special form of
envelopes, sufficient supply of the same will be furnished to DST
but the size and form of said envelopes will be subject to the
approval of DST. If stamped envelopes are used, they must be
furnished by the Fund; or if postage stamps are to be affixed to
the envelopes, the stamps or the cash necessary for such stamps
must be furnished by the Fund.
D. DST shall establish and maintain on behalf of the Fund one or more
deposit accounts as Agent for the Fund, into which DST shall
deposit the funds DST receives for payment of dividends,
distributions, redemptions or other disbursements provided for
hereunder and to draw checks against such accounts.
19
<PAGE>
E. DST is authorized and directed to stop payment of checks
theretofore issued hereunder, but not presented for payment, when
the payees thereof allege either that they have not received the
checks or that such checks have been mislaid, lost, stolen,
destroyed or through no fault of theirs, are otherwise beyond their
control, and cannot be produced by them for presentation and
collection, and, to issue and deliver duplicate checks in
replacement thereof.
21. ASSUMPTION OF DUTIES BY THE FUND OR AGENTS DESIGNATED BY THE FUND.
A. The Fund or its designated agents other than DST may assume certain
duties and responsibilities of DST or those services of Transfer
Agent and Dividend Disbursing Agent as those terms are referred to
in Section 4.D. of this Agreement including but not limited to
answering and responding to telephone inquiries from shareholders
and brokers, accepting shareholder and broker instructions (either
or both oral and written) and transmitting orders based on such
instructions to DST, preparing and mailing confirmations, obtaining
certified TIN numbers, classifying the status of shareholders and
shareholder accounts under applicable tax law, establishing
shareholder accounts on the TA2000 System and assigning social
codes and Taxpayer Identification Number codes thereof, and
disbursing monies of the Fund, said assumption to be embodied in
writing to be signed by both parties.
B. To the extent the Fund or its agent or affiliate assumes such
duties and responsibilities, DST shall be relieved from all
responsibility and liability therefor and is hereby indemnified
and held harmless against any liability therefrom and in the same
manner and degree as provided for in Section 8 hereof.
C. Initially the Fund or its designees shall be responsible for the
following: (i) answering and responding to phone calls from
shareholders and broker-dealers, (ii) faxing information to DST as
such calls or items are received by the Fund, and (iii) monitoring
and following up upon wire order trades which failed to settle
timely, and (iv) notifying and instructing DST as to the
establishment of and maintenance of information pertaining to
broker-dealers on the Broker-Dealer File.
20
<PAGE>
22. TERMINATION OF AGREEMENT.
A. This Agreement shall be in effect for an initial period of two (2)
years and six (6) months (through August 31, 2000) and, thereafter,
shall automatically extend for additional, successive twelve (12)
month terms upon the expiration of any term hereof unless
terminated as hereinafter provided.
B. Each party, in addition to any other rights and remedies, shall
have the right to terminate this Agreement forthwith upon the
occurrence at any time of any of the following events with respect
to the other party:
(1) The bankruptcy of the other party or its assigns or the
appointment of a receiver for the other party or its assigns;
or
(2) Failure by the other party or its assigns to perform its
duties in accordance with the Agreement, which failure
materially adversely affects the business operations of the
first party and which failure continues for thirty (30) days
after receipt of written notice from the first party.
C. Either party may terminate this Agreement at any time by delivery
to the other party of six (6) months prior written notice of such
termination.
D. In the event of any termination of this Agreement:
(1) The Fund will continue to pay to DST as invoiced all sums due
for DST's services until completion of the Deconversion and
will pay to DST, no later than contemporaneously with the
dispatch by DST of the Fund's records, all amounts payable to
DST.
