SEMI-ANNUAL REPORT
May 31, 1998
OAK RIDGE GROWTH FUND
Shareholder Services
1(800)407-7298
OAK RIDGE INVESTMENTS, LLC
Investment Adviser
OAK RIDGE GROWTH FUND
- -------------------------------------------------------------------
LETTER TO SHAREHOLDERS
JULY 20, 1998
Dear Shareholder:
The Oak Ridge Growth Fund has continued to outperform its benchmark, the
Russell 2000 Stock Index. The Fund's class A shares, on a no load basis,
advanced 7.4% the past fiscal six months, compared to 6.5% for the Russell 2000.
This extends gains since the January 2, 1994 inception date to +21.8%, comparing
favorably to the index return of +15.4%.
While these results are satisfying on both a relative and historic basis,
they have failed to keep pace with the large stock S&P 500 index. The gap
between small and large-cap returns has actually widened since our last
correspondence. In a nervous market demanding instant gratification, the hot
money has chased the market leaders, and many institutions have surrendered
active management to index portfolios. The importance of brand name recognition
in a global economy is cited as justification for multiples in excess of 50x
trailing earnings on blue chip companies such as Coca Cola and Microsoft.
A favorable interest rate environment and reasonable profit growth are
necessary in order for stock prices to advance further. Smaller companies trade
at reasonable valuations compared to future prospects for earnings growth.
These stocks also enjoy more robust revenue gains than larger concerns, who
continue to utilize share buybacks and cost cutting measures to meet estimates.
The remarkable coexistence of a tight job market and low inflation is likely
to continue, despite the strike at General Motors and threats at other large
employers. The abundance of capital created through Federal Reserve monetary
policy and market appreciation has furthered investment growth. Productivity
gains remain strong and, along with cheap imports of goods ranging from oil to
electronics, are negating inflationary pressures. The victim of this otherwise
perfect scenario is profit margins, which should pressure corporate earnings for
the balance of the year.
Second quarter earnings reports will provide greater insight into the
severity of the impact Asian weakness and a strong U.S. dollar will have on
various sectors of our economy. In times of historically high valuations, it is
imperative to thoroughly understand company fundamentals, which has been
difficult in today's market and economic environment.
For the past year Oak Ridge has polled companies, during the normal course of
our due diligence, as to their year 2000 compliance. It is our opinion that
while some serious problems exist, particularly in many government agencies, the
media hysterics are dramatically overblown. Many companies will earmark
substantial funds to provide necessary upgrades. These costs are misleading, as
significantly improved systems will enhance productivity and profitability into
the new millennium.
By the time a macro issue gains the magnitude of attention that the federal
deficit created in the early 1980's or the Year 2000 issue has today, the market
has already reflected the potential impact of such an occurrence. It is an
unexpected event, like Saddam Hussein's invasion of Kuwait in 1990, or the Asian
crisis of 1997, that is likely to have the greatest impact on the market. In
early 1997, company management at most institutional conferences boasted of
their Asian exposure. Today, research reports stress minimal business
dependence on the region. There is no foolproof means of avoiding market
volatility. The patient long-term equity investor should be amply rewarded.
We appreciate your confidence and believe we are well positioned to
capitalize on the opportunities offered by the small cap sector.
Sincerely,
/s/ David M. Klaskin
David M. Klaskin
President
Average Annual Total Return*<F1>
For the period ended May 31, 1998
Fiscal Since
Year-to-Date One Year Inception**<F2>
Oak Ridge Growth Fund -
Class A (no load) 7.4% 26.6% 21.8%
Oak Ridge Growth Fund -
Class A (load) 2.8% 21.2% 20.6%
Oak Ridge Growth Fund - Class C 7.0% 25.7% 21.6%
*<F1>Periods less than a year are not annualized.
**<F2>Class A - January 3, 1994 inception. Class C - March 1, 1997
inception.
Oak Ridge Oak Ridge
Growth Fund - Growth Fund -
Class A - Class A - S&P 500 Russell 2000
Date No Load Load Stock Index Index
1/94 10,000 9,575 10,000 10,000
2/94 10,870 10,408 10,059 10,276
5/94 10,160 9,728 9,904 9,682
8/94 10,620 10,169 10,387 10,039
11/94 10,480 10,035 9,983 9,562
2/95 10,609 10,158 10,799 10,098
5/95 11,121 10,648 11,903 10,680
8/95 13,717 13,134 12,614 12,127
11/95 14,359 13,749 13,675 12,287
2/96 15,755 15,085 14,546 12,990
5/96 17,483 16,740 15,287 14,513
8/96 16,121 15,436 14,976 13,439
11/96 17,358 16,620 17,485 14,315
2/97 17,816 17,059 18,352 14,620
5/97 18,846 18,045 19,784 15,524
8/97 22,115 21,176 21,064 17,331
11/97 22,217 21,273 22,469 17,667
2/98 23,977 21,981 24,774 19,001
5/98 23,857 20,942 25,852 18,822
This chart assumes an initial gross investment of $10,000 made upon inception.
