As filed with the Securities and Exchange Commission on March 21, 2000
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 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 10 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 11
OAK RIDGE FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
10 South LaSalle Street, Suite 1050 60603
Chicago, Illinois (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (312) 857-1040
Samuel Wegbreit
Oak Ridge Funds, Inc.
10 South LaSalle Street, Suite 1050
Chicago, Illinois 60603
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
It is proposed that this filing will become
effective (check appropriate box).
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on March 29, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) 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>
PROSPECTUS
March 29, 2000
Oak Ridge Funds, Inc.
Oak Ridge Small Cap Equity Fund
Oak Ridge Large Cap Equity Fund
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-407-7298
Small Cap Fund Symbol: ORIGX
The investment objective of both the Oak Ridge
Small Cap Equity Fund (the "Small Cap Fund")
(previously known as the Oak Ridge Growth Fund) and the
Oak Ridge Large Cap Equity Fund (the "Large Cap Fund")
is capital appreciation. Each Fund seeks to achieve
its investment objective by investing primarily in
equity securities of domestic small capitalization or
large capitalization, as the case may be, companies
that Oak Ridge Investments, LLC (the "Advisor")
believes have the potential to appreciate faster than
the general market.
This Prospectus contains information you should
consider before you invest in the Funds. Please read
it carefully and keep it for future reference.
___________________
Neither the Securities and Exchange Commission
("SEC") nor any state securities commission has
approved or disapproved of these securities or
determined if this Prospectus is truthful or complete.
Any representation to the contrary is a criminal
offense.
___________________
<PAGE>
TABLE OF CONTENTS
HIGHLIGHTS 3
FEES AND EXPENSES OF THE FUNDS 5
INVESTMENT OBJECTIVE 6
INVESTMENT STRATEGY 6
IMPLEMENTATION OF INVESTMENT OBJECTIVE 7
FINANCIAL HIGHLIGHTS OF THE FUNDS 8
PRIOR PERFORMANCE OF THE ADVISOR 11
FUND MANAGEMENT AND DISTRIBUTION 12
YOUR ACCOUNT 13
VALUATION OF FUND SHARES 18
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT 18
ADDITIONAL INFORMATION 19
No one has been authorized to give any information
or to make any representations other than those
contained in this Prospectus and the Funds' Statement
of Additional Information ("SAI"), and if given or
made, the information or representations may not be
relied upon as having been made by the Funds. This
Prospectus is not an offer to sell securities in any
state or jurisdiction in which an offering may not
lawfully be made.
<PAGE>
HIGHLIGHTS
Investment Objective
The investment objective of both Funds is capital
appreciation. The Small Cap Fund seeks to achieve its
investment objective by investing primarily in equity
securities of domestic, small capitalization companies.
The Large Cap Fund seeks to achieve its investment
objective by investing primarily in equity securities
of domestic, large capitalization companies. The
Advisor will not consider dividend or interest income
in the selection of investments.
Investment Strategy
The Small Cap Fund seeks to achieve its investment
objective by investing primarily in equity securities
of small capitalization U.S. companies that the Advisor
believes have the potential to appreciate faster than
the general market. For this purpose, a small
capitalization company would typically have a market
capitalization of $2 billion or less. The Large Cap
Fund seeks to achieve its investment objective by
investing primarily in equity securities of large
capitalization U.S. companies that the Advisor believes
have the potential to appreciate faster than the
general market. For this purpose, a large
capitalization company would typically have a market
capitalization of $5 billion or more. Equity
securities in which the Funds may invest include common
stocks, preferred stocks, warrants to purchase common
and preferred stocks and securities convertible or
exchangeable into common and preferred stocks. Under
normal market conditions, each Fund will invest at
least 65% of its total assets in these securities.
Under unusual circumstances, as a temporary defensive
technique, a Fund may invest up to 35% of its assets in
cash and cash equivalents.
Risk Factors
Because the Funds will invest primarily in equity
securities, you should expect that the value of each
Fund's shares will be more volatile than the shares of
a fund that invests in fixed-income securities. The
share price will fluctuate and may, at redemption, be
worth more, or less, than your initial purchase price -
accordingly, you may lose money on your investment.
Other risks of investing in the Funds include:
* Liquidity Risk: Certain securities may be difficult or
impossible to sell at the time and price
that a Fund seeks.
* Market Risk: The market value of a security will move
up and down, sometimes rapidly and
unpredictably due to economic or market
trends.
* Opportunity Risk: An investment opportunity may be missed
because the assets necessary to take
advantage of it are tied up in other
investments.
* Management Risk: A strategy used by the Advisor may fail to
produce the intended result.
Who Should Invest
The Funds are suitable for long-term investors
only. The Funds are not designed as short-term
investment vehicles. An investment in one or both
Funds may be appropriate for you if you:
* seek long-term capital appreciation;
* want to include an equity fund in your investment portfolio; and
<PAGE>
* are willing to accept the risk that your
investment may fluctuate over the short term in
exchange for the potential to realize greater financial
gains in the future.
Performance Bar Chart and Tables
The performance of the Small Cap Fund is provided
in the bar chart and tables below. This performance
information illustrates how the Small Cap Fund's
performance can vary, which is one indication of the
risks of investing in the Fund. The information shows
changes in the Small Cap Fund's performance from year
to year and shows how the Fund's average annual returns
compare with those of a broad-based measure of market
performance over the life of the Fund. Please keep in
mind that the Small Cap Fund's past performance does
not necessarily represent how it will perform in the
future. There is no performance information to report
for the Large Cap Fund because it has less than a full
calendar year of performance.
Small Cap Fund
Class A Shares Calendar Year Total Returns(1)
1994(2) 1995 1996 1997 1998 1999
3.18% 43.55% 19.15% 25.95% (1.35)% 17.08%
[bar chart]
____________
(1) The Class A shares' year-to-date return through February 29, 2000
was 23.33%.
(2) The Class A shares commenced operations on January 3, 1994.
Small Cap Fund
Class A Shares Best and Worst Quarterly Performance
1/3/94 to 12/31/99
Best quarter return Worst quarter return
23.36% (24.92)%
(4th quarter, 1999) (3rd quarter,1998)
Small Cap Fund
Average Annual Total Returns
as of December 31, 1999
Fund/Index One Year Five Years Since Inception
Class A 12.11% 18.95% 16.19%(1)
Class C 16.17% N/A 12.31%(2)
Russell 2000 Index(3) 21.26% 16.69% 13.38%
____________
(1) The Class A shares commenced operations on January 3, 1994.
(2) The Class C shares commenced operations on March 1, 1997.
(3) The Russell 2000 Stock Index is an unmanaged
index generally representative of the U.S. market
for small capitalization stocks.
Please note that the returns presented in the
chart entitled "Small Cap Fund Class A Shares Calendar
Year Total Returns" and in the table entitled "Small
Cap Fund Class A Shares Best and Worst Quarterly
Performance" do not reflect the 4.25% maximum sales
charge imposed on purchases of the Small Cap Fund's
Class A shares. If this sales charge was reflected,
the returns would be less than those shown. The
returns presented in the "Small Cap Fund Average Annual
Total Returns" table do, however, reflect this sales
charge.
<PAGE>
FEES AND EXPENSES OF THE FUNDS
The following table describes the fees and
expenses that you may pay if you buy and hold shares of
the Funds.
Small Cap Fund Large Cap Fund
Class A Class C Class A Class C(1)
Shareholder Fees (fees paid directly
from your investment) (2)
Maximum Sales Charge (Load) Imposed on
Purchases
(as a percentage of offering price) 4.25%(3) None 4.25%(4) None
Maximum Deferred Sales Charge (Load)
Imposed on Redemptions None None None None
Redemption Fee None None None None
Annual Fund Operating Expenses (expenses
that are deducted from Fund assets) (5)
Management Fees 0.75% 0.75% 0.60% 0.60%
Distribution and Service (12b-1) Fees 0.25% 1.00% 0.25% 1.00%
Other Expenses 1.50% 1.50% 6.95% 5.53%
Total Annual Fund Operating Expenses 2.50% 3.25% 7.80% 7.13%
Fee Waiver/Expense Reimbursement(6) (.50)% (.50)% (5.80)% (4.38)%
Net Expenses 2.00% 2.75% 2.00% 2.75%
____________
(1) The Large Cap Fund's Class C shares are not
currently being offered to investors.
(2) If you purchase or redeem shares by wire, you
will be charged a $12.00 service fee. See "Your
Account - Buying Shares" and "Your Account - Redeeming Shares."
(3) This sales charge is the maximum applicable to
purchases of Class A shares by persons first
purchasing shares on and after January 1, 1996.
Persons who were shareholders as of December 31,
1995, as well as certain other persons, do not have
to pay this sales charge. See "Your Account - Class
A Sales Charge Waivers."
(4) This sales charge is the maximum applicable to
purchases of Class A shares. You may not have to
pay this sales charge because waivers are available.