(2) If, for any reason, the Fund desires to convert from the
TA2000 System ("Deconvert") other than on the first day after
six (6) months from the receipt by DST of the termination
notice (such first day after the expiration of six (6) months
being hereinafter referred to as the "Termination Date"), and
DST is able, through reasonable efforts, to accomplish such
earlier conversion of the Fund's data and records off the
TA2000 System (the "Deconversion"), the Fund shall pay to DST
on the day of or before the Deconversion the fees which DST
would have earned had the Fund not Deconverted, and had DST
remained the transfer/shareholder servicing agent, until the
Termination Date. The amount of such fees shall be
21
<PAGE>
calculated by: (a) dividing the aggregate fees charged to
the Fund with respect to the six (6) whole months immediately
preceding receipt by DST of the six (6) month termination
notice by (b) twenty-six (26) (the number of weeks in such
six (6) month period) to determine the average weekly fee and
(c) multiplying the average weekly fee times the number of
whole or partial weeks between the date on which Deconversion
actually occurs and the Termination Date.
(3) Subsequent to any Deconversion:
(a) The Fund shall continue to pay to DST, subject to and in
accordance with the terms and conditions set forth in
Sections 6.A., 6.B., 6.C. and 6.D. of this Agreement,
for all expenses incurred on the Fund's behalf and the
post-Deconversion fees set forth in Exhibit B to this
Agreement until (i) the Fund accounts are purged from
the TA2000 System (no longer being required for Year
End Reporting) with respect to closed account fees and
(ii) so long as DST's services are utilized with
respect to all fees other than those for closed accounts
by the Fund, its new transfer agent and its
shareholders, former shareholders, broker-dealers or
other entities with whom the Fund does business and
persons claiming through or on behalf of any of the
foregoing; and
(b) To the extent applicable regulations of the Internal
Revenue Service and tax laws permit, the Fund shall
require its new transfer agent to perform and dispatch
or file all required year end reporting (tax or
otherwise and federal and state) to shareholders,
broker-dealers, beneficial owners, federal and state
agencies and any other recipients thereof and DST shall
have no, and the Fund hereby indemnifies DST and holds
DST harmless against any, liability or Adverse
Consequences whatsoever with respect thereto, including
by way of example and not limitation, reports or returns
on Forms 1099, 5498, 945, 1042 and 1042S, annual account
valuations for retirement accounts and year end
statements for all accounts and
22
<PAGE>
any other reports required to be made by state
governments or the federal government or regulatory or
self-regulatory agencies (the "Returns");
(c) If the Fund is unable to obtain a commitment from the new
transfer agent that the new transfer agent will perform
year end reporting (tax or otherwise) for the entire
year and mailing or filing all Returns, (i) DST shall
perform year end reporting as instructed by the Fund
for the portion of the year DST served as transfer
agent and (ii) DST shall be paid therefore a monthly per
CUSIP fee through the end of the last month during
which the last Return or form is filed. The Fund will
cause the new transfer agent to timely advise DST of all
changes to the shareholder records effecting such
reporting until all DST reporting obligations cease;
and DST shall have no, and the Fund hereby indemnifies
DST and holds DST harmless against any, liability or
any Adverse Consequences arising out of or resulting
from the failure of the new transfer agent to timely
advise DST thereof or which could have been avoided if
the new transfer agent had timely advised DST thereof.
All amendments to, or delivery of duplicate, Returns
after their initial dispatch or filing will be
effectuated and filed or dispatched by the new transfer
agent regardless of who filed or dispatched the
original Return; and
(d) All of the records belonging to the Fund on the TA2000
System may be purged by DST without liability to the Fund
or its agents, shareholders, and parties with whom the
Fund has done or will do business, at any time on or
after the forty-fifth (45th) day after the Termination
Date (in which case DST shall not be able to perform any
year end reporting or the mailing and filing of any
Returns for any portion of the year in which such
destruction occurs). The Fund shall and hereby agrees
to indemnify and hold DST harmless against any Adverse
Consequences directly or indirectly arising out
23
<PAGE>
of or resulting from any inability to produce such
purged records. The Fund will, and will cause the new
transfer agent to, maintain and preserve the records
converted from the TA2000 System or any hard copy
records transferred by DST to the Fund or the new
transfer agent in accordance with the requirements of
all applicable law, including without limitation 17
C.F.R. Sections 240.17Ad-6, -7, -10, -11 and -15
(including without limitation to make copies thereof
available timely and at no charge to appropriate
regulatory agencies and, as reasonably necessary, DST).
