As filed with the Securities and Exchange Commission on December 26, 1995
Securities Act Registration No. 33-70590
Investment Company Act Registration No. 811-8088
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 5 [X]
O.R.I. FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
233 N. Michigan Avenue, Suite 1807 60601
Chicago, Illinois (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (312) 616-1040
Samuel Wegbreit
O.R.I. Funds, Inc.
233 N. Michigan Avenue, Suite 1807
Chicago, Illinois 60601
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Registrant has registered an indefinite amount of securities pursuant
to Rule 24f-2 under the Securities Act of 1933; the Registrant's Rule 24f-2
Notice for the year ending November 30, 1995 will be filed on or before
January 30, 1996.
It is proposed that this filing will become effective (check
appropriate box).
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on January 1, 1996 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on January 1, 1996, pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and B of Form N-1A).
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
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PART A - INFORMATION REQUIRED IN PROSPECTUS
-------------------------------------------
1. Cover Page Cover Page
2. Synopsis Summary; Summary of Fund Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Fund Organization; Investment
Objective and Policies; Investment
Techniques and Risks; Investment
Restrictions
5. Management of the Fund Management; Fund Expenses
5A. Management's Discussion of Fund
Performance Fund Performance
6. Capital Stock and Other Securities Income Dividends, Capital Gains
Distributions and Tax Status; Fund
Organization
7. Purchase of Securities Being
Offered How to Purchase Fund Shares;
Determination of Net Asset Value;
Distribution Plan
8. Redemption or Repurchase How to Redeem Shares; Calculation
of Net Asset Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Included in Prospectus under the
heading Fund Organization
13. Investment Objectives and Policies Investment Restrictions; Investment
Techniques and Risks
14. Management of the Fund Directors and Officers
<PAGE>
15. Control Persons and Principal Principal Shareholders; Directors
Holders of Securities and Officers; Investment Advisor
and Underwriter
16. Investment Advisory and Other Investment Advisor and Underwriter;
Services Distribution Plan; Management (in
Prospectus); Custodian; Transfer
Agent and Dividend-Disbursing
Agent; Independent Accountants
17. Brokerage Allocation and Other Portfolio Transactions and
Practices Brokerage
18. Capital Stock and Other Securities Included in Prospectus under the
heading Fund Organization
19. Purchase, Redemption and Pricing Included in Prospectus under the
of Securities Being Offered headings How to Purchase Fund
Shares; Determination of Net Asset
Value; How to Redeem Shares; and in
the Statement of Additional
Information under the heading
Investment Advisor and Underwriter
20. Tax Status Included in Prospectus under the
heading Income Dividends, Capital
Gains Distributions and Tax Status
21. Underwriters Investment Advisor and Underwriter
22. Calculations of Performance Data Performance Information
23. Financial Statements Financial Statements
- ---------------------------------
*Answer negative or inapplicable
<PAGE>
PROSPECTUS
January 1, 1996
OAK RIDGE INVESTMENTS, INC.
Presents
O.R.I. Growth Fund
a Series of
O.R.I. Funds, Inc.
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-407-7298
The O.R.I. Growth Fund (the "Fund") is a series of O.R.I. Funds, Inc. (the
"Corporation"), an open-end, diversified, management investment company
commonly referred to as a mutual fund. The investment objective of the Fund
is to seek capital appreciation. The Fund will seek, under normal market
conditions, to achieve its investment objective by investing its assets
primarily in equity securities of domestic companies. The Fund may invest in
all types of equity securities that, in the opinion of the Fund's manager,
Oak Ridge Investments, Inc. ("Oak Ridge"), have the potential to appreciate
faster than the general market.
This Prospectus sets forth concisely the information that you should be aware
of prior to investing in the Fund. Please read this Prospectus carefully and
retain it for future reference. Additional information regarding the Fund is
included in the Statement of Additional Information dated January 1, 1996,
which has been filed with the Securities and Exchange Commission and is
incorporated in this Prospectus by reference. A copy of the Fund's Statement
of Additional Information is available without charge by writing to the Fund
at the address listed above or by calling 1-800-407-7298.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY OF FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . 5
Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FUND PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 8
INVESTMENT TECHNIQUES AND RISKS . . . . . . . . . . . . . . . . . . . . . 9
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Short-Term Fixed Income Securities . . . . . . . . . . . . . . . . 9
Lending of Portfolio Securities . . . . . . . . . . . . . . . . . . 9
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . 10
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
HOW TO PURCHASE FUND SHARES . . . . . . . . . . . . . . . . . . . . . . . 11
Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Purchases at Net Asset Value . . . . . . . . . . . . . . . . . . . 12
Initial Investment - Minimum $2,000 . . . . . . . . . . . . . . . . 12
Automatic Investment Plan - Minimum $100 . . . . . . . . . . . . . 13
Subsequent Investments . . . . . . . . . . . . . . . . . . . . . . 14
Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . 14
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . 14
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 14
In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Written Redemption . . . . . . . . . . . . . . . . . . . . . . . . 15
Telephone Redemption . . . . . . . . . . . . . . . . . . . . . . . 15
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . . . 16
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TAX SHELTERED RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . . 17
Individual Retirement Account ("IRA") . . . . . . . . . . . . . . . 17
401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . 17
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT . . . . . 17
<PAGE>
FUND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CUSTODIAN, TRANSFER AGENT, AND DISTRIBUTOR . . . . . . . . . . . . . . . 19
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 19
COMPARISON OF INVESTMENT RESULTS . . . . . . . . . . . . . . . . . . . . 19
--------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and the
Statement of Additional Information, and if given or made, such information
or representations may not be relied upon as having been authorized by the
Fund. This prospectus does not constitute an offer to sell securities in any
state to any person to whom it is unlawful to make such offer in such state.
--------------------
<PAGE>
SUMMARY
-------
Investment Objective
- --------------------
The investment objective of the Fund is to seek capital appreciation.
The Fund will seek to achieve its investment objective by investing its
assets primarily in equity securities of domestic companies that, in the
opinion of Oak Ridge, have the potential to appreciate faster than the
general market. The Fund's investments are subject to market risk and the
value of its shares will fluctuate with changing market valuations of its
portfolio holdings. See "INVESTMENT OBJECTIVE AND POLICIES" and "INVESTMENT
TECHNIQUES AND RISKS."
Investment Advisor
- ------------------
Oak Ridge is the investment advisor to the Fund. Oak Ridge was
organized in 1989 and acts as the investment advisor to individual and
institutional clients with investment portfolios of approximately $95
million. See "MANAGEMENT."
Purchase and Redemptions
- ------------------------
Shares of the Fund are offered at net asset value per share plus a
maximum initial sales charge of 4.25% of the offering price. This front-end
sales load on the purchase of Fund shares is imposed on persons who first
become shareholders of the Fund on or after January 1, 1996. Accordingly,
existing shareholders as of December 31, 1995 are not subject to this front-
end sales load on additional purchases of Fund shares. Certain other
exceptions may also apply. See "HOW TO PURCHASE FUND SHARES." In addition,
the Fund has adopted a distribution plan under Rule 12b-1 of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), for shares
sold on or after January 1, 1996 (the "Plan"), which authorizes the Fund to
pay a distribution fee of up to 0.25% per annum of the Fund's average daily
net assets. The actual dollar amount of distribution fees paid in current
and future years will depend on the amount of the Fund's assets that become
subject to such fees on or after January 1, 1996. See "DISTRIBUTION PLAN."
The minimum initial investment required by the Fund is $2,000. The
minimum subsequent investment is $100, if made by mail, or $1,000, if made by
wire. The minimum initial investment for individual retirement accounts is
$1,000, and for investors using the Automatic Investment Plan, the minimum
initial investment is $100. These minimums may be changed or waived at any
time at the discretion of the Fund. See "HOW TO PURCHASE FUND SHARES."
Shares may be redeemed using either written or telephone redemption
procedures at net asset value per share without the imposition of any
redemption charges. See "HOW TO REDEEM SHARES."
Shareholder Services
- --------------------
Questions regarding the Fund may be directed to the Fund at the address
and telephone number on the front page of this Prospectus.
<PAGE>
SUMMARY OF FUND EXPENSES
------------------------
The purpose of the following table is to assist an investor in
understanding the various costs and expenses that an investor in the Fund
will bear directly (shareholder transaction expenses) and indirectly (annual
fund operating expenses). The figures presented have been restated to
reflect current sales load and Rule 12b-1 fees.
Fee Table
Shareholder Transaction Expenses (1)
Maximum Sales Load Imposed on Purchases 4.25%(2)
(as a percentage of offering price)
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load Imposed on Redemptions NONE
Redemption Fees NONE
Annual Fund Operating Expenses (after waivers or reimbursements) (as a
percentage of average net assets)
Management Fee 1.00%
Rule 12b-1 (Distribution Plan) Fees 0.25%(3),(4)
Other Expenses (net of reimbursement) 0.75%(5)
-----
TOTAL FUND OPERATING EXPENSES 2.00%(5)
(after waivers or reimbursements) =====
- --------------------
(1) In addition to the shareholder transaction expenses listed below,
shareholders who chose to purchase and/or redeem shares by wire may be
charged a $7.50 service fee. See "How to Purchase Fund Shares -
Initial Investment - Minimum $2,000" and "How to Redeem Shares -
Written Redemption."
(2) The sales load illustrated is the maximum rate applicable to purchases
of Fund shares by new shareholders on or after January 1, 1996.
Existing shareholders as of December 31, 1995 as well as certain other
investors are exempt from having to pay this sales load, as described
more fully under "HOW TO PURCHASE FUND SHARES."
(3) The Rule 12b-1 distribution plan adopted by the Fund (the "Plan") is
effective for shares of the Fund sold on or after January 1, 1996. See
"DISTRIBUTION PLAN" for more details.
(4) Consistent with the National Association of Securities Dealers, Inc.'s
(the "NASD") rules, it is possible that the Rule 12b-1 fees could cause
long-term investors of the Fund to pay more than the economic
equivalent of the maximum front-end sales charges permitted under those
same rules.
(5) The Fund's investment advisor, Oak Ridge, has agreed to waive its
management fee and/or reimburse the Fund's operating expenses to the
extent necessary to ensure that the Fund's Total Operating Expenses do
not exceed 2.00% of the Fund's average daily net assets. "Other
Expenses" are presented net of reimbursement. Absent these
reimbursements, Other Expenses and Total Fund Operating Expenses for
the period ended November 30, 1995 would have been 5.5% and 6.5%,
respectively. The Fund's management fee is higher than that paid by
other similar investment companies. For additional information
concerning management fees and operating expenses, see "MANAGEMENT."
<PAGE>
Example
You would pay the following expenses on a $1,000 investment, assuming (i) 5%
annual return, and (ii) redemption at the end of each time period.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$63 $104 $148 $269
The Example is based on the Total Operating Expenses specified in the
table above. In addition, the maximum front-end sales load is reflected in
the Example. The amounts in the Example may increase absent the waivers or
reimbursements. Please remember that the Example should not be considered
representative of past or future expenses and that actual expenses may be
greater or lesser than those shown. The assumption in the Example of a 5%
annual rate of return is required by regulations of the Securities and
Exchange Commission ("SEC") applicable to all mutual funds. This return is
hypothetical and should not be considered representative of past or future
performance of the Fund.
FINANCIAL HIGHLIGHTS
--------------------
The following table of selected financial information has been audited
by Price Waterhouse LLP, independent accountants, for the periods indicated
in their report which appears in the Annual Report of the Fund for the period
ended November 30, 1995. The following information should be read in
conjunction with the financial statements and related notes included in the
Fund's 1995 Annual Report, a copy of which may be obtained without charge by
calling or writing to the Fund.
January 3, 1994
(commencement
Year Ended of operations)
November 30, 1995 to November 30, 1994
----------------- --------------------
Per Share Operating Performance
Net asset value, beginning of
period $10.48 $10.00
------ ------
Income from investment operations:
Net investment (loss) income (0.13) (0.07)
Net realized and unrealized
gains on investments 4.00 0.55
------ ------
Total from investment operations 3.87 0.48
------ ------
Less distributions:
Dividends from capital gains (0.03) -
------ ------
Net Asset value, end of period $14.32 $10.48
====== ======
Total Return 37.0%(1) 4.8%(2)
<PAGE>
Ratios/Supplemental Data
Net assets, end of period $4,182,246 $2,708,546
Ratio of expenses to average net
assets (3),(4) 2.0% 2.0%
Ratio of net investment income
(loss) to average net assets(3),(4) (1.3%) (1.1%)
Portfolio turnover rate 109% 80%
- ------------------
(1) Does not reflect the effect of the 4.25% sales charge.
(2) Not annualized for the period from January 3, 1994 to November 30, 1994.
(3) Net of reimbursements and waivers. Without reimbursements and waivers,
the ratio of net expenses to average net assets would have been 6.5% and
9.0%, and the ratio of net investment loss to average net assets would
have been (5.8%) and (8.1)% during the period ended November 30, 1995
and from January 3, 1994 to November 30, 1994, respectively.
(4) Annualized for the period ended November 30, 1994.
FUND PERFORMANCE
----------------
Information regarding the performance of the Fund is contained in the
Fund's 1995 Annual Report, a copy of which may be obtained without charge by
calling or writing to the Fund.
INVESTMENT OBJECTIVE AND POLICIES
---------------------------------
The Fund is the first and presently, the only series of the Corporation,
an open-end, diversified management company. The Fund's investment objective
is to seek capital appreciation. The generation of investment income is not
an investment objective and, therefore, any income earned by the Fund will be
incidental to the Fund's objective. The Fund will seek, under normal market
conditions, to achieve its investment objective by investing its assets
primarily in equity securities of domestic companies, which include but are
not limited to common stocks; preferred stocks; warrants to purchase common
stocks or preferred stocks; and securities convertible into common or
preferred stocks, such as convertible bonds and debentures. The Fund will
limit its investment in each of the following to 5% of its net assets:
preferred stock; warrants to purchase common stocks or preferred stocks; and
securities convertible into common or preferred stocks. The Fund may invest
in all types of equity securities that, in the opinion of Oak Ridge, have the
potential to appreciate faster than the general market. In addition, the
Fund may invest up to 5% of its net assets in "Investment Grade Debt
Securities," as defined below. The Fund may, when Oak Ridge deems a more
conservative approach is warranted, invest up to 35% of its total assets in
short-term, fixed income securities (commonly referred to as cash
equivalents) as a temporary defensive measure or pending investment or
reinvestment. Since the Fund's assets will, under normal market conditions,
consist primarily of equity securities, the Fund's net asset value may be
subject to greater principal fluctuation than a portfolio containing a
substantial amount of fixed income securities.
When making investment decisions, Oak Ridge utilizes information and
analyses from numerous sources regarding a company's sales and earnings
growth; earnings power, trends and predictability; industry, economic and
political trends; relative valuation; and liquidity, to determine whether the
security has the potential to appreciate faster than the general market.
While the Fund has no policy regarding market
<PAGE>
capitalizations of issuers of
equity securities in which it may invest, Oak Ridge believes that the Fund
will generally invest in medium capitalization growth companies. The Fund is
only intended to be an investment vehicle for that part of an investor's
capital which can appropriately be exposed to above average risk in
anticipation of greater rewards. The Fund is not designed to offer a
balanced investment program suitable for all investors.
Except for the Fund's investment objective and the investment
restrictions contained in the Statement of Additional Information, some of
which are set forth below, the Fund's policies may be changed without a vote
of the Fund's shareholders.
INVESTMENT RESTRICTIONS
-----------------------
The Fund has adopted several restrictions on its investments and other
activities that may not be changed without shareholder approval.
Specifically,
(1) With respect to 75% of its total assets, the Fund may not
purchase securities of any issuer (except securities of the U.S.
government or any agency or instrumentality thereof) if such action
would cause more than 5% of the Fund's total assets to be invested in
securities of any one issuer, or purchase more than 10% of the
outstanding voting securities of any one issuer;
(2) The Fund may not borrow money except from banks for
temporary or emergency purposes (but not for the purchase of
investments) and then, only in an amount not to exceed 33-1/3% of the
value of the Fund's net assets at the time the borrowing is incurred;
provided however, the Fund may engage in transactions in options,
futures contracts and options on futures contracts. The Fund may not
purchase securities when borrowings exceed 5% of its total assets; and
(3) The Fund may not pledge, mortgage, hypothecate, or otherwise
encumber any of its assets, except to secure permitted borrowings and
except that the Fund may invest in options, futures contracts and
options on futures contracts.
For additional investment restrictions, see the Fund's Statement of
Additional Information.
INVESTMENT TECHNIQUES AND RISKS
-------------------------------
In General
- ----------
The Fund will not invest more than 5% of its net assets in any one of
the following types of investments: investment grade debt securities;
repurchase agreements with member banks of the Federal Reserve System or
certain non-bank dealers; warrants; illiquid securities; unseasoned
companies; securities purchased on a when-issued or delayed delivery basis;
transactions in short sales against the box; call and put options; and
futures and options on futures. The ability of the Fund to effectively use
put and call options and futures transactions is largely dependent upon Oak
Ridge's ability to correctly use these instruments, which may involve
different skills than are associated with securities generally. Investment
Grade Debt Securities are (i) bonds rated Baa or higher by Moody's Investors
Service ("Moody's"), BBB or higher by Standard & Poor's Corporation ("S&P"),
Duff & Phelps, Inc. ("D&P") or Fitch Investors Service, Inc. ("Fitch"); or
(ii) commercial paper rated A-1 or higher by S&P, P-1 or higher by Moody's,
Duff 2 or higher by D&P, or Fitch 2 or higher by Fitch. Bonds rated BBB by
S&P or Baa by Moody's, although considered investment grade, have speculative
characteristics and may be subject to greater fluctuations in value than
higher-rated bonds. For
<PAGE>
a more extensive discussion of these investments and
techniques and risks associated therewith, see the Fund's Statement of
Additional Information.
Short-Term Fixed Income Securities
- ----------------------------------
In times when Oak Ridge believes that adverse economic or market
conditions justify such action, up to 35% of the Fund's assets may be held
temporarily in short-term fixed-income securities, including without
limitation: U.S. government securities, including bills, notes and bonds,
differing as to maturity and rate of interest, which are either issued or
guaranteed by the U.S. Treasury or by U.S. governmental agencies or
instrumentalities; certificates of deposit issued against funds deposited in
a U.S. bank or savings and loan association; bank time deposits, which are
monies kept on deposit with U.S. banks or savings and loan associations for a
stated period of time at a fixed rate of interest; bankers' acceptances which
are short-term credit instruments used to finance commercial transactions;
repurchase agreements entered into only with respect to obligations of the
U.S. government, its agencies or instrumentalities; or commercial paper and
commercial paper master notes (which are demand instruments without a fixed
maturity bearing interest at rates which are fixed to known lending rates and
automatically adjusted when such lending rates change) rated A-1 or better by
S&P, Prime-1 or better by Moody's, Duff 2 or higher by D&P, or Fitch 2 or
higher by Fitch. The Fund may also invest up to 35% of its assets in such
instruments in amounts as Oak Ridge believes are reasonable to satisfy
anticipated redemption requests.
Lending of Portfolio Securities
- -------------------------------
The Fund may lend its portfolio securities, up to 5% of its total
assets, to broker-dealers or institutional investors. The loans will be
secured continuously by collateral equal at least to the value of the
securities lent by "marking to market" daily. The collateral may consist of
cash, government securities, letters of credit, or other collateral permitted
by regulatory agencies. The Fund will continue to receive the equivalent of
the interest or dividends paid by the issuer of the securities lent. The
Fund may also receive interest on the investment of the collateral or a fee
from the borrower as compensation for the loan. The Fund may pay reasonable
custodial and administrative fees in connection with a loan. The Fund will
retain the right to call, upon notice, the lent securities. While there may
be delays in recovery or even loss of rights in the collateral should the
borrower fail financially, Oak Ridge will review the creditworthiness of the
entities to which loans are made to evaluate those risks.
Portfolio Turnover
- ------------------
The Fund's historical portfolio turnover rate is listed under
"Financial Highlights." The portfolio turnover rate indicates changes in the
Fund's investments. A turnover rate of 100% would occur, for example, if all
of the securities held by the Fund were replaced within one year. The
turnover rate may vary from year to year, as well as within a year. It may
be affected by sales of portfolio securities necessary to meet cash
requirements for redemption of shares. Under normal market conditions, the
Fund anticipates that its portfolio turnover rate is not expected to exceed
100%. In the event the Fund were to have a turnover rate of 100% or more in
any year, it would result in the payment by the Fund of above average
transaction costs and could result in the payment by shareholders of above
average amounts of taxes on realized investment gains.
MANAGEMENT
----------
Under the laws of the State of Maryland, the Board of Directors of the
Corporation is responsible for managing its business and affairs. The
Corporation, on behalf of the Fund, has entered into an investment advisory
agreement with Oak Ridge Investments, Inc. ("Oak Ridge") pursuant to which
Oak Ridge manages the Fund's investments and business affairs, subject to the
supervision of the Corporation's Board of Directors (the
<PAGE>
"Investment Advisory Agreement"). The Board of Directors also oversees
duties required by applicable state and federal law.
Oak Ridge, a growth equity capital management firm, is the investment
advisor to the Fund. Oak Ridge was founded in 1989 and is located at 233
North Michigan Avenue, Suite 1807, Chicago, IL 60601. Under the Investment
Advisory Agreement, the Corporation, on behalf of the Fund, compensates Oak
Ridge for its investment advisory services at the annual rate of 1.00% of the
Fund's average daily net assets. The Corporation's Board of Directors
believes that this fee is reasonable in light of the Fund's investment
objective. Oak Ridge has agreed to waive its management fee and/or reimburse
the operating expenses to the extent necessary to ensure that the Fund's
total operating expenses do not exceed 2.00% of the Fund's average daily net
assets. Any such waiver or reimbursement will have the effect of lowering
the overall expense ratio for the Fund and increasing the Fund's overall
return to investors at the time any such amounts were waived and/or
reimbursed.
The Fund is currently managed by David M. Klaskin, who has been the
President, Treasurer and Chief Investment Officer of Oak Ridge since its
founding in September 1989. From 1982 until founding Oak Ridge, Mr. Klaskin
was a financial consultant with Shearson/Lehman Bros.
Oak Ridge provides continuous advice and recommendations concerning the
Fund's investments, and is responsible for selecting the broker-dealers who
execute the portfolio transactions for the Fund. Oak Ridge provides office
space for the Corporation and pays the salaries, fees and expenses of all the
Corporation's officers and directors who are interested persons of Oak Ridge.
In addition to providing investment advice to the Fund, Oak Ridge serves as
investment advisor to pension and profit-sharing plans, and other
institutional and private investors. As of November 30, 1995, Oak Ridge had
approximately $95 million under management. Mr. David M. Klaskin and Mr.
Samuel Wegbreit each own shares representing more than 35% but less than 51%
of the voting rights of Oak Ridge.
FUND EXPENSES
-------------
The Corporation, on behalf of the Fund, is responsible for all of its
expenses, including: interest charges; taxes; brokerage commissions;
organizational expenses; expenses of registering or qualifying shares for
sale with the states and the SEC; expenses of issue, sale, repurchase or
redemption of shares; expenses of printing and distributing prospectuses to
existing shareholders; charges of custodians; expenses for accounting,
administrative, audit, and legal services; fees for directors who are not
interested persons of Oak Ridge; expenses of fidelity bond coverage and other
insurance; expenses of indemnification; extraordinary expenses; and costs of
shareholder and director meetings. For the period ended November 30, 1995,
after waivers and reimbursements, these expenses totaled 1.00% of the Fund's
average net assets.
HOW TO PURCHASE FUND SHARES
---------------------------
Shares of the Fund may be purchased at the Offering Price (as defined
below) through any dealer which has entered into a sales agreement with Oak
Ridge, in its capacity as principal underwriter of shares of the Fund (the
"Distributor"), or through the Distributor directly. Firstar Trust Company,
the Fund's transfer agent (the "Transfer Agent"), may also accept purchase
applications.
Applications will not be accepted unless they are accompanied by
payment in U.S. funds. Payment should be made by check or money order drawn
on a U.S. bank, savings and loan, or credit union. The minimum initial
investment in the Fund is $2,000. Subsequent investments may be made by mail
($100 minimum) or by wire ($1,000 minimum). For individual retirement
accounts ("IRAs"), the minimum initial
<PAGE>
investment is $1,000. For investors
using the Automatic Investment Plan, as described below, the minimum
investment is $100. Minimum investments are waived for employee benefit
plans qualified under Sections 401, 403(b)(7) or 457 of the Internal Revenue
Code. These minimums can be changed by the Fund at any time. Shareholders
will be given at least 30 days' notice of any increase in the minimum dollar
amount of subsequent investments.
If you purchase shares of the Fund by check or the Automatic Investment
Plan and request the redemption of such shares within fifteen days of the
initial purchase, the redemption will not be effective, and the Fund will not
forward the redemption proceeds until the Fund is reasonably satisfied that
your check or purchase order has cleared. (This is a security precaution
only and does not affect your investment).
Offering Price
- --------------
Shares of the Fund are sold on a continual basis at the next offering
price (the "Offering Price"), which is the sum of the net asset value per
share (next computed following (i) receipt of an order in proper form by a
dealer, the Distributor or the Transfer Agent, as the case may be, and (ii)
acceptance of such order by the Fund) and the sales charge as set forth
below. Net asset value per share is calculated once daily as of the close of
trading (currently 4:00 p.m., Eastern Standard Time) on each day the New York
Stock Exchange is open. See "DETERMINATION OF NET ASSET VALUE." The sales
charge imposed on purchases of Fund shares is as follows:
<TABLE>
Total Sales Charge
------------------------------------------
Amount of Sale As a Percentage of As a Percentage of Portion of Total
at Offering Offering Price of Net Asset Value of Offering Price
Price the Shares Purchased the Shares Purchased Retained by Dealers*
<S> <C> <C> <C>
- -------------- -------------------- -------------------- --------------------
Less than $50,000 4.25% 4.44% 4.00%
$50,000 but less
than $100,000 3.75% 3.90% 3.50%
$100,000 but less
than $250,000 3.25% 3.36% 3.00%
$250,000 but less
than $500,000 2.25% 2.30% 2.00%
$500,000 but less
than $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more 1.00% 1.01% 0.90%
</TABLE>
- ------------------
* At the discretion of the Distributor, all sales charges may at times be
paid to the securities dealer, if any, involved in the trade. A securities
dealer which is paid all or substantially all of the sales charges may
be deemed an "underwriter" under the Securities Act of 1933, as amended.
Investors described under "Purchases at Net Asset Value," below, may
purchase shares of the Fund without the imposition of a sales charge. In
addition, no sales charge is imposed on the reinvestment of dividends or
capital gains. A confirmation indicating the details of each purchase
transaction will be sent to you promptly following such transaction. If a
purchase order is placed through a dealer, the dealer must promptly forward
the order, together with payment, to the Transfer Agent.
Purchases at Net Asset Value
- ----------------------------
Shares of the Fund may be purchased at net asset value without the
imposition of a sales charge, upon the written assurance that the purchase is
made for investment purposes and that the shares will not be transferred or
resold except through redemption or repurchase by or on behalf of the Fund,
by any of the
<PAGE>
following: (i) employee benefit plans qualified under Section
401(k) of the Internal Revenue Code of 1986, as amended, subject to minimum
requirements with respect to the number of employees or amount of purchase,
which may be established by the Distributor. Currently, those criteria
require that the employer establishing the plan have 1,000 or more eligible
employees; (ii) directors, officers, and full-time employees of the Fund, the
Distributor, and affiliates of such companies, and by spouses and family
members of such persons; (iii) registered securities brokers and dealers
which have entered into a sales agreement with the Distributor, and their
affiliates, for their investment account only; (iv) registered personnel and
employees of such securities brokers and dealers referred to in (iii) above,
and their spouses and family members, in accordance with the internal
policies and procedures of the employing securities dealer; and (v)
registered investment advisors affiliated with the Distributor, by agreement
or otherwise, on behalf of their clients, who are participating in a
comprehensive fee program (also known as a wrap fee program). Please call
1-800-407-7298 for more information on purchases at net asset value.
Initial Investment - Minimum $2,000
- -----------------------------------
You may purchase Fund shares by completing the enclosed application
form and mailing it along with a check or money order payable to "O.R.I.
Growth Fund" to your securities dealer, the Distributor or the Transfer
Agent, as the case may be. If mailing to the Distributor or Transfer Agent,
please send to the following address: Firstar Trust Company, Mutual Fund
Services, P. O. Box 701, Milwaukee, Wisconsin 53201-0701. In addition,
overnight mail should be sent to the following address: O.R.I. Growth Fund,
Firstar Trust Company, Mutual Fund Services, Third Floor, 615 East Michigan
Street, Milwaukee, Wisconsin 53202. You may also purchase Fund shares by
telephone. For information regarding this option, please call
1-800-407-7298.
If the securities dealer you have chosen to purchase Fund shares
through has not entered into a sales agreement with the Distributor, such
dealer may, nevertheless, offer to place your order for the purchase of Fund
shares. Purchases made through such dealers will be affected at the Offering
Price. Such dealers may also charge a transaction fee, as determined by the
dealer. That fee will be in addition to the sales charge payable by you upon
purchase, and may be avoided if shares are purchased through a dealer who has
entered into a sales agreement with the Distributor or through the Transfer
Agent.
If your check does not clear, you will be charged a $15 service fee.
You will also be responsible for any losses suffered by the Fund as a result.
Neither cash nor third-party checks will be accepted. All applications to
purchase Fund shares are subject to acceptance by the Fund and are not
binding until so accepted. The Fund reserves the right to decline or accept
a purchase order application in whole or in part.
You may also purchase Fund shares by wire. The following instructions
should be followed when wiring funds to the Transfer Agent for the purchase
of Fund shares:
Wire to: Firstar Bank
ABA Number 075000022
Credit: Firstar Trust Company
Account 112-952-137
Further Credit: O.R.I. Growth Fund
(shareholder account number)
(shareholder name/account registration)
Please call 1-800-407-7298 prior to wiring any funds to notify the Transfer
Agent that the wire is coming and to verify the proper wire instructions so
that the wire is properly applied when received. The Transfer Agent may
<PAGE>
charge a $7.50 service fee for wire transactions. The Fund is not
responsible for the consequences of delays resulting from the banking or
Federal Reserve wire system.
Automatic Investment Plan - Minimum $100
- ----------------------------------------
The Automatic Investment Plan ("AIP") allows you to make regular,
systematic investments in the Fund from your bank checking or NOW account.
The Fund will reduce the minimum initial investment to $100 for investors
using the AIP. To establish the AIP, complete the appropriate section in the
Fund's application attached to this Prospectus. Under certain circumstances
(such as discontinuation of the AIP before the Fund's minimum initial
investment is reached, or, after reaching the minimum initial investment, the
account balance is reduced to less than $500), the Fund reserves the right to
close the investor's account. Prior to closing any account for failure to
reach the minimum initial investment, the Fund will give the investor written
notice and 60 days in which to reinstate the AIP or otherwise reach the
minimum initial investment. You should consider your financial ability to
continue in the AIP until the minimum initial investment amount is met
because the Fund has the right to close an investor's account for failure to
reach the minimum initial investment. Such closing may occur in periods of
declining share prices.
