O.R.I. GROWTH FUND
LETTER TO SHAREHOLDERS
MAY 1996
Dear Investor,
Once again it is a pleasure to report that the O.R.I. Growth Fund has
experienced another strong six month period, extending both real returns and
our performance relative to appropriate benchmarks. The broad market continues
to outpace historical returns by a wide margin, displaying impressive
resiliency to rising rates and bureaucratic gridlock.
Stock market profits have become a foregone conclusion. The only unknown
variables are how much, and when these gains will occur. For the truly
long-term investor this may not be a totally unrealistic outlook. The problem
is that the definition of long-term has become quarter to quarter for many
investors. Many of our shareholders are on-line following daily returns, while
others call or write the Fund's management team inquiring about specific
securities in the portfolio. Investing for long-term goals should not be any
more fun today than a meeting with a bank trust officer was 50 years ago.
The purpose in voicing my concern for today's investor outlook is not
intended to be critical, for every shareholder's interests are important to
me. However, it does explain the heightened volatility in many growth stocks
and the funds that buy these momentum favorites. The O.R.I. Growth Fund is
primarily invested in small to mid-cap companies not widely followed by Wall
Street analysts. Our insistence on reasonable valuations has eliminated
exposure to lofty P/E stocks, but does not necessarily reduce short-term price
swings.
The Fund has continued to enjoy strong contributions from pollution
control and technology holdings, which have offset sluggish financial and
healthcare issues. Currently numerous technology and healthcare stocks are
being abandoned by the fast money crowd. Some of these fallen angels will
continue to disappoint, while a number of these gems are likely to surface and
complement our core holdings.
To continue the market's broad yearly advance, corporate profits must
remain on track without fueling inflationary fears. The 30-year Treasury yield
is unlikely to remain under 7%. Higher commodity prices and an expected spike
in second quarter economic growth could pressure rates to the 7.25% - 7.50%
level. As the election approaches it is unlikely the Federal Reserve will
intervene in any significant manner.
Historically rich valuations suggest that greater selectivity is
advisable. Global prospects will play a significant factor in profit growth.
Companies providing emerging technologies and innovative products are more
recession resistant and can be explosive performers.
Adherence to a strong and decisive investment discipline is essential to
enjoy long-term success. Stratospheric valuations and IPO's of unproven
companies in hot fields such as the Internet, are obvious examples of
speculative excess. Even investors in Warren Buffet's Berkshire Hathaway
common stock may be guilty of bull market hysteria by affording a two times
book value premium on the company's shares. To Mr. Buffet's credit, boldly
displayed on the prospectus for the recent offering of his company's shares is
his statement that he would not recommend purchase at the current price. Many
investors ignored his comments.
Staying committed is difficult for managers and investors. I remain
confident that by avoiding market timing and observing a fundamental
discipline, the O.R.I. Growth Fund will be a success over any realistically
defined long-term horizon.
Sincerely,
David M. Klaskin
President
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
SCHEDULE OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C>
COMMON STOCK 88.38%
AUTOMOTIVE & RELATED
PRODUCTS 0.34%
580 Borg-Warner Automotive, Inc. $ 22,910
----------
BANKING 5.04%
1,500 BayBanks, Inc. 162,000
10,000 Greater New York Savings Bank 111,250
3,500 Kankakee Bancorp, Inc. 66,500
----------
339,750
----------
CHEMICALS 1.50%
10,000 Environmental Technologies
Corporation* 101,250
----------
COMMUNICATIONS 15.04%
6,000 Comsat Corporation 170,250
7,000 Digital Systems International, Inc.* 154,875
6,000 Frontier Corporation 192,000
8,000 GST Telecommunications, Inc.* 115,000
6,500 IPC Information Systems, Inc.* 138,125
5,000 WorldCom, Inc.* 244,375
----------
1,014,625
----------
COMPUTERS - NETWORKING 5.57%
6,000 Sun Microsystems, Inc.* 375,750
----------
COMPUTERS - SOFTWARE 13.23%
2,600 BMC Software, Inc.* 163,800
7,000 Control Data Systems, Inc.* 173,250
10,000 Globalink, Inc.* 86,250
7,500 Hyperion Software Corporation 105,000
4,000 MDL Information Systems, Inc.* 122,500
3,000 Sterling Software, Inc.* 241,500
----------
892,300
----------
<PAGE>
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C>
DEFENSE ELECTRONICS 1.55%
5,000 Tracor, Inc.* $104,375
----------
DISTRIBUTION 0.66%
1,100 Hughes Supply, Inc. 44,275