Notwithstanding the foregoing, upon the request and at
the expense of the Fund, DST shall not purge, but shall
retain as closed accounts on the TA2000 System, the
records belonging to the Fund.
E. In addition, in the event of any termination, DST will, provided
the Fund contemporaneously pays all outstanding charges and fees,
promptly transfer all of the records of the Fund to the designated
successor transfer agent. DST shall also provide reasonable
assistance to the Fund and its designated successor transfer agent
and other information relating to its services provided hereunder
(subject to the recompense of DST for such assistance and
information at its standard rates and fees for personnel then in
effect at that time); provided, however, as used herein "reasonable
assistance" and "other information" shall not include assisting any
new service or system provider to modify, alter, enhance, or
improve its system or to improve, enhance, or alter its current
system, or to provide any new, functionality or to require DST to
disclose any DST Confidential Information, as hereinafter defined,
or any information which is otherwise confidential to DST. The
Fund acknowledges and agrees that DST customarily prohibits
Deconversion during the period from November 15 through March 15
(the "Blackout Period") and that that prohibition is being deleted
at the demand of the Fund and on condition that no assistance other
than the provision of tapes in standard conversion format with a
written identification of the fields therein is to be required of
DST with respect to Deconversion during the Blackout Period. Any
additional assistance during such Blackout Period shall be at DST's
discretion and,
24
<PAGE>
if rendered, shall be rendered on a "reasonable
efforts basis" and may be limited in scope and timeliness (without
any liability on the part of DST) compared to the assistance
usually rendered by DST at other times during the year.
23. CONFIDENTIALITY.
A. DST agrees that, except as provided in the last sentence of Section
19.J. hereof, or as otherwise required by law, DST will keep
confidential all records of and information in its possession
relating to the Fund or its shareholders or shareholder accounts
and will not disclose the same to any person except at the request
or with the consent of the Fund.
B. The Fund owns all of the data supplied by or on behalf of the Fund
to DST. The Fund has proprietary rights to all such data, records
and reports containing such data, but not including the software
programs upon which such data is installed, and all records
containing such data will be transferred in accordance with Section
22.D above in the event of termination.
C. The Fund agrees to keep confidential all non-public financial
statements and other financial records of DST received hereunder,
all accountants' reports relating to DST, the terms and provisions
of this Agreement, including all exhibits and schedules now or in
the future attached hereto and all manuals, systems and other
technical information and data, not publicly disclosed, relating to
DST's operations and programs furnished to it by DST pursuant to
this Agreement and will not disclose the same to any person except
at the request or with the consent of DST.
D. (1) The Fund acknowledges that DST has proprietary rights in and
to the TA2000 System used to perform services hereunder
including, but not limited to the maintenance of shareholder
accounts and records, processing of related information and
generation of output, including, without limitation any
changes or modifications of the TA2000 System and any other
DST programs, data bases, supporting documentation, or
procedures (collectively "DST Confidential Information") which
the Fund's access to the TA2000 System or computer hardware or
software may permit the Fund or its employees or agents to
become aware of or to access and that
25
<PAGE>
the DST Confidential Information constitutes confidential
material and trade secrets of DST. The Fund agrees to
maintain the confidentiality of the DST Confidential
Information.
(2) The Fund acknowledges that any unauthorized use, misuse,
disclosure or taking of DST Confidential Information which is
confidential as provided by law, or which is a trade secret,
residing or existing internal or external to a computer,
computer system, or computer network, or the knowing and
unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be subject
to civil liabilities and criminal penalties under applicable
state law. The Fund will advise all of its employees and
agents who have access to any DST Confidential Information or
to any computer equipment capable of accessing DST or DST
hardware or software of the foregoing.