Under the AIP, you may choose to make investments on the fifth and/or
twentieth day of each month from your financial institution in amounts of
$100 or more. There is no service fee for participating in the AIP.
However, a service fee of $15 will be deducted from your Fund account for any
AIP purchase that does not clear due to insufficient funds or, if prior to
notifying the Fund in writing or by telephone to terminate the plan, you
close your bank account or in any manner prevent withdrawal of funds from the
designated checking or NOW account. You can set up the AIP with any
financial institution that is a member of the Automated Clearing House.
The AIP is a method of using dollar cost averaging which is an
investment strategy that involves investing a fixed amount of money at a
regular time interval. However, a program of regular investment cannot
ensure a profit or protect against a loss from declining markets. By always
investing the same amount, you will be purchasing more shares when the price
is low and fewer shares when the price is high. Since such a program
involves continuous investment regardless of fluctuating share values, you
should consider your financial ability to continue the program through
periods of low share price levels.
Subsequent Investments
- ----------------------
Additions to your account may be made by mail ($100 minimum) or by wire
($1,000 minimum). When making an additional purchase by mail, enclose a
check payable to "O.R.I. Growth Fund" along with the Additional Investment
Form provided on the lower portion of your account statement. To make an
additional purchase by wire, please call 1-800-407-7298 for complete wiring
instructions. You may also make additional purchases by telephone.
Information regarding this option can be obtained by calling 1-800-407-7298.
Share Certificates
- ------------------
Although share purchases are credited to your account, certificates
will not be issued. Nevertheless, you will have full shareholder rights.
DETERMINATION OF NET ASSET VALUE
--------------------------------
The net asset value per share is determined as of the close of trading
(currently 4:00 p.m. Eastern Standard Time) on each day the New York Stock
Exchange ("NYSE") is open for business. Purchase orders received or shares
tendered for redemption on a day the NYSE is open for trading, prior to the
close of trading
<PAGE>
on that day, will be valued as of the close of trading on
that day. Applications for purchase of shares and requests for redemption of
shares received after the close of trading on the NYSE will be valued as of
the close of trading on the next day the NYSE is open. The Fund's net asset
value may not be calculated on days during which the Fund receives no orders
to purchase shares and no shares are tendered for redemption. Net asset
value is calculated by taking the fair value of the Fund's total assets,
including interest or dividends accrued, but not yet collected, less all
liabilities, and dividing by the total number of shares outstanding. The
result, rounded to the nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are
valued at market value. Common stocks and other equity-type securities are
valued at the last sales price on the national securities exchange or NASDAQ
on which such securities are primarily traded; provided, however, securities
traded on an exchange or NASDAQ for which there were no transactions on a
given day, and securities not listed on an exchange or NASDAQ, are valued at
the most recent bid prices. Debt securities are valued by a pricing service
that utilizes electronic data processing techniques to determine values for
normal institutional sized trading units of debt securities without regard to
the existence of sale or bid prices when such values are believed to more
accurately reflect the fair market value of such securities; otherwise,
actual sale or bid prices are used. Any securities or other assets for which
market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Directors. Debt securities having
remaining maturities of 60 days or less when purchased are valued by the
amortized cost method when the Board of Directors determines that the fair
market value of such securities is their amortized cost. Under this method
of valuation, a security is initially valued at its acquisition cost, and
thereafter, amortization of any discount or premium is assumed each day,
regardless of the impact of fluctuating interest rates on the market value of
the security.
HOW TO REDEEM SHARES
--------------------
In General
- ----------
Investors may request redemption of part or all of their Fund shares at
any time at the next determined net asset value. See "DETERMINATION OF NET
ASSET VALUE." The Fund normally will mail your redemption proceeds the next
business day and, in any event, no later than seven business days after
receipt of a redemption request in good order. However, the Fund may hold
payment until investments which were made by check, telephone or the
Automatic Investment Plan have been collected.
Redemptions may also be made through brokers or dealers. Such
redemptions will be effected at the net asset value next determined after
receipt by the Fund of the broker or dealer's instruction to redeem shares.
In addition, some brokers or dealers may charge a fee in connection with such
redemptions.
Written Redemption
- ------------------
For most redemption requests, an investor need only furnish a written,
unconditional request to redeem his or her shares at net asset value to the
Fund's Transfer Agent: Firstar Trust Company, Mutual Fund Services, P. O.
Box 701, Milwaukee, Wisconsin 53201-0701. Overnight mail should be sent to
O.R.I. Growth Fund, Firstar Trust Company, Mutual Fund Services, Third Floor,
615 East Michigan Street, Milwaukee, Wisconsin 53202. Requests for
redemption must be signed exactly as the shares are registered, including the
signature of each joint owner. You must also specify the number of shares or
dollar amount to be redeemed. Redemption proceeds made by written redemption
request may also be wired to a commercial bank that you have authorized on
your account application. The Transfer Agent may charge a $7.50 service fee
for wire transactions. Additional documentation may be requested from
corporations, executors, administrators, trustees, guardians, agents, or
attorneys-in-fact.
<PAGE>
Telephone Redemption
- --------------------
You may redeem shares by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application.
Proceeds redeemed by telephone will be mailed or wired only to an investor's
address or bank of record as shown on the records of the Transfer Agent. To
effect a telephone redemption, you may call 1-800-407-7298. The Fund reserves
the right to refuse any request made by telephone and may limit the amount
involved or the number of telephone redemptions. Please call the Transfer
Agent at 1-800-407-7298 to obtain current instructions. Once you place a
telephone redemption request, it cannot be cancelled or modified. Neither
the Fund nor its Transfer Agent will be responsible for the authenticity of
redemption instructions received by telephone. Accordingly, the investor
bears the risk of loss. The Fund will use reasonable procedures to ensure
that instructions received by telephone are genuine. These procedures may
include recording telephonic transactions and sending written confirmation of
such transactions. However, if the Fund or its Transfer Agent fails to
employ such procedures, the Fund may be liable for any losses due to
unauthorized or fraudulent instructions. Shareholders may experience
difficulty in implementing a telephone redemption during periods of drastic
economic or market changes. If an investor is unable to contact the Transfer
Agent by telephone, shares may also be redeemed by delivering the redemption
request to the Transfer Agent in person or by mail. If in person or by
overnight mail, deliver such request to O.R.I. Growth Fund, Firstar Trust
Company, Mutual Fund Services, Third Floor, 615 East Michigan Street,
Milwaukee, Wisconsin 53202; if by regular mail, such request may be sent to
Firstar Trust Company, Mutual Fund Services, P. O. Box 701, Milwaukee,
Wisconsin 53201-0701.
Systematic Withdrawal Plan
- --------------------------
You may set up automatic withdrawals from your account with the Fund at
regular intervals. To begin distributions, you must have an initial balance
of $5,000 in your account and withdraw at least $50 per payment. To
establish the Systematic Withdrawal Plan, please call 1-800-407-7298.
Depending upon the size of the account and the withdrawals requested (and
fluctuations in the net asset value of the shares redeemed), redemptions for
the purpose of satisfying such withdrawals may reduce or even exhaust your
account. If the amount remaining in your account is not sufficient to meet a
plan payment, the remaining amount will be redeemed and the plan will be
terminated.
In certain circumstances, such as when corporations, executors,
administrators, trustees, guardians, agents or attorneys-in-fact are involved
or when the proceeds of redemption are requested to be sent to other than the
address of record, additional documentation and signature guarantees may be
required. Questions regarding such circumstances may be directed to the
Transfer Agent by calling 1-800-407-7298. In addition, redemptions over
$25,000 must be made in writing and require a signature guarantee. A
signature guarantee may be obtained from any eligible guarantor institution,
as defined by the SEC. These institutions include banks, saving
associations, credit unions, brokerage firms, and others. Please note that a
notary public stamp or seal is not acceptable.
Shareholders who have an Individual Retirement Account ("IRA") or other
retirement plan must indicate on their redemption request whether or not to
withhold federal income tax. Redemption requests failing to indicate an
election not to have federal tax withheld will be subject to withholding.
Your account may be terminated by the Fund on not less than 30 days'
notice if, at the time of any redemption of shares in your account, the value
of the remaining shares in the account falls below $500. Upon any such
termination, a check for the proceeds of redemption will be sent to you
within seven days of the redemption.
<PAGE>
DISTRIBUTION PLAN
-----------------
The Fund has adopted a plan pursuant to Rule 12b-1 under the Investment
Company Act (the "Plan"), which requires it to pay the Distributor a
distribution fee of up to 0.25% of its average daily net assets computed on
an annual basis. Under the terms of the Plan, the Distributor is authorized
to, in turn, pay all or a portion of this fee to any securities dealer,
financial institution or any other person (the "Recipient") who renders
assistance in distributing or promoting the sale of Fund shares pursuant to a
written agreement (the "Rule 12b-1 Related Agreement"). To the extent such
fee is not paid to such persons, the Distributor may use the fee for its own
distribution expenses incurred in connection with the sale of the Fund's
shares, although it is the Distributor's current intention to pay out all or
most of the fee. A form of the 12b-1 Related Agreement referred to above has
been approved by a majority of the Board of Directors of the Fund, and of the
members of the Board who are not "interested persons" of the Fund as defined
in the Investment Company Act and who have no direct or indirect financial
interest in the operation of the Plan or any related agreements (the
"Disinterested Directors") voting separately. Accordingly, the Distributor
may enter into 12b-1 Related Agreements with securities dealers, financial
institutions or other persons without further Board approval.
Payment of the distribution fee is to be made quarterly, within 30 days
after the close of the quarter for which the fee is payable, upon the
Distributor forwarding to the Board of Directors a written report of all
amounts expensed pursuant to the Plan; provided, however, that the aggregate
payments by the Fund under the Plan in any month to the Distributor and all
Recipients may not exceed 0.25% of the Fund's average net assets for that
quarter; and provided further that no fee may be paid in excess of the
distribution expenses as set forth in the quarterly written report. Thus,
the Plan does not provide for the payment of distribution fees in subsequent
quarters that relate to expenses incurred in prior quarters.
The Plan, and any Rule 12b-1 Related Agreement which is entered into,
will continue in effect for a period of more than one year only so long as
its continuance is specifically approved at least annually by a vote of a
majority of the Fund's Board of Directors, and of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting on
the Plan, or the Rule 12b-1 Related Agreement, as applicable. In addition,
the Plan, and any Rule 12b-1 Related Agreement, may be terminated at any
time, without penalty, by vote of a majority of the outstanding voting
securities of the Fund, or by vote of a majority of Disinterested Directors,
on not more than sixty (60) days' written notice.
TAX SHELTERED RETIREMENT PLANS
------------------------------
The Fund offers through Firstar Trust Company, in its capacity as
custodian of Fund assets (the "Custodian"), several qualified retirement
plans for adoption by individuals and employers. Participants in these plans
can accumulate shares of the Fund on a tax deferred basis. Contributions to
these plans are generally tax deductible and earnings are tax deferred until
distributed.
Individual Retirement Account ("IRA"). Individuals under age 70 1/2 with
earned income, may contribute money to an IRA. You are allowed to contribute
up to the lesser of $2,000 or 100% of your earned income each year to an IRA.
Individuals who are covered by existing retirement plans, or have spouses
covered by such plans, and whose income exceed certain amounts, are not
permitted to deduct their IRA contributions for income tax purposes.
However, whether or not an individual's contributions are deductible, the
earnings in his or her IRA are not taxed until the account is distributed.
401(k) Plan. A 401(k) Plan is a type of profit sharing plan that allows
employees to have part of their salary contributed to a retirement plan which
will earn tax-deferred income. A 401(k) Plan is funded by employee
contributions, employer contributions, or a combination of both.
<PAGE>
Defined Contribution Plan. A Defined Contribution Plan, commonly referred to
as a Keogh Plan, allows self-employed individuals, partners, or a corporation
to provide retirement benefits for themselves and their employees. There are
three plan types: profit sharing, money purchase pension and a paired plan.
A paired plan is a combination of a profit sharing plan and a money purchase
plan.
A complete description of the various plans, as well as a description
of the applicable service fees are available from the Fund and may be
obtained by calling 1-800-407-7298 or writing to the Fund at P. O. Box 701,
Milwaukee, Wisconsin 53201-0701.
Please note that early withdrawals from a retirement plan may result in
adverse tax consequences.
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
---------------------------------------------------------------
The Corporation intends to continue to qualify for treatment as a
"Regulated Investment Company" under Subchapter M of the Internal Revenue
Code, and, if so qualified, will not be liable for federal income taxes to
the extent earnings are distributed on a timely basis.
For federal income tax purposes, all dividends paid by the Corporation,
on behalf of the Fund, and net realized short-term capital gains are taxable
as ordinary income whether reinvested or received in cash unless you are
exempt from taxation or entitled to a tax deferral. Distributions paid by
the Corporation, on behalf of the Fund, from net realized long-term capital
gains, whether received in cash or reinvested in additional shares, are
taxable as such. The capital gain holding period is determined by the length
of time the Fund has held the security and not the length of time you have
held shares in the Fund. Investors are informed annually as to the amount
and nature of all dividends and capital gains paid during the prior year.
Such gains and dividends may also be subject to state or local taxes. If you
are not required to pay taxes on your income, you will not be required to pay
federal income taxes on the amounts distributed to you.
Dividends are usually paid, and capital gains, if any, are usually
distributed annually in December. When a dividend or capital gain is
distributed, the Fund's net asset value will decrease by the amount of the
payment. A dividend paid shortly after the purchase of shares will reduce
the net asset value of the shares purchased by the amount of the dividend.
All dividends or capital gains distributions will automatically be reinvested
in shares of the Fund at the then prevailing net asset value unless an
investor specifically requests that either dividends or capital gains or both
be paid in cash. The election to receive dividends or reinvest them may be
changed by writing to the Fund at P. O. Box 701, Milwaukee, Wisconsin 53201-
0701. Such notice must be received at least 10 days prior to the record date
of any dividend or capital gain distribution.
If you do not furnish the Fund with your correct social security number
or employer identification number, the Fund is required by federal law to
withhold federal income tax at a rate of 31% from your distributions and
redemption proceeds.
This section is not intended to be a full discussion of federal income
tax laws and the effect of such laws on you. There may be other federal,
state, or local tax considerations applicable to a particular investor. You
are urged to consult your own tax advisor.
FUND ORGANIZATION
-----------------
The Corporation was organized as a Maryland corporation on October 15,
1993. The Corporation is authorized to issue 500,000,000 $.01 par value
shares of common stock and series and classes of series of shares of common
stock. The Fund, which has been allocated 100,000,000 of those shares, is
the first and
<PAGE>
presently, the only series of the Corporation. If the
Corporation issues additional series, the assets belonging to each series of
shares will be held separately by the Custodian, and in effect each series
will be a separate fund.
Each share, irrespective of series, is entitled to one vote on all
questions, except that certain matters must be voted on separately by the
series of shares affected, and matters affecting only one series are voted
upon only by that series. All shares have non-cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of directors can elect all of the directors if they choose to do so,
and in such event, the holders of the remaining shares will not be able to
elect any person or persons to the board of directors.
The Corporation will not hold annual shareholders' meetings except when
required by the Investment Company Act of 1940. The Corporation has adopted
procedures in its Bylaws for the removal of directors by the shareholders.
As of November 30, 1995, no person owned a controlling interest in the Fund.
ADMINISTRATOR
-------------
Pursuant to Administration and Accounting Service Agreements, Firstar
Trust Company (the "Administrator"), Mutual Fund Services, Third Floor, 615
East Michigan Street, Milwaukee, Wisconsin 53202, calculates the daily net
asset value of the Fund, prepares and files all federal and state tax
returns, oversees the Fund's insurance relationships, participates in the
preparation of the registration statement, proxy statements and reports,
prepares compliance filings relating to the registration of the securities of
the Fund pursuant to state securities laws, compiles data for and prepares
notices to the SEC, prepares the financial statements for the annual and
semi-annual reports to the SEC and current investors, monitors the Fund's
expense accruals and performs securities valuations, monitors the
Corporation's status as a registered investment company under Subchapter M of
the Internal Revenue Code and monitors compliance with the Fund's investment
policies and restrictions, from time to time, and generally assists in the
Fund's administrative operations. The Administrator, at its own expense and
without reimbursement from the Fund, furnishes office space and all necessary
office facilities, equipment, supplies and clerical and executive personnel
for performing the services required to be performed by it under the
Administration and Accounting Service Agreements. For the foregoing services
and until the Fund's net assets total $25 million, the Administrator receives
from the Fund the following aggregate fees, computed daily and payable
monthly based on the Fund's aggregate average net assets: (a) pursuant to the
Administration Agreement, the Administrator receives an aggregate fee at the
annual rate of .05 of 1% on the first $100 million of average net assets, .04
of 1% on the next $400 million of average net assets, and .03 of 1% on
average net assets in excess of $500 million, subject to an annual aggregate
minimum of $20,000 for the fiscal year ended November 30, 1996, $25,000 for
the fiscal year ended November 30, 1997, and $30,000 for succeeding years,
plus out of pocket expenses; and (b) pursuant to the Accounting Service
Agreement, the Administrator receives an aggregate fee of (i) $18,000 for the
first $40 million of average net assets for the fiscal year ended November
30, 1996, $20,000 for the first $40 million of average net assets for the
fiscal year ended November 30, 1997, and $22,000 for the first $40 million of
average net assets for succeeding years, and (ii) .01 of 1% on the next $200
million of average net assets and .005 of 1% on the balance, plus out of
pocket expenses.
CUSTODIAN, TRANSFER AGENT, AND DISTRIBUTOR
------------------------------------------
Firstar Trust Company, Mutual Fund Services, Third Floor, 615 East
Michigan Street, Milwaukee, Wisconsin 53202, acts as custodian of the Fund's
assets and as dividend-disbursing and transfer agent for the Fund. Oak Ridge
acts as the principal distributor of the Fund's shares.
<PAGE>
PORTFOLIO TRANSACTIONS
----------------------
As provided in the Investment Advisory Agreement, Oak Ridge is
responsible for the Fund's portfolio decisions and the placing of portfolio
transactions. In executing such transactions, Oak Ridge seeks to obtain the
best net results for the Fund. Pursuant to guidelines adopted by the
Corporation's Board of Directors, on behalf of the Fund, and in accordance
with Rules of the SEC, Oak Ridge may serve as a broker for the Fund; however,
in order for Oak Ridge to effect any portfolio transactions for the Fund, the
commissions, fees or other remuneration received by Oak Ridge must be
reasonable and fair compared to fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period of time.
COMPARISON OF INVESTMENT RESULTS
--------------------------------
The Fund may from time to time compare its investment results to
various passive indices or other mutual funds and cite such comparisons in
reports to shareholders, sales literature, and advertisements. The results
may be calculated on the basis of average annual total return, total return,
or cumulative total return.
Average annual total return and total return figures assume the
reinvestment of all dividends and measure the net investment income generated
by, and the effect of, any realized and unrealized appreciation or
depreciation of the underlying investments in the Fund over a specified
period of time. Average annual total return figures are annualized and
therefore represent the average annual percentage change over the specified
period. Total return figures are not annualized and represent the aggregate
percentage or dollar value change over the period. Cumulative total return
simply reflects the Fund's performance over a stated period of time. All
performance figures reflect the deduction of the 4.25% maximum initial sales
charge.
Average annual total return, total return and cumulative total return
are based upon the historical results of the Fund and are not necessarily
representative of the future performance of the Fund. Additional information
concerning the Fund's performance appears in the Statement of Additional
Information.
- ------------------------------------
The Fund reserves the right to change any of its policies,
practices and procedures described in this Prospectus, including
the Statement of Additional Information, without shareholder
approval except in those instances where shareholder approval is
expressly required.
<PAGE>
DIRECTORS
- ---------
David M. Klaskin
Samuel Wegbreit
Daniel A. Kaplan
Dr. A. Charlene Sullivan
Martin Z. Craig
OFFICERS
- --------
David M. Klaskin
President
Samuel Wegbreit
Chairman of the Board
Mark C. Pappas
Secretary
INVESTMENT ADVISOR
- ------------------
Oak Ridge Investments, Inc.
233 N. Michigan Avenue, Suite 1807
Chicago, IL 60601
CUSTODIAN, ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND-DISBURSING AGENT
- ----------------------------------------
Firstar Trust Company
Mutual Fund Services
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
INDEPENDENT ACCOUNTANTS
- -----------------------
Price Waterhouse LLP
100 E. Wisconsin Avenue
Milwaukee, WI 53202
LEGAL COUNSEL
- -------------
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
O.R.I. Growth Fund
a series of
O.R.I. Funds, Inc.
sponsored by
Oak Ridge Investments, Inc.
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-407-7298
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus of the O.R.I. Growth Fund (the
"Fund"), a series of O.R.I. Funds, Inc. (the "Corporation") dated January 1,
1996. Requests for copies of the Prospectus should be made by writing to the
Fund at the address listed above or by calling 1-800-407-7298.
This Statement of Additional Information is dated January 1, 1996.
<PAGE>
O.R.I. GROWTH FUND
TABLE OF CONTENTS
Page No.
--------
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . 4
INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . . . 5
Illiquid Securities . . . . . . . . . . . . . . . . . . . . . . . . 5
Short-Term Fixed Income Securities . . . . . . . . . . . . . . . . 6
Hedging Strategies . . . . . . . . . . . . . . . . . . . . . . . . 7
General Description of Hedging Strategies . . . . . . . . . . 7
General Limitations on Futures and Options Transactions . . . 8
Asset Coverage for Futures and Options Positions . . . . . . 8
Purchasing Put and Call Options . . . . . . . . . . . . . . . 8
Stock Index Options . . . . . . . . . . . . . . . . . . . . . 9
Short Sales Against the Box and Writing Covered Call and
Put Options . . . . . . . . . . . . . . . . . . . . . . . . . 11
Certain Considerations Regarding Options . . . . . . . . . . 13
Federal Tax Treatment of Options . . . . . . . . . . . . . . 13
Futures Contracts . . . . . . . . . . . . . . . . . . . . . . 14
Options on Futures . . . . . . . . . . . . . . . . . . . . . 16
Federal Tax Treatment of Futures Contracts . . . . . . . . . 17
Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
When-Issued Securities . . . . . . . . . . . . . . . . . . . . . . 18
DIRECTORS AND OFFICERS OF THE CORPORATION . . . . . . . . . . . . . . . 19
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 21
INVESTMENT ADVISOR AND UNDERWRITER . . . . . . . . . . . . . . . . . . 21
DISTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Description of Plan . . . . . . . . . . . . . . . . . . . . . . . . 23
Anticipated Benefits to the Fund . . . . . . . . . . . . . . . . . 23
PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . . . . . . 24
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT . . . . . . . . . . . . . 26
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . 26
<PAGE>
SHAREHOLDER MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . 27
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 28
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . 30
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 30
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
---------------------
No person has been authorized to give any information or to make
any representations other than those contained in this Statement of
Additional Information and the Prospectus dated January 1, 1996, and if given
or made, such information or representations may not be relied upon as having
been authorized by the Fund.
--------------------
This Statement of Additional Information does not constitute an
offer to sell securities.
--------------------
<PAGE>
INVESTMENT RESTRICTIONS
-----------------------
The investment objective of the O.R.I. Growth Fund (the "Fund") is to
seek capital appreciation. The Fund's investment objective and policies are
described in detail in the Prospectus under the caption "INVESTMENT OBJECTIVE
AND POLICIES." The following is a complete list of the Fund's fundamental
investment limitations which cannot be changed without shareholder approval.
The Fund may not:
1. With respect to 75% of its total assets, purchase securities
of any issuer (except securities of the U.S. government or any agency
or instrumentality thereof) if such action would cause more than 5% of
the Fund's total assets to be invested in securities of any one issuer,
or purchase more than 10% of the outstanding voting securities of any
one issuer.
2. Borrow money except from banks for temporary or emergency
purposes (but not for the purpose of purchase of investments) and then,
only in an amount not to exceed 33 1/3% of the value of the Fund's net
assets at the time the borrowing is incurred; provided however, the
Fund may engage in transactions in options, futures contracts and
options on futures contracts. The Fund may not purchase securities
when borrowings exceed 5% of its total assets.
3. Act as an underwriter of another issuer's securities except
for the sale of restricted securities.
4. Pledge, mortgage, hypothecate, or otherwise encumber any of
its assets, except to secure permitted borrowings and except that the
Fund may invest in options, futures contracts and options on futures
contracts.
5. Make loans, except through (i) the purchase of investments
permissible under the Fund's investment policies, or (ii) the lending
of portfolio securities provided that no such loan of portfolio
securities may be made by it if, as a result, the aggregate of such
loans would exceed 5% of the value of the Fund's total assets.
6. Purchase any securities on margin, except for the use of
short-term credit necessary for clearance of purchases of portfolio
securities, the payment of initial and variation margin deposits in
connection with futures contracts and options thereon, and the purchase
and sale of options.
7. Purchase, hold, or deal in commodities or commodity contracts
(except that the Fund may engage in futures and options on futures), or
purchase or sell real estate including real estate limited
partnerships, other than, to the extent permitted under the Fund's
investment policies, instruments secured by real estate or interests
therein or instruments issued by entities that invest in real estate or
interests therein.
8. Issue senior securities. For purposes of this investment
restriction, the futures, options and borrowing actions permitted under
the Fund's investment policies are not deemed to be the issuance of
senior securities.
9. Concentrate more than 25% of the value of its total assets
(taken at market value at the time of each investment) in securities of
issuers whose principal business activities are in the same industry or
group of industries.
<PAGE>
With the exception of the investment restriction set out in item 2
above, if a percentage restriction is adhered to at the time of investment, a
later increase in percentage resulting from a change in market value of the
investment or the total assets will not constitute a violation of that
restriction.
The following investment limitations may be changed by the
Corporation's Board of Directors without shareholder approval.
The Fund may not:
1. Purchase or retain the securities of any issuer if those
officers or directors of the Fund or Oak Ridge Investments, Inc. ("Oak
Ridge"), owning individually more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such
issuer.
2. Invest in the securities of an issuer for the purpose of
management or the exercise of control.
3. Purchase securities of issuers having less than three years
continuous operation (including operations of any predecessors), if
such purchase would cause the value of the Fund's investments in all
such issuers to exceed 5% of the value of its net assets.
4. Invest in illiquid securities (i.e., securities that are not
readily marketable) if, as a result of such investments, more than 5%
of the Fund's net assets (taken at market value at the time of each
investment) would be invested in illiquid securities.
5. Invest in direct interests in oil, gas, or other mineral
exploration programs or leases; however, the Fund may invest in the
securities of companies that engage in these activities.
6. Invest in any investment company.
7. Enter into futures contracts or related options if more than
5% of the Fund's net assets would be represented by futures contracts
or more than 5% of the Fund's net assets would be committed to initial
margin and premiums on futures contracts and related options.
INVESTMENT POLICIES AND TECHNIQUES
----------------------------------
The following information supplements the discussion of the Fund's
investment objective, policies, and techniques that are described in the
Prospectus under the captions "INVESTMENT OBJECTIVE AND POLICIES" and
"INVESTMENT TECHNIQUES AND RISKS."
Illiquid Securities
The Fund may invest in illiquid securities (i.e., securities that are
not readily marketable). For purposes of this restriction, illiquid
securities include restricted securities (securities the disposition of which
is restricted under the federal securities laws). However, the Fund will not
acquire illiquid securities if, as a result, they would comprise more than 5%
of the value of the Fund's total assets. The Board of Directors or its
delegate has the ultimate authority to determine, to the extent permissible
under the federal securities laws, which securities are liquid or illiquid
for purposes of this 5% limitation. Certain securities exempt from
registration or issued in transactions exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), including
securities that may be resold pursuant to Rule 144A under the Securities Act,
may be considered liquid. The Board
<PAGE>
of Directors of the Corporation has
delegated to Oak Ridge the day-to-day determination of the liquidity of any
Rule 144A security, although it has retained oversight and ultimate
responsibility for such determinations. Although no definitive liquidity
criteria are used, the Board of Directors has directed Oak Ridge to look to
such factors as (i) the nature of the market for a security (including the
institutional private resale market), (ii) the terms of certain securities or
other instruments allowing for the disposition to a third party or the issuer
thereof (e.g., certain repurchase obligations and demand instruments), (iii)
the availability of market quotations (e.g., for securities quoted in the
PORTAL system), and (iv) other permissible relevant factors.
Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a registration
statement is in effect under the Securities Act. Where registration is
required, the Fund may be obligated to pay all or part of the registration
expenses and a considerable period may elapse between the time of the
decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable
price than prevailed when it decided to sell. Restricted securities will be
priced at fair value as determined in good faith by the Board of Directors of
the Corporation. If through the appreciation of restricted securities or the
depreciation of unrestricted securities, the Fund should be in a position
where more than 5% of the value of its net assets are invested in illiquid
securities, including restricted securities which are not readily marketable,
the Fund will take such steps as is deemed advisable, if any, to protect
liquidity.
Short-Term Fixed Income Securities
The Fund may invest, for defensive, temporary purposes, in short-term
fixed income securities, including without limitation, the following:
1. U.S. government securities, including bills, notes and bonds
differing as to maturity and rates of interest, which are either issued
or guaranteed by the U.S. Treasury or by U.S. government agencies or
instrumentalities. U.S. government agency securities include
securities issued by (a) the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small
Business Administration, and the Government National Mortgage
Association, whose securities are supported by the full faith and
credit of the United States; (b) the Federal Home Loan Banks, Federal
Intermediate Credit Banks, and the Tennessee Valley Authority, whose
securities are supported by the right of the agency to borrow from the
U.S. Treasury; (c) the Federal National Mortgage Association, whose
securities are supported by the discretionary authority of the U.S.
government to purchase certain obligations of the agency or
instrumentality; and (d) the Student Loan Marketing Association, the
Interamerican Development Bank, and the International Bank for
Reconstruction and Development, whose securities are supported only by
the credit of such agencies. While the U.S. government provides
financial support to such U.S. government-sponsored agencies or
instrumentalities, no assurance can be given that it always will do so
since it is not so obligated by law. The U.S. government, its
agencies, and instrumentalities do not guarantee the market value of
their securities, and consequently, the value of such securities may
fluctuate.
2. Certificates of Deposit issued against funds deposited in a
bank or savings and loan association. Such certificates are for a
definite period of time, earn a specified rate of return, and are
normally negotiable. If such certificates of deposit are non-
negotiable, they will be considered illiquid securities and be subject
to the Fund's 5% restriction on investments in illiquid securities.
Pursuant to the certificate of deposit, the issuer agrees to pay the
amount deposited plus interest to the bearer of the certificate on the
date specified thereon. Under current FDIC regulations, the maximum
insurance payable as to any one certificate of deposit is $100,000;
therefore, certificates of deposit purchased by the Fund will not
generally be fully insured.
<PAGE>
3. Bankers' acceptances which are short-term credit instruments
used to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or an importer to obtain a
stated amount of funds to pay for specific merchandise. The draft is
then "accepted" by a bank that, in effect, unconditionally guarantees
to pay the face value of the instrument on its maturity date. The
acceptance may then be held by the accepting bank as an asset or it may
be sold in the secondary market at the going rate of interest for a
specific maturity.