See "Your Account - Class A Sales Charge Waivers."
(5) Fund operating expenses are deducted from Fund
assets before computing the daily share price or
making distributions. As a result, they do not
appear on your account statement, but instead reduce
the amount of total return you receive.
(6) Pursuant to an expense cap agreement dated
March 1, 1999, as amended January 6, 2000, the
Advisor has agreed until April 1, 2001 to waive its
management fee and/or reimburse each Fund's
operating expenses to the extent necessary to ensure
that (i) the total operating expenses for the Class
A shares do not exceed 2.00% and (ii) the total
operating expenses for the Class C shares do not
exceed 2.75%. After April 1, 2001 the expense cap
may be terminated or revised at any time. "Other
Expenses" are presented before
waivers/reimbursements.
Example
The following Example is intended to help you
compare the cost of investing in one or both of the
Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in each
Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The
Example also assumes that you have a 5% return each
year and that each Fund's total operating expenses
remain the same each year. Please note that the one-
year numbers are based on each class's net expenses
resulting from the expense cap agreement described
above. The three-, five- and ten- year numbers are
based on each Fund's expenses before any waivers or
reimbursements. Although your actual costs may be
higher or lower, based on these assumptions, your costs
would be as follows:
<PAGE>
1 Year 3 Years 5 Years 10 Years
Small Cap Fund
Class A(1) $ 619 $1,122 $1,651 $3,092
Class C $ 278 $ 951 $1,647 $3,499
Large Cap Fund
Class A(1) $ 619 $2,031 $2,364 $6,385
Class C $ 278 $1,644 $2,952 $5,987
____________
(1) The 4.25% maximum sales charge imposed on purchases
of Class A shares is reflected in the Example.
INVESTMENT OBJECTIVE
The investment objective of both Funds is to seek
capital appreciation. Under normal market conditions,
each Fund will attempt to achieve this objective by
investing at least 65% of its assets in equity
securities of domestic companies. The Funds may also
invest up to 35% of their respective assets in cash and
cash equivalents to provide them with liquidity and
flexibility.
INVESTMENT STRATEGY
In managing the Funds' portfolios, the Advisor
seeks investments in domestic companies that the
Advisor believes have the potential to grow or
appreciate faster than the general market. For the
Small Cap Fund, the Advisor invests primarily in small
capitalization companies, and for the Large Cap Fund,
the Advisor invests primarily in large capitalization
companies. For this purpose, a small capitalization
company would typically have a market capitalization of
$2 billion or less, while a large capitalization
company would typically have a market capitalization of
$5 billion or more. The Advisor's general strategy is
to invest at least 65% of each Fund's total assets in
the equity securities of these companies (i.e., small
capitalization companies for the Small Cap Fund and
large capitalization companies for the Large Cap Fund).
When making purchase decisions for the Funds, the
Advisor uses a "buy discipline" that involves three key
components:
* Research
The Advisor gathers research on potential
investment candidates from a wide variety of
internal and external sources, including research
provided by institutions and the brokerage
community, internally-generated analysis, business
and trade publications and annual reports,
prospectuses and publicly available filings made
with the SEC. To further qualify prospective
investments, the Advisor analyzes information from
corporate contacts, industry conferences and
conversations and visits with company management.
* Fundamentals
Once the research phase is complete, the Advisor
reviews certain fundamental attributes that it
believes a "buy" candidate should possess relating
to, among other things, (i) growth of sales and
earnings, (ii) earnings power, trends and
predictability, (iii) quality of management, (iv)
competitive position of products and/or services,
(v) fundamentals of the industry in which the
company operates and (vi) economic and political
trends affecting the company. The Advisor also
assesses the liquidity of the investment to
determine whether it has the potential to
appreciate faster than the general market.
<PAGE>
* Valuation
Finally, the Advisor values companies by
considering price to sales ratios and price to
earnings ratios within a peer group.
From this process, the Advisor constructs a list
of securities for each Fund to purchase.
The Advisor makes sell decisions for the Funds
based on a number of factors, including deterioration
in a company's underlying fundamentals (as detailed
above) and better relative value in other securities.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
In implementing its investment objective, each
Fund may invest in the following securities and use the
following investment techniques. Some of these
securities and investment techniques involve special
risks, which are described below, elsewhere in this
Prospectus and in the Funds' SAI.
Common Stocks and Other Equity Securities
Each Fund will invest in common stocks and other
equity securities. Other equity securities may include
preferred stocks, warrants to purchase common and
preferred stocks and securities convertible or
exchangeable into common and preferred stocks. Common
stocks and other equity securities generally increase
or decrease in value based on the earnings of a
company, expectations for the company's prospects and
general industry and market conditions. A fund that
invests a significant amount of its assets in common
stocks and other equity securities is likely to have
greater fluctuations in share price than a fund that
invests a significant portion of its assets in fixed-
income securities.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs and to retain
the flexibility to respond promptly to changes in
market and economic conditions, each Fund may invest up
to 35% of its assets in cash and cash equivalents.
Cash equivalents are short-term fixed-income securities
issued by private and governmental institutions. It is
impossible to predict when and for how long the Advisor
may employ these strategies for the Funds. To the
extent a Fund engages in any of these temporary
strategies, the Fund may not achieve its investment
objective.
Small Capitalization Companies
The Small Cap Fund will invest primarily in the
common stocks and other equity securities of small
companies. While companies with smaller market
capitalizations have the potential for significant
capital appreciation, the equity securities of these
companies also involve greater risks than larger, more
established companies. Small capitalization companies
may lack the management experience or depth, financial
resources, product diversification and competitive
strength of large capitalization companies. Moreover,
the market for small capitalization securities is
generally less liquid and subject to greater price
volatility than the market for large capitalization
securities.
<PAGE>
FINANCIAL HIGHLIGHTS OF THE FUNDS
The financial highlights table is intended to help
you understand each Fund's financial performance. The
total returns presented in the table represent the rate
that an investor would have earned (or lost) on an
investment in the Funds for the stated periods
(assuming reinvestment of all dividends and
distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with
each Fund's financial statements, are included in the
Funds' annual report, which is available upon request.
The information below is for the Small Cap Fund's Class
A shares from December 1, 1994 through November 30,
1999, the Small Cap Fund's Class C shares from March 1,
1997 (commencement of operations for Class C) through
November 30, 1999, the Large Cap Fund's Class A shares
from March 1, 1999 (commencement of operations for
Class A) through November 30, 1999 and the Large Cap
Fund's Class C shares from April 26, 1999 through
November 25, 1999.
<TABLE>
Small Cap Fund
Nine Months
Year Ended Year Ended Year Ended Ended Year Ended Year Ended
Nov. 30,1995 Nov. 30, 1996 Nov. 30, 1997 Nov. 30, 1997(1) Nov. 30, 1998 Nov. 30, 1999
Class A Class A Class A Class C Class A Class C Class A Class C
<S> <C> <C> <C> <C> <C> <C> <C>
Per share data:
Net asset value, beginning
of period $10.48 $14.32 $16.57 $16.20 $19.84 $19.75 $16.73 $16.54
Income from investment
operations:
Net investment loss (0.13)(2) (0.16)(2) (0.22)(2) (0.13)(2) (0.18)(2) (0.34)(3) (0.27)(2) (0.46)(2)
Net realized and unrealized
gains (losses) on investments 4.00 3.01 4.58 3.68 (1.67) (1.61) 3.18 3.20
Total from investment operations 3.87 2.85 4.36 3.55 (1.85) (1.95) 2.91 2.74
Less distributions:
From net realized gains (0.03) (0.60) (1.09) - (1.26) (1.26) (0.04) (0.04)
Net asset value, end of period $14.32 $16.57 $19.84 $19.75 $16.73 $16.54 $19.60 $19.24
Total Return 37.0% 20.9%(4) 28.0%(4) 21.9%(5) (9.8)%(4) (10.4)% 17.4%(4) 16.6%
____________
</TABLE>
(1) Effective March 1, 1997, the Small Cap Fund offered
a second class of shares, Class C.
(2) 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.
(3) Net investment loss per share represents net
investment loss divided by the average shares
outstanding throughout the year.
(4) Effective January 1, 1996, the Small Cap Fund
instituted a maximum 4.25% front-end sales load on
Class A shares. The total return calculation does
not reflect the 4.25% front-end sales load.
(5) Not annualized.
