SEMI-ANNUAL
REPORT
May 31, 1997
O.R.I.
GROWTH
FUND
Shareholder Services
1(800) 407-7298
OAK RIDGE INVESTMENTS, INC.
Investment Adviser
O.R.I. GROWTH FUND
LETTER TO SHAREHOLDERS
MAY 1997
Dear Shareholder:
It is a pleasure to report continued strong results for the O.R.I. Growth
Fund, both in absolute returns and compared with our most representative
benchmark, the Russell 2000. Large stocks widened their 3 1/2 year
outperformance over smaller issues, as popular index funds propelled the largest
of the large stocks to lofty levels.
A flow of money into pools mandated to buy more and more blue chip securities
has created an unusual disparity in valuations. Historically, small to mid-cap
stocks have been more volatile, but have provided greater returns (typically 2-
3% higher annually) than large stocks. Currently, all capitalizations are
trading at approximately 18-19 times forward earnings with the greater growth
prospects clearly held by smaller companies.
During the past several years, statistics suggest that a global market
presence creates more profitable opportunities for large multinational
corporations. This data is misleading, as prolonged economic strength has
allowed shareholder conscious management to increase per share earnings and
stock prices through means such as share buybacks, restructuring and other cost
cutting measures. This creates real concern over the quality and sustainability
of earnings gains, particularly among large stocks. It is imperative to invest
in companies able to profit through expanding revenues, with management teams
capable of exploiting the prospects presented by true growth.
The most attractive sectors have long-term potential to expand their
businesses in growing fields. Healthcare and technology sectors present the
most lucrative opportunities. It is particularly important to diversify in
these areas, as fast growth can lead to obsolescence and unexpected competitive
problems. The consolidating financial services sector of banks, brokerage and
specialty organizations offers reliable fundamentals with upside to earnings and
share price resulting from merger activity.
Overall market strength has left little room for disappointment and the
likelihood of increased volatility. Investors can concentrate on the favorable
demographics creating a steady stream of 401K and other equity investments from
baby boomers, to avoid the temptation of becoming market timers.
Recent stock gains serve as compelling evidence of the importance in
remaining fully invested with long-term funds. Somehow, after a period where
virtually all market indices have enjoyed spectacular results, valuations appear
to be no more expensive than when the advance began. This is due to
significantly lower inflationary fears and the resulting outlook for a stable
interest rate environment. Corporate earnings remain on track for a sixth
consecutive year of growth. Surveys reflect high levels of consumer confidence
and indicators suggest the improvement of consumer debt problems. A further
positive is the persistent level of low unemployment without wage pressures. In
total, such favorable conditions support current high stock multiples and do
not, by historical standards, suggest an imminent market selloff.
Current conditions appear well suited for good stock pickers to fare better
against the major indices. The O.R.I. Growth Fund, with its bias to smaller
growth stocks, is positioned to capitalize on these opportunities.
Thank you for your continued confidence.