4. Repurchase agreements which involve purchases of debt
securities. In such a transaction, at the time the Fund purchases the
security, it simultaneously agrees to resell and redeliver the security
to the seller, who also simultaneously agrees to buy back the security
at a fixed price and time. This assures a predetermined yield for the
Fund during its holding period since the resale price is always greater
than the purchase price and reflects an agreed-upon market rate. Such
transactions afford an opportunity for the Fund to invest temporarily
available cash. The Fund may enter into repurchase agreements only
with respect to obligations of the U.S. government, its agencies or
instrumentalities; certificates of deposit; or bankers acceptances in
which the Fund may invest. Repurchase agreements may be considered
loans to the seller, collateralized by the underlying securities. The
risk to the Fund is limited to the ability of the seller to pay the
agreed-upon sum on the repurchase date; in the event of default, the
repurchase agreement provides that the Fund is entitled to sell the
underlying collateral. If the value of the collateral declines after
the agreement is entered into, however, and if the seller defaults
under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Fund could incur a
loss of both principal and interest. Oak Ridge monitors the value of
the collateral at the time the transaction is entered into and at all
times during the term of the repurchase agreement. Oak Ridge does so
in an effort to determine that the value of the collateral always
equals or exceeds the agreed-upon repurchase price to be paid to the
Fund. If the seller were to be subject to a federal bankruptcy
proceeding, the ability of the Fund to liquidate the collateral could
be delayed or impaired because of certain provisions of the bankruptcy
laws.
5. Bank time deposits, which are monies kept on deposit with
banks or savings and loan associations for a stated period of time at a
fixed rate of interest. There may be penalties for the early
withdrawal of such time deposits, in which case the yields of these
investments will be reduced.
6. Commercial paper, which are short-term unsecured promissory
notes, including variable rate master demand notes issued by
corporations to finance their current operations. Master demand notes
are direct lending arrangements between the Fund and the corporation.
There is no secondary market for the notes. However, they are
redeemable by the Fund at any time. Oak Ridge will consider the
financial condition of the corporation (e.g., earning power, cash flow,
and other liquidity ratios) and will continuously monitor the
corporation's ability to meet all of its financial obligations, because
the Fund's liquidity might be impaired if the corporation were unable
to pay principal and interest on demand. Investments in commercial
paper will be limited to commercial paper rated in the two highest
categories by a major rating agency or unrated commercial paper which
is, in the opinion of Oak Ridge, of comparable quality.
Hedging Strategies
General Description of Hedging Strategies
The Fund may engage in hedging activities in the future without
obtaining shareholder approval. Oak Ridge may cause the Fund to utilize a
variety of financial instruments, including options, futures contracts
(sometimes referred to as "futures") and options on futures contracts to
attempt to hedge the Fund's portfolio.
<PAGE>
Hedging instruments on securities generally are used to hedge against
price movements in one or more particular securities positions that the Fund
owns or intends to acquire. Hedging instruments on stock indices, in
contrast, generally are used to hedge against price movements in broad equity
market sectors in which the Fund has invested or expects to invest. The use
of hedging instruments is subject to applicable regulations of the Securities
and Exchange Commission (the "SEC"), the several options and futures
exchanges upon which they are traded, the Commodity Futures Trading
Commission (the "CFTC") and various state regulatory authorities. In
addition, the Fund's ability to use hedging instruments will be limited by
tax considerations.
General Limitations on Futures and Options Transactions
The Fund has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the CFTC and the
National Futures Association, which regulate trading in the futures markets.
Pursuant to Section 4.5 of the regulations under the Commodity Exchange Act
(the "CEA"), the notice of eligibility for the Fund includes the following
representation that the Fund will use futures contracts and related options
solely for bona fide hedging purposes within the meaning of CFTC regulations,
provided that the Fund may hold other positions in futures contracts and
related options that do not fall within the definition of bona fide hedging
transactions if aggregate initial margins and premiums paid do not exceed 5%
of the net asset value of the Fund. In addition, the Fund will not: (i)
enter into futures contracts and futures options transactions if more than 5%
of its net assets would be committed to such instruments, (ii) write covered
put or call options if the value of the Fund's assets covering such options
exceeds 5% of the Fund's net assets, or (iii) purchase put or call options if
the amount of all premiums paid for such options exceeds 5% of the Fund's net
assets. The Fund will limit its option premiums and assets covering open
option positions to 5% of the Fund's net assets. These limitations do not
apply to options attached to or acquired or traded together with an
underlying security and do not apply to securities that incorporate features
similar to options. The Fund will not purchase or write over-the-counter
options.
The foregoing limitations are not fundamental policies of the Fund and
may be changed without shareholder approval as regulatory agencies permit.
Various exchanges and regulatory authorities have undertaken reviews of
options and futures trading in light of market volatility. Among the
possible transactions that have been presented are proposals to adopt new or
more stringent daily price fluctuation limits for futures and options
transactions and proposals to increase the margin requirements for various
types of futures transactions.
Asset Coverage for Futures and Options Positions
The Fund will comply with regulatory requirements of the SEC and the
CFTC with respect to coverage of options and futures positions by registered
investment companies and, if the guidelines so require, will set aside cash
and/or liquid assets permitted by the SEC and CFTC in a segregated custodial
account in the amount prescribed. Securities held in a segregated account
cannot be sold while the futures or options position is outstanding, unless
replaced with other permissible assets and will be market-to-market daily.
Purchasing Put and Call Options
Put Options. The Fund may purchase put options. As the holder of a
put option, the Fund would have the right to sell the underlying security at
the exercise price at any time during the option period. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire. The Fund may purchase put options for defensive
purposes in order to protect against an anticipated decline in the value of
its securities or to profit from a decline in the value of securities it does
not own. This protection is provided only during the exercise period. For
example, the Fund may purchase a put option to protect unrealized
appreciation
<PAGE>
of a security where Oak Ridge deems it desirable to continue to
hold the security because of tax considerations. The premium paid for the
put option and any transaction costs would reduce any capital gain otherwise
available for distribution when the security is eventually sold.
The Fund may also purchase put options at a time when the Fund does not
own the underlying security. By purchasing put options on a security it does
not own, the Fund seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining
value, and if the market price of the underlying security remains equal to or
greater than the exercise price during the life of the put option, the Fund
will lose its entire investment in the put option. In order for the purchase
of a put option to be profitable, the market price of the underlying security
must decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale
transaction.
The premium paid by the Fund when purchasing a put option will be
recorded as an asset of the Fund and will be adjusted daily to the option's
current market value, which will be the latest sale price at the time at
which the net asset value per share of the Fund is computed (close of the New
York Stock Exchange), or, in the absence of such sale, the latest bid price.
This asset will be terminated upon exercise, the selling (writing) of an
identical option in a closing action, or the delivery of the underlying
security upon the exercise of the option.
Call Options. The Fund may purchase call options. As the holder of a
call option, the Fund would have the right to purchase the underlying
security at the exercise price at any time during the exercise period. The
Fund may enter into closing sale transactions with respect to such options,
exercise them or permit them to expire. The Fund may purchase call options
for the purpose of hedging against a possible increase in the price of
securities at a time when the Fund has a significant cash position. The Fund
may also purchase call options in order to acquire the underlying securities.
The Fund may purchase call options on underlying securities owned by
it. A call option may be purchased when tax considerations make it
inadvisable to realize gains through a closing purchase transaction. Call
options may also be purchased at times to avoid realizing losses that would
result in a reduction of the Fund's current return. For example, where the
Fund has written a call option on an underlying security having a current
market value below the price at which such security was purchased by the
Fund, an increase in the market price would result in the exercise of the
call option written by the Fund and the realization of a loss on the
underlying security with the same exercise price and expiration date as the
option previously written.
Call options may also be purchased by the Fund for the purpose of
acquiring the underlying securities for its portfolio. Utilized in this
fashion, the purchase of call options enables the Fund to acquire the
securities at the exercise price of the call option plus the premium paid.
At times the net cost of acquiring securities in this manner may be less than
the cost of acquiring securities directly; the net cost may also exceed the
cost of acquiring securities directly. This technique may also be useful to
the Fund in purchasing a large block of securities that would be more
difficult to acquire by direct market purchases. So long as the Fund holds
such a call option rather than the underlying security itself the Fund is
partially protected from any unexpected decline in the market price of the
underlying security and in such event could allow the call option to expire,
incurring a loss only to the extent of the premium paid for the option.
Stock Index Options
The Fund may (i) purchase stock index options for any purpose, (ii)
sell stock index options in order to close out existing positions, and/or
(iii) write covered options on stock indexes for hedging purposes. Stock
index options are put options and call options on various stock indexes. In
most respects, they are identical to listed
<PAGE>
options on common stocks. The
primary difference between stock options and index options occurs when index
options are exercised. In the case of stock options, the underlying
security, common stock, is delivered. However, upon the exercise of an index
option, settlement does not occur by delivery of the securities comprising
the index. The option holder who exercises the index option receives an
amount of cash if the closing level of the stock index upon which the option
is based is greater than, in the case of a call, or less than, in the case of
a put, the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the stock index and the exercise
price of the option expressed in dollars times a specified multiple.
A stock index fluctuates with changes in the market values of the
stocks included in the index. For example, some stock index options are
based on a broad market index, such as the Standard & Poor's 500 or the Value
Line Composite Index or a narrower market index, such as the Standard &
Poor's 100. Indexes may also be based on an industry or market segment, such
as the AMEX Oil and Gas Index or the Computer and Business Equipment Index.
Options on stock indexes are currently traded on the following exchanges:
the Chicago Board Options Exchange, the New York Stock Exchange, the American
Stock Exchange, the Pacific Stock Exchange, and the Philadelphia Stock
Exchange.
The Fund may purchase call and put options in an attempt to either
hedge against the risk of unfavorable price movements adversely affecting the
value of the Fund's securities, or securities the Fund intends to buy or
otherwise in furtherance of the Fund's investment objective. The Fund will
sell (write) stock index options for hedging purposes or in order to close
out positions in stock index options which the Fund has purchased. The Fund
may only write covered options. The Fund may cover a call option on a stock
index it writes by, for example, having a portfolio of securities which
approximately correlates with the stock index.
Put options may be purchased in order to hedge against an anticipated
decline in stock market prices that might adversely affect the value of the
Fund's portfolio securities or in an attempt to capitalize on an anticipated
decline in stock market prices. If the Fund purchases a put option on a
stock index, the amount of the payment it receives upon exercising the option
depends on the extent of any decline in the level of the stock index below
the exercise price. Such payments would tend to offset a decline in the
value of the Fund's portfolio securities. If, however, the level of the
stock index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs.
Such loss may be offset by an increase in the value of the Fund's portfolio
securities.
Call options on stock indexes may be purchased in order to participate
in an anticipated increase in stock market prices or to hedge against higher
prices for securities that the Fund intends to buy in the future. If the
Fund purchases a call option on a stock index, the amount of the payment it
receives upon exercising the option depends on the extent of any increase in
the level of the stock index above the exercise price. Such payments would
in effect allow the Fund to benefit from stock market appreciation even
though it may not have had sufficient cash to purchase the underlying stocks.
Such payments may also offset increases in the price of stocks that the Fund
intends to purchase. If, however, the level of the stock index declines and
remains below the exercise price while the call option is outstanding, the
Fund will not be able to exercise the option profitably and will lose the
amount of the premium and transaction costs. Such loss may be offset by a
reduction in the price the Fund pays to buy additional securities for its
portfolio.
The Fund's use of stock index options is subject to certain risks.
Successful use by the Fund of options on stock indexes will be subject to the
ability of the Fund's investment advisor to correctly predict movements in
the directions of the stock market. This requires different skills and
techniques than predicting changes in the prices of individual securities.
In addition, the Fund's ability to effectively hedge all or a portion of the
securities in its portfolio, in anticipation of or during a market decline
through transactions in put options on stock indexes, depends on the degree
to which price movements in the underlying index correlate with the price
movements in the Fund's
<PAGE>
portfolio securities. Inasmuch as the Fund's
portfolio securities will not duplicate the components of an index, the
correlation will not be perfect. Consequently, the Fund will bear the risk
that the prices of its portfolio securities being hedged will not move in the
same amount as the prices of the Fund's put options on the stock indexes. It
is also possible that there may be a negative correlation between the index
and the Fund's portfolio securities which would result in a loss on both such
portfolio securities and the options on stock indexes acquired by the Fund.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that cannot
be reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions. The
purchase of stock index options involves the risk that the premium and
transaction costs paid by the Fund in purchasing an option will be lost as a
result of unanticipated movements in prices of the securities comprising the
stock index on which the option is based.
Short Sales Against the Box and Writing Covered Call and Put Options
Short Sales Against the Box. When Oak Ridge believes that the price of
a particular security in the Fund's portfolio may decline, it may use certain
techniques to hedge the unrealized gain on such security. The first
technique, known as "selling short against the box," involves selling a
security which the Fund owns for delivery at a specified date in the future.
The Fund will limit its transactions in short sales against the box to 5% of
its net assets. If, for example, the Fund bought 100 shares of ABC at $40
per share in January and the price appreciates to $50 in March, the Fund
might "sell short" the 100 shares at $50 for delivery the following July.
Thereafter, if the price of the stock declines to $45, it will realize the
full $1,000 gain rather than the $500 gain it would have received had it sold
the stock in the market. On the other hand, if the price appreciates to $55
per share, the Fund would be required to sell at $50 and thus receive a
$1,000 gain rather than the $1,500 gain it would have received had it sold
the stock in the market. The Fund may also be required to pay a premium for
short sales which would partially offset its gain.
Covered Call Options. The Fund may write (sell) covered call options
and purchase options to close out options previously written by the Fund.
The purpose of writing covered call options is to reduce the effect of price
fluctuations of the securities owned by the Fund (and involved in the
options) on the Fund's net asset value per share. Although premiums may be
generated through the use of covered call options, Oak Ridge does not
consider the premiums which may be generated as the primary reason for
writing covered call options.
A call option gives the holder (buyer) the right to purchase a security
at a specified price (the exercise price) at any time until a certain date
(the expiration date). So long as the obligation of the writer of a call
option continues, such writer may be assigned an exercise notice by the
broker-dealer through whom such option was sold, requiring the writer to
deliver the underlying security against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or such earlier
time at which the writer effects a closing purchase transaction by
repurchasing the option the writer previously sold. To secure the writer's
obligation to deliver the underlying security in the case of a call option,
the writer is required to deposit in escrow the underlying security or other
assets in accordance with the rules of the clearing corporations and of the
exchanges.
Covered call options may also be used to hedge an unrealized gain. For
example, if the Fund wrote an option at $50 on the same 100 shares of ABC
bought at $40 per share and now selling for $50 per share, it might receive a
premium of approximately $600. If the market price of the underlying
security declined to $45, the option would not be exercised and the Fund
could offset the unrealized loss of $500 by the $600 premium. On the other
hand, if the market price of the underlying security increased to $55, the
option would be exercised and the Fund
<PAGE>
will have foregone the unrealized
$1,500 gain for a $1,000 gain plus the $600 premium. The Fund can also close
out its position in the call option by repurchasing the option contract
separately and independent of any transaction in the underlying security and,
therefore, realize capital gain or loss. If the Fund could not enter into
such a closing purchase transaction, it may be required to hold a security
that it may otherwise have sold to protect against depreciation.
Portfolio securities on which call options may be written will be
purchased solely on the basis of investment considerations consistent with
the Fund's investment objective. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk
(in contrast to the writing of naked or uncovered options, which the Fund
will not do), but capable of enhancing the Fund's total return. When writing
covered call option, the Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security or
other liquid assets above the exercise price, but conversely retains the risk
of loss should the price of the security decline. If a call option which the
Fund has written expires, the Fund will realize a gain in the amount of the
premium; however, such gain may be offset by a decline in the market value of
the underlying security during the option period. If the call option is
exercised, the Fund will realize a gain or loss from the sale of the
underlying security. The securities or other liquid assets covering the call
option will be maintained in a segregated account of the Fund's custodian.
The Fund does not consider a security covered by a call option to be
"pledged" as that term is used in the Fund's policy which limits the pledging
or mortgaging of its assets.
The premium received is the market value of an option. The premium the
Fund will receive from writing a call option, will reflect, among other
things, the current market price of the underlying security, the relationship
of the exercise price to such market price, the historical price volatility
of the underlying security, the length of the option period, the general
supply of and demand for credit, and the general interest rate environment.
The premium received by the Fund for writing covered call options will be
recorded as a liability in the Fund's statement of assets and liabilities.
This liability will be adjusted daily to the option's current market value,
which will be the latest sale price at the time at which the net asset value
per share of the Fund is computed (close of the New York Stock Exchange), or,
in the absence of such sale, the latest asked price. The liability will be
extinguished upon expiration of the option, the purchase of an identical
option in a closing transaction, or delivery of the underlying security upon
the exercise of the option.
A closing transaction will be effected in order to realize a profit or
minimize a loss on an outstanding call option, to prevent an underlying
security from being called or put, or to permit the sale of the underlying
security. Furthermore, effecting a closing transaction will permit the Fund
to write another call option on the underlying security with either a
different exercise price or expiration date or both. If the Fund desires to
sell a particular security from its portfolio on which it has written a call
option, or purchased a put option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security. There
is, of course, no assurance that the Fund will be able to effect such closing
actions at a favorable price. If the Fund cannot enter into such a
transaction, it may be required to hold a security that it might otherwise
have sold, in which case it would continue to be at market risk on the
security. This could result in higher transaction costs, including brokerage
commissions. The Fund will pay brokerage commissions in connection with the
writing or purchase of options to close out previously written options. Such
brokerage commissions are normally higher than the transaction costs
applicable to purchases and sales of portfolio securities.
Call options written by the Fund will normally have expiration dates
between three and nine months from the date written. The exercise price of
the options may be below, equal to, or above the current market values of the
underlying securities at the time the options are written. From time to
time, the Fund may purchase an underlying security for delivery in accordance
with an exercise notice of a call option assigned to it, rather than
delivering such security from its portfolio. In such cases additional
transaction costs will be incurred.
<PAGE>
Covered Put Options. The Fund may also write (sell) covered put
options and purchase options to close out options previously written by the
Fund. The Fund may write covered put options in circumstances where it would
like to acquire the underlying security at a price lower than the then
prevailing market price of the security. Although premiums may be generated
through the use of covered put options, Oak Ridge does not consider the
premiums which may be generated as the primary reason for writing covered put
options.
A put option gives the purchaser of the option the right to sell, and
the writer (seller) has the obligation to buy, the underlying security at the
exercise price at any time until the expiration date. So long as the
obligation of the writer continues, the writer may be assigned an exercise
notice by the broker-dealer through whom such option was sold requiring the
writer to make payment of the exercise price against delivery of the
underlying security. The operations of put options in other respects,
including related risks and rewards, are substantially identical to that of
call options.
The Fund will write put options only on a secured basis, which means
that the Fund would maintain a segregated account consisting of cash or other
permissible liquid assets in an amount not less than the exercise price of
the option or the Fund will own an option to sell the underlying security
subject to the option having an exercise price equal to or greater than the
exercise price of the covered option at all times while the put option is
outstanding. The Fund will generally write covered put options where it
wishes to purchase a security for the Fund's portfolio at a price less than
the current market price. In this event, the Fund would write a put option
at an exercise price which, reduced by the premium received on the options,
reflects the lower price it is willing to pay. Since the Fund may also
receive interest on the debt securities maintained to cover the exercise
price of the option, this technique could be used to enhance current returns
during periods of market uncertainty. The risk in such a transaction would
be that the market price of the underlying security would decline below the
exercise price less the premiums received. Such a decline could be
substantial and result in a significant loss to the Fund. In addition, the
Fund, because it does not own the specific securities which it may be
required to purchase in the exercise of the put, cannot benefit from
appreciation, if any, with respect to such specific securities.
Certain Considerations Regarding Options
There is no assurance that a liquid secondary market on an options
exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange or elsewhere may exist.
If the Fund is unable to close out a call option on securities that it has
written before the option is exercised, the Fund may be required to purchase
the optioned securities in order to satisfy its obligation under the option
to deliver such securities. If the Fund is unable to effect a closing sale
transaction with respect to options on securities that it has purchased, it
would have to exercise the option in order to realize any profit and would
incur transaction costs upon the purchase and sale of the underlying
securities.
The writing and purchasing of options is a highly specialized activity
which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. Imperfect
correlation between the options and securities markets may detract from the
effectiveness of attempted hedging. Options transactions may result in
significantly higher transaction costs and portfolio turnover for the Fund.
Federal Tax Treatment of Options
Certain option transactions have special tax results for the Fund.
Expiration of a call option written by the Fund will result in short-term
capital gain. If the call option is exercised, the Fund will realize a gain
or loss from the sale of the security covering the call option, and in
determining such gain or loss the option premium will be included in the
proceeds of the sale.
<PAGE>
If the Fund writes options other than "qualified covered call options,"
as defined in Section 1092 of the Internal Revenue Code of 1986, as amended
(the "Code"), or purchases puts, any losses on such options transactions, to
the extent they do not exceed the unrealized gains on the securities covering
the options, may be subject to deferral until the securities covering the
options have been sold.
In the case of transactions involving "nonequity options," as defined
in Code Section 1256, the Fund will treat any gain or loss arising from the
lapse, closing out or exercise of such positions as 60% long-term and 40%
short-term capital gain or loss as required by Section 1256 of the Code. In
addition, such positions must be marked-to-market as of the last business day
of the year, and gain or loss must be recognized for federal income tax
purposes in accordance with the 60%/40% rule discussed above even though the
position has not been terminated. A "nonequity option" includes an option
with respect to any group of stocks or a stock index if there is in effect a
designation by the CFTC of a contract market for a contract based on such
group of stocks or indexes. For example, options involving stock indexes
such as the Standard & Poor's 500 and 100 indexes would be "nonequity
options" within the meaning of Code Section 1256.
Futures Contracts
The Fund may enter into futures contracts (hereinafter referred to as
"Futures" or "Futures Contracts"), including interest rate and index Futures
as a hedge against movements in the equity markets and changes in prevailing
levels of interest rates, in order to establish more definitively the
effective return on securities held or intended to be acquired by the Fund or
for other purposes permissible under the CEA. The Fund's hedging may include
sales of Futures as an offset against the effect of expected declines in
stock prices or increases in interest rates and purchases of Futures as an
offset against the effect of expected increases in stock prices and declines
in interest rates.
The Fund will not enter into Futures Contracts which are prohibited
under the CEA and will, to the extent required by regulatory authorities,
enter only into Futures Contracts that are traded on national futures
exchanges and are standardized as to maturity date and underlying financial
instrument. The principal interest rate Futures exchanges in the United
States are the Board of Trade of the City of Chicago and the Chicago
Mercantile Exchange. Futures exchanges and trading are regulated under the
CEA by the CFTC. Although techniques other than sales and purchases of
Futures Contracts could be used to reduce the Fund's exposure to interest
rate or portfolio market price fluctuations, the Fund may be able to hedge
its exposure more effectively and perhaps at a lower cost through using
Futures Contracts, since Futures Contracts involve lower transaction costs
(i.e., brokerage costs only) than options on securities and stock index
options, which require the payment of brokerage costs and premiums.
An index Futures Contract is an agreement pursuant to which the parties
agree to take or make delivery of an amount of cash equal to the difference
between the value of the index at the close of the last trading day of the
contract and the price at which the index Futures Contract was originally
written. An interest rate Futures Contract provides for the future sale by
one party and purchase by another party of a specified amount of a specific
financial instrument for a specified price at a designated date, time, and
place. Transactions costs are incurred when a Futures Contract is bought or
sold and margin deposits must be maintained. A Futures Contract may be
satisfied by delivery or purchase, as the case may be, of the instrument or
by payment of the change in the cash value of the index. More commonly,
Futures Contracts are closed out prior to delivery by entering into an
offsetting transaction in a matching Futures Contract. Although the value of
an index might be a function of the value of certain specified securities, no
physical delivery of those securities is made. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it
is more, the Fund realizes a loss. Conversely, if the offsetting sale price
is more than the original purchase price, the Fund realizes a gain; if it is
less, the Fund realizes a loss. The transaction costs must also be included
in these calculations. There can be no assurance, however, that the Fund
will be able to enter into an offsetting transaction with respect to a
particular Futures Contract at a
<PAGE>
particular time. If the Fund is not able to
enter into an offsetting transaction, the Fund will continue to be required
to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction in which the underlying
financial instrument is not delivered pursuant to an interest rate Futures
Contract, the contractual obligations arising from the sale of one Futures
Contract of September Treasury Bills on an exchange may be fulfilled at any
time before delivery is required (i.e., on a specified date in September, the
"delivery month") by the purchase of one Futures Contract of September
Treasury Bills on the same exchange. In such instance, the difference
between the price at which the Futures Contract was sold and the price paid
for the offsetting purchase, after allowance for transaction costs,
represents the profit or loss to the Fund.
Persons who trade in Futures Contracts may be broadly classified as
"hedgers" and "speculators." Hedgers, such as the Fund, whose business
activity involves investment or other commitments in securities or other
obligations, use the Futures markets to offset unfavorable changes in value
that may occur because of fluctuations in the value of the securities or
obligations held or expected to be acquired by them. Debtors and other
obligors may also hedge the interest cost of their obligations. The
speculator, like the hedger, generally expects neither to deliver nor to
receive the financial instrument underlying the Futures Contract; but, unlike
the hedger, hopes to profit from fluctuations in prevailing prices.
A public market exists in Futures Contracts covering a number of
indexes, including, but not limited to, the Standard & Poor's 500 Index, the
Standard & Poor's 100 Index, the NASDAQ 100 Index, the Value Line Composite
Index and the New York Stock Exchange Composite Index. A public market
exists in interest rate Futures Contracts primarily covering the following
financial instruments: U.S. Treasury bonds; U.S. Treasury notes; Government
National Mortgage Association ("GNMA") modified pass-through mortgage-backed
securities; three-month U.S. Treasury bills; 90-day commercial paper; bank
certificates of deposit; and Eurodollar certificates of deposit. The
standard contract size is generally $100,000 for Futures Contracts in U.S.
Treasury bonds, U.S. Treasury notes, and GNMA pass-through securities and
$1,000,000 for the other designated Contracts.
The Fund's Futures transactions will be entered into for hedging
purposes permissible under the CEA. For hedging purposes, Futures Contracts
may be sold to protect against a decline in the price of securities that the
Fund owns, or Futures Contracts may be purchased to protect the Fund against
an increase in the price of securities it intends to purchase. As evidence
of this hedging intent, the Fund expects that approximately 75% of such
Futures Contract purchases will be "completed"; that is, upon the sale of
these long Futures Contracts, equivalent amounts of related securities will
have been or are then being purchased by the Fund in the cash market.
Alternatively, the Fund's purchases of long Futures Contracts will not exceed
5% of the Fund's net asset value.
Margin is the amount of funds that must be deposited by the Fund with
its custodian in a segregated account in the name of the futures commission
merchant in order to initiate Futures trading and to maintain the Fund's open
positions in Futures Contracts. A margin deposit is intended to ensure the
Fund's performance of the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures
Contract is traded and may be significantly modified from time to time by the
exchange during the term of the Futures Contract. Futures Contracts are
customarily purchased and sold on margins that may range upward from less
than 5% of the value of the Futures Contract being traded.
If the price of an open Futures Contract changes (by increase in the
case of a sale or by decrease in the case of a purchase) so that the loss on
the Futures Contract reaches a point at which the margin on deposit docs not
satisfy margin requirements, the broker will require an increase in the
margin. However, if the value of a position increases because of favorable
price changes in the Futures Contract so that the margin deposit exceeds the
required margin, the broker will pay the excess to the Fund. In computing
daily net asset value, the Fund will mark to
<PAGE>
market the current value of its
open Futures Contracts. The Fund expects to earn interest income on its
margin deposits.
The prices of Futures Contracts are volatile and are influenced, among
other things, by actual and anticipated changes in interest rates, which in
turn are affected by fiscal and monetary policies and national and
international political and economic events.
At best, the correlation between changes in prices of Futures Contracts
and of the securities being hedged can be only approximate. The degree of
imperfection of correlation depends upon circumstances such as: variations
in speculative market demand for futures and debt securities, including
technical influences in Futures trading; differences between the financial
instruments being hedged and the instruments underlying the standard Futures
Contracts available for trading; and with respect to interest rate Futures,
maturities and creditworthiness of issuers and, in the case of index futures
contracts, the composition of the index, including the issuers and the
weighting of each issue, may differ from the composition of the Fund's
portfolio. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-received hedge may be unsuccessful to some degree
because of unexpected market behavior or interest rate trends.
Because of the low margin deposits required, Futures trading involves
an extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss,
as well as gain, to the investor. For example, if at the time of purchase,
10% of the value of the Futures Contract is deposited as margin, a subsequent
10% decrease in the value of the Futures Contract would result in a total
loss of the margin deposit, before any deduction for the transaction costs,
if the account were then closed out. A 15% decrease would result in a loss
equal to 150% of the original margin deposit, if the Futures Contract were
closed out. Thus, a purchase or sale of a Futures Contract may result in
losses in excess of the amount initially invested in the Futures Contract.
However, the Fund would presumably have sustained comparable losses if,
instead of the Futures Contract, it had invested in the underlying financial
instrument and sold it after the decline.
Most United States Futures exchanges limit the amount of fluctuation
permitted in Futures Contract prices during a single trading day. The daily
limit establishes the maximum amount that the price of a Futures Contract may
vary either up or down from the previous day's settlement price at the end of
a trading session. Once the daily limit has been reached in a particular
type of Futures Contract, no trades may be made on that day at a price beyond
that limit. The daily limit governs only price movement during a particular
trading day and therefore does not limit potential losses, because the limit
may prevent the liquidation of unfavorable positions. Futures Contract
prices have occasionally moved to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation
of Futures positions and subjecting some Futures traders to substantial
losses.
There can be no assurance that a liquid market will exist at a time
when the Fund seeks to close out a Futures or futures option position. The
Fund would continue to be required to meet margin requirements until the
position is closed possibly resulting in a decline in the Fund's net asset
value. In addition, many of the contracts discussed above are relatively new
instruments without a significant trading history. As a result, there can be
no assurance that an active secondary market will develop or continue to
exist.
Options on Futures
The Fund may also purchase or write put and call options on Futures
Contracts and enter into closing transactions with respect to such options to
terminate an existing position. A futures option gives the holder the right,
in return for the premium paid, to assume a long position (call) or short
position (put) in a Futures Contract at a specified exercise price prior to
the expiration of the option. Upon exercise of a call option, the holder
acquires
<PAGE>
a long position in the Futures Contract and the writer is assigned
the opposite short position. In the case of a put option, the opposite is
true. Prior to exercise or expiration, a futures option may be closed out by
an offsetting purchase or sale of a futures option of the same series.