<TABLE>
Nine Months
Year Ended Year Ended Year Ended Ended Year Ended Year Ended
Nov. 30, 1995 Nov. 30, 1996 Nov. 30, 1997 Nov. 30, 1997 Nov. 30, 1998 Nov. 30, 1999
Class A Class A Class A Class C Class A Class C Class A Class C
<S> <C> <C> <C> <C> <C> <C> <C>
Supplemental data and ratios:
Net assets, end of period $4,182,246 $7,725,072 $11,758,733 $334,836 $13,215,299 $1,255,930 $14,001,255 $1,497,642
Ratio of expenses to
average net assets:
Before expense waiver 6.5% 3.5% 2.9% 3.6%(6) 2.7% 3.4% 2.5% 3.3%
After expense waiver 2.0% 2.0% 2.0% 2.8%(6) 1.9% 2.6% 2.0% 2.8%
Ratio of net investment
loss to average net assets:
Before expense waiver (5.8)% (2.7)% (2.2)% (3.0)%(6) (1.9)% (2.6)% (2.0)% (2.7)%
After expense waiver (1.3)% (1.2)% (1.3)% (2.2)%(6) (1.1)% (1.9)% (1.5)% (2.2)%
Portfolio turnover rate(7) 109% 71% 55% 55% 57% 57% 64% 64%
</TABLE>
____________
(6) Annualized.
(7) Calculated on the basis of the Small Cap Fund as a
whole without distinguishing between the classes of
shares issued.
<PAGE>
Large Cap Fund
March 1, 1999(1) April 26, 1999(1)(2)
to to
Nov. 30, 1999 Nov. 25,1999
Class A Class C
Per share data:
Net asset value, beginning of period $12.00 $12.66
Income from investment operations:
Net investment loss (0.05)(3) (0.10)(3)
Net realized and unrealized gains
on investments 0.50 0.03
Total from investment operations 0.45 (0.07)
Less distributions:
From net realized gains - -
Net asset value, end of period $12.45 $12.59
Total Return 3.8%(4)(5) (0.6)%(4)
Supplemental data and ratios:
Net assets, end of period $1,855,483 $ 0
Ratio of expenses to average net assets:
Before expense waiver 7.8%(6) 7.2%(6)
After expense waiver 2.0%(6) 2.8%(6)
Ratio of net investment loss to
average net assets:
Before expense waiver (6.4)%(6) (5.8)%(6)
After expense waiver (0.6)%(6) (1.4)%(6)
Portfolio turnover rate(7) 52% 52%
____________
(1) Commencement of operations.
(2) Effective April 26, 1999, the Large Cap Fund offered a
second class of shares, Class C. However, the Large Cap Fund's
Class shares are not currently available to investors.
(3) 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) Not annualized.
(5) The total return calculation does not reflect the 4.25% sales load.
(6) Annualized.
(7) Calculated on the basis of the Large Cap Fund as a whole without
distinguishing between the classes of shares issued.
<PAGE>
PRIOR PERFORMANCE OF THE ADVISOR
The performance information set forth below for
the private accounts of the Advisor has been calculated
in accordance with recommended standards of the
Association of Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses, if any. Total return is calculated
quarterly in accordance with the "time-weighted" rate
of return method provided for by AIMR standards,
accounted for on a trade-date and accrual basis. AIMR
standards for calculation of total return differ from
the standards required by the SEC for calculation of
average annual total return. Principal additions and
withdrawals are weighted in computing the quarterly
returns based on the timing of these transactions. The
quarterly returns are geometrically linked to derive
annual total returns.
Since April 1990, the Advisor has managed separate
private accounts (the "Private Accounts") which pursue
substantially the same investment objective, policies
and strategies, and which are managed in the same
manner, as the Large Cap Fund. The Private Accounts
are not subject to the same types of expenses to which
the Large Cap Fund is subject nor to the specific tax
restrictions and investment limitations imposed on the
Large Cap Fund by the Internal Revenue Code of 1986, as
amended (the "Code"), and the Investment Company Act of
1940, as amended (the "1940 Act"), respectively. The
following chart illustrates how the performance of the
Advisor's Large Cap Equity Composite (a composite
including all of the Advisor's large cap equity Private
Accounts) compares to the average performance of the
S&P 500 for the ten years ended December 31, 1999. The
performance results of the composite described below
could have been adversely affected if the Private
Accounts included in the composite had been regulated
as investment companies under the federal tax and
securities laws.
Large Cap Equity Composite
Performance vs. S&P 500
Performance from April 1990 through December 31, 1999
Total Return
Large Cap
Time Period Equity Composite S&P 500
1/1/99 - 12/31/99 (0.72)% 21.04%
1/1/98 - 12/31/98 21.38% 28.58%
1/1/97 - 12/31/97 29.21% 33.36%
1/1/96 - 12/31/96 28.65% 22.97%
1/1/95 - 12/31/95 43.83% 37.59%
1/1/94 - 12/31/94 2.05% 1.32%
1/1/93 - 12/31/93 8.24% 10.08%
1/1/92 - 12/31/92 (0.06)% 7.62%
1/1/91 - 12/31/91 40.24% 30.47%
4/1/90 - 12/31/90 (2.16)% (0.09)%
The composite performance presented above reflects
the performance of the Private Accounts included in the
Large Cap Equity Composite reduced by the total annual
fund operating expenses of the Large Cap Fund's Class A
shares before waivers or reimbursements as set forth
under the heading "Fees and Expenses of the Funds."
The S&P 500 returns assume reinvestment of all
dividends paid by the stocks included in the index, but
do not include brokerage commissions or other fees an
investor would incur by investing in the portfolio of
stocks comprising the index. The Large Cap Equity
Composite represents the Advisor's past performance for
all similarly managed private accounts and should not
be interpreted as indicative of the future performance
of the Large Cap Fund.
<PAGE>
FUND MANAGEMENT AND DISTRIBUTION
Management
The Funds have entered into an Investment Advisory
Agreement with the Advisor pursuant to which the
Advisor manages the Funds' investments and business
affairs, subject to the supervision of the Funds' Board
of Directors.
Advisor. The Advisor is a growth equity capital
management firm which serves as investment advisor to
individual and institutional clients. The Advisor is
located at 10 South LaSalle Street, Suite 1050,
Chicago, Illinois 60603. The Advisor, including its
predecessor, Oak Ridge Investments, Inc., has been in
the investment management business since September
1989.
Under an Amended and Restated Investment Advisory
Agreement dated March 1, 1999, the Small Cap Fund pays
the Advisor an annual management fee of 0.75% and the
Large Cap Fund pays the Advisor an annual fee of 0.60%
of the respective Fund's average daily net assets
attributable to each class. The advisory fee is
accrued daily and paid monthly. For the fiscal year
ended November 30, 1999, the Advisor contractually
agreed to waive its management fee and/or reimburse
operating expenses for each Fund to the extent
necessary to ensure that (i) the total operating
expenses for each Fund's Class A shares did not exceed
2.00% of average daily net assets and (ii) the total
operating expenses for each Fund's Class C shares did
not exceed 2.75% of average daily net assets. Pursuant
to an expense cap agreement dated March 1, 1999, as
amended January 6, 2000, the Advisor has agreed to
continue this waiver/reimbursement policy until April
1, 2001. After April 1, 2001, the Advisor may from
time to time voluntarily (but is not required to) waive
all or a portion of its fee and/or reimburse all or a
portion of a Fund's operating expenses for either
class. Any waivers or reimbursements have the effect
of lowering the overall expense ratio for the
applicable Fund and class and increasing the overall
return to investors at the time any such amounts are
waived and/or reimbursed.
Under the Investment Advisory Agreement, not only
is the Advisor responsible for management of the Funds'
assets, but also for portfolio transactions and
brokerage.
Portfolio Manager. The Funds are managed by David
M. Klaskin, who is the Chairman, Treasurer and Chief
Investment Officer of the Advisor. Mr. Klaskin has
held the position of Chairman of the Advisor since
November 1998, and has held the other positions with
the Advisor (and its predecessor) since December 1989.
Mr. Klaskin served as the President of the Advisor (and
its predecessor) from December 1989 until November
1998. From May 1982 until December 1989, Mr. Klaskin
was a Financial Consultant with Shearson Lehman Hutton
in Chicago, Illinois. Mr. Klaskin received his B.S.
degree in Finance from Indiana University in 1982.
Custodian, Transfer Agent and Administrator
Firstar Bank, N.A. acts as custodian of the Fund's
assets. Firstar Mutual Fund Services, LLC serves as
transfer agent for the Fund (the "Transfer Agent") and
as the Fund's administrator. Firstar Bank, N.A. and
Firstar Mutual Fund Services, LLC are affiliated
entities.
Distributor
Oak Ridge Investments, Inc., a registered broker-
dealer and member of the National Association of
Securities Dealers, Inc., acts as distributor of the
Funds' shares (the "Distributor"). Prior to July 1997,
the Distributor also served as the investment advisor
to the Small Cap Fund (the Large Cap Fund was not
available at that time). In July 1997, the Advisor
succeeded to the investment advisory business of the
Distributor, which included management of the Small Cap
Fund's assets. The Distributor is managed and owned by
the same persons who manage and own the Advisor.
Accordingly, the Distributor and the Advisor are
affiliates.
<PAGE>
YOUR ACCOUNT
Choosing a Fund
This Prospectus offers two Funds to prospective
investors: the Small Cap Fund and the Large Cap Fund.