Returns shown include the reinvestment of all dividends. For Class A shares, a
4.25% maximum sales load took effect January 1, 1996. The load performance for
Class A has been restated to reflect the impact of the sales load as if the
sales load had been imposed since inception. Performance reflects expense
reimbursements and fee waivers in effect. Absent expense reimbursements and fee
waivers, total returns would be reduced. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than the original
cost.
Russell 2000 Index - A stock market index comprised of the 2,000 smallest U.S.
domiciled publicly traded common stocks that are included in the Russell 3000
Index. These common stocks represent approximately 11% of the U.S. equity
market. The Russell 3000 Index is comprised of the 3,000 largest U.S. domiciled
publicly-traded common stocks by market capitalization representing
approximately 98% of the U.S. publicly traded equity market.
S&P 500 Stock Index - An unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of the 500 stocks which represent all major
industries.
SCHEDULE OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
NUMBER OF
SHARES VALUE
-------- ------
COMMON STOCK -- 94.32%
BANKING -- 7.41%
6,178 Astoria Financial Corporation $ 339,983
3,300 BankBoston Corporation 347,737
15,000 BankUnited Financial Corporation*<F3> 270,469
3,500 Kankakee Bancorp, Inc. 121,625
---------
1,079,814
---------
BUSINESS SERVICE -- 1.12%
15,000 CulturalAccessWorldwide, Inc.*<F3> 163,594
---------
CHEMICALS -- 3.58%
4,500 Cambrex Corporation 251,719
10,000 Crompton & Knowles Corporation 269,375
---------
521,094
---------
COMMUNICATIONS -- 2.71%
12,000 Mosaix, Inc.*<F3> 132,000
11,000 Premiere Technologies, Inc.*<F3> 262,625
---------
394,625
---------
COMPUTERS - NETWORKING -- 3.76%
9,600 Comdisco, Inc. 349,200
19,000 Data Systems Network Corporation*<F3> 59,375
6,000 MRV Communications, Inc.*<F3> 139,500
---------
548,075
---------
COMPUTERS - SOFTWARE -- 5.44%
11,000 BancTec, Inc.*<F3> 257,125
2,500 Hyperion Software Corporation*<F3> 80,781
4,777 Sterling Commerce, Inc.*<F3> 189,587
6,000 Sterling Software, Inc.*<F3> 163,125
9,000 TSR, Inc.*<F3> 102,375
---------
792,993
---------
COMPUTER SYSTEMS -- 1.14%
10,000 Sequent Computer
Systems, Inc.*<F3> 165,625
---------
DEFENSE ELECTRONICS -- 1.36%
5,000 Tracor, Inc.*<F3> 197,500
---------
DRUGS & MEDICAL -- 6.62%
3,000 Boron, LePore &
Associates, Inc.*<F3> 88,500
5,500 Express Scripts, Inc. *<F3> 423,156
12,000 Shire Pharmaceuticals
Group PLC*<F3> 234,000
5,000 Watson Pharmaceuticals, Inc.*<F3> 218,750
---------
964,406
---------
ELECTRONICS -- 3.97%
7,000 Alpha Industries, Inc.*<F3> 116,375
7,000 SCI Systems, Inc.*<F3> 238,875
22,000 Universal Electronics Inc.*<F3> 222,750
---------
578,000
---------
ENTERTAINMENT & LEISURE -- 3.19%
6,000 Hasbro, Inc. 229,500
11,000 Orlando Predators
Entertainment, Inc.*<F3> 48,125
16,000 Racing Champions Corporation*<F3> 188,000
---------
465,625
---------
ENVIRONMENTAL SERVICES/
POLLUTION CONTROL -- 3.62%
7,500 Culligan Water
Technologies, Inc.*<F3> 418,594
6,000 Newpark Resources, Inc. 109,125
---------
527,719
---------
FINANCIAL SERVICES -- 3.86%
4,000 FIRSTPLUS Financial Group, Inc.*<F3> 159,500
20,000 Long Beach
Financial Corporation*<F3> 235,000
8,000 WMF Group, Ltd. *<F3> 168,000
---------
562,500
---------
HEALTH CARE EQUIPMENT & SUPPLIES -- 3.88%
8,000 Coherent, Inc.*<F3> 184,500
5,000 Kensey Nash Corporation*<F3> 94,375
8,300 Maxxim Medical, Inc.*<F3> 194,013
3,500 Sabratek Corporation*<F3> 91,875
---------
564,763
---------
HOSPITALS & HEALTH CARE -- 7.10%
15,000 America Service Group Inc.*<F3> 198,750
20,000 Paragon Health Network, Inc.*<F3> 307,500
25,500 United Payors &
United Providers, Inc.*<F3> 529,125
---------
1,035,375
---------
HOUSEHOLD PRODUCTS -- 3.91%
8,500 Nortek, Inc.*<F3> 261,375
7,000 Triangle Pacific Corp.*<F3> 308,875
---------
570,250
---------