The Fund may use its options on Futures Contracts in connection with
hedging strategies. Generally, these strategies would be employed under the
same market and market sector conditions in which the Fund uses put and call
options on securities or indexes. (See "Short Sales Against the Box and
Writing Covered Call and Put Options" and "Purchasing Put and Call Options"
above.) The purchase of put options on Futures Contracts is analogous to the
purchase of puts on securities or indexes so as to hedge the Fund's portfolio
of securities against the risk of declining market prices. The writing of a
call option or the purchasing of a put option on a Futures Contract
constitutes a partial hedge against declining prices of the securities which
are deliverable upon exercise of the Futures Contract. If the futures price
at expiration of a written call option is below the exercise price, the Fund
will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's holdings of
securities. If the futures price when the option is exercised is above the
exercise price, however, the Fund will incur a loss, which may be offset, in
whole or in part, by the increase in the value of the securities in the
Fund's portfolio that were being hedged. Writing a put option or purchasing
a call option on a Futures Contract serves as a partial hedge against an
increase in the value of the securities the Fund intends to acquire. If the
Futures Contract price at expiration of a put option the Fund has written is
above the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase that may have
occurred in the price of the securities the Fund intends to acquire. If the
Futures Contract price at expiration of a put option the Fund has written is
below the exercise price, however, the Fund will incur a loss, which may be
offset, in whole or in part, by the decrease in the price of the securities
the Fund intends to acquire.
As with investments in Futures Contracts, the Fund is also required to
deposit and maintain margin with respect to put and call options on Futures
Contracts written by it. Such margin deposits will vary depending on the
nature of the underlying Futures Contract (and the related initial margin
requirements), the current market value of the option, and other futures
positions held by the Fund. The Fund will set aside in a segregated account
at the Fund's custodian liquid assets, such as cash, U.S. government
securities or other high grade debt obligations equal in value to the amount
due on the underlying obligation. Such segregated assets will be marked to
market daily, and additional assets will be placed in the segregated account
whenever the total value of the segregated account falls below the amount due
on the underlying obligation.
The risks associated with the use of options on Futures Contracts
include the risk that the Fund may close out its position as a writer of an
option only if a liquid secondary market exists for such options, which
cannot be assured. The Fund's successful use of options on Futures Contracts
depends on Oak Ridge's ability to correctly predict the movement in prices of
Futures Contracts and the underlying instruments, which may prove to be
incorrect. In addition, there may be imperfect correlation between the
instruments being hedged and the Futures Contract subject to the option.
(For additional information, see "Futures Contracts.")
Federal Tax Treatment of Futures Contracts
For federal income tax purposes, the Fund is required to recognize as
income for each taxable year its net unrealized gains and losses on Futures
Contracts as of the end of the year, as well as gains and losses actually
realized during the year. Except for transactions in Futures Contracts that
are classified as part of a "mixed straddle" under Code Section 1256, any
gain or loss recognized with respect to a Futures Contract is considered to
be 60% long-term capital gain or loss and 40% short-term capital gain or
loss, without regard to the holding period of the Futures Contract. In the
case of a Futures transaction not classified as a "mixed straddle," the
recognition of losses may be deferred to a later taxable year.
<PAGE>
Sales of Futures Contracts that are intended to hedge against a change
in the value of securities held by the Fund may affect the holding period of
such securities and, consequently, the nature of the gain or loss on such
securities upon disposition.
The Fund intends to operate as a "Regulated Investment Company" under
Subchapter M of the Code, and therefore will not be liable for federal income
taxes to the extent earnings are distributed on a timely basis. In addition,
as a result of being a Regulated Investment Company, net capital gains that
the Fund distributes to shareholders will retain their original capital gain
character in the shareholders' individual tax returns.
In order for the Fund to qualify for federal income tax treatment as a
Regulated Investment Company, at least 90% of its gross income for a taxable
year must be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities and gains from the sale of
securities, and other income (including gains on options and futures
contracts) derived with respect to the Fund's business of investing in stock
or securities. In addition, gains realized on the sale or other disposition
of securities or Futures Contracts held for less than three months must be
limited to less than 30% of the Fund's annual gross income. It is
anticipated that any net gain realized from the closing out of Futures
Contracts will be considered gain from the sale of securities and therefore
will be qualifying income for purposes of the 90% requirement. For purposes
of applying these tests, any increase in value on a position that is part of
a designated hedge will be offset by any decrease in value (whether or not
realized) on any other position that is part of such hedge. It is
anticipated that unrealized gains on Futures Contracts which have been open
for less than three months as of the end of the Fund's fiscal year and which
are recognized for tax purposes will not be considered gains on securities
held less than three months for purposes of the 30% test.
The Fund will distribute to shareholders annually any net capital gains
which have been recognized for federal income tax purposes (including
unrealized gains at the end of the Fund's fiscal year) on Futures
transactions. Such distributions will be combined with distributions of
capital gains realized on the Fund's other investments and shareholders will
be advised of the nature of the payments.
Warrants
The Fund may invest in warrants if after giving effect thereto, not
more than 5% of its net assets will be invested in warrants other than
warrants acquired in units or attached to other securities. Of such 5% not
more than 2% of the Fund's net assets at the time of purchase may be invested
in warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Investments in warrants is pure speculation in that
they have no voting rights, pay no dividends, and have no rights with respect
to the assets of the corporation issuing them. Warrants basically are
options to purchase equity securities at a specific price for a specific
period of time. They do not represent ownership of the securities but only
the right to buy them. Warrants differ from call options in that warrants
are issued by the issuer of the security which may be purchased on their
exercise, whereas call options may be written or issued by anyone. (See
"Purchasing Put and Call Options" above.) The prices of warrants do not
necessarily move parallel to the prices of the underlying securities.
When-Issued Securities
The Fund may from time to time purchase securities on a "when-issued"
basis up to 5% of its net assets. The price of securities purchased on a
when-issued basis is fixed at the time the commitment to purchase is made,
but delivery and payment for the securities take place at a later date.
Normally, the settlement date occurs within 45 days of the purchase. During
the period between the purchase and settlement, no payment is made by the
Fund to the issuer, no interest is accrued on debt securities, and no
dividend income is earned on equity securities. Forward commitments involve
a risk of loss if the value of the security to be purchased declines prior to
the settlement date, which risk is in addition to the risk of decline in
value of the Fund's other assets. While when-
<PAGE>
issued securities may be sold
prior to the settlement date, the Fund intends to purchase such securities
with the purpose of actually acquiring them. At the time the Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net
asset value. The Fund does not believe that its net asset value will be
adversely affected by its purchases of securities on a when-issued basis.
The Fund will maintain cash and marketable securities equal in value to
commitments for when-issued securities. Such segregated securities either
will mature or, if necessary, be sold on or before the settlement date. When
the time comes to pay for when-issued securities, the Fund will meet its
obligations from then available cash flow, sale of the securities held in the
separate account, described above, sale of other securities or, although it
would not normally expect to do so, from the sale of the when-issued
securities themselves (which may have a market value greater or less than the
Fund's payment obligation).
Repurchase Obligations
The Fund may enter into repurchase agreements with respect to no more
than 5% of its net assets with member banks of the Federal Reserve System and
certain non-bank dealers. In a repurchase agreement, the Fund buys a
security at one price and, at the time of the sale, the seller agrees to
repurchase the obligation at a mutually agreed upon time and price (usually
within seven days). The repurchase agreement thereby determines the yield
during the purchaser's holding period, while the seller's obligation to
repurchase is secured by the value of the underlying security. Oak Ridge
will monitor, on an ongoing basis, the value of the underlying securities to
ensure that the value always equals or exceeds the repurchase price plus
accrued interest. Repurchase agreements could involve certain risks in the
event of a default or insolvency of the other party to the agreement,
including possible delays or restrictions upon the Fund's ability to dispose
of the underlying securities.
Unseasoned Companies
The Fund may invest not more than 5% of its net assets in unseasoned
companies. While smaller companies generally have potential for rapid
growth, they often involve higher risks because they lack the management
experience, financial resources, product diversification, and competitive
strengths of larger corporations. In addition, in many instances, the
securities of smaller companies are traded only over-the-counter or on
regional securities exchanges, and the frequency and volume of their trading
is substantially less than is typical of larger companies. Therefore, the
securities of smaller companies may be subject to wider price fluctuations.
When making large sales, the Fund may have to sell portfolio holdings of
small companies at discounts from quoted prices or may have to make a series
of smaller sales over an extended period of time due to the trading volume in
smaller company securities.
DIRECTORS AND OFFICERS OF THE CORPORATION
-----------------------------------------
Directors and officers of the Corporation, together with information as
to their principal business occupations during the last five years, and other
information, are shown below. Each director who is deemed an "interested
person," as defined in the Investment Company Act of 1940 ("Investment
Company Act"), is indicated by an asterisk.
<PAGE>
*David M. Klaskin, President and a Director of the Corporation.
Mr. Klaskin has been the President and Chief Investment Officer of Oak
Ridge since its founding in 1989. For the eight years prior to
founding Oak Ridge, Mr. Klaskin was a financial consultant with
Shearson/Lehman Bros. responsible for managing funds for both
individual and institutional clients. Mr. Klaskin graduated from
Indiana University with a B.S. in Finance.
*Samuel Wegbreit, Chairman of the Board, Treasurer and a Director of the
Corporation.
Mr. Wegbreit has been the Chairman of Oak Ridge since its founding in
September, 1989. From April 1988 until founding Oak Ridge, Mr.
Wegbreit was a securities trader. From 1983 to 1988 Mr. Wegbreit was a
securities trader and Vice-President with Morgan Stanley & Co. Mr.
Wegbreit graduated from Brown University with a B.S. in Applied
Mathematics.
Daniel A. Kaplan, a Director of the Corporation.
Mr. Kaplan is a certified public accountant and the Chief Financial
Officer of Loft Development Corporation. Mr. Kaplan has been employed
by Loft Development Corporation since 1986.
Mark C. Pappas, Secretary of the Corporation.
Mr. Pappas joined Oak Ridge as Senior Vice President in 1993. From
1992 until 1993, Mr. Pappas was the Senior Portfolio Analyst for the
General Board of Pensions of the United Methodist Church. From 1990-
1992, Mr. Pappas was a Consultant with Oak Ridge. From 1986-1991, Mr.
Pappas attended Purdue University where he received his B.S. in
Economics/Finance.
A. Charlene Sullivan, Ph.D., a Director of the Corporation.
Dr. Sullivan has been an Associate Professor of Finance at Purdue
University since 1978. In addition, Dr. Sullivan has been a member of
the board of directors of the Federal Reserve Bank in Chicago since
1990.
Martin Z. Craig, a Director of the Corporation.
Mr. Craig has been the principal of Craig Capital Investments since
January, 1991. From 1988 through 1990 Mr. Craig was the Executive Vice
President and a Director of HHL Financial Services, Inc.
Except for Mr. Kaplan, Dr. Sullivan and Mr. Craig, the address of all
of the above persons is Oak Ridge Investments, Inc., 233 N. Michigan Ave.,
Suite 1807, Chicago, Illinois 60601. Mr. Kaplan's address is 641 W. Lake
Street, Chicago, Illinois 60661. Dr. Sullivan's address is Purdue
University, Krannert Center, #217, West Lafayette, IN 47907; and Mr. Craig's
address is 854 Bluff Street, Glencoe, IL 60022.
As of November 30, 1995, officers and directors of the Corporation
beneficially owned 14,322 shares of common stock of the Fund, which was 4.91%
of the Fund's then outstanding shares. Directors and officers of the
Corporation who are officers, directors, employees, or shareholders of Oak
Ridge do not receive any remuneration from the Corporation or the Fund for
serving as directors or officers.
<PAGE>
The following table provides information relating to compensation paid
to directors of the Corporation for their services as such for the fiscal
year ended November 30, 1995:
Name Cash Compensation(1) Other Compensation Total
- ---- ----------------- ------------------ -----
David M. Klaskin $ 0 $ 0 $ 0
Samuel Wegbreit $ 0 $ 0 $ 0
Daniel A. Kaplan $1,000 $ 0 $1,000
A. Charlene Sullivan $1,000 $ 0 $1,000
Martin Z. Craig $1,000 $ 0 $1,000
All directors as a
group (5 persons) $3,000 $ 0 $3,000
___________________
(1) Each director who is not deemed an "interested person," as defined in
the Investment Company Act, receives $250 for each board of directors
meeting attended by such person. The board held 4 meetings during
fiscal 1995. Thus, each director described above received $1,000
during such time period from the Corporation.
PRINCIPAL SHAREHOLDERS
----------------------
As of November 30, 1995, the following persons owned of record or are
known by the Corporation to own of record or beneficially more than 5% of the
Fund's outstanding shares:
Name and Address Number of Shares Percentage
- ---------------- ---------------- ----------
Milton Vainder
35 Aspen Lane
Glencoe, IL 60022 19,084 6.5%
INVESTMENT ADVISOR AND UNDERWRITER
----------------------------------
Oak Ridge Investments, Inc. ("Oak Ridge") is the investment advisor to
the Fund. Mr. Klaskin controls Oak Ridge and is the President, Treasurer and
a director of Oak Ridge. Mr. Wegbreit is the Chairman, Secretary and a
director of Oak Ridge. Mr. Pappas is the Senior Vice President of Oak Ridge.
Neither Mr. Klaskin nor Mr. Wegbreit own 51% of Oak Ridge. A brief
description of the Fund's investment advisory agreement is set forth in the
Prospectus under "MANAGEMENT."
The Fund's Advisory Agreement is dated January 3, 1994 (the "Advisory
Agreement"). The Advisory Agreement has an initial term of two years and
thereafter is required to be approved annually by the Board of Directors of
the Corporation or by vote of a majority of the Fund's outstanding voting
securities (as defined in the Investment Company Act). Each annual renewal
must also be approved by the vote of a majority of the Corporation's
directors who are not parties to the Advisory Agreement or interested persons
of any such party, cast
<PAGE>
in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement was approved by the vote of
a majority of the Corporation's directors who are not parties to the Advisory
Agreement or interested persons of any such party on December 16, 1993 and by
the initial shareholders of the Fund on December 21, 1993. The Advisory
Agreement is terminable without penalty, on 60 days' written notice by the
Board of Directors of the Corporation, by vote of a majority of the
Corporation's outstanding voting securities, or by Oak Ridge, and will
terminate automatically in the event of its assignment.
Under the terms of the Advisory Agreement, Oak Ridge manages the Fund's
investments subject to the supervision of the Corporation's Board of
Directors. Oak Ridge is responsible for investment decisions and supplies
investment research and portfolio management. At its expense, Oak Ridge
provides office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Fund.
As compensation for its services, the Corporation, on behalf of the
Fund, pays to Oak Ridge a monthly advisory fee at the annual rate of 1.00% of
the average daily net asset value of the Fund. See "Determination of Net
Asset Value" in the Prospectus. From time to time, Oak Ridge may voluntarily
waive all or a portion of its management fee for the Fund. For the periods
ended November 30, 1994 and 1995, the Fund did not pay an advisory fee to Oak
Ridge because Oak Ridge waived its entire advisory fee. If Oak Ridge had not
agreed to waive the advisory fee, Oak Ridge would have received $15,506 and
$33,642 in 1994 and 1995, respectively. The organizational expenses of the
Fund were advanced by Oak Ridge and will be reimbursed by the Fund over a
period of not more than 60 months. The organizational expenses for the Fund
were approximately $44,002.
The Advisory Agreement requires Oak Ridge to reimburse the Fund in the
event that the expenses and charges payable by the Fund in any fiscal year,
including the advisory fee but excluding taxes, interest, brokerage
commissions, and similar fees, exceed two percent (2%) of the average net
asset value of the Fund for such year. Such excess is determined by
valuations made as of the Fund's fiscal year. In addition, various states
impose expense limitations. The most restrictive percentage limitation
currently applicable to the Fund will be 2 1/2% of its average net asset
value up to $30,000,000, 2% on the next $70,000,000 of its average net asset
value and 1 1/2% of its average net asset value in excess of $100,000,000.
Reimbursement of expenses in excess of the applicable limitation will be made
on a monthly basis and will be paid to the Fund by reduction of Oak Ridge's
fee, subject to later adjustment, month by month, for the remainder of the
Fund's fiscal year. Oak Ridge may from time to time voluntarily absorb
expenses for the Fund in addition to the reimbursement of expenses in excess
of the limitations described above.
Under a Distribution Agreement dated January 3, 1994 (the "Distribution
Agreement"), Oak Ridge also acts as underwriter of the Fund's shares. The
Distribution Agreement provides that Oak Ridge will use its best efforts to
distribute the Fund's shares, which shares are offered for sale by the Fund
continuously at net asset value per share plus a maximum initial sales charge
of 4.25% of the offering price. Existing shareholders of the Fund as of
December 31, 1995 are not subject to this sales charge on additional
purchases of Fund shares. In addition, no sales charge is imposed on the
reinvestment of dividends or capital gains. Certain other exceptions to the
imposition of this sales charge apply, as discussed more fully in the
Prospectus under the catpion "HOW TO PURCHASE FUND SHARES -- Purchases at Net
Asset Value." These exceptions are made available because minimal or no sales
effort is required with respect to the categories of investors so excepted.
Pursuant to the terms of the Distribution Agreement, Oak Ridge bears the
costs of printing prospectuses and shareholder reports which are used for
selling purposes, as well as advertising and any other costs attributable to
the distributor of Fund shares. For the periods ended November 30, 1994 and
1995, Oak Ridge did not receive any compensation for its services as
underwriter.
<PAGE>
The Distribution Agreement is subject to the same termination and
renewal provisions as are described above with respect to the Advisory
Agreement, except that the Distribution Agreement need not be approved by the
Fund's shareholders.
DISTRIBUTION PLAN
-----------------
Description of Plan
The Fund has adopted a plan pursuant to Rule 12b-1 under the Investment
Company Act (the "Plan"), which requires it to pay Oak Ridge, in its capacity
as the principal underwriter of Fund shares, a distribution fee of up to
0.25% per annum of the Fund's average daily net assets. Under the terms of
the Plan, Oak Ridge is authorized to, in turn, pay all or a portion of this
fee to any securities dealer, financial institution or any other person (the
"Recipient") who renders assistance in distributing or promoting the sale of
Fund shares pursuant to a written agreement (the "Rule 12b-1 Related
Agreement"). To the extent such fee is not paid to such persons, Oak Ridge
may use the fee for its own distribution expenses incurred in connection with
the sale of the Fund's shares, although it is Oak Ridge's current intention
to pay out all or most of the fee. A form of the 12b-1 Related Agreement
referred to above has been approved by a majority of the Board of Directors,
and of the Disinterested Directors voting separately. Accordingly, Oak Ridge
may enter into 12b-1 Related Agreements with securities dealers, financial
institutions or other persons without further Board approval.
Pursuant to the terms of the Plan, payment of the distribution fee is
to be made quarterly, within 30 days after the close of the quarter for which
the fee is payable, upon Oak Ridge forwarding to the Board of Directors a
written report of all amounts expensed pursuant to the Plan; provided,
however, that the aggregate payments by the Fund under the Plan in any month
to Oak Ridge and all Recipients may not exceed 0.25% of the Fund's average
net assets for that quarter; and provided further that no fee may be paid in
excess of the distribution expenses as set forth in the quarterly written
report. Thus, the Plan does not provide for the payment of distribution fees
in subsequent periods that relate to expenses incurred in prior periods.
The Plan, and any Rule 12b-1 Related Agreement which is entered into,
will continue in effect for a period of more than one year only so long as
its continuance is specifically approved at least annually by a vote of a
majority of the Fund's Board of Directors, and of the Disinterested
Directors, cast in person at a meeting called for the purpose of voting on
the Plan, or the Rule 12b-1 Related Agreement, as applicable. In addition,
the Plan, and any Rule 12b-1 Related Agreement, may be terminated at any
time, without penalty, by vote of a majority of the outstanding voting
securities of the Fund, or by vote of a majority of Disinterested Directors,
on not more than sixty (60) days' written notice.
Since the Plan did not become effective until January 1, 1996, no
amounts were paid by the Fund under the Plan for the year ended November 30,
1995.
Anticipated Benefits to the Fund
Prior to approving the Plan, the Board of Directors was furnished with
drafts of the Plan and related materials, including information relating to
the advantages and disadvantages of 12b-1 plans currently being used in the
mutual fund industry. Legal counsel for the Fund provided additional
information, summarized the provisions of the proposed Plan and discussed the
legal and regulatory considerations in adopting such Plan.
<PAGE>
The Board considered various factors in connection with its decision to
approve the Plan, including: (a) the nature and causes of the circumstances
which made implementation of the Plan necessary and appropriate; (b) the way
in which the Plan would address those circumstances, including the nature and
potential amount of expenditures; (c) the nature of the anticipated benefits;
(d) the merits of possible alternative plans or pricing structures; (e) the
relationship of the Plan to other distribution efforts of the Fund, including
the imposition of the 4.25% front-end sales load, subject to certain
exceptions; (f) the possible benefits of the Plan to any other person
relative to those of the Fund; and (g) the effect of the Plan on existing
shareholders.
Based upon its review of the foregoing factors and the material
presented to it, and in light of its fiduciary duties under relevant state
law and the Investment Company Act, the Board determined, in the exercise of
its business judgment, that the Plan was reasonably likely to benefit the
Fund and its shareholders in at least one or several potential ways.
Specifically, the Board concluded that Oak Ridge and any Recipients operating
under Rule 12b-1 Related Agreements would have little or no incentive to
incur promotional expenses on behalf of the Fund if a Rule 12b-1 Plan were
not in place to reimburse them, thus making the adoption of such Plan
important to the continued viability of the Fund. In addition, the Board
determined that the payment of distribution fees to these persons should
motivate them to maintain and enhance the level of service provided to Fund
shareholders, which would, of course, benefit such shareholders. Finally,
the adoption of the Plan would likely lead to an increase in net assets under
management, given the enhanced marketing efforts on the part of Oak Ridge and
Recipients to sell Fund shares. While the Board of Directors recognized that
Oak Ridge, in its capacity as the Fund's investment advisor, would benefit
from such an increase since its fees are based upon a percentage of net
assets of the Fund, the increase in net assets would also benefit both the
Fund and its shareholders by reducing the per share operating expenses of the
Fund which would result since the Fund's fixed expenses would be spread over
a larger asset base.
While there is no assurance that the expenditure of Fund assets to
finance distribution of Fund shares will have the anticipated results, the
Board of Directors believes there is a reasonable likelihood that one or more
of such benefits will result, and since the Board will be in a position to
monitor the distribution expenses of the Fund, it will be able to evaluate
the benefit of such expenditures in deciding whether to continue the Plan.
PORTFOLIO TRANSACTIONS AND BROKERAGE
------------------------------------
As investment advisor to the Fund, Oak Ridge is responsible for
decisions to buy and sell securities for the Fund and for the placement of
the Fund's portfolio business, the negotiation of the commissions to be paid
on such transactions and the allocation of portfolio brokerage and principal
business. It is the policy of Oak Ridge to seek the best execution at the
best security price available with respect to each transaction, in light of
the overall quality of brokerage and research services provided to Oak Ridge
or the Fund. The best price to the Fund means the best net price without
regard to the mix between purchase or sale price and commission, if any.
Purchases may be made from underwriters, dealers, and, on occasion, the
issuers. Commissions will be paid on the Fund's futures and options
transactions, if any. The purchase price of portfolio securities purchased
from an underwriter or dealer may include underwriting commissions and dealer
spreads. The Fund may pay mark-ups on principal transactions. In selecting
broker-dealers and in negotiating commissions, Oak Ridge considers the firm's
reliability, the quality of its execution services on a continuing basis and
its financial condition. Brokerage will not be allocated based on the sale
of the Fund's shares. As noted in the Prospectus under the caption
"PORTFOLIO TRANSACTIONS," pursuant to guidelines adopted by the Corporation's
Board of Directors and in accordance with the Rules of the SEC, Oak Ridge may
serve as a broker to the Fund; however, in order for Oak Ridge to effect any
portfolio transactions for the Fund, the commissions, fees or other
remuneration received by Oak Ridge must be reasonable and fair compared to
fees or other remuneration paid to other brokers in connection with
comparable transactions involving similar securities being purchased or sold
in a securities exchange during a comparable period of time.
<PAGE>
The aggregate amount of brokerage commissions paid by the Fund for the
periods ended November 30, 1994 and 1995 was $2,409 and $4,635, respectively.
Of these total brokerage commissions, Oak Ridge received $1,678 and $2,058 in
1994 and 1995, respectively.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment advisor, under certain circumstances, to cause an
account to pay a broker or dealer who supplies brokerage and research
services a commission for effecting a transaction in excess of the amount of
commission another broker or dealer would have charged for effecting the
transaction. Brokerage and research services include (a) furnishing advice
as to the value of securities, the advisability of investing, purchasing or
selling securities, and the availability of securities or purchasers or
sellers of securities; (b) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and the performance of accounts; and (c) effecting securities
transactions and performing functions incidental thereto (such as clearance,
settlement, and custody).
Oak Ridge is responsible for selecting brokers in connection with
securities transactions. In selecting such brokers, Oak Ridge considers
investment and market information and other research, such as economic,
securities and performance measurement research, provided by such brokers,
and the quality and reliability of brokerage services, including execution
capability, performance, and financial responsibility. Accordingly, the
commissions charged by any such broker may be greater than the amount another
firm might charge if Oak Ridge determines in good faith that the amount of
such commissions is reasonable in relation to the value of the research
information and brokerage services provided by such broker to the Fund. Oak
Ridge believes that the research information received in this manner provides
the Fund with benefits by supplementing the research otherwise available to
the Fund. The Advisory Agreement provides that such higher commissions will
not be paid by the Fund unless (a) Oak Ridge determines in good faith that
the amount is reasonable in relation to the services in terms of the
particular transaction or in terms of Oak Ridge's overall responsibilities;
and (b) such payment is made in compliance with the provisions of Section
28(e) and other applicable state and federal laws. The investment advisory
fees paid by the Fund under the Advisory Agreement are not reduced as a
result of Oak Ridge's receipt of research services. The Fund did not pay
brokerage commissions for the periods ended November 30, 1994 and 1995 for
transactions for which research services were provided.
Oak Ridge places portfolio transactions for other advisory accounts
managed by Oak Ridge. Research services furnished by firms through which the
Fund effects its securities transactions may be used by Oak Ridge in
servicing all of its accounts; not all of such services may be used by Oak
Ridge in connection with the Fund. Oak Ridge believes it is not possible to
measure separately the benefits from research services to each of the
accounts (including the Fund) managed by it. Because the volume and nature
of the trading activities of the accounts are not uniform, the amount of
commissions in excess of those charged by another broker paid by each account
for brokerage and research services will vary. However, Oak Ridge believes
such costs to the Fund will not be disproportionate to the benefits received
by the Fund on a continuing basis. Oak Ridge seeks to allocate portfolio
transactions equitably whenever concurrent decisions are made to purchase or
sell securities by the Fund and another advisory account. In some cases,
this procedure could have an adverse effect on the price or the amount of
securities available to the Fund. In making such allocations between the
Fund and other advisory accounts, the main factors considered by Oak Ridge
are the respective investment objectives, the relative size of portfolio
holdings of the same or comparable securities, the availability of cash for
investment and the size of investment commitments generally held.
The Fund's portfolio turnover rate for the periods ended November 30,
1994 and 1995 was 80% and 109%, respectively. The Fund anticipates that its
portfolio turnover rate may continue to exceed 50%, although such rate is not
expected to exceed 100%. The annual portfolio turnover rate indicates
changes in the Fund's portfolio; for instance, a rate of 100% would result if
all the securities in the portfolio (excluding securities whose maturities at
acquisition were one year or less) at the beginning of an annual period had
been replaced by the end of the period.
<PAGE>
The turnover rate may vary from year
to year, as well as within a year, and may be affected by portfolio sales
necessary to meet cash requirements for redemptions of the Fund's shares.
CUSTODIAN
---------
As custodian of the Fund's assets, Firstar Trust Company ("Firstar")
has custody of all securities and cash of the Fund, delivers and receives
payment for securities sold, receives and pays for securities purchased,
collects income from investments and performs other duties, all as directed
by the officers of the Corporation. The custodian is in no way responsible
for any of the investment policies or decisions of the Fund.
TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
--------------------------------------------
Firstar also acts as transfer agent and dividend-disbursing agent for
the Fund. Firstar is compensated based on an annual fee per open account of
$14, plus out-of-pocket expenses such as postage and printing expenses in
connection with shareholder communications. Firstar also receives an annual
fee per closed account of $14.
TAXES
-----
As indicated under "INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND
TAX STATUS" in the Prospectus, it is the Corporation's intent, on behalf of
the Fund, to continue to qualify annually as a "regulated investment company"
under the Code. This qualification does not involve government supervision
of the Fund's management practices or policies.
A dividend or capital gains distribution received shortly after the
purchase of shares reduces the net asset value of shares by the amount of the
dividend or distribution and, although in effect a return of capital, will be
subject to income taxes. Net gain on sale of securities when realized and
distributed, any or constructively, is taxable as capital gain. If the net
asset value of shares were reduced below a shareholder's cost by distribution
of gains realized on sales of securities, such distribution would be a return
of investment although taxable as stated above.
DETERMINATION OF NET ASSET VALUE
--------------------------------
As set forth in the Prospectus under the same caption, the net asset
value of the Fund will be determined as of the close of trading on each day
the New York Stock Exchange is open for trading. The Fund does not determine
net asset value on days the New York Stock Exchange is closed and at other
times described in the Prospectus. The New York Stock Exchange is closed on
New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the New York Stock Exchange will
not be open for trading on the preceding Friday and when such holiday falls
on a Sunday, the New York Stock Exchange will not be open for trading on the
succeeding Monday, unless unusual business conditions exist, such as the
ending of a monthly or the yearly accounting period.
<PAGE>
SHAREHOLDER MEETINGS
--------------------
Maryland law permits registered investment companies, such as the
Corporation, to operate without an annual meeting of shareholders under
specified circumstances if an annual meeting is not required by the
Investment Company Act. The Corporation has adopted the appropriate
provisions in its Bylaws and may, at its discretion, not hold an annual
meeting in any year in which the election of directors is not required to be
acted on by shareholders under the Investment Company Act.
The Corporation's Bylaws also contain procedures for the removal of
directors by shareholders. At any meeting of shareholders, duly called and
at which a quorum is present, the shareholders may, by the affirmative vote
of the holders of a majority of the votes entitled to be cast thereon, remove
any director or directors from office and may elect a successor or successors
to fill any resulting vacancies for the unexpired terms of removed directors.
Upon the written request of the holders of shares entitled to not less
than ten percent (10%) of all the votes entitled to be cast at such meeting,
the Secretary of the Corporation shall promptly call a special meeting of
shareholders for the purpose of voting upon the question of removal of any
director. Whenever ten or more shareholders of record who have been such for
at least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at
least one percent (1%) of the total outstanding shares, whichever is less,
shall apply to the Corporation's Secretary in writing, stating that they wish
to communicate with other shareholders with a view to obtaining signatures to
a request for a meeting as described above and accompanied by a form of
communication and request which they wish to transmit, the Secretary shall
within five business days after such application either: (1) afford to such
applicants access to a list of the names and addresses of all shareholders as
recorded on the books of the Corporation; or (2) inform such applicants as to
the approximate number of shareholders of record and the approximate cost of
mailing to them the proposed communication and form of request.