Sincerely,
/s/David M. Klaskin
David M. Klaskin
President
SCHEDULE OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
NUMBER OF
SHARES VALUE
--------- ------
COMMON STOCK -- 93.62%
AUTOMOTIVE & RELATED PRODUCTS -- 0.31%
580 Borg-Warner Automotive, Inc. $28,275
----------
BANKING -- 6.98%
3,300 Bank of Boston Corporation 240,900
16,000 Greater New York Savings Bank 306,000
3,500 Kankakee Bancorp, Inc. 96,250
----------
643,150
----------
CHEMICALS -- 4.30%
4,500 Cambrex Corporation 162,562
10,000 Crompton & Knowles Corporation 233,750
----------
396,312
----------
COMMUNICATIONS -- 5.02%
6,000 Comsat Corporation 135,000
6,500 IPC Information Systems, Inc.*<F1> 81,250
7,000 Mosaix, Inc.*<F1> 98,875
5,000 Worldcom, Inc.*<F1> 148,125
----------
463,250
----------
COMPUTERS - NETWORKING -- 8.71%
6,400 Comdisco, Inc. 236,000
25,000 Data Systems Network Corporation*<F1> 234,375
5,500 Microtouch Systems, Inc.*<F1> 138,875
6,000 Sun Microsystems, Inc.*<F1> 193,500
----------
802,750
----------
COMPUTERS - SOFTWARE -- 6.46%
7,500 BancTec, Inc.*<F1> 189,375
2,500 Hyperion Software Corporation*<F1> 45,000
4,777 Sterling Commerce, Inc.*<F1> 158,835
3,000 Sterling Software, Inc.*<F1> 99,750
4,000 TRO Learning, Inc.*<F1> 40,000
2,500 TSR, Inc. 63,125
----------
596,085
----------
DEFENSE ELECTRONICS -- 1.38%
5,000 Tracor, Inc.*<F1> 126,875
----------
DRUGS & MEDICAL -- 1.06%
2,500 Watson Pharmaceuticals, Inc.*<F1> 97,813
----------
ELECTRONICS -- 5.64%
15,000 Alpha Industries, Inc.*<F1> 110,625
7,500 BE Aerospace, Inc.*<F1> 181,875
3,500 SCI Systems, Inc.*<F1> 227,500
----------
520,000
----------
ENTERTAINMENT & LEISURE -- 1.89%
6,000 Hasbro, Inc. 174,000
----------
ENVIRONMENTAL SERVICES/POLLUTION CONTROL -- 6.57%
4,000 Culligan Water
Technologies, Inc.*<F1> 178,000
1,500 Newpark Resources, Inc.*<F1> 78,750
5,000 United States Filter Corporation*<F1> 157,500
5,000 United Waste Systems, Inc.*<F1> 191,875
----------
606,125
----------
FINANCIAL SERVICES -- 3.01%
7,500 FIRSTPLUS Financial Group, Inc.*<F1> 191,250
6,000 IMC Mortgage Company*<F1> 86,250
----------
277,500
----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 5.08%
4,000 Coherent, Inc.*<F1> 175,000
3,300 Maxxim Medical, Inc.*<F1> 48,263
8,000 Medpartners, Inc.*<F1> 152,000
3,500 Sabratek Corporation*<F1> 93,188
----------
468,451
----------
HOSPITALS & HEALTH CARE -- 8.38%
6,840 Healthsouth Corporation*<F1> 156,465
5,000 The Multicare Companies, Inc.*<F1> 124,375
2,400 Pediatric Services of America, Inc.*<F1> 47,400
7,500 RehabCare Group, Inc.*<F1> 258,750
6,750 Tenet Healthcare Corporation*<F1> 185,625
----------
772,615
----------
HOUSEHOLD PRODUCTS -- 4.41%
8,500 Nortek, Inc.*<F1> 197,625
7,000 Triangle Pacific Corp.*<F1> 209,125
----------
406,750
----------
INSURANCE -- 2.21%
9,500 USF&G Corporation 204,250
----------
MISCELLANEOUS -- 7.90%
25,000 The Judge Group, Inc.*<F1> 103,125
6,000 Personnel Group of America, Inc.*<F1> 182,250
10,000 RCM Technologies, Inc.*<F1> 91,250
6,600 Service Corporation International 232,650
5,000 U.S. Rentals, Inc.*<F1> 118,750
----------
728,025
----------
OFFICE EQUIPMENT -- 0.31%
5,400 Cantel Industries, Inc.*<F1> 28,350
----------
OIL & GAS -- 5.94%
8,000 Global Marine, Inc.*<F1> 180,000
10,000 Magnum Hunter Resources, Inc.*<F1> 55,000
7,500 Oceaneering International, Inc.*<F1> 127,500
5,000 Seitel, Inc.*<F1> 185,625
----------
548,125
----------
REAL ESTATE INVESTMENT TRUST -- 1.18%
5,000 Glenborough Realty Trust, Inc. 108,750
----------
RETAIL - GROCERY -- 2.10%
8,000 Dominick's Supermarkets, Inc.*<F1> 194,000
----------
TRAVEL & RECREATION -- 1.87%
7,500 CUC International, Inc.*<F1> 172,500