----------
DRUGS & MEDICAL 1.67%
2,500 Watson Pharmaceuticals, Inc.* 112,500
----------
ELECTRICAL EQUIPMENT 1.56%
12,000 JPM Company* 105,000
----------
ELECTRONICS 2.33%
3,500 SCI Systems, Inc.* 157,500
----------
ENVIRONMENTAL SERVICES/
POLLUTION CONTROL 8.94%
20,000 Alanco Environmental Resource
Corporation* 51,250
5,000 CET Environmental Services, Inc.* 56,250
9,000 ERD Waste Corporation* 85,500
5,000 U.S. Filter Corporation* 174,375
8,000 U.S.A. Waste Services, Inc.* 236,000
----------
603,375
----------
GOLD & PRECIOUS METALS 1.05%
10,000 First Dynasty Mines Ltd.* 70,625
----------
HEALTH CARE EQUIPMENT &
SUPPLIES 3.36%
4,000 Coherent, Inc.* 195,500
1,700 Maxxim Medical, Inc.* 31,025
----------
226,525
----------
See Notes to the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
MAY 31, 1996 (UNAUDITED)
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C>
HOSPITALS & HEALTH CARE 8.56%
2,300 Columbia/HCA Healthcare
Corporation $ 123,912
3,420 Healthsouth Rehabilitation* 119,700
7,500 Multicare Companies, Inc.* 150,000
5,000 OrNda HealthCorp.* 125,625
2,400 Pediatric Services of America, Inc.* 58,500
----------
577,737
----------
HOUSEHOLD PRODUCTS 1.47%
4,000 First Brands Corporation 99,000
----------
MISCELLANEOUS 4.77%
3,300 Service Corporation International 184,388
6,000 Personnel Group of America, Inc.* 137,250
----------
321,638
----------
OFFICE EQUIPMENT 0.82%
5,400 Cantel Industries, Inc.* 55,350
----------
OIL & GAS 4.48%
4,500 Occidental Petroleum Corporation 116,438
4,500 Tidewater, Inc. 185,625
----------
302,063
----------
RESTAURANTS 2.00%
4,000 Apple South, Inc. 100,000
5,000 Woodroast Systems, Inc.* 35,000
----------
135,000
RETAIL 1.70%
6,000 Zale Corporation* 115,500
----------
<PAGE>
<CAPTION>
NUMBER OF
SHARES VALUE
<S> <C> <C>
TRAVEL & RECREATION 2.74%
5,000 CUC International, Inc.* $ 185,000
----------
Total Common Stock
(cost $4,045,496) 5,962,048
----------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
SHORT-TERM INVESTMENTS 4.82%
VARIABLE RATE DEMAND NOTES 4.82%
<S> <C> <C>
$119,485 General Mills, Inc. $ 119,485
99,707 Pitney Bowes, Inc. 99,707
48,264 Warner-Lambert Co. 48,264
57,987 Wisconsin Electric Power Co. 57,987
----------
Total Short-Term Investments
(cost $325,443) 325,443
----------
Total Investments 93.20%
(cost $4,370,939) 6,287,491
----------
Other Assets less Liabilities 6.80% 458,460
----------
NET ASSETS 100.00% $6,745,951
==========
<FN>
* Non-income producing security
See Notes to the Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
ASSETS:
<S> <C>
Investments at market value (cost $4,370,939)............................................. $6,287,491
Receivable for investments sold........................................................... 435,805
Receivable from Adviser................................................................... 14,874
Organizational expenses, net of accumulated amortization.................................. 22,614
Prepaid expenses.......................................................................... 11,727
Interest and dividends receivable......................................................... 3,328
----------
Total Assets.............................................................................. 6,775,839
----------
LIABILITIES:
Accrued other expenses.................................................................... 29,888
----------
Total Liabilities......................................................................... 29,888
----------
NET ASSETS................................................................................ $6,745,951
==========
NET ASSETS CONSIST OF:
Capital stock............................................................................. $ 4,043
Paid-in-capital in excess of par.......................................................... 4,690,959
Undistributed net investment loss......................................................... (28,979)
Undistributed net realized gain on investments............................................ 163,376
Net unrealized appreciation on investments................................................ 1,916,552
----------
Net Assets................................................................................ $6,745,951
==========
CAPITAL STOCK, $.01 par value
Authorized................................................................................ 100,000,000
Issued and outstanding.................................................................... 404,253
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE............................................ $16.69
==========
MAXIMUM OFFERING PRICE PER SHARE.......................................................... $17.43
==========
See Notes to the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Interest................................................................................... $8,249