The only difference between the two Funds is that the
Small Cap Fund will invest primarily in equity
securities of small capitalization companies (i.e.,
companies with a market capitalization of $2 billion or
less), while the Large Cap Fund will invest primarily
in equity securities of large capitalization companies
(i.e., companies with a market capitalization of $5
billion or more).
Choosing a Class
Each Fund has two classes of shares: Class A and
Class C. (However, the Large Cap Fund's Class C shares
are not currently available to investors.) Each class
has its own cost structure, as follows:
Class A Class C
* Front-end sales * No front-end sales
charge with break charge.
points and certain
exceptions.
* Rule 12b-1 fees
* Rule 12b-1 fees equal to 1.00% of the
equal to 0.25% of the average daily net
average daily net assets of the class.
assets of the class.
Class A Shares
Class A shares are offered and sold on a continual
basis at the next offering price (the "Offering
Price"), which is the sum of the net asset value per
share (computed after the purchase order and funds are
received by the Transfer Agent) and the sales charge
indicated below:
Total Sales Charge
As a As a
Your Investment Percentage Percentage of
of Offering Your
Price Investment
Less than $50,000 4.25% 4.44%
$50,000 but less than $100,000 3.75% 3.90%
$100,000 but less than $250,000 3.25% 3.36%
$250,000 but less than $500,000 2.25% 2.30%
$500,000 but less than $1,000,000 1.75% 1.78%
$1,000,000 or more 1.00% 1.01%
No sales charge is imposed on the reinvestment of
dividends or capital gains. To determine whether you
qualify to purchase shares at net asset value, see
"- Class A Sales Charge Waivers," below.
In addition to the sales charge described above,
Class A shares are also subject to Rule 12b-1 fees in
an aggregate amount of 0.25% of the average daily net
assets attributable to such shares. For more
information, see "- Distribution Plans," below.
Class C Shares
Class C shares are offered and sold on a continual
basis at net asset value (computed after the purchase
order and funds are received by the Transfer Agent)
without the imposition of any sales charge. However,
as described under "- Distribution Plans," Class C
shares are subject to higher Rule 12b-1 fees than Class
A shares.
<PAGE>
Class A Sales Charge Waivers
The following persons may purchase Class A shares
without any 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 relevant Fund:
* employee benefit plans qualified under Section
401(k) of the Code, 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;
* directors, officers and full-time employees of the
Funds, the Advisor, the Distributor and affiliates of
such companies, and spouses and family members of such
persons;
* registered securities brokers and dealers which
have entered into a sales agreement with the
Distributor, and their affiliates, for their investment
accounts only;
* registered personnel and employees of such
securities brokers and dealers referred to above, and
their spouses and family members, in accordance with
the internal policies and procedures of the employing
securities dealer; and
* registered investment advisors affiliated with the
Advisor and/or 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 of Class A shares at net asset value.
Distribution Plans
Each Fund has adopted a plan pursuant to Rule
12b-1 under the 1940 Act for each class of shares (the
"Class A Plan" and the "Class C Plan") pursuant to
which certain distribution and/or service fees are paid
to the Distributor. Under the Class A Plan, each Fund
is required to pay the Distributor a distribution fee
for the promotion and distribution of the Class A
shares of 0.25% of the average daily net assets of the
Fund attributable to the Class A shares, computed on an
annual basis. The Class C Plan requires each Fund to
pay the Distributor (i) a distribution fee of 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
shareholders and/or the maintenance of shareholder
accounts of 0.25% of the average daily net assets of
the Fund attributable to the Class C shares, computed
on an annual basis. Because these fees are paid out of
each Fund's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
Investing in the Funds
Before opening an account and investing in Fund
shares, you should:
(1) Read this Prospectus carefully.
(2) Determine which Fund or Funds you would like
to invest in and which class or classes of
shares you would like to buy.
(3) Determine how much you would like to invest.
The minimum initial investment requirements
for both Class A and Class C shares are:
* Non-retirement account: $2,000
* Traditional IRA: $1,000
<PAGE>
* Education IRA: $ 500
* Subsequent investments: $ 100 (if by check)
$1,000 (if by wire
or telephone)
* Automatic Investment Plan ("AIP"): $ 100
(to maintain the plan, you must invest
at least $100 per month)
* Employee benefit plans qualified Minimum is waived
under Sections 401, 403(b)(7) or 457
of the Code
The Funds may change or waive these minimums
at any time; you will be given at least 30
days' notice of any increase in the minimum
dollar amount of purchases.
(4) Complete the appropriate parts of the account
application, carefully following the
instructions. If you have questions, please
contact your investment professional or the
Funds at 1-800-407-7298. Account
applications will be accepted by the
Distributor, the Transfer Agent or investment
professionals who have entered into a selling
or service agreement with the Distributor.
(5) Make your initial investment, and any
subsequent investments, following the
instructions set forth below.
Buying Shares
Opening an Account. You may open an account by
completing an account application and paying for your
shares by check or wire. You may also open an account
using the Funds' exchange privilege, which is described
in detail in the SAI. All new account applications
should be given to your investment professional or
forwarded to the Distributor or the Transfer Agent,
whose addresses appear on the back cover page of this
Prospectus. A confirmation indicating the details of
each purchase transaction will be sent to you promptly.
By check
* Make out a check for the investment amount,
payable to "Oak Ridge Small Cap Equity Fund," if you
are purchasing shares in the Small Cap Fund, or "Oak
Ridge Large Cap Equity Fund," if you are purchasing
shares in the Large Cap Fund. Payment should be made
in U.S. funds by check drawn on a U.S. bank, savings
and loan or credit union. Neither cash nor third-party
checks will be accepted.
* You may be charged a transaction fee in addition
to the sales charge with respect to Class A shares sold
by certain broker-dealers. Certain broker-dealers may
also charge a transaction fee for purchases of Class C
shares.
* If your check does not clear, you will be charged
a $25 service fee. You will also be responsible for
any losses suffered by the Funds as a result.
* All applications to purchase Fund shares are
subject to acceptance by the Funds and are not binding
until so accepted. The Funds reserve the right to
decline a purchase application in whole or in part.
By wire
* Instruct your bank to use the following
instructions when wiring funds:
Wire to: Firstar Bank, N.A.
ABA Number 075000022
Credit: Firstar Mutual Fund Services, LLC
Account Number 112-952-137
<PAGE>
Further credit: (name of Fund being purchased)
(class of shares being purchased)
(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 confirm the wire instructions. The
Transfer Agent may charge a $12.00 service fee for wire
transactions.
* The Funds are not responsible for the consequences
of delays resulting from the banking or Federal Reserve
wire system.
Adding to an Account. You may add to your account
by check, wire or telephone. You may also add to your
account using the Funds' exchange privilege. Please
see the SAI for more information. A confirmation
indicating the details of each subsequent purchase
transaction will be sent to you promptly.
By check
* Make out a check for the investment amount,
payable to "Oak Ridge Small Cap Equity Fund," if you
are purchasing shares in the Small Cap Fund, or "Oak
Ridge Large Cap Equity Fund," if you are purchasing
shares in the Large Cap Fund. Neither cash nor third-
party checks will be accepted.
* Fill out the detachable investment form from your
account statement or send a note specifying your
account number and the name(s) in which the account is
registered.
* Deliver the check and your investment form or note
to your investment professional, the Distributor or the
Transfer Agent.
By wire
* Follow the wire instructions used to open an account.
By telephone
* Please call 1-800-407-7298 for information
regarding the purchase of Fund shares by telephone.
Automatic Investment Plan. The Automatic
Investment Plan ("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. 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. The AIP
allows you to make regular, systematic investments in
one or both of the Funds from your checking account.
The minimum initial investment for investors using the
AIP is $100. Please refer to the SAI for instructions
as to how you may establish the AIP for your account,
or call 1-800-407-7298.
Redeeming Shares
To Redeem Some or All of Your Shares. You may
request redemption of part or all of your Fund shares
at any time. The price per share will be the net asset
value next computed after the time the redemption
request is received in proper form by the Transfer
Agent. See "Valuation of Fund Shares." The Funds
normally will mail your redemption proceeds the next
business day and, in any event, no later than seven
days after receipt by the Transfer Agent of a
redemption request in good order. However, the Funds
may hold payment until investments which were made by
check, telephone or pursuant to the AIP have been
collected (which may take up to 15 days from the
initial investment date). Redemptions may be made by
written request, telephone or wire. You may also
redeem shares using the Funds' exchange privilege, as
discussed in the SAI. An exchange of Fund shares is
not a tax-free transaction.
<PAGE>
By written request
* Write a letter of instruction indicating the Fund
name, your share class, your account number, the
name(s) in which the account is registered and the
dollar value or number of shares you wish to sell.
* Include all signatures and any additional
documents that may be required. See "Redeeming
Shares-Special Situations," below.
* Forward the materials to the Transfer Agent.