----------
UTILITIES -- 2.91%
6,500 Calenergy Company, Inc.*<F1> 268,125
----------
Total Common Stock
(cost $6,561,948) 8,632,076
----------
PRINCIPAL
AMOUNT VALUE
--------- -----
SHORT-TERM INVESTMENTS -- 6.22%
VARIABLE RATE DEMAND NOTES -- 6.22%
$188,741 American Family Financial Services, Inc. 188,741
69,594 General Mills, Inc. 69,594
133,068 Johnson Controls, Inc. 133,068
101,454 Pitney Bowes, Inc. 101,454
80,690 Wisconsin Electric Power Co. 80,690
----------
Total Short-Term Investments
(cost $573,547) 573,547
----------
Total Investments -- 99.84%
(cost $7,135,495) 9,205,623
----------
Other Assets,
less Liabilities -- 0.16% 14,556
----------
NET ASSETS -- 100.00% $9,220,179
==========
*<F1>Non-income producing security
See Notes to the Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED)
ASSETS:
Investments, at market value (cost $7,135,495) $9,205,623
Receivable for investments sold 10,078
Receivable from Adviser 11,696
Receivable for capital shares sold 1,206
Organizational expenses, net of accumulated amortization 13,814
Prepaid expenses 23,552
Interest and dividends receivable 3,703
---------
Total Assets 9,269,672
---------
LIABILITIES:
Accrued other expenses 49,493
---------
Total Liabilities 49,493
---------
NET ASSETS $9,220,179
=========
NET ASSETS CONSIST OF:
Capital stock $5,478
Paid-in-capital in excess of par 6,951,676
Undistributed net investment (loss) (25,466)
Undistributed net realized gain on investments 218,363
Net unrealized appreciation on investments 2,070,128
---------
Net Assets $9,220,179
=========
CLASS A:
Net assets $9,143,692
Shares authorized ($.01 par value) 50,000,000
Shares issued and outstanding 543,277
Net asset value and redemption price per share $16.83
=====
Maximum offering price per share $17.58
======
CLASS C:
Net assets $76,487
Shares authorized ($.01 par value) 50,000,000
Shares issued and outstanding 4,550
Net asset value, redemption price and offering price per share $16.81
======
See Notes to the Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INVESTMENT INCOME:
Interest $13,829
Dividends 13,338
--------
27,167
--------
EXPENSES:
Fund administration and accounting fees 27,021
Investment advisory fees 40,815
Professional fees 17,755
Shareholder servicing fees and expenses 18,483
Reports to shareholders 1,585
Federal and state registration fees 6,214
Amortization of organizational expenses 4,388
Directors' fees 1,416
Custody fees 5,352
12b-1 fees -- Class A 10,173
12b-1 fees -- Class C 125
--------
Total expenses before waiver and reimbursement 133,327
Less: Waiver and reimbursement of expenses by Adviser (51,604)
--------
Net expenses 81,723
--------
NET INVESTMENT (LOSS) (54,556)
--------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions 249,177
Change in unrealized appreciation on investments 525,004
--------
Net gain on investments 774,181
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $719,625
========
See Notes to the Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
UNAUDITED
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1997 NOVEMBER 30, 1996
--------------- ----------------
OPERATIONS:
Net investment (loss) $(54,556) $(75,533)
Net realized gain on investments 249,177 579,775
Change in unrealized appreciation on
investments 525,004 615,635
---------- ---------
Net increase in net assets resulting from
operations 719,625 1,119,877
---------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold 1,148,671 2,818,792
Shares issued to holders in reinvestment of
dividends 476,916 164,945
Shares redeemed (341,432) (382,732)
---------- ---------
Net increase 1,284,155 2,601,005
