<PAGE>
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OAK HALL`r' EQUITY FUND
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2 Portland Square, Portland, ME 04101
Shareholder Inquiries:
Forum Financial Corp. [OAK HALL`r' EQUITY FUND LOGO]
P.O. Box 446, Portland, Maine 04112
207-879-0001
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SEMI-ANNUAL REPORT February 20, 1996
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Dear Shareholder:
For the 1995 calendar year, Oak Hall'r' Equity Fund rose 9.3% in value. The Fund
trailed the market averages for the past calendar year primarily because of our
concentration in precious metals and energy. This strategy began to pay off in
the latter part of the year, however. For the six month period ending December
31, 1995, Oak Hall'r' Equity Fund had a total return of 10.41%. This represents
a total return of 21.72% on an annualized basis.
I am happy to say that we are off to an excellent start in 1996, with a return
of 8.9% since the beginning of the year. The gold and energy groups in which we
have concentrated are outperforming such market indices as the S&P 500 and the
Dow Jones Industrial Average.
Our investment thesis on gold has been validated (finally) with gold trading
comfortably above $400/oz. While corrections from this level are always
possible, we believe that the strong fundamentals point to higher prices ahead.
The enclosed note on gold explains these fundamentals in detail. Among the more
important considerations are declining interest rates in the US, Japan and
Germany which make gold a more attractive investment, and the continuing strong
supply and demand fundamentals -- demand exceeds mining supply by anywhere from
1/3 to 1/2. In other words, the market has become hooked on supply from such
unpredictable or unsustainable sources as central bank and producer forward
selling. When these dry up as they inevitably must, gold prices will rise
sharply.
Oil and gas, another disappointing performer in 1995, has come to life in the
early days of 1996. Very strong commodity fundamentals resulted in a sharp
increase in natural gas prices over the last 30 days. We do not see a repeat of
the depressed prices that prevailed in 1995. Consolidation among the drilling
and service companies means shrinking capacity to explore for new reserves just
as industry exploration expenditures are rising strongly.
Our contrarian investment approach is to invest in out of favor securities or
sectors before most others see the same attraction as we do. We believe that on
a risk adjusted basis, our returns will prove to be satisfactory over time.
Since its inception on July 13, 1992, the Fund has generated a respectable
average annual total return of 11.9%.
We appreciate your support and look forward to a prosperous 1996.
Sincerely,
John C. Hathaway
President and Chief Investment Officer
Oak Hall'r' Capital Advisors, L.P.
Past Performance is no guarantee of future results. The Fund's annualized total
return assumes reinvestment of all dividend and capital gain distributions.
During this period some of the Fund's fees were waived or expenses reimbursed
otherwise total return would have been lower. Investment return and principal
value will fluctuate so that, when redeemed, and investor's shares may be worth
more or less than their original cost. Forum Financial Services, Inc.,
Distributor.
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OAK HALL'r' EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
COMMON STOCK (91.9%)
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLIES, & MOBILE
HOME DEALERS (0.1%)
700 Waban, Inc.*..................... $ 13,125
-----------
BUSINESS SERVICES (6.4%)
8,200 MacNeal-Schwendler Corporation... 131,200
15,800 Metromedia International Group,
Inc.*.......................... 221,200
16,700 Primark Corporation*............. 501,000
-----------
853,400
-----------
COAL MINING (3.0%)
27,200 Addington Resources, Inc.*....... 397,800
-----------
ELECTRIC, GAS, & SANITARY SERVICES (1.0%)
5,200 Petroleum Geo-Services A/S,
ADR*........................... 130,000
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT (1.5%)
10,000 Blonder Tongue Laboratories*..... 97,500
37,000 Quality Dino Entertainment,
Ltd*........................... 106,375
-----------
203,875
-----------
FABRICATED METAL PRODUCTS (7.0%)
9,400 Alliant Techsystems, Inc.*....... 475,875
17,600 Newell Company................... 455,400
-----------
931,275
-----------
FOOD & KINDRED PRODUCTS (1.9%)
100,000 EPL Technologies, Inc.*`D'....... 258,346
-----------
FOREIGN DEPOSITORY INSTITUTIONS (2.9%)
46 Bank Fuer International
Zahlungsausgleich, Registered
Shares......................... 387,780
-----------
FURNITURE & FIXTURES (1.8%)
7,800 Herman Miller, Inc............... 234,000
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
HEALTH CARE (0.4%)
2,800 Mariner Health Group, Inc.*...... $ 46,900
-----------
HOLDING & OTHER INVESTMENT OFFICES (4.4%)
17,900 Allied Capital Commercial
Corporation.................... 353,525
34,800 Noel Group, Inc.*................ 226,200
5 Presidio Capital Corporation..... 187
-----------
579,912
-----------
INDUSTRIAL & COMMERCIAL MACHINERY (2.1%)
17,000 Wang Laboratories, Inc.*......... 282,625
-----------
INSURANCE AGENTS, BROKERS, & SERVICES (0.1%)
300 E.W. Blanch Holdings, Inc........ 7,012
-----------
INSURANCE CARRIERS (1.0%)
6,100 U.S. Facilites Corporation....... 130,387
-----------
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE (1.5%)