* A check will be mailed to the name(s) and address
in which the account is registered, or otherwise
according to your letter of instruction.
By telephone
* Fill out the "Telephone Redemption" section of
your new account application.
* To place your redemption request, please call
1-800-407-7298.
* Redemption requests by telephone are available for
redemptions of $25,000 or less. Redemption requests
for more than $25,000 must be in writing.
* Proceeds redeemed by telephone will be mailed or
wired only to your address or bank of record as shown
on the records of the Transfer Agent.
* In order to arrange for telephone redemptions
after an account has been opened or to change the bank
account or address designated to receive redemption
proceeds, a written request must be sent to the
Transfer Agent. The request must be signed by each
shareholder of the account, with the signatures
guaranteed. Further documentation may be requested
from corporations, executors, administrators, trustees
and guardians. See "Redeeming Shares-Special
Situations," below.
* The Funds reserve the right to refuse any request
made by telephone and may limit the amount involved or
the number of telephone redemptions.
* Once you place a telephone redemption request, it
cannot be canceled or modified.
* Neither the Funds nor the Transfer Agent will be
responsible for the authenticity of redemption
instructions received by telephone. Accordingly, you
bear the risk of loss. However, the Funds will use
reasonable procedures to ensure that instructions
received by telephone are genuine, including recording
telephonic transactions and sending written
confirmation of such transactions to investors.
* You may experience difficulty in implementing a
telephone redemption during periods of drastic economic
or market changes. If you are unable to contact the
Transfer Agent by telephone, you may also redeem shares
by written request, as noted above.
By wire
* Redemptions by wire may be made pursuant to a
written redemption request or pursuant to a telephone
instruction.
* Please call 1-800-407-7298 for information
regarding redemptions by wire.
* Funds will be wired on the next business day after
receipt of redemption instructions. A $12 fee will be
deducted from your account.
Systematic Withdrawal Plan. You may set up
automatic withdrawals from your account with the Funds
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.
Special Situations. 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
<PAGE>
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. These institutions
include banks, saving associations, credit unions,
brokerage firms and others. A notary public stamp or
seal is not acceptable.
IRAs. Shareholders who have an Individual
Retirement Account or other retirement plan must
indicate on their redemption requests whether or not to
withhold federal income taxes. Redemption requests
failing to indicate an election will be subject to
withholding.
Termination of Accounts. Your account may be
terminated by the Funds 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. A check for the proceeds of
redemption will be sent to you within seven days of the
redemption.
VALUATION OF FUND SHARES
The price of Fund shares is based on each Fund's
net asset value, which is calculated using the market
price method of valuation and is determined as of the
close of trading (generally 4:00 p.m. Eastern Time) on
each day the New York Stock Exchange ("NYSE") is open
for business. The Fund does not determine net asset
value on days the NYSE is closed. The NYSE is closed
on New Year's Day, Martin Luther King, Jr. Day,
President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. In addition, if any of these holidays
falls on a Saturday, the NYSE will not be open for
trading on the preceding Friday, and when such holiday
falls on a Sunday, the NYSE will not be open for
trading on the succeeding Monday, unless unusual
business conditions exist, such as the ending of a
monthly or yearly accounting period. The price at
which a purchase order or redemption request is
effected is based on the next calculation of net asset
value after the order or request is placed.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
For federal income tax purposes, all dividends and
distributions of net realized short-term capital gains
you receive from the Funds are taxable as ordinary
income, whether reinvested in additional shares or
received in cash. Distributions of net realized long-
term capital gains you receive from the Funds, whether
reinvested in additional shares or received in cash,
are taxable as a capital gain. The capital gain
holding period (and the applicable tax rate) is
determined by the length of time the Funds have held
the security and not the length of time you have held
shares in the Funds. You will be informed annually as
to the amount and nature of all dividends and capital
gains paid during the prior year. Such capital gains
and dividends may also be subject to state or local
taxes. If you are not required to pay taxes on your
income, you are generally not required to pay federal
income taxes on the amounts distributed to you.
Dividends and capital gains, if any, will be
distributed annually in December. Please note,
however, that the objective of both Funds is capital
appreciation, not the production of distributions. You
should measure the success of your investment by the
value of your investment at any given time and not by
the distributions you receive. The Funds expect that,
because of this investment objective, their
distributions will consist primarily of long-term
capital gains.
All dividends or capital gains distributions will
automatically be reinvested in additional Fund shares
at the then prevailing net asset value unless you
specifically request that dividends or capital gains
or both be paid in cash. The election to receive
dividends in cash or reinvest them in shares may be
changed by writing to the Funds at Oak Ridge Funds,
Inc., c/o Firstar Mutual Fund Services, LLC, P. O. Box
701, Milwaukee, Wisconsin 53201-0701. Such notice must
be received at least ten days prior to the record date
of any dividend or capital gain distribution. If you
choose to have distribution checks mailed to you and
either the U.S. Postal Service is unable to deliver the
check to you or the check remains outstanding for at
least six months, the Funds reserve the right to
reinvest the check at the then current net asset value
until you notify us with different instructions.
<PAGE>
ADDITIONAL INFORMATION
INVESTMENT ADVISOR TRANSFER AGENT AND ADMINISTRATOR
Oak Ridge Investments, LLC Firstar Mutual Fund Services, LLC
10 South LaSalle Street, Suite 1050
Chicago, Illinois 60603 For overnight deliveries, use:
Oak Ridge Funds, Inc.
DISTRIBUTOR c/o Firstar Mutual Fund Services, LLC
Third Floor
Oak Ridge Investments, Inc. 615 East Michigan Street
10 South LaSalle Street, Suite 1050 Milwaukee, Wisconsin 53202
Chicago, Illinois 60603
For regular mail deliveries, use:
CUSTODIAN Oak Ridge Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
Firstar Bank, N.A. P.O. Box 701
777 East Wisconsin Avenue Milwaukee, Wisconsin 53202
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
The SAI contains additional information about the
Funds. Information about each Fund's investments is
contained in the Funds' annual and semi-annual reports
to shareholders. The annual report provides a
discussion of the market conditions and investment
strategies that significantly affected each Fund's
performance during its last fiscal year. The Funds'
SAI, which is incorporated by reference into this
Prospectus, annual reports and semi-annual reports are
available without charge upon request to the address or
toll-free telephone number noted in this Prospectus.
These documents may also be obtained from certain
financial intermediaries, including the Distributor,
who purchase and sell Fund shares. Shareholder
inquiries and requests for other information about the
Funds can be directed to the Funds at the address and
toll-free telephone number in this Prospectus.
Information about the Funds (including the SAI) can be
reviewed and copied at the SEC's Public Reference Room
in Washington, D.C. Please call the SEC at 1-202-942-
8090 for information relating to the operation of the
Public Reference Room. Reports and other information
about the Funds are available on the EDGAR Database on
the SEC's Internet website located at
http://www.sec.gov. Alternatively, copies of this
information may be obtained, upon payment of a
duplicating fee, by electronic request to the following
e-mail address: [email protected], or by writing the
Public Reference Section of the SEC, Washington, D.C.
20549.
The Funds' 1940 Act File Number is 811-8088.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Oak Ridge Funds, Inc.
Oak Ridge Small Cap Equity Fund
Oak Ridge Large Cap Equity Fund
P. O. Box 701
Milwaukee, Wisconsin 53201-0701
1-800-407-7298
This Statement of Additional Information ("SAI")
is not a prospectus and should be read in conjunction
with the Prospectus of the Oak Ridge Small Cap Equity
Fund (the "Small Cap Fund") (previously known as the
Oak Ridge Growth Fund) and the Oak Ridge Large Cap
Equity Fund (the "Large Cap Fund"), dated March 29,
2000. Each Fund is a series of Oak Ridge Funds, Inc.
(the "Corporation").
Each Fund's audited financial statements for the
year ended November 30, 1999 are incorporated herein by
reference to the Funds' 1999 Annual Report.
A copy of the 1999 Annual Report and/or the Funds'
Prospectus is available without charge upon request to
the above address or toll-free telephone number.
This Statement of Additional Information is dated March 29, 2000.
<PAGE>
TABLE OF CONTENTS
FUND ORGANIZATION 3
FUND POLICIES: FUNDAMENTAL & NON-FUNDAMENTAL 3
IMPLEMENTATION OF INVESTMENT OBJECTIVE 4
DIRECTORS AND OFFICERS 14
CODE OF ETHICS 15
PRINCIPAL SHAREHOLDERS 16
INVESTMENT ADVISOR AND DISTRIBUTOR 17
FUND TRANSACTIONS AND BROKERAGE 19
ADMINISTRATOR AND FUND ACCOUNTANT 20
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 21
DISTRIBUTION PLANS 21
PURCHASE, EXCHANGE AND PRICING OF SHARES 23
TAXATION OF THE FUNDS 24
PERFORMANCE INFORMATION 24
INDEPENDENT ACCOUNTANTS 26
FINANCIAL STATEMENTS 26
No person has been authorized to give any
information or to make any representations other than
those contained in this SAI and related Prospectus, and
if given or made, the information or representations
may not be relied upon as having been made by the
Funds. This SAI is not an offer to sell securities in
any state or jurisdiction in which an offering may not
lawfully be made.