If the Secretary elects to follow the course specified in clause (2) of
the last sentence of the preceding paragraph, the Secretary, upon the written
request of such applicants, accompanied by a tender of the material to be
mailed and of the reasonable expenses of mailing, shall, with reasonable
promptness, mail such material to all shareholders of record at their
addresses as recorded on the books unless within five business days after
such tender the Secretary shall mail to such applicants and file with the
SEC, together with a copy of the material to be mailed, a written statement
signed by at least a majority of the Board of Directors to the effect that in
their opinion either such material contains untrue statements of fact or
omits to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion.
After opportunity for hearing upon the objections specified in the
written statement so filed, the SEC may, and if demanded by the Board of
Directors or by such applicants shall, enter an order either sustaining one
or more of such objections or refusing to sustain any of them. If the SEC
shall enter an order refusing to sustain any of such objections, or if, after
the entry of an order sustaining one or more of such objections, the SEC
shall find, after notice and opportunity for hearing, that all objections so
sustained have been met, and shall enter an order so declaring, the Secretary
shall mail copies of such material to all shareholders with reasonable
promptness after the entry of such order and the renewal of such tender.
<PAGE>
PERFORMANCE INFORMATION
-----------------------
As described in the "Performance" section of the Fund's Prospectus, the
Fund's historical performance or return may be shown in the form of various
performance figures. It may occasionally cite statistics to reflect its
volatility or risk. The Fund's performance figures are based upon historical
results and are not necessarily representative of future performance.
Factors affecting the Fund's performance include general market conditions,
operating expenses, the imposition of sales charges and investment
management. Any additional fees charged by a dealer or other financial
services firm would reduce the returns described in this section.
Total Return
The average annual total return of the Fund is computed by finding the
average annual compounded rates of return over the periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the stated periods
at the end of the stated periods.
Calculation of the Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by
first taking an investment (assumed to be $1,000) ("initial investment") in
the Fund's shares on the first day of the period and computing the "ending
value" of that investment at the end of the period. The total return
percentage is then determined by subtracting the initial investment from the
ending value and dividing the remainder by the initial investment and
expressing the result as a percentage. The calculation reflects the
deduction of the maximum initial sales charge and assumes that all income and
capital gains dividends paid by the Fund have been reinvested at the net
asset value of the Fund on the reinvestment dates during the period. Total
return may also be shown as the increased dollar value of the hypothetical
investment over the period.
Cumulative total return represents the simple change in value of an
investment over a stated period and may be quoted as a percentage or as a
dollar amount. Total returns may be broken down into their components of
income and capital (including capital gains and changes in share price) in
order to illustrate the relationship between these factors and their
contributions to total return.
The Fund's performance figures for the periods ended November 30, 1994
and 1995 may be found in its 1995 Annual Report, which may be obtained free
of charge by calling or writing to the Fund.
Volatility
Occasionally statistics may be used to specify Fund volatility or risk.
Measures of volatility or risk are generally used to compare the Fund's net
asset value or performance relative to a market index. One measure of
volatility is beta. Beta is the volatility of a fund relative to the total
market as represented by the Standard & Poor's 500 Stock Index. A beta of
more than 1.00 indicates volatility greater than the market, and a beta of
less than 1.00 indicates volatility less than the market. Another measure of
volatility or risk is standard deviation. Standard
<PAGE>
deviation is used to
measure variability of net asset value or total return around an average,
over a specified period of time. The premise is that greater volatility
connotes greater risk undertaken in achieving performance.
Comparisons
The Fund may compare its performance to that of United States Treasury
Bills, Notes or Bonds. Treasury obligations are issued in selected
denominations. Rates of Treasury obligations are fixed at the time of
issuance and payment of principal and interest is backed by the full faith
and credit of the United States Treasury. The market value of such
instruments will generally fluctuate inversely with interest rates prior to
maturity and will equal par value at maturity. Generally, the values of
obligations with shorter maturities will fluctuate less than those with
longer maturities.
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds in
general or to the performance of particular types of mutual funds with
similar investment goals, as tracked by independent organizations. Among
these organizations, Lipper Analytical Services, Inc. ("Lipper"), a widely
used independent research firm which ranks mutual funds by overall
performance, investment objectives, and assets, may be cited. Lipper
performance figures are based on changes in net asset value, with all income
and capital gains dividends reinvested. Such calculations do not include the
effect of any sales charges. The Fund will be compared to Lipper's
appropriate fund category, that is, by fund objective and portfolio holdings.
The Fund's performance may also be compared to the performance of other
mutual funds by Morningstar, Inc. ("Morningstar"), which rates funds on the
basis of historical risk and total return. Morningstar's ratings range from
five stars (highest) to one star (lowest) and represent Morningstar's
assessment of the historical risk level and total return of a fund as a
weighted average for 3, 5, and 10 year periods. Ratings are not absolute or
necessarily predictive of future performance.
Evaluations of Fund performance made by independent sources may also be
used in advertisements concerning the Fund, including reprints of or
selections from, editorials or articles about the Fund. Sources for Fund
performance and articles about the Fund may include publications such as
Money, Forbes, Kiplinger's, Financial World, Business Week, U.S. News and
World Report, the Wall Street Journal, Barron's and a variety of investment
newsletters.
The Fund may compare its performance to a wide variety of indices and
measures of inflation including the Standard & Poor's Index of 500 Stocks and
the NASDAQ Over-the-Counter Composite Index. There are differences and
similarities between the investments that the Fund may purchase for its
portfolio and the investments measured by these indices.
Investors may want to compare the Fund's performance to that of
certificates of deposit offered by banks and other depository institutions.
Certificates of deposit may offer fixed or variable interest rates and
principal is guaranteed and may be insured. Withdrawal of the deposits prior
to maturity normally will be subject to a penalty. Rates offered by banks
and other depository institutions are subject to change at any time specified
by the issuing institution.
Investors may also want to compare performance of the Fund to that of
money market funds. Money market fund yields will fluctuate and shares are
not insured, but share values usually remain stable.
<PAGE>
INDEPENDENT ACCOUNTANTS
-----------------------
Price Waterhouse LLP have been selected as the independent accountants
for the Fund.
FINANCIAL STATEMENTS
--------------------
The following Financial Statements of the Fund are contained herein:
(a) Schedule of Investments at November 30, 1995.
(b) Statement of Assets and Liabilities at November 30, 1995.
(c) Statement of Operations for the year ended November 30,
1995.
(d) Statement of Changes in Net Assets for the period January
3, 1994 (commencement of operations) to November 30, 1994
and for the year ended November 30, 1995.
(e) Financial Highlights for the period January 3, 1994
(commencement of operations) to November 30, 1994 and for
the year ended November 30, 1995.
(f) Notes to Financial Statements.
(g) Report of Independent Accountants.
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
SCHEDULE OF INVESTMENTS
November 30, 1995
<S>
Number of Number of
Shares Value Shares Value
- --------- ------- --------- ------
<C> <C> <C> <C>
COMMON STOCK 90.53% Defense Electronics 1.81%
5,000 Tracor, Inc.* $ 75,625
Automotive & Related -------
Products 0.41% Drugs & Medical 2.82%
580 Borg-Warner Automotive, Inc. $ 17,183 2,500 Watson Pharmaceutical, Inc.* 117,812
------- -------
Banking 10.11% Entertainment 1.43%
1,500 BayBanks, Inc. 124,500 5,000 Boyd Gaming Corp.* 60,000
5,000 Bay Ridge Bancorp, Inc.* 109,375 -------
10,000 Greater New York Savings Bank 117,500
3,500 Kankakee Bancorp, Inc. 71,312 Environmental Services/
422,687 Pollution Control 11.63%
------- 20,000 Alanco Environmental Resource Corp.* 46,250
10,500 CET Environmental Services, Inc.* 86,625
Communications 3.88% 9,000 ERD Waste Corp.* 75,375
5,000 WorldCom, Inc.* 162,500 5,000 U.S. Filter Corp.* 110,000
------- 8,000 U.S.A. Waste Services, Inc.* 168,000
-------
Computers - Networking 6.03% 486,250
3,000 Sun Microsystems, Inc.* 252,375 -------
------- Health Care Equipment &
Computers - Retailing 1.12% Supplies 4.66%
1,000 Micro Warehouse, Inc.* 47,000 4,000 Coherent, Inc.* 168,000
------- 1,700 Maxxim Medical, Inc.* 26,988
-------
Computers - Software 9.64% 194,988
2,600 BMC Software, Inc.* 109,850 -------
5,000 MDL Information Systems, Inc.* 116,250
3,000 Sterling Software, Inc.* 177,000 Hospitals & Health Care 11.05%
------- 2,300 Columbia/HCA Healthcare Corp. 118,738
403,100 3,420 Healthsouth Rehabilitation* 103,455
------- 1,740 Horizon/CMS Healthcare Corp.* 37,627
Consumer Products-- 5,000 Multicare Cos., Inc.* 104,375
Miscellaneous 3.26% 5,000 OrNda HealthCorp.* 98,125
3,125 Mattel, Inc. 87,500 -------
8,000 Rentrack Corp.* 49,000 462,320
------- -------
136,000 Household Products 2.19%
2,000 First Brands Corp. 91,500
------
</TABLE>
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
SCHEDULE OF INVESTMENTS
November 30, 1995
<TABLE>
Number of Principal
Shares Value Amount Value
- --------- ------- --------- -------
<S> <C> <C> <C> <C>
Miscellaneous 3.21% SHORT-TERM INVESTMENTS 5.48%
3,300 Service Corp. International $ 134,063 $229,121 United Missouri Bank Money
---------- Market Fiduciary $ 229,121
Office Equipment 1.29% ----------
5,400 Cantel Industries, Inc.* 54,000 Total Short-Term Investments
---------- (cost $229,121) 229,121
Oil & Gas 2.38% ----------
4,500 Occidental Petroleum Corp. 99,562 Total Investments 96.01%
---------- (cost $3,085,971) 4,015,461
Restaurants 2.01%
4,000 Apple South, Inc. 84,000 Cash and Other Assets
---------- less Liabilities 3.99% 166,785
Retail 2.39% ----------
6,000 Zale Corp.* 99,750 NET ASSETS 100.00% 4,182,246
---------- ==========
Savings & Loans 5.52% * Non-income producing security
7,000 Home Financial Corp. 105,000
4,000 Sunrise Bancorp, Inc. 126,000
----------
Semiconductor--
Related Products 3.69%
4,500 GaSonics International Corp.* 79,875
6,000 LTX Corp.* 74,250
----------
154,125
----------
Total Common Stock
(cost $2,856,850) 3,786,340
----------
</TABLE>
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1995
ASSETS:
Investments at market value (cost $3,085,971) . . . . . . . . $4,015,461
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,800
Receivable for investments sold . . . . . . . . . . . . . . . 224,275
Receivable from Adviser . . . . . . . . . . . . . . . . . . . 47,192
Organizational expenses, net of accumulated amortization . . 27,026
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 1,250
Interest and dividends receivable . . . . . . . . . . . . . . 2,111
----------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . 4,410,115
----------
LIABILITIES:
Payable for securities purchased . . . . . . . . . . . . . . 192,058
Accrued other expenses . . . . . . . . . . . . . . . . . . . 32,350
Accrued investment advisory fee . . . . . . . . . . . . . . . 3,461
----------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . 227,869
----------
NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . $4,182,246
==========
NET ASSETS CONSIST OF:
Capital stock . . . . . . . . . . . . . . . . . . . . . . . . $ 2,921
Paid-in-capital in excess of par . . . . . . . . . . . . . . 3,071,779
Undistributed net realized gain on investments . . . . . . . 178,056
Net unrealized appreciation on investments . . . . . . . . . 929,490
----------
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . $4,182,246
==========
CAPITAL STOCK, $.01 par value
Authorized . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000,000
Issued and outstanding . . . . . . . . . . . . . . . . . . . . 292,144
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $14.32
======
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
STATEMENT OF OPERATIONS
For the Year Ended November 30, 1995
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,214
Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . 15,012
----------
24,226
----------
EXPENSES:
Fund administration and accounting fees . . . . . . . . . . . 60,259
Investment advisory fees . . . . . . . . . . . . . . . . . . 33,642
Professional fees . . . . . . . . . . . . . . . . . . . . . . 51,843
Shareholder servicing fees and expenses . . . . . . . . . . . 23,908
Reports to shareholders . . . . . . . . . . . . . . . . . . . 15,903
Federal and state registration fees . . . . . . . . . . . . . 13,952
Amortization of organizational expenses . . . . . . . . . . . 8,828
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . 3,000
Custody fees . . . . . . . . . . . . . . . . . . . . . . . . 3,094
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,982
----------
Total expenses before waiver and reimbursement . . . . . . . 217,911
Less: Waiver and reimbursement of expenses by Adviser . . . (151,027)
----------
Net expenses . . . . . . . . . . . . . . . . . . . . . . . . 66,884
----------
NET INVESTMENT INCOME (LOSS) . . . . . . . . . . . . . . . . (42,658)
----------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions . . . . . . . . 204,643
Change in unrealized appreciation/depreciation on investments 939,317
----------
Net gain on investments . . . . . . . . . . . . . . . . . . . 1,143,960
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . $1,101,302
==========
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Year January 3, 1994(1)
Ended to
November 30, 1995 November 30, 1994
----------------- -----------------
OPERATIONS:
Net investment income (loss) . . . $ (42,658) $ (17,052)
Net realized gain on investments . . . . 204,643 19,535
Change in unrealized appreciation/
depreciation on investments . . . . . . 939,317 (9,827)
---------- ----------
Net increase (decrease) in net
assets resulting from operations . . . 1,101,302 (7,344)
---------- ----------
DIVIDENDS PAID FROM:
Net realized gains . . . . . . . . (7,454) --
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold . . . . .. . . . . . . . . . 1,049,419 2,948,350
Shares issued to holders in
reinvestment of dividends . . . . . . . 6,813 --
Shares redeemed . . . . . . . . . . . . . . (676,380) (332,460)
---------- ----------
Net increase . . . . . . . . . . . . . 379,852 2,615,890
---------- ----------
TOTAL INCREASE IN NET ASSETS . . . . . . 1,473,700 2,608,546
NET ASSETS:
Beginning of period . . . . . . . . . . 2,708,546 100,000
---------- ----------
End of period . . . . . . . . . . . . . $4,182,246 $2,708,546
========== ==========
(1) Commencement of operations.
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
FINANCIAL HIGHLIGHTS
Year January 3, 1994(1)
Ended to
November 30, 1995 November 30, 1994
----------------- -----------------
Net asset value, beginning of period . $10.48 $10.00
Income from investment operations:
Net investment (loss) income . . . . (0.13) (0.07)
Net realized and unrealized gains on
investments . . . . . . . . . . . . . 4.00 0.55
----- -----
Total from investment operations . . 3.87 0.48
----- -----
Less distributions:
Dividends from capital gains . . . . (0.03) --
----- -----
Net asset value, end of period . . . . $14.32 $10.48
===== =====
Total return (2) . . . . . . . . . . . 37.0% 4.8%
Supplemental data and ratios:
Net assets, end of period . . . . . . . . $4,182,246 $2,708,546
Ratio of expenses to average net assets (3)(4) 2.0% 2.0%
Ratio of net investment (loss) income
to average net assets(3)(4). . . . . . . (1.3)% (1.1)%
Portfolio turnover rate . . . . . . . . 109% 80%
(1) Commencement of operations.
(2) Not annualized for the period ended November 30, 1994.
(3) Net of reimbursements and waivers. Absent reimbursements and waivers
of expenses by Adviser, the ratios of expenses to average net assets would
have been 6.5% and 9.0%, respectively and net investment income (loss)
to average net assets would have been (5.8)% and (8.1)%, respectively.
(4) Annualized for the period ended November 30, 1994.
See Notes to the Financial Statements.
<PAGE>
O.R.I. GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
The O.R.I. Growth Fund, Inc. (the "Fund") was incorporated on October 15,
1993 as a Maryland Corporation and is registered as an open-end diversified
management investment company under the Investment Company Act of 1940. Oak
Ridge Investments, Inc. (the "Adviser") is the Fund's investment adviser.
The Fund commenced operations on January 3, 1994.
Costs incurred in connection with the organization, initial registration and
public offering of shares aggregated $44,002. These costs are being
amortized over a period of not more than five years from the Fund's
commencement of operations. The proceeds of any redemption of the initial
shares by the original shareholders or any transferee will be reduced by a
pro rata portion of any then unamortized organizational expenses in the same
proportion as the number of initial shares being redeemed bears to the number
of initial shares outstanding at the time of such redemption.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Common stocks and other equity-type securities
are valued at the last sale price on a national securities exchange or
Nasdaq on which securities are primarily traded; provided, however,
securities traded on an exchange or Nasdaq for which there were no
transactions on a given day, and securities not listed on an exchange
or Nasdaq, are valued at the most recent bid price. Debt securities
(other than short-term instruments) are valued at prices furnished by a
pricing service, subject to review by the Adviser and determination of
the appropriate price whenever a furnished price is significantly
different from the previous day's furnished price. Debt securities
having remaining maturities of 60 days or less when purchased are
valued by the amortized cost method. Any securities or other assets
for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Directors.
b) Federal Income Taxes - No provision for federal income taxes has been
made since the Fund has complied to date with the provisions of the
Internal Revenue Code available to regulated investment companies and
intends to comply in future years.
c) Distribution to Shareholders - The Fund pays dividends of net
investment income annually. Distributions of net realized capital
gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with Federal income tax
regulations, which may differ from generally accepted accounting
principles. To the extent these book and tax differences are permanent
in nature, such amounts are reclassified to paid-in capital in excess
of par value. Accordingly, at November 30, 1995, reclassifications
were recorded to increase undistributed net investment income by
$42,658, decrease undistributed net realized gain on investments by
$26,587, and decrease paid-in capital in excess of par by $16,071.
<PAGE>
d) Short-Term Investments - The Fund maintains uninvested cash in a bank
overnight investment vehicle at its custodian. This may present credit
risk to the extent the custodian fails to perform in accordance with
the custody agreement. The credit worthiness of the custodian is
monitored and this investment is determined to present minimal credit
risk by the Fund's Adviser.
e) Other - Investment transactions are accounted for on the trade date
plus one. The Fund determines the gain or loss realized from
investment transactions by comparing the original cost of the security
lot sold with the net sale proceeds. The Fund's basis in investments
is the same for income tax and financial reporting purposes. Dividend
income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
Year January 3, 1994
Ended to
November 30, 1995 November 30, 1994
----------------- -----------------
Shares sold 90,685 279,905
Shares issued to holders in
reinvestment of dividends 662 --
Shares redeemed (57,549) (31,559)
------- -------
Net increase 33,798 248,346
======= =======
4. INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an agreement with the Adviser, with whom certain
officers and directors of the Fund are affiliated, to furnish investment
advisory services to the Fund. Under the terms of this agreement, the Fund
will pay the Adviser a monthly fee at the annual rate of 1.00% on average
daily net assets.
The Adviser voluntarily agrees to reimburse its management fee and other
expenses to the extent that total operating expenses (exclusive of interest,
taxes, brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items) exceed the
annual rate of 2.00% of the net assets of the Fund, computed on a daily
basis. This voluntary reimbursement may be modified or discontinued at any
time.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments for the Fund for the year ended November 30, 1995 were $3,686,524
and $3,404,171, respectively. There were no purchases or sales of long-term
U.S. government securities.
At November 30, 1995, gross unrealized appreciation and depreciation of
investments were as follows:
Appreciation . . . . . . . . . . . . . . . . . $986,561
Depreciation . . . . . . . . . . . . . . . . . (57,071)
--------
Net appreciation on investments . . . . . . . . $929,490
========
<PAGE>
O.R.I. GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
O.R.I. Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of O.R.I. Growth
Fund (the "Fund") at November 30, 1995, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period January 3, 1994
(commencement of operations) through November 30, 1994, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
November 30, 1995 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse LLP
December 15, 1995
<PAGE>
APPENDIX
--------
SHORT-TERM RATINGS
Standard & Poor's Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt having an original maturity of no
more than 365 days. The categories are as follows:
A issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues within this category are
delineated with the numbers 1, 2 and 3 to indicate the relative degree
of safety.
A-1 designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety
characteristics are designated A-1+.
A-2 designation indicates that the capacity for timely
payment is strong. However, the relative degree of safety is not
as high as for issues designated A-1.
A-3 designation indicates a satisfactory capacity for
timely payment. Issues with this designation however, are
somewhat more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B issues are regarded as having only an adequate capacity for
timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying
the higher designations.
C issues have a doubtful capacity for payment.
D issues are in payment default. The D rating category is used
when interest payments or principal payments are not made on the due
date even if the applicable grace period has not expired, unless
Standard & Poor's believes that such payments will be made during such
grace period.
Standard & Poor's Note Ratings
A Standard & Poor's note rating reflects the liquidity concerns and
market access risks unique to notes. Notes due in three years or less
normally receive a note rating. Notes maturing beyond three years normally
receive a bond rating, although the following criteria are used in making
such an assessment: (i) the amortization schedule (the larger the final
maturity relative to the other maturities, the more likely the issue will be
rated as a note), and (ii) the source of payment (the more dependent the
issue is on the market for its refinancing, the more likely it will be rated
as a note).
SP-1 notes have very strong or strong capacity to pay principal
and interest. Those issues determined to possess overwhelming safety
characteristics are designated as SP-1+.
SP-2 notes have satisfactory capacity to pay principal and
interest.
SP-3 notes have speculative capacity to pay principal and
interest.
<PAGE>
Moody's Commercial Paper Ratings
Moody's rates commercial paper as either Prime, which contains three
categories, or Not Prime. The commercial paper ratings are as follows:
P-1 issuers (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations, normally
evidenced by the following characteristics: (i) leading market
positions in well established industries, (ii) high rates of return on
funds employed, (iii) conservative capitalization structures with
moderate reliance on debt and ample asset protection, (iv) broad
margins in earnings coverage of fixed financial charges and high
internal cash generation and (v) well established access to a range of
financial markets and assured sources of alternate liquidity.
P-2 issuers (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations, normally
evidenced by many of the characteristics of a P-1 rating, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
P-3 issuers (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations.
The effect of industry characteristics and market composition may be
more pronounced. Variability in earnings and profitability may result
in changes in the level of debt protection measurements and the
requirement for relatively high financial leverage. Adequate alternate
liquidity is maintained.
Not Prime issuers (or related supporting institutions) do not
fall within any of the Prime rating categories.
Moody's Note Ratings
MIG-1 notes are the best quality. There is present strong protection
by established cash flows, superior liquidity support or demonstrated broad-
based access to the market for refinancing.
MIG-2 notes are high quality. Margins of protection are ample although
not so large as in the preceding group.
MIG-3 notes are favorable quality. All security elements are accounted
for but there is lacking the undeniable strength of the preceding grades.
Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG-4 notes are adequate quality. Protection commonly regarded as
required of an investment security is present and although not distinctly or
predominantly speculative, there is specific risk.
S.G. notes are speculative quality. Debt instruments in this category
lack margins of protection.
Fitch Investors Service, Inc. Commercial Paper and Note Ratings
Fitch's short-term ratings apply to debt obligations that are payable
on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal
and
<PAGE>
investment notes. Although the credit analysis is similar to Fitch's
bond rating analysis, the short-term rating places greater emphasis on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner. Fitch's short-term ratings are as follows:
Fitch-1+ (Exceptionally Strong Credit Quality) Issues
assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
Fitch-2 (Very Strong Credit Quality) Issues assigned this
rating reflect an assurance of timely payment only
slightly less in degree than issues rated Fitch-1+.
Fitch-2 (Good Credit Quality) Issues carrying this rating
have a satisfactory degree of assurance for timely
payment but the margin of safety is not as great as
the two higher categories.
Fitch-3 (Fair Credit Quality) Issues carrying this rating
have characteristics suggesting that the degree of
assurance for timely payment is adequate, however,
near-term adverse change is likely to cause these
securities to be rated below investment grade.
Fitch-S (Weak Credit Quality) Issues carrying this rating
have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to
near term adverse changes in financial and economic
conditions.
D (Default) Issues carrying this rating are in actual
or imminent payment default.
Duff & Phelps, Inc. Short-Term Ratings
Duff & Phelps' short-term ratings are consistent with the rating
criteria utilized by money market participants. The ratings apply to all
obligations with maturities of under one year, including commercial paper,
the uninsured portion of certificates of deposit, unsecured bank loans,
master notes, bankers acceptances, irrevocable letters of credit, and current
maturities of long-term debt. Asset-backed commercial paper is also rated
according to this scale.
Emphasis is placed on liquidity which is defined as not only cash from
operations, but also access to alternative sources of funds, including trade
credit, bank lines, and the capital markets. An important consideration is
the level of an obligor's reliance on short-term funds on an ongoing basis.
A. Category 1: High Grade
---------- ----------
Duff 1+ Highest certainty of timely payment. Short-
term liquidity, including internal operating
factors and/or access to alternative sources of
funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
Duff 1 Very high certainty of timely payment.
Liquidity factors are excellent and supported
by good fundamental protection factors. Risk
factors are minor.
Duff 1- High certainty of timely payment. Liquidity
factors are strong and supported by good
fundamental protection factors. Risk factors
are very small.
<PAGE>
B. Category 2: Good Grade
---------- ----------
Duff 2 Good certainty of timely payment. Liquidity
factors and company fundamentals are sound.
Although ongoing funding needs may enlarge
total financing requirements, access to capital
markets is good. Risk factors are small.
C. Category 3: Satisfactory Grade
---------- ------------------
Duff 3 Satisfactory liquidity and other protection
factors quality issue as to investment grade.
Risk factors are larger and subject to more
variation. Nevertheless, timely payment is
expected.
D. Category 4: Non-investment Grade
---------- --------------------
Duff 4 Speculative investment characteristics.
Liquidity is not sufficient to insure against
disruption in debt service. Operating factors
and market access may be subject to a high
degree of variation.
E. Category 5: Default
---------- -------
Duff 5 Issuer failed to meet scheduled principal
and/or interest payments.
BOND RATINGS
Standard & Poor's Bond Ratings
A Standard & Poor's corporate rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The debt rating is not a recommendation to purchase, sell, or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may
be changed, suspended, or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default -- capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal
in accordance with the terms of the obligation.
2. Nature of and provisions of the obligation.
<PAGE>
3. Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization, or other
arrangement under the laws of bankruptcy and other laws affecting
creditors' rights.
AAA Bonds have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Bonds have a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A Bonds have 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.
BBB Bonds are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit 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
bonds in this category than in higher rated categories.
BB, B, CCC, CC and C Bonds are regarded, on balance, as predominantly
speculative 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 or major risk exposures to adverse conditions. A C
rating is typically applied to debt subordinated to senior debt which is
assigned an actual or implied CCC rating. It may also be used to cover a
situation where a bankruptcy petition has been filed, but debt service
payments are continued.
Moody's Bond Ratings
Aaa Bonds 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 by 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.
Aa Bonds are judged to be of high quality by all standards. Together
with the Aaa group 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 risks appear somewhat larger than
in Aaa securities.
A Bonds 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 some time in the future.
Baa Bonds 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.
<PAGE>
Ba Bonds 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.
B Bonds 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.
Caa Bonds are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or interest.
Ca Bonds represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.
C Bonds 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.
Fitch Investors Service, Inc. Bond Ratings
The Fitch Bond Rating provides a guide to investors in determining the
investment risk associated with a particular security. The rating represents
its assessment of the issuer's ability to meet the obligations of a specific
debt issue. Fitch bond ratings are not recommendations to buy, sell or hold
securities since they incorporate no information on market price or yield
relative to other debt instruments.
The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the record of the issuer and
of any guarantor, as well as the political and economic environment that
might affect the future financial strength and credit quality of the issuer.
Bonds which have the same rating are of similar but not necessarily
identical investment quality since the limited number of rating categories
cannot fully reflect small differences in the degree of risk. Moreover, the
character of the risk factor varies from industry to industry and between
corporate, health care and municipal obligations.
In assessing credit risk, Fitch Investors Service relies on current
information furnished by the issuer and/or guarantor and other sources which
it considers reliable. Fitch does not perform an audit of the financial
statements used in assigning a rating.
Ratings may be changed, withdrawn or suspended at any time to reflect
changes in the financial condition of the issuer, the status of the issue
relative to other debt of the issuer, or any other circumstances that Fitch
considers to have a material effect on the credit of the obligor.
AAA rated bonds are considered to be investment grade and of the
highest credit quality. The obligor has an extraordinary ability
to pay interest and repay principal, which is unlikely to be
affected by reasonably foreseeable events.
AA rated bonds are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and
repay principal, while very strong, is somewhat less than for AAA
rated securities or more subject to possible change over the term
of the issue.
<PAGE>
A rated bonds are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable
to adverse changes in economic conditions and circumstances than
bonds with higher ratings.
BBB rated bonds are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay
interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances,
however, are more likely to weaken this ability than bonds with
higher ratings.
BB rated bonds are considered speculative and of low investment
grade. The obligor's ability to pay interest and repay principal
is not strong and is considered likely to be affected over time
by adverse economic changes.
B rated bonds are considered highly speculative. Bonds in this
class are lightly protected as to the obligor's ability to pay
interest over the life of the issue and repay principal when due.
CCC rated bonds may have certain identifiable characteristics which,
if not remedied, could lead to the possibility of default in
either principal or interest payments.
CC rated bonds are minimally protected. Default in payment of
interest and/or principal seems probable.
C rated bonds are in actual or imminent default in payment of
interest or principal.
Duff & Phelps, Inc. Long-Term Ratings
These ratings represent a summary opinion of the issuer's long-term
fundamental quality. Rating determination is based on qualitative and
quantitative factors which may vary according to the basic economic and
financial characteristics of each industry and each issuer. Important
considerations are vulnerability to economic cycles as well as risks related
to such factors as competition, government action, regulation, technological
obsolescence, demand shifts, cost structure, and management depth and
expertise. The projected viability of the obligor at the trough of the cycle
is a critical determination.
Each rating also takes into account the legal form of the security,
(e.g., first mortgage bonds, subordinated debt, preferred stock, etc.). The
extent of rating dispersion among the various classes of securities is
determined by several factors including relative weightings of the different
security classes in the capital structure, the overall credit strength of the
issuer, and the nature of covenant protection. Review of indenture
restrictions is important to the analysis of a company's operating and
financial constraints.
The Credit Rating Committee formally reviews all ratings once per
quarter (more frequently, if necessary).
<PAGE>
Rating
Scale Definition
- -----------------------------------------------------------------------------
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
- -----------------------------------------------------------------------------
AA+ High credit quality. Protection factors are strong. Risk is
AA modest, but may vary slightly from time to time because of
AA- economic conditions.
- -----------------------------------------------------------------------------
A+ Protection factors are average but adequate. However, risk
factors
A are more variable and greater in periods of economic stress.
A-
- -----------------------------------------------------------------------------
BBB+ Below average protection factors but still considered sufficient
for
BBB prudent investment. Considerable variability in risk during
BBB- economic cycles.