6,500 Champion Enterprises, Inc........ 200,687
2,575 Ehlco Liquidating Trust*......... 386
-----------
201,073
-----------
METAL MINING (16.3%)
59,000 Agnico-Eagle Mines, Ltd.......... 744,875
148,100 Dayton Mining Corporation*....... 592,400
3,900 Firstmiss Gold, Inc.*............ 86,775
185 Freeport McMoran Copper & Gold,
Inc............................ 5,180
18,115 Homestake Mining Company......... 283,046
21,600 Pegasus Gold, Inc.*.............. 299,700
12,000 Santa Fe Pacific Gold
Corporation.................... 145,500
-----------
2,157,476
-----------
MISCELLANEOUS MANUFACTURING INDUSTRIES (1.9%)
15,700 WMS Industries, Inc.*............ 257,087
-----------
MISCELLANEOUS RETAIL (1.7%)
71,500 Ongard Systems, Inc.*`D'......... 230,365
-----------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
2
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OAK HALL'r' EQUITY FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1995
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<TABLE>
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
OIL & GAS EXTRACTION (13.1%)
<C> <S> <C>
99,172 Forest Oil Corporation........... $ 278,923
37,215 Global Natural Resources,
Inc.*.......................... 390,758
9,500 Louisiana Land & Exploration
Company........................ 407,313
60,100 Miramar Mining Corporation*...... 292,988
50,000 Southern Pacific Petroleum,
ADR*........................... 73,435
21,300 Texas Meridian Resources
Corporation*................... 290,213
-----------
1,733,630
-----------
PRINTING, PUBLISHING, & ALLIED INDUSTRIES (1.5%)
5,100 Reynolds & Reynolds.............. 198,263
-----------
SAVINGS INSTITUTION, FEDERALLY CHARTERED (3.6%)
13,400 Dime Bancorp, Inc.*.............. 155,775
18,700 Glendale Federal Bank, FSB*...... 327,250
-----------
483,025
-----------
TRANSPORTATION EQUIPMENT (0.8%)
1,800 General Dynamics Corporation..... 106,425
-----------
WATER TRANSPORTATION (2.7%)
11,200 Tidewater, Inc................... 352,800
-----------
<CAPTION>
SECURITY
SHARES DESCRIPTION VALUE
- ----------- --------------------------------- -----------
<C> <S> <C>
WHOLESALE TRADE-DURABLE GOODS (10.9%)
262,340 Cedar Group, Inc.*............... $ 1,442,870
-----------
WHOLESALE TRADE-NONDURABLE GOODS (4.3%)
11,150 McKesson Corporation............. 564,470
-----------
TOTAL COMMON STOCK (COST $10,710,435).......... $12,183,921
-----------
WARRANTS (0.0%)
METAL MINING (0.0%)
43,750 Carson Gold Corporation*`D'...... 160
-----------
TOTAL WARRANTS (COST $0)....................... $ 160
-----------
SHORT-TERM HOLDINGS (8.1%)
633,215 1784 U.S. Treasury Money Market
Fund........................... 633,215
442,585 Forum Daily Assets Treasury
Fund........................... 442,585
-----------
TOTAL SHORT-TERM HOLDINGS (COST $1,075,800).... $ 1,075,800
-----------
TOTAL INVESTMENTS (100.0%) (COST
$11,786,235)................................. $13,259,881
-----------
</TABLE>
* Non-income producing securities
`D' Restricted securities
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
3
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OAK HALL'r' EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
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<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $11,786,235)........................................................ $13,259,881
Interest, dividends and other receivables....................................................... 934,689
Organization costs.............................................................................. 16,732
-----------
Total assets......................................................................................... 14,211,302
-----------
LIABILITIES:
Payable for securities purchased................................................................ 263,235
Payable for shares redeemed..................................................................... 113,970
Accrued advisory fees........................................................................... 8,916
Accrued management fees......................................................................... 3,081
Accrued fees and other expenses................................................................. 70,899
-----------
Total liabilities.................................................................................... 460,101
-----------
NET ASSETS........................................................................................... $13,751,201
-----------
-----------
COMPONENTS OF NET ASSETS:
Capital paid in................................................................................. $16,579,345
Net investment loss............................................................................. (79,827)
Net unrealized appreciation..................................................................... 1,473,646
Accumulated net realized losses................................................................. (4,221,963)
-----------
NET ASSETS........................................................................................... $13,751,201
-----------
-----------
SHARES OUTSTANDING................................................................................... 1,099,579
-----------
-----------
NET ASSET VALUE PER SHARE............................................................................ $ 12.51
-----------
-----------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
4