Dividends.................................................................................. 11,894
----------
20,143
----------
EXPENSES:
Fund administration and accounting fees.................................................... 25,328
Investment advisory fees .................................................................. 26,767
Professional fees.......................................................................... 9,610
Shareholder servicing fees and expenses.................................................... 14,233
Reports to shareholders.................................................................... 3,660
Federal and state registration fees........................................................ 6,936
Amortization of organizational expenses.................................................... 4,412
Directors' fees............................................................................ 1,504
Custody fees............................................................................... 1,887
12b-1 fees................................................................................. 5,704
Other...................................................................................... 1,402
----------
Total expenses before waiver and reimbursement............................................. 101,443
Less: Waiver and reimbursement of expenses by Adviser...................................... (47,909)
----------
Net expenses............................................................................... 53,534
----------
NET INVESTMENT (LOSS)...................................................................... (33,391)
----------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions............................................... 163,377
Change in unrealized appreciation on investments........................................... 987,062
----------
Net gain on investments.................................................................... 1,150,439
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................................... $1,117,048
==========
See Notes to the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
MAY 31, 1996 NOVEMBER 30,
(UNAUDITED) 1995
<S> <C> <C>
OPERATIONS:
Net investment (loss) ............................... $ (33,391) $ (42,658)
Net realized gain on investments .................... 163,377 204,643
Change in unrealized appreciation on investments .... 987,062 939,317
----------- -----------
Net increase in net assets resulting from operations 1,117,048 1,101,302
----------- -----------
DIVIDENDS PAID FROM:
Net realized gains .................................. (178,056) (7,454)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold ......................................... 1,701,845 1,049,419
Shares issued to holders in reinvestment of dividends 164,944 6,813
Shares redeemed ..................................... (242,076) (676,380)
----------- -----------
Net increase ........................................ 1,624,713 379,852
----------- -----------
TOTAL INCREASE IN NET ASSETS ........................ 2,563,705 1,473,700
NET ASSETS:
Beginning of period ................................. 4,182,246 2,708,546
----------- -----------
End of period ....................................... $ 6,745,951 $ 4,182,246
=========== ===========
See Notes to the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
O.R.I. GROWTH FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
SIX MONTHS YEAR JANUARY 3, 1994(1)
ENDED ENDED TO
MAY 31, 1996 NOVEMBER 30, NOVEMBER 30,
(UNAUDITED) 1995 1994
<S> <C> <C> <C>
Net asset value, beginning of period.............. $14.32 $10.48 $10.00
Income from investment operations:
Net investment (loss)............................. (0.07) (0.13) (0.07)
Net realized and unrealized gains on
investments..................................... 3.04 4.00 0.55
------------ ----------- ----------
Total from investment operations.................. 2.97 3.87 0.48
------------ ----------- ----------
Less distributions:
Dividends from capital gains...................... (0.60) (0.03) --
------------ ----------- ----------
Net asset value, end of period.................... $16.69 $14.32 $10.48
============ =========== ==========
Total return (2) (3).............................. 21.8% 37.0% 4.8%
Supplemental data and ratios:
Net assets, end of period......................... $6,745,951 $4,182,246 $2,708,546
Ratio of expenses to average net assets (4) (5)... 2.0% 2.0% 2.0%
Ratio of net investment (loss) to average
net assets (4) (5) ............................ (1.2)% (1.3)% (1.1)%
Portfolio turnover rate........................... 41% 109% 80%
Average commission rate paid...................... $0.0530
<FN>
(1) Commencement of operations.