INDUSTRIAL PRODUCTS -- 4.53%
14,000 Consolidated Capital Corporation*<F3> 308,875
13,000 Gardner Denver, Inc.*<F3> 351,813
---------
660,688
---------
INFORMATION MANAGEMENT SERVICES -- 2.85%
20,000 Donnelley Enterprise Solutions Inc. *<F3> 415,000
---------
INSURANCE COMPANIES -- 2.97%
10,000 ReliaStar Financial Corp. 432,500
---------
INVESTMENT COMPANIES -- 1.66%
12,500 Friedman, Billings,
Ramsey Group, Inc.*<F3> 196,094
4,000 Rock Financial Corporation 46,000
---------
242,094
---------
METAL - DIVERSIFIED -- 1.54%
10,000 Lindberg Corporation 225,000
---------
MISCELLANEOUS -- 11.97%
13,300 Personnel Group of America, Inc.*<F3> 269,325
15,000 RCM Technologies, Inc.*<F3> 311,250
9,000 Steelcase, Inc. 268,313
11,000 Thomas Group, Inc. *<F3> 111,375
11,000 United Rentals, Inc.*<F3> 379,500
12,500 U.S. Rentals, Inc.*<F3> 405,469
---------
1,745,232
---------
OIL & GAS -- 1.22%
8,000 Global Marine, Inc.*<F3> 178,500
---------
REAL ESTATE INVESTMENT TRUST -- 1.93%
10,000 Glenborough Realty Trust, Inc. 281,250
---------
RETAIL - GROCERY -- 1.63%
5,500 Dominick's Supermarkets, Inc.*<F3> 237,187
---------
UTILITIES -- 1.35%
6,500 Calenergy Company, Inc.*<F3> 196,625
---------
Total Common Stock
(cost $10,338,659) 13,746,034
---------
PRINCIPAL
AMOUNT
--------
SHORT-TERM INVESTMENTS -- 4.72%
VARIABLE RATE DEMAND NOTES -- 4.72%
$187,417 General Mills, Inc. 187,417
207,511 Johnson Controls, Inc. 207,511
190,216 Sara Lee Co. 190,216
103,444 Warner-Lambert Co. 103,444
---------
Total Short-Term Investments
(cost $688,588) 688,588
---------
Total Investments -- 99.04%
(cost $11,027,247) 14,434,622
---------
Other Assets,
less Liabilities -- 0.96% 139,448
---------
NET ASSETS -- 100.00% $14,574,070
---------
---------
*<F3> Non-income producing security
See Notes to the Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED)
ASSETS:
Investments, at market value (cost $11,027,247) $14,434,622
Receivable for investments sold 155,452
Organizational expenses, net of accumulated amortization 5,013
Prepaid expenses 16,013
Interest and dividends receivable 5,197
----------
Total Assets 14,616,297
----------
LIABILITIES:
Payable to Adviser 5,637
Accrued other expenses 36,590
----------
Total Liabilities 42,227
----------
NET ASSETS $14,574,070
----------
----------
NET ASSETS CONSIST OF:
Capital stock $ 7,320
Paid-in-capital in excess of par 10,521,702
Undistributed net investment (loss) (59,468)
Undistributed net realized gain on investments 697,141
Net unrealized appreciation on investments 3,407,375
----------
Net Assets $14,574,070
----------
----------
CLASS A:
Net assets $13,992,149
Shares authorized ($.01 par value) 50,000,000
Shares issued and outstanding 702,546
Net asset value and redemption price per share $19.92
------
------
Maximum offering price per share $20.80
------
------
CLASS C:
Net assets $581,921
Shares authorized ($.01 par value) 50,000,000
Shares issued and outstanding 29,458
Net asset value, redemption price and offering price per share $19.75
------
------
See Notes to the Financial Statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
INVESTMENT INCOME:
Interest $ 22,778
Dividends 21,183
--------
43,961
--------
EXPENSES:
Fund administration and accounting fees 35,854
Investment advisory fees 66,877
Professional fees 17,290
Shareholder servicing fees and expenses 22,204
Reports to shareholders 3,458
Federal and state registration fees 6,370
Amortization of organizational expenses 4,388
Directors' fees 1,456
Custody fees 3,094
12b-1 fees -- Class A 1,823
12b-1 fees -- Class C 721
Other 910
--------
Total expenses before waiver and reimbursement 164,445
Less: Waiver of expenses by Adviser (44,867)
--------
Net expenses 119,578
--------
NET INVESTMENT (LOSS) (75,617)
--------
REALIZED AND UNREALIZED GAIN:
Net realized gain on investment transactions 710,616
Change in unrealized appreciation on investments 252,027
--------
Net gain on investments 962,643