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OAK HALL'r' EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend......................................................................................... $ 61,213
Interest......................................................................................... 20,045
----------
Total income.......................................................................................... 81,258
----------
EXPENSES:
Advisory......................................................................................... 60,321
Administration................................................................................... 20,107
Distribution..................................................................................... 414
Transfer agency.................................................................................. 13,941
Custodian........................................................................................ 6,642
Accounting....................................................................................... 19,000
Professional fees................................................................................ 12,500
Directors........................................................................................ 2,336
Directors' and officers' insurance............................................................... 16,819
Legal............................................................................................ 10,428
Amortization of organization costs............................................................... 5,577
Filing........................................................................................... 9,813
Other............................................................................................ 3,302
----------
Total expenses........................................................................................ 181,200
Advisory fees waived............................................................................. (20,115)
----------
Net expenses.......................................................................................... 161,085
NET INVESTMENT LOSS................................................................................... (79,827)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions..................................................... 461,913
Net change in unrealized appreciation on investments............................................. 1,249,651
----------
NET GAIN ON INVESTMENTS............................................................................... 1,711,564
----------
INCREASE IN NET ASSETS FROM OPERATIONS................................................................ $1,631,737
----------
----------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
5
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OAK HALL'r' EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
AND FOR THE YEAR ENDED JUNE 30, 1995
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<TABLE>
<CAPTION>
AMOUNT SHARES
----------- ----------
<S> <C> <C>
NET ASSETS -- June 30, 1994...................................................... $35,469,525
OPERATIONS:
Net investment loss......................................................... (59,338)
Net realized gain on investments and written option transactions............ (4,889,942)
Net change in unrealized depreciation of investments, written option
transactions, and short sale.............................................. 4,364,265
-----------
(585,015)
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net realized capital gain................................................... (1,944,286)
-----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares.............................................................. 1,314,380 106,848
Reinvested dividends........................................................ 1,917,656 168,511
----------- ----------
3,232,036 275,359
Shares repurchased.......................................................... (19,773,107) (1,655,543)
----------- ----------
(16,541,071) (1,380,184)
----------- ----------
----------
NET ASSETS -- June 30, 1995...................................................... $16,399,153
-----------
OPERATIONS:
Net investment loss......................................................... (79,827)
Net realized gain on investment transactions................................ 461,913
Net change in unrealized depreciation of investments........................ 1,249,651
-----------
1,631,737
-----------
CAPITAL SHARE TRANSACTIONS:
Sale of shares.............................................................. 2,258,979 178,959
Shares repurchased.......................................................... (6,538,668) (526,576)
----------- ----------
(4,279,689) (347,617)
----------- ----------
NET ASSETS -- December 31, 1995.................................................. $13,751,201
-----------
-----------
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
6
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OAK HALL'r' EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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NOTE 1. SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Stone Bridge Funds, Inc. (the 'Company') is registered as an open-end management
investment company. The Company consists of two active investment portfolios.
Included in this report is Oak Hall'r' Equity Fund (the 'Fund'), a diversified
portfolio that commenced operations on July 13, 1992.