- -----------------------------------------------------------------------------
BB+ Below investment grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors
fluctuate
BB- according to industry conditions or company fortunes. Overall
quality may move up or down frequently within this category.
- -----------------------------------------------------------------------------
B+ Below investment grade and possessing risk that obligations will
not
B be met when due. Financial protection factors will fluctuate
widely
B- according to economic cycles, industry conditions and/or company
fortunes. Potential exists for frequent changes in the rating
within this category or into a higher or lower rating grade.
- -----------------------------------------------------------------------------
CCC Well below investment grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be
substantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.
- -----------------------------------------------------------------------------
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.
DP Preferred stock with dividend arrearages.
- -----------------------------------------------------------------------------
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements (All included in Parts A and B)
Schedule of Investments at November 30, 1995
Statement of Assets and Liabilities at November 30, 1995
Statement of Operations for the year ended November 30, 1995
Statement of Changes in Net Assets for the period
January 3, 1994 (commencement of operations) to
November 30, 1994 and for the year ended November 30,
1995
Financial Highlights for the period January 3, 1994
(commencement of operations) to November 30, 1994 and
for the year ended November 30, 1995
Notes to Financial Statements
Report of Independent Accountants
(b) Exhibits
(1) Registrant's Articles of Incorporation*
(2) Registrant's By-Laws, as amended***
(3) None
(4) None
(5) Investment Advisory Agreement**
(6.1) Distribution Agreement**
(6.2) Form of Dealer Agreement
(7) None
(8) Custodian Agreement with Firstar Trust Company
(9.1) Transfer Agency Agreement with Firstar Trust Company
(9.2) Administration Agreement with Firstar Trust Company
(9.3) Accounting Agreement with Firstar Trust Company
<PAGE>
(10) Opinion and Consent of Godfrey & Kahn, S.C.**
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreements**
(14) (a) Prototype Defined Contribution Retirement Plan
with Standardized Adoption Agreements**
(b) Individual Retirement Custodial Account**
(15) Rule 12b-1 Distribution Plan****
(16) Schedule for Computations of Performance Quotations
(17) N/A
* Incorporated by reference to Registrant's Registration Statement on
Form N-1A as filed with the Securities and Exchange Commission on
October 20, 1993.
** Incorporated by reference to Registrant's Pre-Effective Amendment No. 1
to its Registration Statement on Form N-1A as filed with the Securities
and Exchange Commission on December 17, 1993.
*** Incorporated by reference to Registrant's Post-Effective Amendment No.
1 to its Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission on June 28, 1994.
**** Incorporated by reference to Registrant's Post-Effective Amendment No.
3 to its Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission on October 31, 1995.
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Registrant neither controls any person nor is under common control
with any other person.
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Securities as of November 30, 1995
- ------------------- -------------------------
Common Stock, $.01 par value 311
Item 27. Indemnification
---------------
Pursuant to the authority of the Maryland General Corporation Law,
Article VI of Registrant's By-Laws provides as follows:
ARTICLE VI INDEMNIFICATION
The Corporation shall indemnify (a) its Directors and
officers, whether serving the Corporation or at its request any
other entity, to the full extent required or permitted by (i)
Maryland law now or hereafter in force, including the advance of
expenses under the procedures and to the full extent permitted by
law, and (ii) the Investment Company Act of 1940, as amended, and
(b) other employees and agents to such extent as shall be
authorized by the Board of Directors and be permitted by law. The
foregoing rights of indemnification shall not be exclusive of any
other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is
necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time
such resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law.
Item 28. Business and Other Connections of Investment Advisor
----------------------------------------------------
None.
Item 29. Principal Underwriters
----------------------
(a) None
(b) Incorporated by reference to the information contained under
"MANAGEMENT" in the Prospectus and under "DIRECTORS AND
OFFICERS OF THE CORPORATION" and "INVESTMENT ADVISOR AND
UNDERWRITER" in the Statement of Additional Information, all
pursuant to Rule 411 under the Securities Act of 1993.
(c) None
Item 30. Location of Accounts and Records
--------------------------------
All accounts, 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 in the possession of Oak Ridge Investments, Inc., Registrant's
investment advisor, at Registrant's corporate offices, except records held
and maintained by Firstar Trust
<PAGE>
Company, Mutual Fund Services, Third Floor,
615 East Michigan Street, Milwaukee, Wisconsin 53202, relating to its
function as custodian, transfer agent, and administrator.
Item 31. Management Services
-------------------
All management-related service contracts entered into by Registrant
are discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
------------
Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of its 1995 Annual Report to Shareholders, upon
request and without charge.
<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 the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago and State of Illinois on the 20th day of December, 1995.
O.R.I. FUNDS, INC. (Registrant)
By: /s/ Samuel Wegbreit
-----------------------------------
Samuel Wegbreit
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the
date(s) indicated.
Name Title Date
---- ----- ----
/s/ Samuel Wegbreit Chairman of the Board, a December 20, 1995
---------------------------- Director and Treasurer
Samuel Wegbreit (principal financial and
accounting officer)
/s/ David M. Klaskin Director and President December 20, 1995
---------------------------- (principal executive
David M. Klaskin officer)
/s/ Daniel A. Kaplan Director December 20, 1995
----------------------------
Daniel A. Kaplan
/s/ Dr. A. Charlene Sullivan Director December 20, 1995
----------------------------
Dr. A. Charlene Sullivan
/s/ Martin Z. Craig Director December 20, 1995
----------------------------
Martin Z. Craig
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
(1) Registrant's Articles of Incorporation
(previously filed as Exhibit 1 to the
Registration Statement on Form N-1A, File Nos.
811-8088 and 33-70590)
(2) Registrant's By-Laws, as amended (previously
filed as Exhibit 2 to the Registrant's Post-
Effective Amendment No. 1 to Registration
Statement on Form N-1A, File Nos. 811-8088 and
33-70590)
(3) None
(4) None
(5) Investment Advisory Agreement (previously filed
as Exhibit 5 to Registrant's Pre-Effective
Amendment No. 1 to Registration Statement on
Form N-1A, File Nos. 811-8088 and 33-70590)
(6.1) Distribution Agreement (previously filed as
Exhibit 6 to Registrant's Pre-Effective
Amendment No. 1 to Registration Statement on
Form N-1A, File Nos. 811-8088 and 33-70590)
(6.2) Form of Dealer Agreement
(7) None
(8) Custodian Agreement with Firstar Trust Company
(9.1) Transfer Agency Agreement with Firstar Trust
Company
(9.2) Administration Agreement with Firstar Trust
Company
(9.3) Accounting Agreement with Firstar Trust Company
(10) Opinion and Consent of Godfrey & Kahn, S.C.,
counsel for Registrant (previously filed as
Exhibit 10 to Registrant's Pre-Effective
Amendment No. 1 to Registration Statement on
Form N-1A, File Nos. 811-8088 and 33-70590)
(11) Consent of Price Waterhouse LLP
(12) None
(13) Subscription Agreements (previously filed as
Exhibit 13 to Registrant's Pre-Effective
Amendment No. 1 to Registration Statement on
Form N-1A, File Nos. 811-8088 and 33-70590)
<PAGE>
(14) (a) Prototype Defined Contribution
Retirement Plan with Standardized
Adoption Agreements (previously filed
as Exhibit 14(a) to Registrant's Pre-
Effective Amendment No. 1 to Regis-
tration Statement on Form N-1A, File
Nos. 811-8088 and 33-70590)
(b) Individual Retirement Custodial
Account (previously filed as Exhibit
14(b) to Registrant's Pre-Effective
Amendment No. 1 to Registration
Statement on Form N-1A, File Nos.
811-8088 and 33-70590)
(15) Rule 12b-1 Distribution Plan (previously filed
as Exhibit 15 to Registrant's Post-Effective
Amendment No. 3 to Registration Statement on
Form N-1A, File Nos. 811-8088 and 33-70590)
(16) Schedule for Computation of Performance
Quotation
(17) N/A
Exhibit 6.2
Form of Dealer Agreement
Oak Ridge Investments, Inc.
233 N. Michigan Ave., Suite 1807
Chicago, IL 60601
January __, 1996
[Dealer Name and
Address]
Dear Sir or Madam:
Oak Ridge Investments, Inc. ("Oak Ridge"), as the Distributor of
the shares of O.R.I. Growth Fund and any other series offered from time to
time by O.R.I. Funds, Inc. to which the terms of this Agreement may be
extended as provided herein (collectively, the "Funds"), understands that you
are a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD") (your signature below constitutes a representation
of such membership in good standing) and, on the basis of such understanding,
invites you to become a Selected Dealer to distribute any or all shares of
these Funds on the following terms:
1. You and ourselves agree to abide by the Rules of Fair
Practice of the NASD and all other federal and state rules and regulations
that are now or may become applicable to transactions hereunder. Your
expulsion or suspension from the NASD will automatically terminate this
Agreement without notice. Oak Ridge may terminate this Agreement at any time
upon notice either in its entirety or with respect to any one or more of the
Funds.
2. Orders for shares received from you and accepted by us will
be at the public offering price applicable to each order, as established by
the then effective prospectus of each Fund. All orders are subject to
acceptance by us, and we reserve the right in our sole discretion to reject
any order. We also reserve the right to establish minimum orders for
individual purchasers as well as for Selected Dealers.
3. You will be compensated for your services herein with
respect to sales made to investors who are not excepted from having to pay a
front-end sales charge on the basis of a dealer concession from the public
offering price, as established in the then current prospectus of each Fund.
You will not, however, be compensated for your services herein with respect
to sales made to investors who, according to the then current prospectus of
the relevant Fund, may purchase shares of the Fund at net asset value
(without the imposition of a front-end sales charge). The front-end sales
charge and related dealer concession or sales commission, as the case may be,
applicable to sales of the shares of a Fund may be increased or decreased in
our discretion in the manner described in Section 10 below.
4. You agree that your transactions in shares of the Funds
will be limited to the purchase of shares from us for resale to your
customers at the public offering price then in effect or for your own bona
fide investment and to repurchases which are made in accordance with the
procedures set forth in the then current prospectus of the relevant Fund.
5. Except for sales pursuant to plans established by the Funds
providing for the periodic investment of new monies, orders will be not be
accepted for less than the minimum number of shares or dollar amounts set
forth in the then current prospectus of the relevant Fund.
<PAGE>
6. You agree that you will not withhold placing customers'
orders so as to profit yourself as a result of such withholding.
7. You agree to sell shares only to your customers at the
applicable public offering price or to the Funds or us as Distributor of the
Funds at net asset value, in each case determined as set forth in the current
prospectus of the relevant Fund. You further agree only to sell shares of
the Funds in those states in which the Funds' shares may legally be offered
for sale.
8. Settlement shall be made within three business days after
our acceptance of the order. If payment is not so received or made, we
reserve the right forthwith to cancel the sale, or at our option, to resell
the shares at the then prevailing net asset value in which latter case you
agree to be responsible for any loss resulting to any Fund or to us from your
failure to make payments as aforesaid.
9. If any shares sold to you under the terms of this Agreement
are redeemed by a Fund or repurchased for the account of a Fund or are
tendered to a Fund for redemption or repurchase within seven business days
after the date of our confirmation to you of your original purchase order
therefor, you agree to pay forthwith to us the full amount of any dealer
concession allowed or commission paid to you on the original sale, and we
agree to pay the amount of any such dealer concession to the Fund when
received by us. We also agree to pay to the Fund the amount of our share, if
any, of any front-end sales charge on the original sale of such shares.
10. All sales will be subject to receipt of shares by us from
the Fund. We reserve the right in our discretion without notice to you to
suspend sales or withdraw any offering of shares entirely or with respect to
one or more Funds, or to change the public offering prices or sales charges
and dealer concessions, as provided in the prospectuses. We further reserve
the right upon written notice to you to amend this Agreement to include one
or more additional Funds, to exclude from this Agreement one or more Funds
then covered by this Agreement, to increase or decrease the amount of any
commissions to be paid to you by us on the sale of shares of any of the
Funds, or otherwise amend or cancel this Agreement. You agree that any order
to purchase shares of a Fund placed by you after your receipt of a revised or
supplemented prospectus relating to such Fund and reflecting any such
amendment, or your receipt of written notice of any such amendment, as the
case may be, shall constitute your agreement to such amendment. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Illinois.
11. No person is authorized to make any representation
concerning any Fund or its shares except those contained in its effective
prospectus and any such information as may be officially designated as
information supplemental to the prospectus. In purchasing shares from us you
shall rely solely on the representations contained in the relevant Fund's
effective prospectus and supplemental information mentioned above.
12. We will supply to you additional copies of the then
effective prospectus and statement of additional information for each Fund in
reasonable quantities upon request.
13. In no transaction shall you have any authority whatsoever
to act as agent of a Fund or of us or of any other Selected Dealer and
nothing in this Agreement shall constitute either of us the agent of the
other or shall constitute you or the Fund the agent of the other. Except as
otherwise indicated herein, all transactions in these shares between you and
us are as principal, each for his own account. This Agreement shall not be
assignable by you.
14. Any notice to you shall be duly given if mailed or
telegraphed to you at your address as registered from time to time with the
NASD. Any notice to Oak Ridge shall be sent to 233 N. Michigan Ave., Suite
1807, Chicago, Illinois 60601, Attention: Samuel Wegbreit, President.
<PAGE>
15. All expenses incurred in connection with your activities
under this Agreement shall be borne by you.
16. This Agreement shall become effective on the date accepted
by you, as reflected on the signature page hereof. This Agreement
constitutes the entire agreement between Oak Ridge and you and supercedes all
prior oral or written agreements between the parties hereto.
Sincerely,
OAK RIDGE INVESTMENTS, INC.
Samuel Wegbreit, President
The undersigned has caused this Agreement to be executed by its duly
authorized officer as of this day of , 19 , to
evidence its acceptance of your invitation to become a selected dealer and
agrees to abide by the foregoing terms and conditions.
(Selected Dealer)
By:
(Authorized Signature)
<PAGE>
Exhibit 8
CUSTODIAN AGREEMENT
THIS AGREEMENT made on December 1, 1995, between O.R.I. Funds, Inc., a
Maryland corporation (the "Company"), on behalf of O.R.I. Growth Fund
(hereinafter called the ("Fund"), and FIRSTAR TRUST COMPANY, a corporation
organized under the laws of the State of Wisconsin (hereinafter called
"Custodian"),
W I T N E S S E T H :
WHEREAS, the Company desires that the securities and cash of the Fund
shall be hereafter held and administered by Custodian pursuant to the terms
of this Agreement;
WHEREAS, the Company desires to name a custodial trustee without
discretionary trust powers and/or a custodian for individual retirement
accounts, simplified employee pension plans, 403(b)(7) custodial accounts and
defined contribution retirement plans (whether or not "qualified" under the
Internal Revenue Code of 1986 and whether or not subject to the Employee
Retirement Income Security Act of 1974 ("ERISA")) which the Company sponsors,
or may hereafter sponsor, for participants to invest solely in shares of the
Fund or any other series of the Company hereinafter established.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
President, a Vice President, the Secretary and the Treasurer of the Fund, or
any other persons duly authorized to sign by the Board of Directors.
The word "Board" shall mean Board of Directors of O.R.I. Funds, Inc.
2. Names, Titles, and Signatures of the Fund's Officers
An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Directors, together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or accounts
in the name of the Fund, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund. Custodian shall make payments of
cash to, or for the account of, the Fund from such cash only:
<PAGE>
(a) for the purchase of securities for the portfolio of the
Fund upon the delivery of such securities to Custodian,
registered in the name of the Fund or of the nominee of
Custodian referred to in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares of the common
stock of the Fund upon delivery thereof to Custodian, or
upon proper instructions from the O.R.I. Growth Fund;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing
and custodian services and expenses for printing and
postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund
held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution
of the Board of Directors of the Fund.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or persons to whom such
payment is to be made, provided, however, that an officers' certificate need
not precede the disbursement of cash for the purpose of purchasing a money
market instrument, or any other security with same or next-day settlement, if
the President, a Vice President, the Secretary or the Treasurer of the
Company issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two
business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Fund as of specified times agreed upon from time to
time by the Fund and the custodian in the amount of checks received in
payment for shares of the Fund which are deposited into the Fund's account.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the Fund, into which
account(s) may be transferred cash and/or securities of the Fund.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any securities of
the Fund held by it pursuant to this Agreement. Custodian agrees to
transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Fund
upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
<PAGE>
(c) for examination by any broker selling any such securities
in accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock
of the Fund upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall
be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h)
of this Section 5 and also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made, provided, however, that an
officers' certificate need not precede any such transfer, exchange or
delivery of a money market instrument, or any other security with same or
next-day settlement, if the President, a Vice President, the Secretary or the
Treasurer of the Company issues appropriate oral or facsimile instructions to
Custodian and an appropriate officers' certificate is received by Custodian
within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Fund, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Fund; (b) collect interest and cash dividends received, with
notice to the Fund, for the account of the Fund; (c) hold for the account of
the Fund hereunder all stock dividends, rights and similar securities issued
with respect to any securities held by it hereunder; and (d) execute, as
agent on behalf of the Fund, all necessary ownership certificates required by
the Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in
effect, inserting the Fund's name on such certificates as the owner of the
securities covered thereby, to the extent it may lawfully do so.
<PAGE>
7. Registration of Securities
Except as otherwise directed by an officers' certificate, Custodian
shall register all securities, except such as are in bearer form, in the name
of a registered nominee of Custodian as defined in the Internal Revenue Code
and any Regulations of the Treasury Department issued hereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. All securities held by the
Custodian hereunder shall be at all times held in an account of the Custodian
containing only assets of the Fund, which assets are the property of the
Fund.
The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation
to such securities, such proxies to be executed by the registered holder of
such securities (if registered otherwise than in the name of the Fund), but
without indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Company, on behalf of the Fund, shall pay or reimburse Custodian
from time to time for any transfer taxes payable upon transfers of securities
made hereunder, and for all other necessary and proper disbursements and
expenses made or incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws
of any state, to exempt from taxation any exemptable transfers and/or
deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such
compensation shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith as
Custodian hereunder upon any certificate herein described or certified copy
of any resolution of the Board, and may rely on the genuineness of any such
document which it may in good faith reasonably believe to have been validly
executed.
The Company, on behalf of the Fund, agrees to indemnify and hold
harmless Custodian and its nominee from all taxes, charges, expenses,
assessments, claims and liabilities (including reasonable counsel fees)
incurred or assessed against it or by its nominee in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's refusal or failure to comply with the terms of this Agreement or
from its or its nominee's
<PAGE>
own bad faith, negligence, willful misconduct, or
recklessness, and except to the extent prohibited by ERISA. Custodian is
authorized to charge any account of the Fund for such items.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold Custodian harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that Custodian will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Fund. The Fund shall have the option to defend Custodian against
any claim which may be the subject of this indemnification. In the event
that the Fund so elects, it will so notify Custodian and thereupon the Fund
shall take over complete defense of the claim, and Custodian shall in such
situation initiate no further legal or other expenses for which it shall seek
indemnification under this section. Custodian shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify Custodian except with the Fund's written consent.
Custodian shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by Custodian as
a result of Custodian's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its reckless
disregard of its obligations and duties under this Agreement, or its failure
to meet the standard of care as set forth above.
11. Subcustodians
Custodian is hereby authorized to engage another bank or trust company
as a Subcustodian for all or any part of the Fund's assets, so long as any
such bank or trust company is itself qualified under the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder (the
"Investment Company Act"), to act as a custodian and provided further that,
if the Custodian utilizes the services of a Subcustodian, the Custodian shall
remain fully liable and responsible for any losses caused to the Fund by the
Subcustodian as fully as if the Custodian was directly responsible for any
such losses under the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Company, on behalf of
the Fund, requires the Custodian to engage specific Subcustodians for the
safekeeping and/or clearing of assets, the Company agrees to indemnify and
hold harmless Custodian from all claims, expenses and liabilities incurred or
assessed against it in connection with the use of such Subcustodian in regard
to the Fund's assets, except as may arise from its own bad faith, negligence,
willful misconduct, or recklessness.
12. Reports by Custodian
Custodian shall furnish the Fund periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Fund.
Custodian shall furnish to the Fund, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of
auditors employed by, the Company.
13. Termination or Assignment
This Agreement may be terminated by the Company, on behalf of the Fund,
or by Custodian, on ninety (90) days notice, given in writing and sent by
registered mail to Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or
to the Fund at Suite 1807, 233 North Michigan Avenue, Chicago, Illinois
60601, Attention Samuel
<PAGE>
Wegbreit, as the case may be. Upon any termination
of this Agreement, pending appointment of a successor to Custodian or a vote
of the shareholders of the Fund to dissolve or to function without a
Custodian of its cash, securities and other property, Custodian shall not
deliver cash, securities or other property of the Fund to the Fund, but may
deliver them to a bank or trust company of its own selection that meets the
requirements of the Investment Company Act to act as a Custodian for the Fund
to be held under terms similar to those of this Agreement, provided, however,
that Custodian shall not be required to make any such delivery or payment
until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by Custodian or
on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation costs and expenses, subject to the
provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Company, authorized or approved by a resolution of its Board of
Directors.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency
or securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Company approves by resolution
the use of such central securities clearing agency or securities depository.
15. Records
The Custodian shall keep records relating to its services to be
performed hereunder, in the form and manner, and for such period, as it may
deem advisable and is agreeable to the Fund but not inconsistent with the
rules and regulations of appropriate government authorities, in particular
Section 31 of the Investment Company Act, and the rules thereunder. The
Custodian agrees that all such records prepared or maintained by the
Custodian relating to the services to be performed by the Custodian hereunder
are the property of the Fund and will be preserved, maintained, and made
available in accordance with such section and rules of the Investment Company
Act and will be promptly surrendered to the Fund on and in accordance with
its request.
16. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held invalid by a court or regulatory agency decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be governed by Wisconsin law,
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above-written by their respective officers
thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
/s/ Gail M. Zen By /s/ James C. Tyler
Assistant Secreatry Vice President
Attest: O.R.I. Funds, Inc.
/s/ Mark C. Pappas By /s/ Samuel Wegbreit
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL AGENT SERVICE
ANNUAL FEE SCHEDULE FOR
DOMESTIC PORTFOLIOS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Fund groups with an aggregate market value of less than $100 million
Annual fee based on market value of assets:
$0.20 per $1,000 (2.0 basis points)
Minimum annual fee per fund: $3,000
Investment transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery)
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$75.00 per Euroclear
$8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$7.50 per variation margin transaction
$7.50 per Fed wire deposit or withdrawal
Variable Amount Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which
is 1/4% of 1%, is deducted from the variable amount note income at the
time it is credited to your account.
Extraordinary expenses: Based on time and complexity involved.
Fees are billed quarterly, based on market value at the beginning of the
quarter.
Exhibit 9.1
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 1st day of December,
1995, by and between O.R.I. Funds, Inc. (the "Company"), on behalf of O.R.I.
Growth Fund (hereinafter referred to as the "Fund"), and Firstar Trust
Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as the "Agent").
W I T N E S S E T H:
WHEREAS, the Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in
the business of administering transfer and dividend disbursing agent
functions for the benefit of its customers;
NOW, THEREFORE, the Company, on behalf of the Fund, and the Agent do
mutually promise and agree as follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs and appoints the Agent to act as transfer agent and
dividend disbursing agent for the Fund.
The Agent shall perform all of the customary services of a transfer
agent and dividend disbursing agent, and as relevant, agent in connection
with accumulation, open account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to:
A. Receive orders for the purchase of shares, with prompt delivery,
where appropriate, of payment and supporting documentation to the
Fund's custodian;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated
shares being held in the appropriate shareholder account;
C. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund's
custodian;
D. Pay monies (upon receipt from the Fund's custodian, where
relevant) in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost,
stolen or destroyed certificates upon receipt of satisfactory
indemnification or surety bond;
H. Prepare and transmit payments for dividends and distributions
declared by the Fund;
<PAGE>
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant
to Section Rule 17ad-10(e), a record of the total number of
shares of the Fund which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemptions and other confirmable transactions
as agreed upon with the Fund; and
O. Provide a Blue Sky System which will enable the Fund to monitor
the total number of shares sold in each state. In addition, the
Fund or its agent, including the Agent, shall identify to the
Agent in writing those transactions and assets to be treated as
exempt from the Blue Sky reporting to the Fund for each state.
The responsibility of the Agent for the Fund's Blue Sky state
registration status is solely limited under this Agreement to the
initial compliance by the Fund and the reporting of such
transactions to the Fund or its agent.
2. Compensation
The Company, on behalf of the Fund, agrees to pay the Agent for
performance of the duties listed in this Agreement; the fees and
out-of-pocket expenses include, but are not limited to the following:
printing, postage, forms, stationery, record retention (if requested by the
Fund), mailing, insertion, programming (if requested by the Fund), labels,
shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Company and the Agent.
The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Company that:
A. It is a trust company duly organized, existing and in good
standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange
Act of 1934, as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
<PAGE>
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the Securities
and Exchange Acts of 1933 and 1934, as amended, the Investment
Company Act of 1940, as amended, and any laws, rules, and
regulations of governmental authorities having jurisdiction.
4. Representations of the Company
The Company represents and warrants to the Agent that:
A. The Company is an open-ended diversified investment company under
the Investment Company Act of 1940;
B. The Company is a corporation organized, existing, and in good
standing under the laws of Maryland;
C. The Company is empowered under applicable laws and by its
Corporate Charter and bylaws to enter into and perform this
Agreement on behalf of the Fund;
D. All necessary proceedings required by the Corporate Charter have
been taken to authorize it to enter into and perform this
Agreement;
E. The Company will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules
and regulations of governmental authorities having jurisdiction;
and
F. A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to
be made, with respect to all shares of the Fund being offered for
sale.
5. Covenants of Company and Agent
The Company shall furnish the Agent a certified copy of the resolution
of the Board of Directors of the Company authorizing the appointment of the
Agent and the execution of this Agreement. The Company shall provide to the
Agent a copy of the Corporate Charter, bylaws of the Corporation, and all
amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund but not inconsistent with the rules
and regulations of appropriate government authorities, in particular Section
31 of the Investment Company Act of 1940, as amended, and the rules
thereunder. The Agent agrees that all such records prepared or maintained by
the Agent relating to the services to be performed by the Agent hereunder are
the property of the Fund and will be preserved, maintained and made available
in accordance with such section and rules of the Investment Company Act and
will be promptly surrendered to the Fund on and in accordance with its
request.
6. Indemnification; Remedies Upon Breach
<PAGE>
The Agent shall exercise reasonable care in the performance of its
duties under this Agreement. The Agent shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or power
supplies beyond the Agent's control, except a loss resulting from the Agent's
refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance of
its duties or reckless disregard by it of its obligations and duties under
this Agreement. Notwithstanding any other provision of this Agreement, the
Fund shall indemnify and hold harmless the Agent from and against any and all
claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Agent may sustain or incur or which may be
asserted against the Agent by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in
accordance with the foregoing standards, or (ii) in reliance upon any written
or oral instruction provided to the Agent by any duly authorized officer of
the Fund, such duly authorized officer to be included in a list of authorized
officers furnished to the Agent and as amended from time to time in writing
by resolution of the Board of Directors of the Fund.
Further, the Fund will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit as a result of the negligence of the Fund or the principal
underwriter (unless contributed to by the Agent's breach of this Agreement or
other Agreements between the Fund and the Agent, or the Agent's own
negligence or bad faith); or as a result of the Agent acting upon telephone
instructions relating to the exchange or redemption of shares received by the
Agent and reasonably believed by the Agent under a standard of care
customarily used in the industry to have originated from the record owner of
the subject shares; or as a result of acting in reliance upon any genuine
instrument or stock certificate signed, countersigned or executed by any
person or persons authorized to sign, countersign or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond the Agent's control. the Agent will make every reasonable
effort to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of the Agent. The Agent agrees that it
shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provisions for emergency use of electrical data
processing equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect the Agent's premises
and operating capabilities at any time during regular business hours of the
Agent, upon reasonable notice to the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Agent harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that the Agent will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Fund. The Fund shall have the option to defend the Agent against
any claim which may be the subject of this indemnification. In the event
that the Fund so elects, it will so notify the Agent and thereupon the Fund
shall take over complete defense of the claim, and the Agent shall in such
situation initiate no further legal or other expenses for which it shall seek
indemnification under this section. The Agent shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify the Agent except with the Fund's written consent.
<PAGE>
The Agent shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by the Agent as
a result of the Agent's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its reckless
disregard of its obligations and duties under this Agreement, or failure to
meet the standard of care as set forth above.
7. Proprietary and Confidential Information
The Agent agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and prior, present, or
potential shareholders of the Fund (and clients of said shareholders), and
not to use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Fund, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or
when so requested by the Fund.
8. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held invalid by a court or regulatory agency decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be governed by Wisconsin law,
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
9. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written consent of
the parties.
B. This Agreement may be terminated upon ninety (90) day's written
notice given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of
the other party.
D. Any notice required to be given by the parties to each other
under the terms of this Agreement shall be in writing, addressed
and delivered, or mailed to the principal place of business of
the other party. If to the Agent, such notice should be sent to
Michael R. McVoy. If the Company and/or the Fund, such notice
shall be sent to O.R.I. Funds, Inc., Suite 1807, 233 North
Michigan Avenue, Chicago, Illinois 60601, Attention Samuel
Wegbreit.
E. In the event that the Company, on behalf of the Fund, gives to
the Agent its written intention to terminate and appoint a
successor transfer agent, the Agent agrees to cooperate in the
transfer of its duties and responsibilities to the successor,
including any and all relevant books, records and other data
established or maintained by the Agent under this Agreement.
<PAGE>
F. Should the Company exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be paid by the Company, on behalf of
the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the
day and year first written above.
O.R.I. Funds, Inc. Firstar Trust Company
By: /s/ Samuel Wegbreit By: /s/James C. Tyler
Attest /s/ Mark C. Pappas Attest: /s/ Gail M. Zen
Assistant Secretary
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
SHAREHOLDER ACCOUNTING SERVICES
NO-LOAD FUNDS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Annual Fee Schedule
$14.00 per shareholder account
$7.50 per Fed wire transfer (billed to investor)
$5.00 per telephone exchange (billed to investor)
Annual minimum fee first year $18,000
Annual minimum fee second year $20,000
Annual minimum fee after second year $24,000
Plus out-of-pocket expenses, including but not limited to:
Telephone - toll-free lines
Postage
Programming if requested by the Fund
Stationary/envelopes
Mailing
Proxies
Retention of records if requested by the Fund
Microfilm/fiche of records if requested by the Fund
Special reports if requested by the Fund
All other out-of-pocket expenses authorized by the Fund
Fees are billed monthly
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL QUALIFIED PLAN
ANNUAL FEE SCHEDULE
(billed to Investors)
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Defined
Contribution 403(b)(7) 401(k)
IRA Plan Plan Plan
Accounts Accounts Accounts Accounts
Annual maintenance fee
per account $12.50 $12.50 $12.50 $12.50
Transfer to successor trustee 15.00 15.00 15.00 15.00
Distribution to a participant
(exclusive of systematic
withdrawal plans) 15.00 15.00 15.00 15.00
Refund of excess
contribution 15.00 15.00 15.00 15.00
Any outgoing wire 7.50 7.50 7.50 7.50
Telephone exchange 5.00 5.00 5.00 5.00
<PAGE>
Exhibit 9.2
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this 1st day of December,
1995, by and between O.R.I Funds, Inc. (the "Company"), on behalf of O.R.I.