---------- ---------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net realized gains (508,673) (178,056)
---------- ---------
TOTAL INCREASE IN NET ASSETS 1,495,107 3,542,826
NET ASSETS:
Beginning of period 7,725,072 4,182,246
---------- ---------
End of period (including undistributed net
investment loss of
($25,466) and $0 respectively) $9,220,179 $7,725,072
========== ==========
See Notes to the Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED JANUARY 3, 1994(1)<F2>
SIX MONTHS ENDED THREE MONTHS ENDED YEAR ENDED YEAR ENDED TO
MAY 31, 1997 MAY 31, 1997(2)<F3>NOVEMBER 30, 1996 NOVEMBER 30, 1995 NOVEMBER 30, 1994
----------------- ------------------ ----------------- ----------------- -----------------
CLASS A CLASS C CLASS A CLASS A CLASS A
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per share data:
Net asset value,
beginning of period $16.57 $16.02 $14.32 $10.48 $10.00
Income from investment
operations:
Net investment (loss) (0.05)(3)<F4> (0.06)(3)<F4> (0.16)(3)<F4> (0.13) (0.07)
Net realized and unrealized
gains on investments 1.40 0.85 3.01 4.00 0.55
------- -------- -------- -------- --------
Total from investment
operations 1.35 0.79 2.85 3.87 0.48
Less distributions:
Distributions from
capital gains (1.09) -- (0.60) (0.03) --
------- -------- -------- -------- --------
Net asset value,
end of period $16.83 $16.81 $16.57 $14.32 $10.48
======= ======== ======== ======== ========
8.6%(4)<F5>(5)<F6> 5.7%(4)<F5> 20.9%(5)<F6> 37.0% 4.8%(4)<F5>
Supplemental data and ratios:
Net assets, end of period $9,143,692 $76,487 $7,725,072 $4,182,246 $2,708,546
Ratio of expenses to average
net assets:
Before expense reimbursement 3.3%(6)<F7> 4.3%(6)<F7> 3.5% 6.5% 9.0%(6)<F7>
After expense reimbursement 2.0%(6)<F7> 2.7%(6)<F7> 2.0% 2.0% 2.0%(6)<F7>
Ratio of net investment (loss)
to average net assets:
Before expense reimbursement (2.6)%(6)<F7> (3.7)%(6)<F7> (2.7)% (5.8)% (8.1)%(6)<F7>
After expense reimbursement (1.3)%(6)<F7> (2.1)%(6)<F7> (1.2)% (1.3)% (1.1)%(6)<F7>
Portfolio turnover rate(7)<F8> 27% 27% 71% 109% 80%
Average commission
rate paid(7)<F8> $0.0535 $0.0535 $0.0512
(1)<F2>Commencement of operations.
(2)<F3>Effective March 1, 1997, the Fund offered a second class of shares, Class
C.
(3)<F4>Net investment (loss) per share is calculated using the ending balance
prior to consideration of adjustments for permanent book and tax differences.
(4)<F5>Not annualized.
(5)<F6>The total return calculation does not reflect the 4.25% front end sales
load.
(6)<F7>Annualized.
(7)<F8>Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
See Notes to the Financial Statements.
</TABLE>
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1997 (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.
The Fund has issued two classes of shares: Class A and Class C. The Class A
shares are subject to a 0.25% distribution fee and an initial sales charge
imposed at the time of purchase, in accordance with the Fund's prospectus. The
maximum sales charge is 4.25% of the offering price or 4.44% of the net asset
value. The Class C shares are subject to a shareholder servicing fee of 0.25%
and distribution fees of 0.75% pursuant to Rule 12b-1. Each class of shares of
the Fund has identical rights and privileges except that each class bears
differing expenses and exclusive voting rights on matters pertaining to the
distribution plan for that class.
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 -- It is the Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and the
Fund intends to distribute investment company net taxable income and net capital
gains to shareholders. Therefore, no federal income tax provision is required.