(3) The Fund acknowledges that disclosure of the DST Confidential
Information may give rise to an irreparable injury to DST
inadequately compensable in damages. Accordingly, DST may
seek (without the posting of any bond or other security)
injunctive relief against the breach of the foregoing
undertaking of confidentiality and nondisclosure, in addition
to any other legal remedies which may be available, and the
Fund consents to the obtaining of such injunctive relief. All
of the undertakings and obligations relating to
confidentiality and nondisclosure, whether contained in this
Section or elsewhere in this Agreement shall survive the
termination or expiration of this Agreement for a period of
ten (10) years.
24. CHANGES AND MODIFICATIONS.
A. During the term of this Agreement DST will use on behalf of the
Fund without additional cost all modifications, enhancements, or
changes which DST may make to the TA2000 System in the normal
course of its business and which are applicable to functions and
features offered by the Fund, unless substantially all DST clients
are charged separately for such modifications, enhancements or
changes, including, without limitation, substantial system
revisions or modifications necessitated by changes in existing
laws, rules or regulations. The
26
<PAGE>
Fund agrees to pay DST promptly for modifications and improvements
which are charged for separately at the rate provided for in DST's
standard pricing schedule which shall be identical for
substantially all clients, if a standard pricing schedule shall
exist. If there is no standard pricing schedule, the parties
shall mutually agree upon the rates to be charged.
B. DST shall have the right, at any time and from time to time, to
alter and modify any systems, programs, procedures or facilities
used or employed in performing its duties and obligations
hereunder; provided that the Fund will be notified as promptly as
possible prior to implementation of such alterations and
modifications and that no such alteration or modification or
deletion shall materially adversely change or affect the operations
and procedures of the Fund in using or employing the TA2000 System
or DST Facilities hereunder or the reports to be generated by such
system and facilities hereunder, unless the Fund is given thirty
(30) days prior notice to allow the Fund to change its procedures
and DST provides the Fund with revised operating procedures and
controls at the time such notice is delivered to the Fund.
C. All enhancements, improvements, changes, modifications or new
features added to the TA2000 System however developed or paid for
shall be, and shall remain, the confidential and exclusive property
of, and proprietary to, DST.
25. SUBCONTRACTORS.
Nothing herein shall impose any duty upon DST in connection with or make
DST liable for the actions or omissions to act of unaffiliated third
parties such as, by way of example and not limitation, Airborne
Services, the U.S. mails and telecommunication companies, provided, if
DST selected such company, DST shall have exercised due care in
selecting the same.
26. LIMITATIONS ON LIABILITY.
A. If the Fund is comprised of more than one Portfolio, each Portfolio
shall be regarded for all purposes hereunder as a separate party
apart from each other Portfolio. Unless the context otherwise
requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund shall be deemed to
relate solely to the particular Portfolio to which such transaction
relates. Under
27
<PAGE>
no circumstances shall the rights, obligations or remedies with
respect to a particular Portfolio constitute a right, obligation
or remedy applicable to any other Portfolio. The use of this
single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and
shall not constitute any basis for joining the Portfolios for any
reason.
B. Notice is hereby given that a copy of the Fund's Trust Agreement
and all amendments thereto is on file with the Secretary of State
of the state of its organization; that this Agreement has been
executed on behalf of the Fund by the undersigned duly authorized
representative of the Fund in his/her capacity as such and not
individually; and that the obligations of this Agreement shall only
be binding upon the assets and property of the Fund and shall not
be binding upon any trustee, officer or shareholder of the Fund
individually.
27. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, excluding that body of law applicable to
choice of law.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns.
C. The representations and warranties, and the indemnification
extended hereunder, if any, are intended to and shall continue
after and survive the expiration, termination or cancellation of
this Agreement.
D. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed by each party hereto.
E. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
F. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
28
<PAGE>
G. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and
not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain
the particular part, term or provision held to be illegal or
invalid.
H. This Agreement may not be assigned by the Fund or DST without the
prior written consent of the other.
I. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between the
Fund and DST. It is understood and agreed that all services
performed hereunder by DST shall be as an independent contractor
and not as an employee of the Fund. This Agreement is between DST
and the Fund and neither this Agreement nor the performance of
services under it shall create any rights in any third parties.
There are no third party beneficiaries hereto.
J. Except as specifically provided herein, this Agreement does not in
any way affect any other agreements entered into among the parties
hereto and any actions taken or omitted by any party hereunder
shall not affect any rights or obligations of any other party
hereunder.
K. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed
as a continuing or permanent waiver of any such terms, conditions,
rights or privileges, but the same shall continue and remain in
full force and effect as if no such forbearance or waiver had
occurred.
L. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof, whether oral or
written, and this Agreement may not be modified except by written
instrument executed by both parties.
M. All notices to be given hereunder shall be deemed properly given if
delivered in person or if sent by U.S. mail, first class, postage
prepaid, or if sent by facsimile
29
<PAGE>
and thereafter, in the case of
non-operational notices only, confirmed by mail as follows:
If to DST:
DST Systems, Inc.
1055 Broadway, 7th Floor
Kansas City, Missouri 64105
Attn: Senior Vice President-Full Service
Facsimile No.: 816-435-3455
With a copy of non-operational notices to:
DST Systems, Inc.
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105
Attn: Legal Department
Facsimile No.: 816-435-8630
If to the Fund:
SEI Investments, Inc.
Attn.: Legal Department
One Freedom Valley Road
Oaks, Pennsylvania 19456
Attn:
Facsimile No.: 610-676-1040
With a copy of non-operational notices to:
SEI Investments, Inc.
Attn.: Legal Dept.
One Freedom Valley Road
Oaks, Pennsylvania 19456
Attn: Legal Department
Facsimile No.: 610-676-1040
or to such other address as shall have been specified in writing by
the party to whom such notice is to be given.
N. The representations and warranties contained herein shall survive
the execution of this Agreement. The representations and
warranties contained herein and the provisions of Section 8 hereof
shall survive the termination of the Agreement and
30
<PAGE>
the performance of services hereunder until any statute of
limitations applicable to the matter at issues shall have expired.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers, to be effective
as of the day and year first above written.
DST SYSTEMS, INC.
By: /s/ Jonathan Boehm
--------------------------------------
Title: Group Vice-President
-----------------------------------
OAK ASSOCIATES FUNDS
By: /s/ William E. White
--------------------------------------
Title: Assistant Secretary
-----------------------------------
31
<PAGE>
EXHIBIT A, P. 1
FULL SERVICE FEE SCHEDULE
EFFECTIVE 09/1/98 - 08/31/00
A. MINIMUM FEE
Minimum Fee Per Cusip $16,000 per cusip per year
Minimum fee per cusip is compared to those fees in section B of this
schedule. Minimum fee applies to new cusips only.
B. ACCOUNT MAINTENANCE AND PROCESSING FEES
Open Accounts in the range of:
1 - 50,000 $18.00 per account per year
50,001 - 100,000 $16.00 per account per year
> 100,000 $14.00 per account per year
C. SHAREOWNER CHARGES
Fiduciary Trustee Fees - $15.00 per account per year
D. OPTIONAL SERVICES
12b-1 Processing $.15/open & closed account/cycle
CDSC/Sharelot Accounting $1.90 per account per year
Ad-Hoc Reporting
Multi File Reports $400 per report
Single File Reports $250 per report
Voice Response System - See Exhibit A.1
NSCC - See Exhibit A.2
Escheatment Costs - as incurred
Conversion/Acquisition Costs - Out of Pocket expenses including but
not limited to travel and accommodations, programming, training,
equipment installation, etc.