<PAGE>
FUND ORGANIZATION
The Corporation is an open-end, diversified,
management investment company, commonly referred to as
a mutual fund. The Corporation is organized as a
Maryland corporation and was incorporated on October
15, 1993. From January 3, 1994 until March 19, 1998,
the Small Cap Fund and the Corporation were known as
the O.R.I. Growth Fund and O.R.I. Funds, Inc.,
respectively. From March 20, 1998 until March 1, 1999,
the Small Cap Fund and the Corporation were known as
the Oak Ridge Growth Fund and the Oak Ridge Funds,
Inc., respectively. On March 1, 1999, the Small Cap
Fund's name was changed to the Oak Ridge Small Cap
Equity Fund and the Large Cap Fund was created.
The Corporation is authorized to issue shares of
common stock in series and classes. The Corporation
currently offers two series of shares: the Oak Ridge
Small Cap Equity Fund and the Oak Ridge Large Cap
Equity Fund. The shares of common stock of each Fund
are further divided into two classes: Class A and
Class C. Each share of common stock of each class of
shares of each Fund is entitled to one vote on all
questions, except that any matter which affects only
one or more series or classes must be voted on
separately by the affected series or class. Each share
is entitled to participate equally in dividends and
capital gains distributions by the respective class of
shares and in the residual assets of the respective
class in the event of liquidation. However, each class
of shares of each Fund bears its own expenses, is
subject to its own sales charges, if any, and has
exclusive voting rights on matters pertaining to the
Rule 12b-1 plan as it relates to that class.
No certificates will be issued for shares held in
your account. You will, however, have full shareholder
rights. Generally, the Funds will not hold annual
shareholders' meetings unless required by the
Investment Company Act of 1940, as amended (the "1940
Act") or Maryland law.
FUND POLICIES: FUNDAMENTAL & NON-FUNDAMENTAL
The following are the fundamental investment
policies applicable to each Fund which cannot be
changed without the approval of a majority of the
relevant Fund's outstanding voting securities. As used
herein, a "majority of the relevant Fund's outstanding
voting securities" means the lesser of (i) 67% of the
shares of common stock of the Fund represented at a
meeting at which more than 50% of the outstanding
shares are present or (ii) more than 50% of the
outstanding shares of common stock of the Fund.
Neither Fund may:
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;
<PAGE>
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; and
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.
The investment objective of both Funds, which is
to seek capital appreciation, is also a fundamental
investment policy which cannot be changed without the
approval of a majority of the relevant Fund's
outstanding voting securities.
The following are the non-fundamental investment
policies applicable to each Fund which may be changed
by the Board of Directors of the Funds without
shareholder approval.
Neither Fund may:
1. 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;
2. Invest in any investment company, except
to the extent permitted under the 1940 Act; and
3. Enter into futures contracts or related
options if more than 5% of the Fund's net assets
would be represented by futures contracts or
related options, or more than 5% of the Fund's net
assets would be committed to initial margin and
premiums on futures contracts and related options.
With the exception of fundamental investment
restriction number 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.
IMPLEMENTATION OF INVESTMENT OBJECTIVE
The following information supplements the
discussion of the Funds' investment objective and
strategy described in the Prospectus under the heading
"Investment Objective" and "Investment Strategy."
In General
Neither Fund will invest more than 5% of its net
assets in any one of the following types of
investments:
* preferred stocks;
* warrants to purchase common or preferred stock;
* securities convertible or exchangeable into common
or preferred stock;
<PAGE>
* investment grade debt securities;
* repurchase agreements with member banks of the
Federal Reserve System or certain non-bank dealers;
* illiquid securities;
* securities purchased on a when-issued or delayed
delivery basis; and
* derivative instruments, such as transactions in
options, futures and options on futures.
Investment grade debt securities include long-term
debt obligations rated Baa or higher by Moody's
Investors Service ("Moody's") or BBB or higher by
Standard & Poor's Corporation ("S&P"), Duff & Phelps,
Inc. ("D&P") or Fitch IBCA Information, Inc. ("Fitch").
Bonds rated Baa by Moody's or BBB by S&P, although
considered investment grade, have speculative
characteristics and may be subject to greater
fluctuations in value than higher-rated bonds.
Warrants
Each Fund may invest in warrants, valued at the
lower of cost or market, if, after giving effect
thereto, not more than 5% of its net assets will be
invested in warrants. Warrants 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. Investing
in warrants is purely speculative in that they have no
voting rights, pay no dividends and have no rights with
respect to the assets of the corporation issuing them.
In addition, the value of the warrant does not
necessarily change with the value of the underlying
security, and a warrant ceases to have value if it is
not exercised prior to its expiration date.
Convertible Securities
Each Fund may invest up to 5% of its net assets in
convertible securities, which are bonds, debentures,
notes or other securities that may be converted into or
exchanged for a specified amount of common or preferred
stock of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt until
the convertible security matures or is redeemed,
converted or exchanged. Convertible securities have
unique investment characteristics in that they
generally (i) have higher yields than common or
preferred stocks, but lower yields than comparable non-
convertible securities, (ii) are less subject to
fluctuation in value than the underlying stock since
they have fixed income characteristics and (iii)
provide the potential for capital appreciation if the
market price of the underlying stock increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by a Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying stock or sell it to a third party.
Repurchase Obligations
Each Fund may enter into repurchase agreements
with respect to no more than 5% of its net assets with
certain banks and certain non-bank dealers. In a
repurchase agreement, a 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. The Funds'
investment advisor, Oak Ridge Investments, LLC (the
"Advisor"), will monitor 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 a Fund's ability to dispose of the
underlying securities. Although no definitive
creditworthiness criteria are used, the Advisor reviews
the creditworthiness of the banks and non-bank dealers
with which the Funds enter into repurchase agreements
to evaluate those risks.
<PAGE>
Illiquid Securities
Each Fund may invest up to 5% of its net assets in
illiquid securities (i.e., securities that are not
readily marketable). For purposes of this restriction,
illiquid securities include, but are not limited to,
restricted securities (i.e., securities the disposition
of which is restricted under the federal securities
laws), securities which may only be resold pursuant to
Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), except 144A securities which
are considered liquid under guidelines adopted by the
Board, repurchase agreements with maturities in excess
of seven days and other securities that are not readily
marketable. The Board of Directors of the Funds 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.
The Board of Directors has delegated the day-to-
day determination of the liquidity of any security to
the Advisor, although it has retained oversight and
ultimate responsibility for such determinations.
Although no definitive liquidity criteria are used, the
Board of Directors has directed the Advisor 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, a 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, or its delegate. If, through the
appreciation of restricted securities or the
depreciation of unrestricted securities, a 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.
When-Issued Securities
Each Fund may invest up to 5% of its net assets in
securities issued on a "when-issued" basis. The price
of securities purchased on a when-issued basis is fixed
at the time the commitment to purchase is made, with
delivery and payment for the securities occurring 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 a Fund to the issuer, and no interest is accrued on
debt securities or 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 a Fund's other
assets. While when-issued securities may be sold prior
to the settlement date, the Funds intend to purchase
such securities with the purpose of actually acquiring
them. At the time a 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 Funds will maintain liquid 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 Funds will meet their obligations from then
available cash flow, sale of the securities held in the
separate account described above, sale of other
securities or, although they 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 Funds' payment obligation).
Derivative Instruments
In General. Each Fund may invest up to 5% of its
net assets in derivative instruments. A Fund may use
derivative instruments for any lawful purpose
consistent with its investment objective such as
hedging or managing risk, but not for speculation.
Derivative instruments are commonly defined to include
securities or contracts whose
<PAGE>
value depend on (or
"derive" from) the value of one or more other assets,
such as securities, currencies or commodities. These
"other assets" are commonly referred to as "underlying
assets."
Hedging. The Funds may use derivative instruments
to protect against possible adverse changes in the
market value of securities held in, or anticipated to
be held in, their portfolios. Derivatives may also be
used by the Funds to "lock-in" realized but
unrecognized gains in the value of their portfolio
securities. Hedging strategies, if successful, can
reduce the risk of loss by wholly or partially
offsetting the negative effect of unfavorable price
movements in the investments being hedged. However,
hedging strategies can also reduce the opportunity for
gain by offsetting the positive effect of favorable
price movements in the hedged investments.
Managing Risk. The Funds may also use derivative
instruments to manage the risks of their portfolios.
Risk management strategies include, but are not limited
to, facilitating the sale of portfolio securities,
managing the effective maturity or duration of debt
obligations in the Funds' portfolios, establishing a
position in the derivatives markets as a substitute for
buying or selling certain securities or creating or
altering exposure to certain asset classes, such as
equity, debt and foreign securities. The use of
derivative instruments may provide a less expensive,
more expedient or more specifically focused way for the
Funds to invest than "traditional" securities (i.e.,
stocks or bonds) would.