A) SECURITY VALUATION
The Company determines the net asset value per share of the Fund as of
4:00 p.m., Eastern time, on each business day by dividing the value of
the Fund's net assets by the number of shares outstanding at the time the
determination is made. Securities, other than short-term, held by the
Fund for which market quotations are readily available are valued using
the last reported sales price provided by independent pricing services.
If no sale is reported, the mean of the last bid and ask price is used.
If no mean price is available, the last bid price is used. In the absence
of readily available market quotations, securities are valued at fair
value determined by the Company's Board of Directors. Securities with
maturity of sixty days or less are valued at amortized cost.
B) PURCHASES AND REDEMPTIONS OF SHARES
Purchases and redemptions of the Fund's shares will be effected at the
time of determination of the next net asset value following the receipt
of any purchase or redemption order.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Realized gains and losses on investments sold are recorded on the basis
of specific identification. Interest income is accrued as earned and
dividend income is recorded on ex-date.
D) DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income and net capital gains, if any,
are declared and paid at least annually.
E) ORGANIZATION COSTS
The costs incurred by the Fund in connection with its organization have
been capitalized and are being amortized on a straight-line basis over a
five year period beginning on the commencement of the Fund's operations.
F) OPTION WRITING
When the Fund writes an option, an amount equal to the premium received
by the Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums received from
writing options which expire unexercised are treated by the Fund on the
expiration date as realized gains from written option transactions. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as
a realized gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security in determining whether the Fund has realized a gain
or loss. If a put option is exercised, the premium reduces the cost basis
of the securities purchased by the Fund. The Fund as writer of an option
may have no control over whether the underlying securities may be sold
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STONE BRIDGE FUNDS, INC.
7
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OAK HALL'r' EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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(called) or purchased (put) and as a result bears the market risk of an
unfavorable change in the price of the security underlying the written
option.
G) FEDERAL TAXES
No provision for Federal income taxes is required because the Fund has
qualified and intends to continue to qualify as a regulated investment
company under the Internal Revenue Code. The Fund distributes all of its
taxable income to its shareholders.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AND OTHER TRANSACTIONS
WITH AFFILIATES
The investment adviser to the Fund is Oak Hall'r' Capital Advisors, Inc. (the
'Adviser'). Pursuant to an Investment Advisory Agreement, the Adviser receives
an advisory fee from the Fund at an annual rate of 0.75% of the average daily
net assets of the Fund. The Adviser has agreed to reimburse the Fund for certain
expenses that exceed the limits applicable to the Fund under the laws of any
state.
The administrator and distributor of the Fund is Forum Financial Services, Inc.
('Forum'). Pursuant to an Administration and Distribution Agreement, Forum
receives a fee from the Fund at an annual rate of 0.25% of the average daily net
assets of the Fund. Forum may delegate to other persons responsibility for
certain services under this Agreement. In addition, certain legal expenses of
$10,428 were charged to the Fund by Forum.
Forum Financial Corp. ('FFC') serves as the Fund's transfer agent and dividend
disbursing agent, and fund accountant. For its services in these capacities, FFC
receives $12,000 plus certain shareholder account fees and $36,000 plus certain
adjustments based on the type and volume of portfolio transactions,
respectively. Forum and FFC are each controlled by their president, John Y.
Keffer, Chairman and President of the Company.
During the period ended December 31, 1995, the Fund placed a portion of its
brokerage transactions through American Securities Corporation, an affiliate of
the Adviser, for which brokerage commissions of $2,125 were paid.
NOTE 3. DISTRIBUTION PLAN
The Company has adopted a Distribution Plan (the 'Plan') pursuant to Rule 12b-1
under the Investment Company Act of 1940 with respect to the Fund. Under the
Plan, the Fund may reimburse Forum for the distribution expenses incurred by
Forum on behalf of the Fund. The Fund may not reimburse Forum for any
distribution expenses in any fiscal year of the Fund in excess of 0.20% of the
average daily net assets of the Fund.
NOTE 4. PURCHASES AND SALES OF SECURITIES
Purchases and sales (excluding short-term investments and written options) of
securities during the period ended December 31, 1995, amounted to $6,659,835 and
$11,844,795, respectively. Unrealized appreciation and depreciation as of
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STONE BRIDGE FUNDS, INC.