Growth Fund (hereinafter referred to as the "Fund"), and Firstar Trust
Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as "FTC").
WHEREAS, The Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the
business of providing fund administration services for the benefit of its
customers;
NOW, THEREFORE, the Company and FTC do mutually promise and agree as
follows:
I. Appointment of Administrator
The Company hereby appoints FTC as Administrator of the Company on the
terms and conditions set forth in this Agreement, and FTC hereby accepts
such appointment and agrees to perform the services and duties set forth
in this Agreement in consideration of the compensation provided for
herein.
II. Duties and Responsibilities of FTC
As Administrator, and subject to the supervision and control of the
Company's Board of Directors, FTC will provide facilities, equipment,
and personnel to carry out the following administrative services for
operation of the business and affairs of the Company:
A. General Fund Management
1. Act as liaison among all Fund service providers
2. Coordinate board communication by:
a. Assisting Fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and
administrative data
c. Preparing minutes of meetings of the Board and
shareholders
d. Evaluating independent auditor
e. Securing and monitoring fidelity bond and director and
officers liability coverage, and making the necessary SEC
filings relating thereto
3. Maintain the Fund's governing documents, including the
Articles of Incorporation, the By-laws, and the minute book
4. Audits
a. Prepare appropriate schedules and assist independent
accountants
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
<PAGE>
5. Advise the Fund and its Board on matters concerning the Fund
and its affairs
6. Assist in overall operations of the Fund
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with Investment Company Act of 1940
requirements
1) Asset diversification tests
2) Performance data calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics
b. Monitor Fund's compliance with the policies and
investment limitations of the Fund as set forth in the
Prospectus, Statement of Additional Information, By-laws,
and Articles of Corporation
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings
relating to the registration of the securities of the
Fund so as to enable the Fund to make a continuous
offering of its shares
b. Monitor status and maintain registration in each state
3. SEC Registration and Reporting
a. Assisting Fund's counsel in updating prospectus, and
statement of additional information, and in preparing
proxy statements and Rule 24F-2 notices
b. Prepare annual and semiannual reports
c. Coordinate the layout and printing of publically
disseminated prospectuses and reports
4. IRS Compliance
a. Monitor Fund's status as a regulated investment company
under Subchapter M through review of the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
<PAGE>
C. Financial Reporting
1. Provide financial data required by fund prospectus and
statement of additional information
2. Prepare financial reports for shareholders, the board, the
SEC, and independent auditors
3. Supervise the Fund's custodian and independent accountants in
the maintenance of the Fund's general ledger and in the
preparation of the Fund's financial statements, including
oversight of expense accruals and payments, of the
determination of net asset value of the Fund's net assets and
of the Fund's shares, and of the declaration and payment of
dividends and other distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and
state tax returns including forms 1120/8610 with any necessary
schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
III. Compensation
The Company, on behalf of the Fund, agrees to pay FTC for performance of
the duties listed in this Agreement and the fees and out-of-pocket
expenses as set forth in the attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Company and FTC.
The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
IV. Performance of Service; Limitation of Liability
FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence, or willful misconduct on its
part in the performance of its duties or reckless disregard by it of its
obligations and duties under this Agreement. Notwithstanding any other
provision of this Agreement, the Fund shall indemnify and hold harmless
FTC from and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which FTC may
sustain or incur or which may be asserted against FTC by any person
arising out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance with the foregoing
standards,
<PAGE>
or (ii) in reliance upon any written or oral instruction
provided to FTC by any duly authorized officer of the Fund, such duly
authorized officer to be included in a list of authorized officers
furnished to FTC and as amended from time to time in writing by
resolution of the Board of Directors of the Fund.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FTC shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond FTC's control. FTC will make every reasonable effort
to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of FTC. FTC agrees that it shall,
at all times, have reasonable contingency plans with appropriate
parties, making reasonable provisions for emergency use of electrical
data processing equipment to the extent appropriate equipment is
available. Representatives of the Fund shall be entitled to inspect
FTC's premises and operating capabilities at any time during regular
business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and correct
administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked
to indemnify or hold FTC harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and
it is further understood that FTC will use all reasonable care to
identify and notify the Fund promptly concerning any situation which
presents or appears likely to present the probability of such a claim
for indemnification against the Fund. The Fund shall have the option to
defend FTC against any claim which may be the subject of this
indemnification. In the event that the Fund so elects, it will so
notify FTC and thereupon the Fund shall take over complete defense of
the claim, and FTC shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
section. FTC shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify FTC except with
the Fund's written consent.
FTC shall indemnify and hold the Fund harmless from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by
any person arising out of any action taken or omitted to be taken by FTC
as a result of FTC's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its
reckless disregard of its obligations and duties under this Agreement,
or failure to meet the standard of care as set forth above.
V. Proprietary and Confidential Information
FTC agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Fund all records and other information relative to the Fund and prior,
present, or potential shareholders of the Fund (and clients of said
shareholders), and not to use such records and information for any
purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by
the Fund, which approval may not be unreasonably withheld and may not be
withheld where FTC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Fund.
VI. Data Necessary to Perform Service
The Fund or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such
form as mutually agreed upon.
<PAGE>
VII. Terms of Agreement
This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue automatically in
effect for successive annual periods. The Agreement may be terminated
by either party upon giving ninety (90) days prior written notice to the
other party or such shorter period as is mutually agreed upon by the
parties.
The terms of this Agreement shall not be waived, altered, modified,
amended, or supplemented in any manner whatsoever except by a written
instrument signed by FTC and the Company, on behalf of the Fund.
VIII. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Fund by
written notice to FTC, FTC will promptly, upon such termination and at
the expense of the Fund, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by FTC
under this Agreement in a form reasonably acceptable to the Fund (if
such form differs from the form in which FTC has maintained, the Fund
shall pay any expenses associated with transferring the data to such
form requested by the Fund), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from
FTC's personnel in the establishment of books, records, and other data
by such successor.
IX. Notices
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to Attention Joe Neuberger, Firstar Trust
Company, 615 East Michigan Street, Milwaukee, Wisconsin 53202, and
notice to the Company and/or the Fund shall be sent to Attention Samuel
Wegbreit, O.R.I. Funds, Inc., Suite 1807, 233 North Michigan Avenue,
Chicago, Illinois 60601.
X. Records
FTC shall keep records relating to the service to be performed
hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular Section 31 of the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and the rules thereunder. FTC agrees
that all such records prepared or maintained by FTC relating to the
services to be performed by FTC hereunder are the property of the Fund
and will be preserved, maintained, and made available in accordance with
such section and rules of the Investment Company Act and will be
promptly surrendered to the Fund on and in accordance with its request.
XI. Miscellaneous
The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held invalid by a court or regulatory agency
decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be governed by
Wisconsin law; provided, however, that nothing herein shall be construed
in a manner inconsistent with the Investment Company Act or any rule or
regulation promulgated by the SEC thereunder. This Agreement
constitutes the entire Agreement of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the
day and year first written above.
O.R.I. Funds, Inc. FIRSTAR TRUST COMPANY
By: /s/ Samuel Wegbreit By: /s/ James C. Tyler
Attest: /s/ Mark C. Pappas Attest: /s/ Gail M. Zen
<PAGE>
EXHIBIT A
FIRSTAR TRUST COMPANY
MUTUAL FUNDS SERVICES
OAK RIDGE INVESTMENTS GROWTH FUND
FUND ADMINISTRATION FEES
Until the Fund reaches a market value of $25 million, the following fees
will apply.
Minimum annual of $20,000 for the first year
Minimum annual of $25,000 for the second year
Minimum annual of $30,000 after the second year
5 basis points (.0005) on the first $100,000,000
4 basis points (.0004) on the next $400,000,000
3 basis points (.0003) on the balance
Plus out-of-pocket expenses, including but not limited to:
Postage
Stationary
Programming if requested by the Fund
Proxies
Record retention if requested by the Fund
Special reports if requested by the Fund
Federal and State regulatory filing fees
Certain Fund insurance premiums
Expenses from Board of Directors meetings
Fund auditing and legal expenses
Other out-of-pocket expenses authorized by the Fund
Fees are billed monthly.
<PAGE>
Exhibit 9.3
FUND ACCOUNTING SERVICING AGREEMENT
This contract between O.R.I. Funds, Inc., a Maryland corporation (the
"Company"), on behalf of O.R.I. Growth Fund (hereinafter called the "Fund")
and Firstar Trust Company, a Wisconsin corporation (hereinafter called "FTC")
is entered into on this 1st day of December, 1995.
WITNESSETH:
WHEREAS, the Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. Services. FTC agrees to provide the following mutual fund
accounting services to the Fund:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis using
security trade information communicated from the investment manager
on a timely basis.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors of the Company and apply
those prices to the portfolio positions. For those securities
where market quotations are not readily available, the Board of
Directors of the Company shall approve, in good faith, the method
for determining the fair value for such securities.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments for
the accounting period.
(4) Determine gain/loss on security sales and identify them
as to short-short, short- or long-term status; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Fund as to methodology, rate or dollar
amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Fund.
(3) Account for fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed upon
by FTC and the Fund.
(4) Provide expense accrual and payment reporting.
<PAGE>
C. Fund Valuation and Financial Reporting Services:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Fund.
(3) Determine net investment income (earnings) for the Fund
as of each valuation date. Account for periodic distributions of
earnings to shareholders and maintain undistributed net investment
income balances as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) For each day the Fund is open as defined in the
prospectus, determine the net asset value of the according to the
accounting policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of fund operation
at such time as required by the nature and characteristics of the
Fund.
(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from time to
time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain tax accounting records for the investment
portfolio of the Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the
tax cost basis designated by the Fund.
(4) Provide the necessary financial information to support
the taxable components of income and capital gains distributions to
the transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the fund accounting
records available to the Fund, the Securities and Exchange
Commission, and the outside auditors.
(2) Keep records relating to the services to be performed
hereunder, in the form and manner, and for such period, as it may
deem advisable and is agreeable to the Fund but not
<PAGE>
inconsistent
with the rules and regulations of appropriate government
authorities, in particular Section 31 of the Investment Company Act
of 1940, as amended, and the rules and regulations thereunder.
2. Changes in Accounting Procedures. Any resolution passed by the
Board of Directors of the Company that affects accounting practices and
procedures under this Agreement shall be effective upon written receipt and
acceptance by the FTC.
3. Changes in Equipment, Systems, Service, Etc. FTC reserves the
right to make changes from time to time, as it deems advisable, relating to
its services, systems, programs, rules, operating schedules and equipment, so
long as such changes do not adversely affect the service provided to the Fund
under this Agreement.
4. Compensation. FTC shall be compensated for providing the services
set forth in this Agreement in accordance with the Fee Schedule attached
hereto as Exhibit A and as mutually agreed upon and amended from time to
time.
5. Performance of Service. FTC shall exercise reasonable care in the
performance of its duties under this Agreement. FTC shall not be liable for
any error of judgement or mistake of law or for any loss suffered by the Fund
in connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or power
supplies beyond FTC's control, except a loss resulting from FTC's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its
duties or reckless disregard by it of its obligations and duties under this
Agreement. Notwithstanding any other provision of this Agreement, the Fund
shall indemnify and hold harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys' fees)
which FTC may sustain or incur or which may be asserted against FTC by any
person arising out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided
to FTC by any duly authorized officer of the Fund, such duly authorized
officer to be included in a list of authorized officers furnished to FTC and
as amended from time to time in writing by resolution of the Board of
Directors of the Fund.
In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, FTC shall take all reasonable steps to
minimize service interruptions for any period that such interruption
continues beyond FTC's control. FTC will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of FTC. FTC agrees that it shall, at all times,
have reasonable contingency plans with appropriate parties, making reasonable
provisions for emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of the Fund shall
be entitled to inspect FTC's premises and operating capabilities at any time
during regular business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Fund may be
asked to indemnify or hold FTC harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that FTC will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund. The Fund shall have the option to defend FTC against any claim
which may be the subject of this indemnification. In the event that the Fund
so elects, it will so notify FTC and thereupon the Fund shall take over
complete defense of the claim, and FTC shall in such
<PAGE>
situation initiate no
further legal or other expenses for which it shall seek indemnification under
this section. FTC shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify FTC except with the
Fund's written consent.
FTC shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Fund by any person arising
out of any action taken or omitted to be taken by FTC as a result of FTC's
refusal or failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct, its reckless disregard of its obligations
and duties under this Agreement, or, its failure to meet the standard of care
as set forth above.
6. No Agency Relationship. Nothing herein contained shall be deemed
to authorize or empower FTC to act as agent for the other party to this
Agreement, or to conduct business in the name of, or for the account of, the
other party to this Agreement.
7. Ownership of Records. All records prepared or maintained by FTC on
behalf of the Fund relating to the services to be performed by FTC hereunder
are the property of the Fund and will be preserved, maintained, and made
available as required by the Investment Company Act and will be surrendered
promptly on the written request of an authorized officer of the Company.
8. Proprietary and Confidential Information. FTC agrees on behalf of
itself and its directors, officers, and employees to treat confidentiality
and as proprietary information of the Fund all records and other information
relative to the Fund and prior, present, or potential shareholders of the
Fund (and clients of said shareholders), and not to use such records and
information for any purpose other than performance of its responsibilities
and duties thereunder, except after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably withheld and
may not be withheld where FTC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Fund.
9. Data Necessary to Perform Services. The Fund or its agent, which
may be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. Notification of Error. The Fund will notify FTC of any balancing
or control error caused by FTC within three (3) business days after receipt
of any reports rendered by FTC to the Fund, or within three (3) business days
after discovery of any error or omission not covered in the balancing or
control procedure, or within three (3) business days of receiving notice from
any shareholder.
11. Term of Agreement. This Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
12. Duties in the Event of Termination. In the event that in
connection with termination a Successor to any of FTC's duties or
responsibilities hereunder is designated by the Fund by written notice to
FTC, FTC will promptly, upon such termination and at the expense of the Fund,
transfer to such Successor all relevant books, records, correspondence and
other data established or maintained by FTC under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the form in
which FTC has maintained the same, the Fund shall pay any expenses associated
with transferring the same to such form requested by the Fund), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FTC's personnel in the establishment of books,
records and other data by such successor.
<PAGE>
13. Notices. Notices of any kind to be given by either party to the
other party shall be duly given if mailed or delivered as follows: Notice to
FTC shall be sent to Michael R. McVoy, and notice to the Company and/or the
Fund shall be sent to O.R.I. Funds, Inc., Suite 1807, 233 North Michigan
Avenue, Chicago, Illinois 60601, Attention Samuel Wegbreit.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held invalid by a court or regulatory
agency decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be governed by Wisconsin
law, provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: Firstar Trust Company
/s/ Gail M. Zen By /s/ James C. Tyler
ATTEST: O.R.I. Funds, Inc.
/s/ Mark C. Pappas By /s/ Samuel Wegbreit
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
FUND VALUATION AND ACCOUNTING
ANNUAL FEE SCHEDULE
FOR DOMESTIC PORTFOLIOS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Until the fund reaches a market value of $25 million, the following fees
will apply.
Portfolio Services - Fixed Income Funds
Annual fee per fund based on market value of assets:
$25,000 for the first $40,000,000
2/100 of 1% (2 basis points) on the next $200,000,000
1/100 of 1% (1 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
Portfolio Services - Equity/Balanced Funds
Annual fee per fund based on market value of assets:
$18,000 for the first $40,000,000 for the first year
$20,000 for the first $40,000,000 for the second year
$22,000 for the first $40,000,000 after the second year
1/100 of 1% (1 basis point) on the next $200,000,000
5/1000 of 1% (1/2 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
Portfolio Services - Money Market Funds
Annual fee per fund based on market value of assets:
$25,000 for the first $40,000,000
5/1000 of 1% (1/2 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
FUND VALUATION AND ACCOUNTING
ASSET PRICING COSTS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Charge per Item per Valuation
Asset Type (daily, weekly, etc.)
Domestic and Canadian Equities $0.15
Options 0.15
Corporate/Gov't/Agency Bonds 0.50
CMOs 0.80
International Equities and Bonds 0.50
Municipal Bonds 0.80
Money Market Instruments 0.80
Pricing costs are billed monthly.
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference in the Prospectus and Statement of
Additional Information constituting parts of this Post-Effective Amendment
No. 4 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 15, 1995, relating to the financial
statements and financial highlights appearing in the November 30, 1995 Annual
Report to Shareholders of O.R.I. Growth Fund, which are included in the
Registration Statement. We also consent to the reference to us under the
heading "Independent Accountants" in the Statement of Additional Information
and to the reference to us under the heading "Financial Highlights" in the
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
December 21, 1995
<PAGE>
Exhibit 16
O.R.I. GROWTH FUND
Schedule for Computations of Performance Quotations
FOR THE ONE YEAR PERIOD ENDED NOVEMBER 30, 1995
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL VALUE) - 1
Total return = 37.0%
37.0% = (14,359/10,480) - 1
FOR THE PERIOD FROM JANUARY 3, 1994 (COMMENCEMENT OF OPERATIONS) TO
NOVEMBER 30, 1995
CUMULATIVE TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL PAYMENT) - 1
Cumulative total return = 43.6%
43.6% = (14,359/10,000) - 1
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL PAYMENT) 1/n - 1
of $10,000
Total return = 20.9%
20.9% = (14,359/10,000) 1/1.9 - 1
Exhibit 6.2
-----------
Form of Dealer Agreement
------------------------
Oak Ridge Investments, Inc.
233 N. Michigan Ave., Suite 1807
Chicago, IL 60601
January __, 1996
[Dealer Name and
Address]
Dear Sir or Madam:
Oak Ridge Investments, Inc. ("Oak Ridge"), as the Distributor of
the shares of O.R.I. Growth Fund and any other series offered from time to
time by O.R.I. Funds, Inc. to which the terms of this Agreement may be
extended as provided herein (collectively, the "Funds"), understands that you
are a member in good standing of the National Association of Securities
Dealers, Inc. (the "NASD") (your signature below constitutes a representation
of such membership in good standing) and, on the basis of such understanding,
invites you to become a Selected Dealer to distribute any or all shares of
these Funds on the following terms:
1. You and ourselves agree to abide by the Rules of Fair
Practice of the NASD and all other federal and state rules and regulations
that are now or may become applicable to transactions hereunder. Your
expulsion or suspension from the NASD will automatically terminate this
Agreement without notice. Oak Ridge may terminate this Agreement at any time
upon notice either in its entirety or with respect to any one or more of the
Funds.
2. Orders for shares received from you and accepted by us will
be at the public offering price applicable to each order, as established by
the then effective prospectus of each Fund. All orders are subject to
acceptance by us, and we reserve the right in our sole discretion to reject
any order. We also reserve the right to establish minimum orders for
individual purchasers as well as for Selected Dealers.
3. You will be compensated for your services herein with
respect to sales made to investors who are not excepted from having to pay a
front-end sales charge on the basis of a dealer concession from the public
offering price, as established in the then current prospectus of each Fund.
You will not, however, be compensated for your services herein with respect
to sales made to investors who, according to the then current prospectus of
the relevant Fund, may purchase shares of the Fund at net asset value
(without the imposition of a front-end sales charge). The front-end sales
charge and related dealer concession or sales commission, as the case may be,
applicable to sales of the shares of a Fund may be increased or decreased in
our discretion in the manner described in Section 10 below.
4. You agree that your transactions in shares of the Funds
will be limited to the purchase of shares from us for resale to your
customers at the public offering price then in effect or for your own bona
fide investment and to repurchases which are made in accordance with the
procedures set forth in the then current prospectus of the relevant Fund.
5. Except for sales pursuant to plans established by the Funds
providing for the periodic investment of new monies, orders will be not be
accepted for less than the minimum number of shares or dollar amounts set
forth in the then current prospectus of the relevant Fund.
<PAGE>
6. You agree that you will not withhold placing customers'
orders so as to profit yourself as a result of such withholding.
7. You agree to sell shares only to your customers at the
applicable public offering price or to the Funds or us as Distributor of the
Funds at net asset value, in each case determined as set forth in the current
prospectus of the relevant Fund. You further agree only to sell shares of
the Funds in those states in which the Funds' shares may legally be offered
for sale.
8. Settlement shall be made within three business days after
our acceptance of the order. If payment is not so received or made, we
reserve the right forthwith to cancel the sale, or at our option, to resell
the shares at the then prevailing net asset value in which latter case you
agree to be responsible for any loss resulting to any Fund or to us from your
failure to make payments as aforesaid.
9. If any shares sold to you under the terms of this Agreement
are redeemed by a Fund or repurchased for the account of a Fund or are
tendered to a Fund for redemption or repurchase within seven business days
after the date of our confirmation to you of your original purchase order
therefor, you agree to pay forthwith to us the full amount of any dealer
concession allowed or commission paid to you on the original sale, and we
agree to pay the amount of any such dealer concession to the Fund when
received by us. We also agree to pay to the Fund the amount of our share, if
any, of any front-end sales charge on the original sale of such shares.
10. All sales will be subject to receipt of shares by us from
the Fund. We reserve the right in our discretion without notice to you to
suspend sales or withdraw any offering of shares entirely or with respect to
one or more Funds, or to change the public offering prices or sales charges
and dealer concessions, as provided in the prospectuses. We further reserve
the right upon written notice to you to amend this Agreement to include one
or more additional Funds, to exclude from this Agreement one or more Funds
then covered by this Agreement, to increase or decrease the amount of any
commissions to be paid to you by us on the sale of shares of any of the
Funds, or otherwise amend or cancel this Agreement. You agree that any order
to purchase shares of a Fund placed by you after your receipt of a revised or
supplemented prospectus relating to such Fund and reflecting any such
amendment, or your receipt of written notice of any such amendment, as the
case may be, shall constitute your agreement to such amendment. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Illinois.
11. No person is authorized to make any representation
concerning any Fund or its shares except those contained in its effective
prospectus and any such information as may be officially designated as
information supplemental to the prospectus. In purchasing shares from us you
shall rely solely on the representations contained in the relevant Fund's
effective prospectus and supplemental information mentioned above.
12. We will supply to you additional copies of the then
effective prospectus and statement of additional information for each Fund in
reasonable quantities upon request.
13. In no transaction shall you have any authority whatsoever
to act as agent of a Fund or of us or of any other Selected Dealer and
nothing in this Agreement shall constitute either of us the agent of the
other or shall constitute you or the Fund the agent of the other. Except as
otherwise indicated herein, all transactions in these shares between you and
us are as principal, each for his own account. This Agreement shall not be
assignable by you.
14. Any notice to you shall be duly given if mailed or
telegraphed to you at your address as registered from time to time with the
NASD. Any notice to Oak Ridge shall be sent to 233 N. Michigan Ave., Suite
1807, Chicago, Illinois 60601, Attention: Samuel Wegbreit, President.
<PAGE>
15. All expenses incurred in connection with your activities
under this Agreement shall be borne by you.
16. This Agreement shall become effective on the date accepted
by you, as reflected on the signature page hereof. This Agreement
constitutes the entire agreement between Oak Ridge and you and supercedes all
prior oral or written agreements between the parties hereto.
Sincerely,
OAK RIDGE INVESTMENTS, INC.
Samuel Wegbreit, President
The undersigned has caused this Agreement to be executed by its duly
authorized officer as of this ____ day of _________, 19__, to evidence its
acceptance of your invitation to become a selected dealer and agrees to abide
by the foregoing terms and conditions.
________________________________
(Selected Dealer)
By: ____________________________
(Authorized Signature)
Exhibit 8
---------
CUSTODIAN AGREEMENT
THIS AGREEMENT made on December 1, 1995, between O.R.I. Funds, Inc., a
Maryland corporation (the "Company"), on behalf of O.R.I. Growth Fund
(hereinafter called the ("Fund"), and FIRSTAR TRUST COMPANY, a corporation
organized under the laws of the State of Wisconsin (hereinafter called
"Custodian"),
W I T N E S S E T H :
WHEREAS, the Company desires that the securities and cash of the Fund
shall be hereafter held and administered by Custodian pursuant to the terms
of this Agreement;
WHEREAS, the Company desires to name a custodial trustee without
discretionary trust powers and/or a custodian for individual retirement
accounts, simplified employee pension plans, 403(b)(7) custodial accounts and
defined contribution retirement plans (whether or not "qualified" under the
Internal Revenue Code of 1986 and whether or not subject to the Employee
Retirement Income Security Act of 1974 ("ERISA")) which the Company sponsors,
or may hereafter sponsor, for participants to invest solely in shares of the
Fund or any other series of the Company hereinafter established.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
President, a Vice President, the Secretary and the Treasurer of the Fund, or
any other persons duly authorized to sign by the Board of Directors.
The word "Board" shall mean Board of Directors of O.R.I. Funds, Inc.
2. Names, Titles, and Signatures of the Fund's Officers
An officer of the Fund will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates
described in Section 1 hereof, and the names of the members of the Board of
Directors, together with any changes which may occur from time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account or accounts
in the name of the Fund, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Fund. Custodian shall make payments of
cash to, or for the account of, the Fund from such cash only:
<PAGE>
(a) for the purchase of securities for the portfolio of the
Fund upon the delivery of such securities to Custodian,
registered in the name of the Fund or of the nominee of
Custodian referred to in Section 7 or in proper form for
transfer;
(b) for the purchase or redemption of shares of the common
stock of the Fund upon delivery thereof to Custodian, or
upon proper instructions from the O.R.I. Growth Fund;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing
and custodian services and expenses for printing and
postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund
held by or to be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution
of the Board of Directors of the Fund.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A, and also, in respect of item (e), upon receipt of an
officers' certificate specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or persons to whom such
payment is to be made, provided, however, that an officers' certificate need
not precede the disbursement of cash for the purpose of purchasing a money
market instrument, or any other security with same or next-day settlement, if
the President, a Vice President, the Secretary or the Treasurer of the
Company issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two
business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Fund as of specified times agreed upon from time to
time by the Fund and the custodian in the amount of checks received in
payment for shares of the Fund which are deposited into the Fund's account.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the Fund, into which
account(s) may be transferred cash and/or securities of the Fund.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or deliver any securities of
the Fund held by it pursuant to this Agreement. Custodian agrees to
transfer, exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Fund
upon receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
<PAGE>
(c) for examination by any broker selling any such securities
in accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities
alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization,
recapitalization or readjustment, or otherwise;
(e) upon conversion of such securities pursuant to their terms
into other securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock
of the Fund upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall
be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such
transfer, exchange or delivery, and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h)
of this Section 5 and also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made, provided, however, that an
officers' certificate need not precede any such transfer, exchange or
delivery of a money market instrument, or any other security with same or
next-day settlement, if the President, a Vice President, the Secretary or the
Treasurer of the Company issues appropriate oral or facsimile instructions to
Custodian and an appropriate officers' certificate is received by Custodian
within two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Fund, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Fund; (b) collect interest and cash dividends received, with
notice to the Fund, for the account of the Fund; (c) hold for the account of
the Fund hereunder all stock dividends, rights and similar securities issued
with respect to any securities held by it hereunder; and (d) execute, as
agent on behalf of the Fund, all necessary ownership certificates required by
the Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in
effect, inserting the Fund's name on such certificates as the owner of the
securities covered thereby, to the extent it may lawfully do so.
<PAGE>
7. Registration of Securities
Except as otherwise directed by an officers' certificate, Custodian
shall register all securities, except such as are in bearer form, in the name
of a registered nominee of Custodian as defined in the Internal Revenue Code
and any Regulations of the Treasury Department issued hereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. All securities held by the
Custodian hereunder shall be at all times held in an account of the Custodian
containing only assets of the Fund, which assets are the property of the
Fund.
The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation
to such securities, such proxies to be executed by the registered holder of
such securities (if registered otherwise than in the name of the Fund), but
without indicating the manner in which such proxies are to be voted.
9. Transfer Tax and Other Disbursements
The Company, on behalf of the Fund, shall pay or reimburse Custodian
from time to time for any transfer taxes payable upon transfers of securities
made hereunder, and for all other necessary and proper disbursements and
expenses made or incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws
of any state, to exempt from taxation any exemptable transfers and/or
deliveries of any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such
compensation shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith as
Custodian hereunder upon any certificate herein described or certified copy
of any resolution of the Board, and may rely on the genuineness of any such
document which it may in good faith reasonably believe to have been validly
executed.
The Company, on behalf of the Fund, agrees to indemnify and hold
harmless Custodian and its nominee from all taxes, charges, expenses,
assessments, claims and liabilities (including reasonable counsel fees)
incurred or assessed against it or by its nominee in connection with the
performance of this Agreement, except such as may arise from its or its
nominee's refusal or failure to comply with the terms of this Agreement or
from its or its nominee's
<PAGE>
own bad faith, negligence, willful misconduct, or
recklessness, and except to the extent prohibited by ERISA. Custodian is
authorized to charge any account of the Fund for such items.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold Custodian harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that Custodian will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Fund. The Fund shall have the option to defend Custodian against
any claim which may be the subject of this indemnification. In the event
that the Fund so elects, it will so notify Custodian and thereupon the Fund
shall take over complete defense of the claim, and Custodian shall in such
situation initiate no further legal or other expenses for which it shall seek
indemnification under this section. Custodian shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify Custodian except with the Fund's written consent.
Custodian shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by Custodian as
a result of Custodian's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its reckless
disregard of its obligations and duties under this Agreement, or its failure
to meet the standard of care as set forth above.
11. Subcustodians
Custodian is hereby authorized to engage another bank or trust company
as a Subcustodian for all or any part of the Fund's assets, so long as any
such bank or trust company is itself qualified under the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder (the
"Investment Company Act"), to act as a custodian and provided further that,
if the Custodian utilizes the services of a Subcustodian, the Custodian shall
remain fully liable and responsible for any losses caused to the Fund by the
Subcustodian as fully as if the Custodian was directly responsible for any
such losses under the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Company, on behalf of
the Fund, requires the Custodian to engage specific Subcustodians for the
safekeeping and/or clearing of assets, the Company agrees to indemnify and
hold harmless Custodian from all claims, expenses and liabilities incurred or
assessed against it in connection with the use of such Subcustodian in regard
to the Fund's assets, except as may arise from its own bad faith, negligence,
willful misconduct, or recklessness.
12. Reports by Custodian
Custodian shall furnish the Fund periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Fund.
Custodian shall furnish to the Fund, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of
auditors employed by, the Company.