Exchange or OTC Derivatives. Derivative
instruments may be exchange-traded or traded in over-
the-counter ("OTC") transactions between private
parties. Exchange-traded derivatives are standardized
options and futures contracts traded in an auction on
the floor of a regulated exchange. Exchange contracts
are generally liquid. The exchange clearinghouse is
the counterparty of every contract. Thus, each holder
of an exchange contract bears the credit risk of the
clearinghouse (and has the benefit of its financial
strength) rather than that of a particular
counterparty. OTC transactions are subject to
additional risks, such as the credit risk of the
counterparty to the instrument, and are less liquid
than exchange-traded derivatives since they often can
only be closed out with the other party to the
transaction.
Risks and Special Considerations. The use of
derivative instruments involves risks and special
considerations as described below. Risks pertaining to
particular derivative instruments are described in the
sections that follow.
(1) Market Risk. The primary risk of derivatives
is the same as the risk of the underlying assets;
namely, that the value of the underlying asset may go
up or down. Adverse movements in the value of an
underlying asset can expose the Funds to losses.
Derivative instruments may include elements of leverage
and, accordingly, the fluctuation of the value of the
derivative instrument in relation to the underlying
asset may be magnified. The successful use of
derivative instruments depends upon a variety of
factors, particularly the Advisor's ability to predict
movements of the securities markets, which requires
different skills than predicting changes in the prices
of individual securities. There can be no assurance
that any particular strategy adopted will succeed. A
decision to engage in a derivative transaction will
reflect the Advisor's judgment that the derivative
transaction will provide value to a Fund and its
shareholders and is consistent with its objectives,
investment limitations and operating policies. In
making such a judgment, the Advisor will analyze the
benefits and risks of the derivative transaction and
weigh them in the context of the relevant Fund's entire
portfolio and investment objective.
(2) Credit Risk. The Funds will be subject to
the risk that a loss may be sustained as a result of
the failure of a counterparty to comply with the terms
of a derivative instrument. The counterparty risk for
exchange-traded derivative instruments is generally
less than for privately-negotiated or OTC derivative
instruments, since generally a clearing agency, which
is the issuer or counterparty to each exchange-traded
instrument, provides a guarantee of performance. For
privately-negotiated instruments, there is no similar
clearing agency guarantee. In all transactions, the
Funds will bear the risk that the counterparty will
default, and this could result in a loss of the
expected benefit of the derivative transaction and
possibly other losses to the Funds. The Funds will
enter into transactions in derivative instruments only
with counterparties that the Advisor reasonably
believes are capable of performing under the contract.
<PAGE>
(3) Correlation Risk. When a derivative
transaction is used to completely hedge another
position, changes in the market value of the combined
position (the derivative instrument plus the position
being hedged) can result from an imperfect correlation
between the price movements of the two instruments.
With a perfect hedge, the value of the combined
position remains unchanged for any change in the price
of the underlying asset. With an imperfect hedge, the
value of the derivative instrument and its hedge are
not perfectly correlated. Correlation risk is the risk
that there might be imperfect correlation, or even no
correlation, between price movements of an instrument
and price movements of investments being hedged. For
example, if the value of a derivative instrument used
in a short hedge (such as writing a call option, buying
a put option or selling a futures contract) increased
by less than the decline in value of the hedged
investments, the hedge would not be perfectly
correlated. Such a lack of correlation might occur due
to factors unrelated to the value of the investments
being hedged, such as speculative or other pressures on
the markets in which these instruments are traded. The
effectiveness of hedges using instruments on indices
will depend, in part, on the degree of correlation
between price movements in the index and price
movements in the investments being hedged.
(4) Liquidity Risk. Derivatives are also subject
to liquidity risk. Liquidity risk is the risk that a
derivative instrument cannot be sold, closed out or
replaced quickly at or very close to its fundamental
value. Generally, exchange contracts are very liquid
because the exchange clearinghouse is the counterparty
of every contract. OTC transactions are less liquid
than exchange-traded derivatives since they often can
only be closed out with the other party to the
transaction. A Fund might be required by applicable
regulatory requirements to maintain assets as "cover,"
maintain segregated accounts and/or make margin
payments when it takes positions in derivative
instruments involving obligations to third parties
(i.e., instruments other than purchased options). If a
Fund is unable to close out its positions in such
instruments, it might be required to continue to
maintain such assets or accounts or make such payments
until the position expired, matured or is closed out.
The requirements might impair the Fund's ability to
sell a portfolio security or make an investment at a
time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a
disadvantageous time. A Fund's ability to sell or
close out a position in an instrument prior to
expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a
market, the ability and willingness of the counterparty
to enter into a transaction closing out the position.
Therefore, there is no assurance that any derivatives
position can be sold or closed out at a time and price
that is favorable to the Funds.
(5) Legal Risk. Legal risk is the risk of loss
caused by the legal unenforceability of a party's
obligations under the derivative. While a party
seeking price certainty agrees to surrender the
potential upside in exchange for downside protection,
the party taking the risk is looking for a positive
payoff. Despite this voluntary assumption of risk, a
counterparty that has lost money in a derivative
transaction may try to avoid payment by exploiting
various legal uncertainties about certain derivative
products.
(6) Systemic or "Interconnection" Risk.
Interconnection risk is the risk that a disruption in
the financial markets will cause difficulties for all
market participants. In other words, a disruption in
one market will spill over into other markets, perhaps
creating a chain reaction. Much of the OTC derivatives
market takes place among the OTC dealers themselves,
thus creating a large interconnected web of financial
obligations. This interconnectedness raises the
possibility that a default by one large dealer could
create losses for other dealers and destabilize the
entire market for OTC derivative instruments.
General Limitations. The use of derivative
instruments is subject to applicable regulations of the
Securities and Exchange Commission (the "SEC"), the
several options and futures exchanges upon which they
may be traded, the Commodity Futures Trading Commission
(the "CFTC") and various state regulatory authorities.
The Funds have 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. In accordance with Rule 4.5 of the
regulations under the Commodities Exchange Act, the
notice of eligibility for the Funds includes
representations that the Funds will use futures
contracts and related options solely for bona fide
hedging purposes within the meaning of CFTC
regulations, provided that the Funds may hold other
positions in futures
<PAGE>
contracts and related options that
do not qualify as a bona fide hedging position if the
aggregate initial margin deposits and premiums required
to establish these positions, less the amount by which
any such futures contracts and related options
positions are "in the money," do not exceed 5% of each
Fund's net assets. Adherence to these guidelines does
not, however, limit a Fund's risk to 5% of its net
assets.
The SEC has identified certain trading practices
involving derivative instruments that involve the
potential for leveraging a Fund's assets in a manner
that raises issues under the 1940 Act. In order to
limit the potential for the leveraging of Fund assets,
the SEC has stated that a Fund may use coverage or the
segregation of its assets. Assets used as cover or
held in a segregated account cannot be sold while the
derivative position is open, unless they are replaced
with similar assets. As a result, the commitment of a
large portion of a Fund's assets to segregated accounts
could impede portfolio management or the Fund's ability
to meet redemption requests or other current
obligations.
In some cases, a Fund may be required to maintain
or limit exposure to a specified percentage of its
assets to a particular asset class. In such cases,
when a Fund uses a derivative instrument to increase or
decrease exposure to an asset class and is required by
applicable SEC guidelines to set aside liquid assets in
a segregated account to secure its obligations under
the derivative instruments, the Advisor may, where
reasonable in light of the circumstances, measure
compliance with the applicable percentage by reference
to the nature of the economic exposure created through
the use of the derivative instrument and by reference
to the nature of the exposure arising from the assets
set aside in the segregated account.
Options. A Fund may use options for any lawful
purpose consistent with its investment objective such
as hedging or managing risk but not for speculation.
An option is a contract in which the "holder" (the
buyer) pays a certain amount (the "premium") to the
"writer" (the seller) to obtain the right, but not the
obligation, to buy from the writer (in a "call") or
sell to the writer (in a "put") a specific asset at an
agreed upon price (the "strike price" or "exercise
price") at or before a certain time (the "expiration
date"). The holder pays the premium at inception and
has no further financial obligation. The holder of an
option will benefit from favorable movements in the
price of the underlying asset but is not exposed to
corresponding losses due to adverse movements in the
value of the underlying asset. The writer of an option
will receive fees or premiums but is exposed to losses
due to changes in the value of the underlying asset.
The Funds may purchase (buy) or write (sell) put and
call options on assets, such as securities and indices
of debt and equity securities ("underlying assets") and
enter into closing transactions with respect to such
options to terminate an existing position. Options
used by the Funds may include European, American and
Bermuda style options. If an option is exercisable
only at maturity, it is a "European" option; if it is
also exercisable prior to maturity, it is an "American"
option; if it is exercisable only at certain times, it
is a "Bermuda" option.