*Computer/Technical Personnel:
Business Analyst/Tester:
Dedicated $90,000 per year
On Request $80 per hour
COBOL Programmer:
Dedicated $150,000 per year
On Request $120 per hour
32
<PAGE>
EXHIBIT A, P. 2
FULL SERVICE FEE SCHEDULE
EFFECTIVE 09/1/98 - 08/31/00
Workstation Programmer:
Dedicated $175,000 per year
On Request $140 per hour
Senior Staff Support $65 per hour
Staff Support $45 per hour
Clerical Support $35 per hour
NOTES TO THE ABOVE FEE SCHEDULE
A. The above schedule does not include reimbursable expenses that are
incurred on the Fund's behalf. Examples of reimbursable expenses
include but are not limited to those set forth on page 34 of this
Agreement. Reimbursable expenses are billed separately from service
fees on a monthly basis. Postage will be paid in advance if so
requested.
B. Any fees or reimbursable expenses not paid within 30 days of the date of
the original invoice will be charged a late payment fee of 1.5% per
month until payment is received.
C. The above fees, except for those indicated by an "*", are guaranteed for
the agreed upon term, subject to an increase on each anniversary of the
agreement in an amount not less than the annual percentage change in the
Consumer Price Index in the Kansas City, Missouri-Kansas Standard
Metropolitan Statistical Area, All Items, Base 1982-1984=100, as last
reported by the U.S. Bureau of Labor Statistics for the 12 calendar
months immediately preceding such anniversary.
D. The monthly fee for an open account shall be charged in the month during
which an account is opened through the month in which such account is
closed. The monthly fee for a closed account shall be charged in the
month following the month during which such account is closed and shall
cease to be charged in the month following the Purge Date, as
hereinafter defined. The "Purge Date" for any year shall be any day
after June 1st of that year, as selected by the Fund, provided that
written notification is presented to DST at least forty-five (45) days
prior to the Purge Date.
E. The charges for the services of Computer/Technical Personnel will
increase annually as of each January 1st as the salaries or costs paid
by DST therefor increase.
33
<PAGE>
EXHIBIT A, P. 3
FULL SERVICE FEE SCHEDULE
EFFECTIVE 09/1/98 - 08/31/00
REIMBURSABLE EXPENSES
Forms
Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at remote
site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm
Freight Charges
Printing
Bank Wire and ACH Charges
Proxy Processing - per proxy mailed
not including postage
Includes: Proxy Card
Printing
Outgoing Envelope
Return Envelope
Tabulation and Certification
T.I.N. Certification (W-8 & W-9)
(Postage associated with the return
envelope is included)
Off-site Record Storage
Second Site Disaster
Backup Fee $0.08 per account per year
Transmission of Statement Data for Currently $.035/per record
Remote Processing (External)
Travel, Per Diem and other Billables
Incurred by DST personnel traveling to,
at and from the Fund at the request
of the Fund
34
<PAGE>
EXHIBIT A.1
TA2000 VOICEO SYSTEM
PER CALL SERVICE FEE
Utilization of DST's TA2000 VoiceO System is based on a service fee of $.20 PER
CALL. Each call has a maximum duration of seven (7) minutes. This charge is a
flat rate regardless of the number or type of transactions that a shareholder
processes during the call. A given call could result in inquiries and/or
transactions being processed for various funds in the complex. Therefore, on a
monthly basis, DST will report the number of inquiries and/or transactions
processed by fund. A percentage of the total will be derived and reported for
each fund. As a result of this process, DST will allocate the charges among
the individual funds.
MULTIPLE CALL FLOWS
An additional fee of $500 per month will be charged for each additional call
flow that requires different flows, functions, vocabulary, processing, rules or
access method. An additional fee of $200 per month will be charged for each
additional call flow that is identical in flows, functions, vocabulary,
processing rules or access method.