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) 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.
e) 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:
CLASS A
---------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1997 NOVEMBER 30, 1996
------------------ -----------------
AMOUNT SHARES AMOUNT SHARES
------- ------- ------- ------
Shares sold $1,076,494 68,318 $2,818,792 186,455
Shares issued to holders in
reinvestment of dividends 476,916 30,262 164,945 12,356
Shares redeemed (341,432) (21,505) (382,732) (24,753)
---------- -------- -------- -------
Net increase $1,211,978 77,075 $2,601,005 174,058
========== ====== ========= =======
CLASS C
-------------------
THREE MONTHS ENDED
MAY 31, 1997
--------------------
AMOUNT SHARES
-------- ------
Shares sold $72,177 4,550
Shares issued to holders in
reinvestment of dividends -- --
Shares redeemed -- --
------- ------
Net increase $72,177 4,550
======= ======
4. INVESTMENT ADVISORY AND OTHER AGREEMENTS
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.
For the fiscal year ending November 30, 1997, the Adviser has voluntarily agreed
to waive its management fee and/or reimburse the Fund's 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) for (i) Class A shares exceed
2.00% of the class' average daily net assets and (ii) Class C shares exceed
2.75% of the class' average daily net assets.
For the six months ended May 31, 1997, the Fund paid Oak Ridge Investments, Inc.
(the "Distributor") $4,932 of brokerage commissions. The Distributor also
received front-end sales charges on Class A shares of $6,333 for the six months
ended May 31, 1997.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended May 31, 1997, were $2,497,892
and $2,084,654 respectively. There were no purchases or sales of long-term U.S.
Government securities.
At May 31, 1997, gross unrealized appreciation and depreciation of investments
for federal income tax purposes were as follows:
Appreciation $2,393,306
(Depreciation) (323,178)
----------
Net unrealized appreciation on investments $2,070,128
=========
At May 31, 1997, the cost of investments for federal income tax purposes was
$7,135,495.
6. DISTRIBUTION PLAN
The Fund has adopted a plan of distribution for each class of shares (the "Class
A Plan" and the "Class C Plan") in accordance with Rule 12b-1 under the 1940 Act
pursuant to which certain distribution and/or service fees are paid. Under the
Class A Plan, the Fund is required to pay the Distributor a distribution fee of
up to 0.25% of the average daily net assets of the Fund attributable to the
Class A shares computed on an annual basis, for the promotion and distribution
of the Class A shares. The Class C Plan requires the Fund to pay the
Distributor (i) a distribution fee of up to 0.75% of the average daily net
assets of the Fund attributable to the Class C shares, computed on an annual
basis, and (ii) a service fee for personal services provided to shareholder
accounts of up to 0.25% of the average daily net assets of the Fund attributable
to the Class C shares, computed on an annual basis. Distribution fees incurred
by Class A shares for the period ended May 31, 1997 were $10,173. Distribution
and service fees incurred by Class C shares for the period ended May 31, 1997
were $125.
SHAREHOLDERS MEETING RESULTS
A special meeting of shareholders of the O.R.I. Growth Fund was held on February
26, 1997. The following matters were voted on at the meeting:
The shareholders of the Fund approved a new investment advisory agreement on
substantially the same terms as the current agreement.
% OF % OF
NO. OF SHARES OUTSTANDING SHARES SHARES VOTED
------------- ------------------ ------------
For 266,145 53.385% 95.130%
Against 8,513 1.708% 3.043%
Abstain 5,111 1.025% 1.827%
The shareholders of the O.R.I. Growth Fund ratified Price Waterhouse LLP as the
independent accountants for O.R.I. Growth Fund for the fiscal year ending
November 30, 1997.
% OF % OF
NO. OF SHARES OUTSTANDING SHARES SHARES VOTED
------------- ------------------ ------------
For 275,943 55.351% 98.632%
Against 1,070 0.214% 0.383%
Abstain 2,756 0.553% 0.985%
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
Shareholders Meeting Results 11
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