13. Termination or Assignment
This Agreement may be terminated by the Company, on behalf of the Fund,
or by Custodian, on ninety (90) days notice, given in writing and sent by
registered mail to Custodian at P.O. Box 2054, Milwaukee, Wisconsin 53201, or
to the Fund at Suite 1807, 233 North Michigan Avenue, Chicago, Illinois
60601, Attention Samuel
<PAGE>
Wegbreit, as the case may be. Upon any termination
of this Agreement, pending appointment of a successor to Custodian or a vote
of the shareholders of the Fund to dissolve or to function without a
Custodian of its cash, securities and other property, Custodian shall not
deliver cash, securities or other property of the Fund to the Fund, but may
deliver them to a bank or trust company of its own selection that meets the
requirements of the Investment Company Act to act as a Custodian for the Fund
to be held under terms similar to those of this Agreement, provided, however,
that Custodian shall not be required to make any such delivery or payment
until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by Custodian or
on or against Custodian, and until full payment shall have been made to
Custodian of all its fees, compensation costs and expenses, subject to the
provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Company, authorized or approved by a resolution of its Board of
Directors.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency
or securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Company approves by resolution
the use of such central securities clearing agency or securities depository.
15. Records
The Custodian shall keep records relating to its services to be
performed hereunder, in the form and manner, and for such period, as it may
deem advisable and is agreeable to the Fund but not inconsistent with the
rules and regulations of appropriate government authorities, in particular
Section 31 of the Investment Company Act, and the rules thereunder. The
Custodian agrees that all such records prepared or maintained by the
Custodian relating to the services to be performed by the Custodian hereunder
are the property of the Fund and will be preserved, maintained, and made
available in accordance with such section and rules of the Investment Company
Act and will be promptly surrendered to the Fund on and in accordance with
its request.
16. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held invalid by a court or regulatory agency decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be governed by Wisconsin law,
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above-written by their respective officers
thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
/s/ Gail M. Zen By /s/ James C. Tyler
- ------------------------- --------------------------
Assistant Secretary Vice President
Attest: O.R.I. Funds, Inc.
/s/ Mark C. Pappas By /s/ Samuel Wegbreit
- ------------------------- --------------------------
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL AGENT SERVICE
ANNUAL FEE SCHEDULE FOR
DOMESTIC PORTFOLIOS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Fund groups with an aggregate market value of less than $100 million
Annual fee based on market value of assets:
$0.20 per $1,000 (2.0 basis points)
Minimum annual fee per fund: $3,000
Investment transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery)
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$75.00 per Euroclear
$8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$7.50 per variation margin transaction
$7.50 per Fed wire deposit or withdrawal
Variable Amount Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which
is 1/4% of 1%, is deducted from the variable amount note income at the
time it is credited to your account.
Extraordinary expenses: Based on time and complexity involved.
Fees are billed quarterly, based on market value at the beginning of the
quarter.
Exhibit 9.1
-----------
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 1st day of December,
1995, by and between O.R.I. Funds, Inc. (the "Company"), on behalf of O.R.I.
Growth Fund (hereinafter referred to as the "Fund"), and Firstar Trust
Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as the "Agent").
W I T N E S S E T H:
WHEREAS, the Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in
the business of administering transfer and dividend disbursing agent
functions for the benefit of its customers;
NOW, THEREFORE, the Company, on behalf of the Fund, and the Agent do
mutually promise and agree as follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs and appoints the Agent to act as transfer agent and
dividend disbursing agent for the Fund.
The Agent shall perform all of the customary services of a transfer
agent and dividend disbursing agent, and as relevant, agent in connection
with accumulation, open account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to:
A. Receive orders for the purchase of shares, with prompt delivery,
where appropriate, of payment and supporting documentation to the
Fund's custodian;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated
shares being held in the appropriate shareholder account;
C. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund's
custodian;
D. Pay monies (upon receipt from the Fund's custodian, where
relevant) in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost,
stolen or destroyed certificates upon receipt of satisfactory
indemnification or surety bond;
H. Prepare and transmit payments for dividends and distributions
declared by the Fund;
<PAGE>
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of the Fund and maintain, pursuant
to Section Rule 17ad-10(e), a record of the total number of
shares of the Fund which are authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemptions and other confirmable transactions
as agreed upon with the Fund; and
O. Provide a Blue Sky System which will enable the Fund to monitor
the total number of shares sold in each state. In addition, the
Fund or its agent, including the Agent, shall identify to the
Agent in writing those transactions and assets to be treated as
exempt from the Blue Sky reporting to the Fund for each state.
The responsibility of the Agent for the Fund's Blue Sky state
registration status is solely limited under this Agreement to the
initial compliance by the Fund and the reporting of such
transactions to the Fund or its agent.
2. Compensation
The Company, on behalf of the Fund, agrees to pay the Agent for
performance of the duties listed in this Agreement; the fees and
out-of-pocket expenses include, but are not limited to the following:
printing, postage, forms, stationery, record retention (if requested by the
Fund), mailing, insertion, programming (if requested by the Fund), labels,
shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Company and the Agent.
The Company agrees to pay all fees and reimbursable expenses within ten
(10) business days following the mailing of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Company that:
A. It is a trust company duly organized, existing and in good
standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange
Act of 1934, as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
<PAGE>
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the Securities
and Exchange Acts of 1933 and 1934, as amended, the Investment
Company Act of 1940, as amended, and any laws, rules, and
regulations of governmental authorities having jurisdiction.
4. Representations of the Company
The Company represents and warrants to the Agent that:
A. The Company is an open-ended diversified investment company under
the Investment Company Act of 1940;
B. The Company is a corporation organized, existing, and in good
standing under the laws of Maryland;
C. The Company is empowered under applicable laws and by its
Corporate Charter and bylaws to enter into and perform this
Agreement on behalf of the Fund;
D. All necessary proceedings required by the Corporate Charter have
been taken to authorize it to enter into and perform this
Agreement;
E. The Company will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules
and regulations of governmental authorities having jurisdiction;
and
F. A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate
state securities law filings have been made and will continue to
be made, with respect to all shares of the Fund being offered for
sale.
5. Covenants of Company and Agent
The Company shall furnish the Agent a certified copy of the resolution
of the Board of Directors of the Company authorizing the appointment of the
Agent and the execution of this Agreement. The Company shall provide to the
Agent a copy of the Corporate Charter, bylaws of the Corporation, and all
amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund but not inconsistent with the rules
and regulations of appropriate government authorities, in particular Section
31 of the Investment Company Act of 1940, as amended, and the rules
thereunder. The Agent agrees that all such records prepared or maintained by
the Agent relating to the services to be performed by the Agent hereunder are
the property of the Fund and will be preserved, maintained and made available
in accordance with such section and rules of the Investment Company Act and
will be promptly surrendered to the Fund on and in accordance with its
request.
6. Indemnification; Remedies Upon Breach
<PAGE>
The Agent shall exercise reasonable care in the performance of its
duties under this Agreement. The Agent shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or power
supplies beyond the Agent's control, except a loss resulting from the Agent's
refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance of
its duties or reckless disregard by it of its obligations and duties under
this Agreement. Notwithstanding any other provision of this Agreement, the
Fund shall indemnify and hold harmless the Agent from and against any and all
claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Agent may sustain or incur or which may be
asserted against the Agent by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in
accordance with the foregoing standards, or (ii) in reliance upon any written
or oral instruction provided to the Agent by any duly authorized officer of
the Fund, such duly authorized officer to be included in a list of authorized
officers furnished to the Agent and as amended from time to time in writing
by resolution of the Board of Directors of the Fund.
Further, the Fund will indemnify and hold the Agent harmless against
any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand,
action or suit as a result of the negligence of the Fund or the principal
underwriter (unless contributed to by the Agent's breach of this Agreement or
other Agreements between the Fund and the Agent, or the Agent's own
negligence or bad faith); or as a result of the Agent acting upon telephone
instructions relating to the exchange or redemption of shares received by the
Agent and reasonably believed by the Agent under a standard of care
customarily used in the industry to have originated from the record owner of
the subject shares; or as a result of acting in reliance upon any genuine
instrument or stock certificate signed, countersigned or executed by any
person or persons authorized to sign, countersign or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond the Agent's control. the Agent will make every reasonable
effort to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of the Agent. The Agent agrees that it
shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provisions for emergency use of electrical data
processing equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect the Agent's premises
and operating capabilities at any time during regular business hours of the
Agent, upon reasonable notice to the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Agent harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that the Agent will use all reasonable care to identify
and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Fund. The Fund shall have the option to defend the Agent against
any claim which may be the subject of this indemnification. In the event
that the Fund so elects, it will so notify the Agent and thereupon the Fund
shall take over complete defense of the claim, and the Agent shall in such
situation initiate no further legal or other expenses for which it shall seek
indemnification under this section. The Agent shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify the Agent except with the Fund's written consent.
<PAGE>
The Agent shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by the Agent as
a result of the Agent's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its reckless
disregard of its obligations and duties under this Agreement, or failure to
meet the standard of care as set forth above.
7. Proprietary and Confidential Information
The Agent agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and prior, present, or
potential shareholders of the Fund (and clients of said shareholders), and
not to use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Fund, which approval shall not
be unreasonably withheld and may not be withheld where the Agent may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or
when so requested by the Fund.
8. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held invalid by a court or regulatory agency decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be governed by Wisconsin law,
provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
9. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written consent of
the parties.
B. This Agreement may be terminated upon ninety (90) day's written
notice given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of
the other party.
D. Any notice required to be given by the parties to each other
under the terms of this Agreement shall be in writing, addressed
and delivered, or mailed to the principal place of business of
the other party. If to the Agent, such notice should be sent to
Michael R. McVoy. If the Company and/or the Fund, such notice
shall be sent to O.R.I. Funds, Inc., Suite 1807, 233 North
Michigan Avenue, Chicago, Illinois 60601, Attention Samuel
Wegbreit.
E. In the event that the Company, on behalf of the Fund, gives to
the Agent its written intention to terminate and appoint a
successor transfer agent, the Agent agrees to cooperate in the
transfer of its duties and responsibilities to the successor,
including any and all relevant books, records and other data
established or maintained by the Agent under this Agreement.
<PAGE>
F. Should the Company exercise its right to terminate, all
reasonable out-of-pocket expenses associated with the movement of
records and material will be paid by the Company, on behalf of
the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the
day and year first written above.
O.R.I. Funds, Inc. Firstar Trust Company
By: /s/ Samuel Wegbreit By: /s/ James C. Tyler
------------------------ -------------------------
Attest /s/ Mark C. Pappas Attest: /s/ Gail M. Zen
--------------------- ---------------------
Assistant Secretary
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
SHAREHOLDER ACCOUNTING SERVICES
NO-LOAD FUNDS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Annual Fee Schedule
$14.00 per shareholder account
$7.50 per Fed wire transfer (billed to investor)
$5.00 per telephone exchange (billed to investor)
Annual minimum fee first year $18,000
Annual minimum fee second year $20,000
Annual minimum fee after second year $24,000
Plus out-of-pocket expenses, including but not limited to:
Telephone - toll-free lines
Postage
Programming if requested by the Fund
Stationary/envelopes
Mailing
Proxies
Retention of records if requested by the Fund
Microfilm/fiche of records if requested by the Fund
Special reports if requested by the Fund
All other out-of-pocket expenses authorized by the
Fund
Fees are billed monthly
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
MUTUAL FUND CUSTODIAL QUALIFIED PLAN
ANNUAL FEE SCHEDULE
(billed to Investors)
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Defined
Contribution 403(b)(7) 401(k)
IRA Plan Plan Plan
Accounts Accounts Accounts Accounts
-------- ------------ -------- --------
Annual maintenance fee
per account $12.50 $12.50 $12.50 $12.50
Transfer to successor trustee 15.00 15.00 15.00 15.00
Distribution to a participant
(exclusive of systematic
withdrawal plans) 15.00 15.00 15.00 15.00
Refund of excess
contribution 15.00 15.00 15.00 15.00
Any outgoing wire 7.50 7.50 7.50 7.50
Telephone exchange 5.00 5.00 5.00 5.00
Exhibit 9.2
-----------
FUND ADMINISTRATION SERVICING AGREEMENT
This Agreement is made and entered into on this 1st day of December,
1995, by and between O.R.I Funds, Inc. (the "Company"), on behalf of O.R.I.
Growth Fund (hereinafter referred to as the "Fund"), and Firstar Trust
Company, a corporation organized under the laws of the State of Wisconsin
(hereinafter referred to as "FTC").
WHEREAS, The Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940;
WHEREAS, FTC is a trust company and, among other things, is in the
business of providing fund administration services for the benefit of its
customers;
NOW, THEREFORE, the Company and FTC do mutually promise and agree as
follows:
I. Appointment of Administrator
The Company hereby appoints FTC as Administrator of the Company on the
terms and conditions set forth in this Agreement, and FTC hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement in consideration of the compensation
provided for herein.
II. Duties and Responsibilities of FTC
As Administrator, and subject to the supervision and control of the
Company's Board of Directors, FTC will provide facilities, equipment,
and personnel to carry out the following administrative services for
operation of the business and affairs of the Company:
A. General Fund Management
1. Act as liaison among all Fund service providers
2. Coordinate board communication by:
a. Assisting Fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and
administrative data
c. Preparing minutes of meetings of the Board and
shareholders
d. Evaluating independent auditor
e. Securing and monitoring fidelity bond and director and
officers liability coverage, and making the necessary SEC
filings relating thereto
3. Maintain the Fund's governing documents, including the
Articles of Incorporation, the By-laws, and the minute book
4. Audits
a. Prepare appropriate schedules and assist independent
accountants
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
<PAGE>
5. Advise the Fund and its Board on matters concerning the Fund
and its affairs
6. Assist in overall operations of the Fund
B. Compliance
1. Regulatory Compliance
a. Monitor compliance with Investment Company Act of 1940
requirements
1) Asset diversification tests
2) Performance data calculations
3) Maintenance of books and records under Rule 31a-3
4) Code of ethics
b. Monitor Fund's compliance with the policies and investment
limitations of the Fund as set forth in the Prospectus,
Statement of Additional Information, By-laws, and Articles
of Corporation
2. Blue Sky Compliance
a. Prepare and file with the appropriate state securities
authorities any and all required compliance filings
relating to the registration of the securities of the Fund
so as to enable the Fund to make a continuous offering of
its shares
b. Monitor status and maintain registration in each state
3. SEC Registration and Reporting
a. Assisting Fund's counsel in updating prospectus, and
statement of additional information, and in preparing
proxy statements and Rule 24F-2 notices
b. Prepare annual and semiannual reports
c. Coordinate the layout and printing of publically
disseminated prospectuses and reports
4. IRS Compliance
a. Monitor Fund's status as a regulated investment company
under Subchapter M through review of the following:
1) Asset diversification requirements
2) Qualifying income requirements
3) Distribution requirements
b. Monitor short short testing
c. Calculate required distributions (including excise tax
distributions)
<PAGE>
C. Financial Reporting
1. Provide financial data required by fund prospectus and
statement of additional information
2. Prepare financial reports for shareholders, the board, the
SEC, and independent auditors
3. Supervise the Fund's custodian and independent accountants in
the maintenance of the Fund's general ledger and in the
preparation of the Fund's financial statements, including
oversight of expense accruals and payments, of the
determination of net asset value of the Fund's net assets and
of the Fund's shares, and of the declaration and payment of
dividends and other distributions to shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and
state tax returns including forms 1120/8610 with any necessary
schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
III. Compensation
The Company, on behalf of the Fund, agrees to pay FTC for performance
of the duties listed in this Agreement and the fees and out-of-pocket
expenses as set forth in the attached Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Company and FTC.
The Company agrees to pay all fees and reimbursable expenses within
ten (10) business days following the mailing of the billing notice.
IV. Performance of Service; Limitation of Liability
FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC's refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or willful misconduct on
its part in the performance of its duties or reckless disregard by it
of its obligations and duties under this Agreement. Notwithstanding
any other provision of this Agreement, the Fund shall indemnify and
hold harmless FTC from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys'
fees) which FTC may sustain or incur or which may be asserted against
FTC by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder (i) in accordance
with the foregoing standards,
<PAGE>
or (ii) in reliance upon any written or
oral instruction provided to FTC by any duly authorized officer of the
Fund, such duly authorized officer to be included in a list of
authorized officers furnished to FTC and as amended from time to time
in writing by resolution of the Board of Directors of the Fund.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FTC shall take all reasonable steps
to minimize service interruptions for any period that such
interruption continues beyond FTC's control. FTC will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FTC. FTC
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provisions for emergency
use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund shall be entitled
to inspect FTC's premises and operating capabilities at any time
during regular business hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be
asked to indemnify or hold FTC harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FTC will use all
reasonable care to identify and notify the Fund promptly concerning
any situation which presents or appears likely to present the
probability of such a claim for indemnification against the Fund. The
Fund shall have the option to defend FTC against any claim which may
be the subject of this indemnification. In the event that the Fund so
elects, it will so notify FTC and thereupon the Fund shall take over
complete defense of the claim, and FTC shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this section. FTC shall in no case confess any
claim or make any compromise in any case in which the Fund will be
asked to indemnify FTC except with the Fund's written consent.
FTC shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which may be asserted against
the Fund by any person arising out of any action taken or omitted to
be taken by FTC as a result of FTC's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence, or willful
misconduct, its reckless disregard of its obligations and duties under
this Agreement, or failure to meet the standard of care as set forth
above.
V. Proprietary and Confidential Information
FTC agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and
prior, present, or potential shareholders of the Fund (and clients of
said shareholders), and not to use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Fund, which approval may not be unreasonably withheld and may
not be withheld where FTC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by
the Fund.
VI. Data Necessary to Perform Service
The Fund or its agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in
such form as mutually agreed upon.
<PAGE>
VII. Terms of Agreement
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. The Agreement
may be terminated by either party upon giving ninety (90) days prior
written notice to the other party or such shorter period as is
mutually agreed upon by the parties.
The terms of this Agreement shall not be waived, altered, modified,
amended, or supplemented in any manner whatsoever except by a written
instrument signed by FTC and the Company, on behalf of the Fund.
VIII. Duties in the Event of Termination
In the event that, in connection with termination, a successor to any
of FTC's duties or responsibilities hereunder is designated by the
Fund by written notice to FTC, FTC will promptly, upon such
termination and at the expense of the Fund, transfer to such successor
all relevant books, records, correspondence, and other data
established or maintained by FTC under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the form
in which FTC has maintained, the Fund shall pay any expenses
associated with transferring the data to such form requested by the
Fund), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FTC's
personnel in the establishment of books, records, and other data by
such successor.
IX. Notices
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FTC shall be sent to Attention Joe Neuberger,
Firstar Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin
53202, and notice to the Company and/or the Fund shall be sent to
Attention Samuel Wegbreit, O.R.I. Funds, Inc., Suite 1807, 233 North
Michigan Avenue, Chicago, Illinois 60601.
X. Records
FTC shall keep records relating to the service to be performed
hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular Section 31 of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), and the rules thereunder. FTC
agrees that all such records prepared or maintained by FTC relating to
the services to be performed by FTC hereunder are the property of the
Fund and will be preserved, maintained, and made available in
accordance with such section and rules of the Investment Company Act
and will be promptly surrendered to the Fund on and in accordance with
its request.
XI. Miscellaneous
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held invalid by a court or
regulatory agency decision, statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall
be governed by Wisconsin law; provided, however, that nothing herein
shall be construed in a manner inconsistent with the Investment
Company Act or any rule or regulation promulgated by the SEC
thereunder. This Agreement constitutes the entire Agreement of the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer on one or more counterparts as of
the day and year first written above.
O.R.I. Funds, Inc. FIRSTAR TRUST COMPANY
By: /s/ Samuel Wegbreit By: /s/ James C. Tyler
-------------------------- ---------------------------
Attest: /s/ Mark C. Pappas Attest: /s/ Gail M. Zen
---------------------- -----------------------
7<PAGE>
Exhibit 9.3
-----------
FUND ACCOUNTING SERVICING AGREEMENT
This contract between O.R.I. Funds, Inc., a Maryland corporation (the
"Company"), on behalf of O.R.I. Growth Fund (hereinafter called the "Fund")
and Firstar Trust Company, a Wisconsin corporation (hereinafter called "FTC")
is entered into on this 1st day of December, 1995.
WITNESSETH:
WHEREAS, the Company is an open-ended management investment company
which is registered under the Investment Company Act of 1940; and
WHEREAS, Firstar Trust Company ("FTC") is in the business of providing,
among other things, mutual fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. Services. FTC agrees to provide the following mutual fund
accounting services to the Fund:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis
using security trade information communicated from the investment
manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors of the Company and
apply those prices to the portfolio positions. For those
securities where market quotations are not readily available, the
Board of Directors of the Company shall approve, in good faith,
the method for determining the fair value for such securities.
(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify
them as to short-short, short- or long-term status; account for
periodic distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of each valuation
date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense
accrual amounts as directed by the Fund as to methodology, rate
or dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Fund.
(3) Account for fund expenditures and maintain expense
accrual balances at the level of accounting detail, as agreed
upon by FTC and the Fund.
(4) Provide expense accrual and payment reporting.
<PAGE>
C. Fund Valuation and Financial Reporting Services:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund share activity
as reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Fund.
(3) Determine net investment income (earnings) for the
Fund as of each valuation date. Account for periodic
distributions of earnings to shareholders and maintain
undistributed net investment income balances as of each valuation
date.
(4) Maintain a general ledger and other accounts, books,
and financial records for the Fund in the form as agreed upon.
(5) For each day the Fund is open as defined in the
prospectus, determine the net asset value of the according to
the accounting policies and procedures set forth in the
prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of fund
operation at such time as required by the nature and
characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed upon from time
to time.
(8) Prepare monthly reports which document the adequacy
of accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain tax accounting records for the investment
portfolio of the Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax cost basis designated by the Fund.
(4) Provide the necessary financial information to
support the taxable components of income and capital gains
distributions to the transfer agent to support tax reporting to
the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the fund accounting
records available to the Fund, the Securities and Exchange
Commission, and the outside auditors.
(2) Keep records relating to the services to be performed
hereunder, in the form and manner, and for such period, as it may
deem advisable and is agreeable to the Fund but not
<PAGE>
inconsistent
with the rules and regulations of appropriate government
authorities, in particular Section 31 of the Investment Company
Act of 1940, as amended, and the rules and regulations
thereunder.
2. Changes in Accounting Procedures. Any resolution passed by the
Board of Directors of the Company that affects accounting practices and
procedures under this Agreement shall be effective upon written receipt and
acceptance by the FTC.
3. Changes in Equipment, Systems, Service, Etc. FTC reserves the
right to make changes from time to time, as it deems advisable, relating to
its services, systems, programs, rules, operating schedules and equipment, so
long as such changes do not adversely affect the service provided to the Fund
under this Agreement.
4. Compensation. FTC shall be compensated for providing the
services set forth in this Agreement in accordance with the Fee Schedule
attached hereto as Exhibit A and as mutually agreed upon and amended from
time to time.
5. Performance of Service. FTC shall exercise reasonable care in
the performance of its duties under this Agreement. FTC shall not be liable
for any error of judgement or mistake of law or for any loss suffered by the
Fund in connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of communication
or power supplies beyond FTC's control, except a loss resulting from FTC's
refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance of
its duties or reckless disregard by it of its obligations and duties under
this Agreement. Notwithstanding any other provision of this Agreement, the
Fund shall indemnify and hold harmless FTC from and against any and all
claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be asserted
against FTC by any person arising out of any action taken or omitted to be
taken by it in performing the services hereunder (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral instruction
provided to FTC by any duly authorized officer of the Fund, such duly
authorized officer to be included in a list of authorized officers furnished
to FTC and as amended from time to time in writing by resolution of the Board
of Directors of the Fund.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FTC shall take all
reasonable steps to minimize service interruptions for any period that such
interruption continues beyond FTC's control. FTC will make every reasonable
effort to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of FTC. FTC agrees that it shall, at
all times, have reasonable contingency plans with appropriate parties, making
reasonable provisions for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives
of the Fund shall be entitled to inspect FTC's premises and operating
capabilities at any time during regular business hours of FTC, upon
reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Fund may be
asked to indemnify or hold FTC harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it
is further understood that FTC will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund. The Fund shall have the option to defend FTC against any claim
which may be the subject of this indemnification. In the event that the Fund
so elects, it will so notify FTC and thereupon the Fund shall take over
complete defense of the claim, and FTC shall in such
<PAGE>
situation initiate no
further legal or other expenses for which it shall seek indemnification under
this section. FTC shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify FTC except with the
Fund's written consent.
FTC shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether with
or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by FTC as a
result of FTC's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct, its reckless
disregard of its obligations and duties under this Agreement, or, its failure
to meet the standard of care as set forth above.
6. No Agency Relationship. Nothing herein contained shall be deemed
to authorize or empower FTC to act as agent for the other party to this
Agreement, or to conduct business in the name of, or for the account of, the
other party to this Agreement.
7. Ownership of Records. All records prepared or maintained by FTC
on behalf of the Fund relating to the services to be performed by FTC
hereunder are the property of the Fund and will be preserved, maintained, and
made available as required by the Investment Company Act and will be
surrendered promptly on the written request of an authorized officer of the
Company.
8. Proprietary and Confidential Information. FTC agrees on behalf
of itself and its directors, officers, and employees to treat confidentiality
and as proprietary information of the Fund all records and other information
relative to the Fund and prior, present, or potential shareholders of the
Fund (and clients of said shareholders), and not to use such records and
information for any purpose other than performance of its responsibilities
and duties thereunder, except after prior notification to and approval in
writing by the Fund, which approval shall not be unreasonably withheld and
may not be withheld where FTC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Fund.
9. Data Necessary to Perform Services. The Fund or its agent, which
may be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. Notification of Error. The Fund will notify FTC of any balancing
or control error caused by FTC within three (3) business days after receipt
of any reports rendered by FTC to the Fund, or within three (3) business days
after discovery of any error or omission not covered in the balancing or
control procedure, or within three (3) business days of receiving notice from
any shareholder.
11. Term of Agreement. This Agreement may be terminated by either
party upon giving ninety (90) days prior written notice to the other party or
such shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
12. Duties in the Event of Termination. In the event that in
connection with termination a Successor to any of FTC's duties or
responsibilities hereunder is designated by the Fund by written notice to
FTC, FTC will promptly, upon such termination and at the expense of the Fund,
transfer to such Successor all relevant books, records, correspondence and
other data established or maintained by FTC under this Agreement in a form
reasonably acceptable to the Fund (if such form differs from the form in
which FTC has maintained the same, the Fund shall pay any expenses associated
with transferring the same to such form requested by the Fund), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FTC's personnel in the establishment of books,
records and other data by such successor.
<PAGE>
13. Notices. Notices of any kind to be given by either party to the
other party shall be duly given if mailed or delivered as follows: Notice to
FTC shall be sent to Michael R. McVoy, and notice to the Company and/or the
Fund shall be sent to O.R.I. Funds, Inc., Suite 1807, 233 North Michigan
Avenue, Chicago, Illinois 60601, Attention Samuel Wegbreit.
14. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held invalid by a court or regulatory
agency decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be governed by Wisconsin
law, provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act or any rule or regulation
promulgated by the SEC thereunder. This Agreement constitutes the entire
Agreement of the parties hereto.
IN WITNESS WHEREOF, the due execution hereof on the date first above
written.
ATTEST: Firstar Trust Company
/s/ Gail M. Zen By /s/ James C. Tyler
---------------------------- -----------------------------
ATTEST: O.R.I. Funds, Inc.
/s/ Mark C. Pappas By /s/ Samuel Wegbreit
---------------------------- -----------------------------
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
FUND VALUATION AND ACCOUNTING
ANNUAL FEE SCHEDULE
FOR DOMESTIC PORTFOLIOS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Until the fund reaches a market value of $25 million, the following fees
will apply.
Portfolio Services - Fixed Income Funds
Annual fee per fund based on market value of assets:
$25,000 for the first $40,000,000
2/100 of 1% (2 basis points) on the next $200,000,000
1/100 of 1% (1 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
Portfolio Services - Equity/Balanced Funds
Annual fee per fund based on market value of assets:
$18,000 for the first $40,000,000 for the first year
$20,000 for the first $40,000,000 for the second year
$22,000 for the first $40,000,000 after the second year
1/100 of 1% (1 basis point) on the next $200,000,000
5/1000 of 1% (1/2 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
Portfolio Services - Money Market Funds
Annual fee per fund based on market value of assets:
$25,000 for the first $40,000,000
5/1000 of 1% (1/2 basis point) on the balance
Out-of-pocket expenses, including daily pricing service
Fees are billed monthly
<PAGE>
FIRSTAR TRUST COMPANY
MUTUAL FUND SERVICES
FUND VALUATION AND ACCOUNTING
ASSET PRICING COSTS
EXHIBIT A
OAK RIDGE INVESTMENTS GROWTH FUND
Charge per Item per Valuation
Asset Type (daily, weekly, etc.)
---------- ---------------------
Domestic and Canadian Equities $0.15
Options 0.15
Corporate/Gov't/Agency Bonds 0.50
CMOs 0.80
International Equities and Bonds 0.50
Municipal Bonds 0.80
Money Market Instruments 0.80
Pricing costs are billed monthly.
8<PAGE>
Exhibit 11
----------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference in the Prospectus and Statement of
Additional Information constituting parts of this Post-Effective Amendment
No. 4 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 15, 1995, relating to the financial
statements and financial highlights appearing in the November 30, 1995 Annual
Report to Shareholders of O.R.I. Growth Fund, which are included in the
Registration Statement. We also consent to the reference to us under the
heading "Independent Accountants" in the Statement of Additional Information
and to the reference to us under the heading "Financial Highlights" in the
Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
December 21, 1995
Exhibit 16
----------
O.R.I. GROWTH FUND
Schedule for Computations of Performance Quotations
---------------------------------------------------
FOR THE ONE YEAR PERIOD ENDED NOVEMBER 30, 1995
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL VALUE) - 1
Total return = 37.0%
37.0% = (14,359/10,480) - 1
FOR THE PERIOD FROM JANUARY 3, 1994 (COMMENCEMENT OF OPERATIONS) TO
NOVEMBER 30, 1995
CUMULATIVE TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL
PAYMENT) - 1
Cumulative total return = 43.6%
43.6% = (14,359/10,000) - 1
TOTAL RETURN = (ENDING REDEEMABLE VALUE/INITIAL PAYMENT) 1/n - 1
of $10,000
Total return = 20.9%
20.9% = (14,359/10,000) 1/1.9 - 1
EXHIBIT A
FIRSTAR TRUST COMPANY
MUTUAL FUNDS SERVICES
OAK RIDGE INVESTMENTS GROWTH FUND
FUND ADMINISTRATION FEES
Until the Fund reaches a market value of $25 million, the following fees
will apply.
Minimum annual of $20,000 for the first year
Minimum annual of $25,000 for the second year
Minimum annual of $30,000 after the second year
5 basis points (.0005) on the first $100,000,000
4 basis points (.0004) on the next $400,000,000
3 basis points (.0003) on the balance
Plus out-of-pocket expenses, including but not limited to:
Postage
Stationary
Programming if requested by the Fund
Proxies
Record retention if requested by the Fund
Special reports if requested by the Fund
Federal and State regulatory filing fees
Certain Fund insurance premiums
Expenses from Board of Directors meetings
Fund auditing and legal expenses
Other out-of-pocket expenses authorized by the Fund
Fees are billed monthly.