8
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OAK HALL'r' EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
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December 31, 1995, were $1,834,781 and $361,135, respectively. The cost of
investments for Federal income tax purposes at December 31, 1995, is the same as
for financial reporting purposes.
NOTE 5. CAPITAL SHARE TRANSACTIONS
The Company has 20 billion shares of $0.001 par value stock authorized of which
2 billion is allocated to the Fund.
NOTE 6. RESTRICTED SECURITIES
At December 31, 1995 the Fund held investments that were purchased through
private offerings and cannot be resold without prior registration under the
Securities Act of 1933 or pursuant to an exemption therefrom. The acquisition
dates, cost, fair values, and their percentage of total investments, at December
31, 1995, are as follows:
<TABLE>
<CAPTION>
ACQUISITION FAIR % OF TOTAL
INVESTMENTS DATE COST VALUE INVESTMENTS
- ------------------------------------------------------- ------------------- -------- -------- ----------
<S> <C> <C> <C> <C>
Carson Gold Warrants................................... December 13, 1994 $ 0 $ 160 0.0%
EPL Technologies....................................... September 21, 1995 200,000 258,346 1.9
Ongard Systems, Inc.................................... September 29, 1995 250,250 230,366 1.7
-------- -------- ---
Total.............................................. $450,250 $488,872 3.6%
-------- -------- ---
-------- -------- ---
</TABLE>
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STONE BRIDGE FUNDS, INC.
9
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OAK HALL'r' EQUITY FUND
FINANCIAL HIGHLIGHTS
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SELECTED DATA FOR A SHARE OUTSTANDING
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, JUNE 30, JUNE 30, JUNE 30,
1995 1995 1994 1993(C)
------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Beginning Net Asset Value Per Share.................. $ 11.33 $ 12.55 $ 14.30 $ 10.00
------------- ---------- ---------- ------------
Net Investment Loss.................................. (0.07) (0.03) (0.09) --
Net Realized and Unrealized Gain/(Loss) on
Investments........................................ 1.25 (0.10) (0.52) 4.31
Distributions from Net Realized Gains................ -- (1.09) (1.14) (0.01)
------------- ---------- ---------- ------------
Ending Net Asset Value Per Share..................... $ 12.51 $ 11.33 $ 12.55 $ 14.30
------------- ---------- ---------- ------------
------------- ---------- ---------- ------------
Ratios to Average Net Assets:
Expenses (a).................................... 2.00% (b) 2.00% 2.01% 1.23% (b)
Net investment loss............................. (0.99%)(b) (.23%) (.96%) (.07%)(b)
Total Return......................................... 10.41% (1.07%) (5.14%) 45.12% (b)
Portfolio Turnover Rate.............................. 43.38% 115.05% 168.61% 187.94%
Net Assets at End of Period (000's omitted).......... $13,751 $ 16,399 $ 35,470 $ 12,581
(a) During the period, various fees and expenses were
waived and reimbursed, respectively. Had such
waiver and reimbursement not occurred, the ratio
of expenses to average net assets would have
been: 2.25% (b) 2.17% 5.91% (b)
(b) Annualized.
(c) For the period July 13, 1992 (commencement of
operations) through June 30, 1993.
</TABLE>
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SEE NOTES TO FINANCIAL STATEMENTS STONE BRIDGE FUNDS, INC.
10
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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INVESTMENT ADVISER
Oak Hall'r' Capital Advisors, Inc.
122 East 42nd Street -- 24th Floor
New York, New York 10168
ADMINISTRATOR
Forum Financial Services, Inc.
2 Portland Square
Portland, ME 04101
DIRECTORS
John Y. Keffer
Joseph J. Nicholson
David B. Pinter
Max J. Schwartz
Seymour G. Siegel
OFFICERS
John Y. Keffer, Chairman and President
Max Berueffy, Vice President and Secretary
Michael D. Martins, Treasurer and Assistant
Secretary
Lynn A. Young, Assistant Treasurer
David I. Goldstein, Assistant Secretary
This Report is authorized for distribution only to
shareholders and to others who have received a copy of
the Oak Hall'r' Equity Fund Prospectus.
OAK HALL'r' EQUITY FUND
SEMI-ANNUAL REPORT
December 31, 1995
[OAK HALL`r' EQUITY FUND LOGO]
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as 'r'
The dagger symbol shall be expressed as `D'
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