(2) Not annualized for the periods ended November 30, 1994 and May 31, 1996.
(3) The total return calculation does not reflect the 4.25% front end sales
charge.
(4) Net of reimbursements and waivers. Absent reimbursements and waivers of
expenses by Adviser, the ratios of expenses to average net assets would have
been 3.8%, 6.5% and 9.0%, for the periods ended May 31, 1996, November 30,
1995 and November 30, 1994, respectively and net investment (loss) to average
net assets would have been (3.0)%, (5.8)% and (8.1)%, for the periods ended
May 31, 1996, November 30, 1995 and November 30, 1994, respectively.
(5) Annualized for the periods ended November 30, 1994 and May 31, 1996.
</FN>
See Notes to the Financial Statements.
</TABLE>
<PAGE>
O.R.I. GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
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 ("1940
Act"). The Fund's investment objective is capital appreciation. 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.
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 or 4.44% of the net asset
value.
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 sales 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.
<PAGE>
O.R.I. GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
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) Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
f) Other - Investment and shareholder transactions are recorded no later than
the first business day after the trade date. 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. Generally accepted accounting principles
require that permanent financial reporting and tax differences be reclassified
to capital stock.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
May 31, 1996 November 30, 1995
<S> <C> <C>
Shares sold 115,805 90,685
Shares issued to holders in
reinvestment of dividends 12,355 662
Shares redeemed (16,051) (57,549)
------- -------
Net increase 112,109 33,798
======= =======
</TABLE>
<PAGE>
O.R.I. GROWTH FUND
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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 six months ended May 31, 1996 were $3,082,054
and $2,056,785, respectively. There were no purchases or sales of long-term
U.S. government securities.
At May 31, 1996, gross unrealized appreciation and depreciation of investments
were as follows:
<TABLE>
<CAPTION>
<S> <C>
Appreciation............................................. $1,984,048
Depreciation............................................. (67,496)
----------
Net appreciation on investments.......................... $1,916,552
==========
6. DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"Plan"), which requires it to pay Oak Ridge Investments, Inc. (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. The Fund incurred fees of $5,704 for the period ended May 31,
1996, pursuant to the Plan.
</TABLE>
<PAGE>
TABLE OF
CONTENTS
Page
Letter to Shareholders................ 1
Schedule of Investments............... 2
Statement of Assets and Liabilities... 4
Statement of Operations............... 5
Statement of Changes in Net Assets.... 6
Financial Highlights.................. 7
Notes to the Financial Statements..... 8
This Report has been prepared for shareholders and may be distributed to
others only if preceded or accompanied by a current prospectus.
SEMI-ANNUAL
REPORT
May 31, 1996
O.R.I.
GROWTH
FUND
Shareholder Services
1 (800) 407-7298
OAK RIDGE INVESTMENTS, INC.
Investment Adviser
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000914037
<NAME> ORI FUNDS, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 4,370,939
<INVESTMENTS-AT-VALUE> 6,287,491
<RECEIVABLES> 454,007
<ASSETS-OTHER> 34,341
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,775,839
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 29,888
<TOTAL-LIABILITIES> 29,888
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,690,959
<SHARES-COMMON-STOCK> 404,253
<SHARES-COMMON-PRIOR> 292,144
<ACCUMULATED-NII-CURRENT> (28,979)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 163,376
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,916,552
<NET-ASSETS> 6,745,951
<DIVIDEND-INCOME> 11,894
<INTEREST-INCOME> 8,249
<OTHER-INCOME> 0
<EXPENSES-NET> 53,534
<NET-INVESTMENT-INCOME> (33,391)
<REALIZED-GAINS-CURRENT> 163,377
<APPREC-INCREASE-CURRENT> 987,062
<NET-CHANGE-FROM-OPS> 1,117,048
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 178,056
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115,805
<NUMBER-OF-SHARES-REDEEMED> 16,051
<SHARES-REINVESTED> 12,355
<NET-CHANGE-IN-ASSETS> 2,563,705
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 178,056
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26,767
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 101,443
<AVERAGE-NET-ASSETS> 5,358,725
<PER-SHARE-NAV-BEGIN> 14.32
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> 3.04
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.60)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.69
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