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $887,026
--------
--------
See Notes to the Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
UNAUDITED
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, 1997
--------------- -----------------
OPERATIONS:
Net investment (loss) $ (75,617) $ (130,974)
Net realized gain on investments 710,616 895,701
Change in unrealized appreciation
on investments 252,027 1,610,223
---------- ----------
Net increase in net assets
resulting from operations 887,026 2,374,950
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 2,205,130 2,932,978
Shares issued to holders in
reinvestment of dividends 744,988 476,916
Shares redeemed (586,545) (907,674)
---------- ----------
Net increase 2,363,573 2,502,220
---------- ----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS:
From net realized gains (748,752) (508,673)
---------- ----------
DISTRIBUTIONS TO CLASS C SHAREHOLDERS:
From net realized gains (21,346) 0
---------- ----------
TOTAL INCREASE IN NET ASSETS 2,480,501 4,368,497
NET ASSETS:
Beginning of period 12,093,569 7,725,072
---------- ----------
End of period (including undistributed net
investment (loss) of ($59,468)
and $0 respectively) $14,574,070 $12,093,569
---------- ----------
---------- ----------
See Notes to the Financial Statements.
FINANCIAL HIGHLIGHTS
<TABLE>
UNAUDITED UNAUDITED
SIX MONTHS SIX MONTHS
ENDED ENDED YEAR ENDED
MAY 31, '98 MAY 31, '98 NOV. 30, '97
---------- ---------- ----------
CLASS A CLASS C CLASS A
------- ------- -------
<S> <C> <C> <C>
Per share data:
Net asset value, beginning
of period $19.84 $19.75 $16.57
Income from investment operations:
Net investment (loss) (.08) (.06) (0.22)(3)<F6>
Net realized and unrealized
gains on investments 1.42 1.32 4.58
------ ------ ------
Total from investment operations 1.34 1.26 4.36
------ ------ ------
Less distributions:
Distributions from capital gains (1.26) (1.26) (1.09)
------ ------ ------
Net asset value, end of period $19.92 $19.75 $19.84
------ ------ ------
------ ------ ------
Total Return 7.4%(4)<F7>(5)<F8> 7.0%(4)<F7> 28.0%(5)<F8>
Supplemental data and ratios:
Net assets, end of period $13,992,149 $581,921 $11,758,733
Ratio of expenses
to average net assets:
Before expense reimbursement 2.5% 2.8% 2.9%
After expense reimbursement 1.8% 2.1% 2.0%
Ratio of net investment (loss)
to average net assets:
Before expense reimbursement (1.8)% (2.1)% (2.2)%
After expense reimbursement (1.1)% (1.4)% (1.3)%
Portfolio turnover rate(7)<F10> 18% 18% 55%
NINE MONTHS
ENDED
NOV. 30, YEAR ENDED YEAR ENDED JAN. 3, '94(1)<F4>
'97(2)<F5> NOV. 30, '96 NOV. 30, '95 NOV. 30, '94
------------ ---------- ---------- ----------
CLASS C CLASS A CLASS A CLASS A
------- ------- ------- -------
<S> <C> <C> <C> <C>
Per share data:
Net asset value, beginning
of period $15.91 $14.32 $10.48 $10.00
Income from investment operations:
Net investment (loss) (0.13)(3)<F6> (0.16)(3)<F6> (0.13)(3)<F6> (0.07)(3)<F6>
Net realized and unrealized
gains on investments 3.97 3.01 4.00 0.55
------ ------ ------ ------
Total from investment operations 3.84 2.85 3.87 0.48
------ ------ ------ ------
Less distributions:
Distributions from capital gains -- (0.60) (0.03) --
------ ------ ------ ------
Net asset value, end of period $19.75 $16.57 $14.32 $10.48
------ ------ ------ ------
------ ------ ------ ------
Total Return 24.1%(4)<F7> 20.9%(5)<F8> 37.0% 4.8%(4)<F7>
Supplemental data and ratios:
Net assets, end of period $334,836 $7,725,072 $4,182,246 $2,708,546
Ratio of expenses
to average net assets:
Before expense reimbursement 3.6%(6)<F9> 3.5% 6.5% 9.0%(6)<F9>
After expense reimbursement 2.8%(6)<F9> 2.0% 2.0% 2.0%(6)<F9>
Ratio of net investment (loss)
to average net assets:
Before expense reimbursement (3.0)%(6)<F9>(2.7)% (5.8)% (8.1)%(6)<F9>
After expense reimbursement (2.2)%(6)<F9>(1.2)% (1.3)% (1.1)%(6)<F9>
Portfolio turnover rate(7)<F10> 55% 71% 109% 80%
</TABLE>
(1)<F4> Commencement of operations.