MINIMUM MONTHLY CHARGE
DST's commitment to the reliability and continued enhancement of the TA2000
Voice System necessitates a minimum monthly charge for the service. The
minimum monthly charge will only be assessed when it is greater than the
monthly service fees. The minimum monthly charge will be implemented on a
graduated basis based on the number of cusips and shareholders in a fund
complex and is the sum of the cusip and account charges. The schedule for
this charge is as follows:
YEARS CHARGE PER CHARGE PER
OF CUSIP AUTHORIZED SHAREHOLDER
SERVICE FOR SERVICE* ACCOUNT**
1 $ 50 $.002
2 $ 75 $.003
3 $100 $.004
* CUSIPS ADDED TO THE SERVICE will be subject to the same minimums
being charged to the other cusips in the complex at the time the
cusips are added.
** THE PER ACCOUNT CHARGE is based on the total number of shareholder
accounts in authorized cusips at the end of each month.
OUT OF POCKET COSTS
Each fund complex will require a unique WATS number for their shareholders to
call. Each WATS number will require a specific number of trunks to service a
given volume of shareholder calls. All installation and monthly usage charges
associated with these will be billed through monthly out-of-pocket invoices.
35
<PAGE>
EXHIBIT A.2
NSCC FEES AND
OUT-OF-POCKET EXPENSES
DST FEES
DST charges $1,500 per cusip per year for the NSCC platform
SETTLING BANK FEES
The fund may be charged fees by the Settling Bank at which the net
settlement account resides for monthly maintenance of this account.
These are negotiated directly between the Fund and the Settling Bank.
NSCC PARTICIPANT FEES
The NSCC charges $40 per month per management company for CPU
access/shared line costs.
A combined participant base fee of $200 per month is charged for the
following services:
FUND/SERV:
The NSCC charges an activity charge of $.30 per inputted transaction.
Transactions include purchases, redemptions and exchanges.
NETWORKING: The NSCC charges the following activity fee:
- $.02 per account for funds paying dividends on a monthly basis
- $.01 per account for funds paying dividends other than monthly
COMMISSION SETTLEMENT: The NSCC charges the following processing fee:
- $.30 per hundred records, per month, for one to 500,000 records;
there is a $50 per month minimum processing charge
- $.20 per hundred records, per month, for 500,001 to 1,000,000
records
- $.10 per hundred records, per month, for 1,000,001 records and
above
Note: Participant fees are cumulative when Fund/SERV, Networking and/or
Commission Settlement are used in conjunction with each other.
36
<PAGE>
EXHIBIT B
POST DECONVERSION FEE SCHEDULE
ALL FEES EFFECTIVE AS OF DECONVERSION:
ACCOUNT MAINTENANCE
Closed Accounts $.20/month/acct
Transaction/Maintenance Processing $2.50/item
Telephone Calls $4.00/call
Research Requests $40/hour (1 hr min)
PROGRAMMING
As required at DST's then current standard rates
REIMBURSABLE EXPENSES
This schedule does not include reimbursable expenses that are incurred on the
Fund's behalf. Examples of reimbursable expenses include but are not limited
to forms, postage, mailing services, telephone line/long distance charges,
transmission of statement data for remote print/mail operations, remote
client hardware, document storage, tax certification mailings, magnetic
tapes, printing, microfiche, Fed wire bank charges, ACH bank charges, NSCC
charges, as required or incurred, etc. Reimbursable expenses are billed
separately from Account Maintenance and Programming fees on a monthly basis
and late payments are subject to late charges in accordance with Section 6.C.
of this Agreement.
37
<PAGE>
EXHIBIT C
AUTHORIZED PERSONNEL
Pursuant to the Agency Agreement between OAK ASSOCIATES FUNDS (the "Fund")
and DST (the "Agreement"), the Fund authorizes the following personnel of the
Fund or its agents to provide instructions to DST, and receive inquiries from
DST in connection with the Agreement:
NAME TITLE
William E. White Vice President and Assistant Secretary
- ------------------------------- --------------------------------------
Robert J. Dellacroce Controller and Chief Financial Officer
- ------------------------------- --------------------------------------
Alecia McNeil SEI Funds Accounting Manager
- ------------------------------- --------------------------------------
Michael Davisson SEI Account Director
- ------------------------------- --------------------------------------
Joseph M. O'Donnell Vice President and Assistant Secretary
- ------------------------------- --------------------------------------
Laurie V. Brooks SEI Mutual Fund Manager
- ------------------------------- --------------------------------------
This Exhibit may be revised by the Fund by providing DST with a substitute
Exhibit C. Any such substitute Exhibit C shall become effective twenty-four
(24) hours after DST's receipt of the document and shall be incorporated into
the Agreement.
ACKNOWLEDGMENT OF RECEIPT:
DST SYSTEMS, INC. OAK ASSOCIATES FUNDS
By: /s/ Jonathan Boehm By: /s/ Bill White
- ------------------------------- --------------------------------------
Title: General Vice President Title: Assistant Secretary
- ------------------------------- --------------------------------------
Date: 2/27/98 Date: 2/27/98
- ------------------------------- --------------------------------------
38
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated November 20, 1998, on the October 31, 1998 financial statements
of the Oak Associates Funds, incorporated by reference in Post-Effective
Amendment No. 4 to the Registration Statement on Form N-1A of the Oak
Associates Funds (Registration Statement No. 333-42115), and to all
references to our firm included in or made part of this Registration
Statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania,
February 24, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001050918
<NAME> OAK ASSOCIATES FUNDS
<SERIES>
<NUMBER> 010
<NAME> WHITE OAK GROWTH STOCK PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 745400
<INVESTMENTS-AT-VALUE> 824499
<RECEIVABLES> 1188
<ASSETS-OTHER> 5596
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 831283
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1064
<TOTAL-LIABILITIES> 1064
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 757077
<SHARES-COMMON-STOCK> 24389
<SHARES-COMMON-PRIOR> 12371
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (5957)
<ACCUM-APPREC-OR-DEPREC> 79099
<NET-ASSETS> 830219
<DIVIDEND-INCOME> 3465
<INTEREST-INCOME> 1234
<OTHER-INCOME> 0
<EXPENSES-NET> (6025)
<NET-INVESTMENT-INCOME> (1326)
<REALIZED-GAINS-CURRENT> (5957)
<APPREC-INCREASE-CURRENT> 56368
<NET-CHANGE-FROM-OPS> 49085
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (848)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20843
<NUMBER-OF-SHARES-REDEEMED> (8854)
<SHARES-REINVESTED> 29
<NET-CHANGE-IN-ASSETS> 467025
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 846
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4460
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6435
<AVERAGE-NET-ASSETS> 602684
<PER-SHARE-NAV-BEGIN> 29.29
<PER-SHARE-NII> (.05)
<PER-SHARE-GAIN-APPREC> 4.86
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.06)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 34.04
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001050918
<NAME> OAK ASSOCIATES FUNDS
<SERIES>
<NUMBER> 020
<NAME> PIN OAK AGGRESSIVE STOCK PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> OCT-31-1998
<INVESTMENTS-AT-COST> 29340
<INVESTMENTS-AT-VALUE> 42366
<RECEIVABLES> 496
<ASSETS-OTHER> 539
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43401
<PAYABLE-FOR-SECURITIES> 1926
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 1957
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28621
<SHARES-COMMON-STOCK> 1887
<SHARES-COMMON-PRIOR> 1628
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (203)
<ACCUM-APPREC-OR-DEPREC> 13026
<NET-ASSETS> 41444
<DIVIDEND-INCOME> 28
<INTEREST-INCOME> 47
<OTHER-INCOME> 0
<EXPENSES-NET> (352)
<NET-INVESTMENT-INCOME> (277)
<REALIZED-GAINS-CURRENT> 1175
<APPREC-INCREASE-CURRENT> 2886
<NET-CHANGE-FROM-OPS> 3784
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1173
<NUMBER-OF-SHARES-REDEEMED> (914)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9763
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1378)
<GROSS-ADVISORY-FEES> 260
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 401
<AVERAGE-NET-ASSETS> 35156
<PER-SHARE-NAV-BEGIN> 19.46
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> 2.65
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.96
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