(2)<F5> Effective March 1, 1997, the Fund offered a second class of shares,
Class C.
(3)<F6> Net investment (loss) per share is calculated using the ending balance
of undistributed net investment (loss) prior to consideration of adjustments for
permanent book and tax differences.
(4)<F7> Not annualized.
(5)<F8> Effective January 1, 1996 the Fund instituted a maximum 4.25% front
end sales load. The total return calculation does not reflect the 4.25% front
end sales load.
(6)<F9> Annualized.
(7)<F10> Calculated on the basis of the Fund as a whole without distinguishing
between the classes of shares issued.
See Notes to the Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED)
1. ORGANIZATION
Oak Ridge Growth Funds, Inc. (the "Corporation") was incorporated on October 15,
1993 as a Maryland corporation. The Oak Ridge Growth Fund (the "Fund") is a
series of the 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, LLC (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 on 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 differences between the
financial reporting and tax basis of the Fund's assets and liabilities 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, 1998 NOVEMBER 30, 1997
-------------------- --------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- ------- -------
Shares sold $1,946,092 97,350 $2,578,553 144,595
Shares issued to holders in
reinvestment of dividends 723,642 40,039 476,916 30,262
Shares redeemed (559,110) (27,437) (865,801) (48,465)
--------- ------- -------- -------
Net increase $2,110,624 109,952 $2,189,668 126,392
--------- ------- -------- -------
--------- ------- -------- -------
CLASS A
----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1998 NOVEMBER 30, 1997
-------------------- --------------------
AMOUNT SHARES AMOUNT SHARES
-------- ------- ------- -------
Shares sold $259,038 12,683 $354,425 18,955
Shares issued to holders in
reinvestment of dividends 21,346 1,187 -- --
Shares redeemed (27,435) (1,368) (41,873) (1,999)
--------- ------- -------- -------
Net increase $252,949 12,502 $312,552 16,956
--------- ------- -------- -------
--------- ------- -------- -------
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% of average daily net
assets.
For the fiscal year ending November 30, 1998, the Adviser has voluntarily agreed
to waive its management fee and/or reimburse the Fund's operating expenses to
ensure 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 do not
exceed 2.00% of the class' average daily net assets and (ii) Class C shares do
not exceed 2.75% of the class' average daily net assets.
For the six months ended May 31, 1998, the Fund paid Oak Ridge Investments, Inc.
(the "Distributor") $1,250 of brokerage commissions. The Fund was advised that
the Distributor also received front-end sales charges on Class A shares of
$12,810 for the six months ended May 31, 1998.
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended May 31, 1998, were $4,430,107
and $2,332,165 respectively. There were no purchases or sales of long-term U.S.
Government securities.
At May 31, 1998, gross unrealized appreciation and depreciation of investments
for federal income tax purposes were as follows:
Appreciation $4,068,156
(Depreciation) (660,781)
----------
Net unrealized appreciation on investments $3,407,375
----------
----------
At May 31, 1998, the cost of investments for federal income tax purposes was
$11,027,247.
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 six months ended May 31, 1998 were $1,823.
Distribution and service fees incurred by Class C shares for the six months
ended May 31, 1998 were $721.
TABLE OF CONTENTS
Page
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Letter to Shareholders 1
Schedule of Investments 3
Statement of Assets and Liabilities 5
Statement of Operations 6
Statement of Changes in Net Assets 7
Financial Highlights 8
Notes to the Financial Statements 9
This Report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