The Funds may purchase (buy) and write (sell) put
and call options and enter into closing transactions
with respect to such options to terminate an existing
position. The purchase of call options serves as a
long hedge, and the purchase of put options serves as a
short hedge. Writing put or call options can enable
the Funds to enhance income by reason of the premiums
paid by the purchaser of such options. Writing call
options serves as a limited short hedge because
declines in the value of the hedged investment would be
offset to the extent of the premium received for
writing the option. However, if the security
appreciates to a price higher than the exercise price
of the call option, it can be expected that the option
will be exercised and the Funds will be obligated to
sell the security at less than its market value or will
be obligated to purchase the security at a price
greater than that at which the security must be sold
under the option. All or a portion of any assets used
as cover for OTC options written by the Funds would be
considered illiquid to the extent described under "-
Illiquid Securities," above. Writing put options
serves as a limited long hedge because increases in the
value of the hedged investment would be offset to the
extent of the premium received for writing the option.
However, if the security depreciates to a price lower
than the exercise price of the put option, it can be
expected that the put option will be exercised and the
Funds will be obligated to purchase the security at
more than its market value.
The value of an option position will reflect,
among other things, the historical price volatility of
the underlying investment, the current market value of
the underlying investment, the time remaining until
expiration, the relationship of the exercise price to
the market price of the underlying investment and
general market conditions.
<PAGE>
A Fund may effectively terminate its right or
obligation under an option by entering into a closing
transaction. For example, a Fund may terminate its
obligation under a call or put option that it had
written by purchasing an identical call or put option;
this is known as a closing purchase transaction.
Conversely, a Fund may terminate a position in a put or
call option it had purchased by writing an identical
put or call option; this is known as a closing sale
transaction. Closing transactions permit the Funds to
realize the profit or limit the loss on an option
position prior to its exercise or expiration.
The Funds may purchase or write both exchange-
traded and OTC options. Exchange-traded options are
issued by a clearing organization affiliated with the
exchange on which the option is listed that, in effect,
guarantees completion of every exchange-traded option
transaction. In contrast, OTC options are contracts
between a Fund and the other party to the transaction
("counterparty") (usually a securities dealer or a
bank) with no clearing organization guarantee. Thus,
when the Funds purchase or write an OTC option, they
rely on the counterparty to make or take delivery of
the underlying investment upon exercise of the option.
Failure by the counterparty to do so would result in
the loss of any premium paid by the Funds as well as
the loss of any expected benefit of the transaction.
The Funds' ability to establish and close out
positions in exchange-listed options depends on the
existence of a liquid market. The Funds intend to
purchase or write only those exchange-traded options
for which there appears to be a liquid secondary
market. However, there can be no assurance that such a
market will exist at any particular time. Closing
transactions can be made for OTC options only by
negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market
exists. Although the Funds will enter into OTC options
only with counterparties that are expected to be
capable of entering into closing transactions with the
Funds, there is no assurance that the Funds will in
fact be able to close out an OTC option at a favorable
price prior to expiration. In the event of insolvency
of the counterparty, the Funds might be unable to close
out an OTC option position at any time prior to its
expiration. If a Fund were unable to effect a closing
transaction for an option it had purchased, it would
have to exercise the option to realize any profit.
The Funds may engage in options transactions on
indices in much the same manner as the options on
securities discussed above, except the index options
may serve as a hedge against overall fluctuations in
the securities market in general.
The writing and purchasing of options is a highly
specialized activity that 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.
Futures Contracts. A Fund may use futures
contracts for any lawful purpose consistent with its
investment objective such as hedging and managing risk
but not for speculation. The Funds may enter into
futures contracts, including interest rate and index
futures, and purchase put and call options, and write
covered put and call options, on such futures. The
purchase of futures or call options thereon can serve
as a long hedge, and the sale of futures or the
purchase of put options thereon can serve as a short
hedge. Writing covered call options on futures
contracts can serve as a limited short hedge, and
writing covered put options on futures contracts can
serve as a limited long hedge, using a strategy similar
to that used for writing covered options in securities.
The Funds' hedging may include purchases of futures as
an offset against the effect of expected increases in
securities prices and sales of futures as an offset
against the effect of expected declines in securities
prices. The Funds may also write put options on
futures contracts while at the same time purchasing
call options on the same futures contracts in order to
create synthetically a long futures contract position.
Such options would have the same strike prices and
expiration dates. The Funds will engage in this
strategy only when the Advisor believes it is more
advantageous than purchasing the futures contract.
To the extent required by regulatory authorities,
the Funds may enter into futures contracts that are
traded on national futures exchanges and are
standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading
are regulated by the CFTC. Although techniques other
than sales and purchases of futures contracts could be
used to reduce the Funds' exposure to market
fluctuations, the Funds may be able to hedge their
exposure more effectively and perhaps at a lower cost
through using futures contracts.
<PAGE>
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 (e.g., debt security) for a specified price
at a designated date, time and place. 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. Transaction 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 Funds realize a loss; if it is more,
the Funds realize a gain. Conversely, if the
offsetting sale price is more than the original
purchase price, the Funds realize a gain; if it is
less, the Funds realize a loss. The transaction costs
must also be included in these calculations. There can
be no assurance, however, that the Funds will be able
to enter into an offsetting transaction with respect to
a particular futures contract at a particular time. If
the Funds are not able to enter into an offsetting
transaction, they will continue to be required to
maintain the margin deposits on the futures contract.
No price is paid by the Funds upon entering into
futures contracts. Instead, at the inception of a
futures contract, the Funds are required to deposit in
a segregated account with their custodian, in the name
of the futures broker through whom the transaction was
effected, "initial margin," consisting of cash or other
liquid assets, in an amount generally equal to 10% or
less of the contract value. Margin must also be
deposited when writing a call or put option on a
futures contract, in accordance with applicable
exchange rules. Unlike margin in securities
transactions, initial margin on futures contracts does
not represent a borrowing, but rather is in the nature
of a performance bond or good-faith deposit that is
returned to the Funds at the termination of the
transaction if all contractual obligations have been
satisfied. Under certain circumstances, such as
periods of high volatility, the Funds may be required
by an exchange to increase the level of their initial
margin payment, and initial margin requirements might
be increased generally in the future by regulatory
action.
Subsequent "variation margin" payments are made to
and from the futures broker daily as the value of the
futures position varies, a process known as "marking to
market." Variation margin does not involve borrowing,
but rather represents a daily settlement of the Funds'
obligations to or from a futures broker. When a Fund
purchases an option on a future, the premium paid plus
transaction costs is all that is at risk. In contrast,
when a Fund purchases or sells a futures contract or
writes a call or put option thereon, it is subject to
daily variation margin calls that could be substantial
in the event of adverse price movements. If a Fund has
insufficient cash to meet daily variation margin
requirements, it might need to sell securities at a
time when such sales are disadvantageous. Purchasers
and sellers of futures positions and options on futures
can enter into offsetting closing transactions by
selling or purchasing, respectively, an instrument
identical to the instrument held or written. Positions
in futures and options on futures may be closed only on
an exchange or board of trade that provides a secondary
market. The Funds intend to enter into futures
transactions only on exchanges or boards of trade where
there appears to be a liquid secondary market.
However, there can be no assurance that such a market
will exist for a particular contract at a particular
time.
Under certain circumstances, futures exchanges may
establish daily limits on the amount that the price of
a future or option on a futures contract can vary from
the previous day's settlement price; once that limit is
reached, no trades may be made that day at a price
beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily
limit for several consecutive days with little or no
trading, thereby preventing liquidation of unfavorable
positions.
If a Fund were unable to liquidate a futures or
option on a futures contract position due to the
absence of a liquid secondary market or the imposition
of price limits, it could incur substantial losses.
Under these circumstances, the Fund would continue to
be subject to market risk with respect to the position.
In addition, except in the case of purchased options,
the Fund would continue to be required to make daily
variation margin payments and might be required to
maintain the position being hedged by the future or
option or to maintain certain liquid securities in a
segregated account.
<PAGE>
Certain characteristics of the futures market
might increase the risk that movements in the prices of
futures contracts or options on futures contracts might
not correlate perfectly with movements in the prices of
the investments being hedged. For example, all
participants in the futures and options on futures
contracts markets are subject to daily variation margin
calls and might be compelled to liquidate futures or
options on futures contracts positions whose prices are
moving unfavorably to avoid being subject to further
calls. These liquidations could increase the price
volatility of the instruments and distort the normal
price relationship between the futures or options and
the investments being hedged. Also, because initial
margin deposit requirements in the futures markets are
less onerous than margin requirements in the securities
markets, there might be increased participation by
speculators in the future markets. This participation
also might cause temporary price distortions. In
addition, activities of large traders in both the
futures and securities markets involving arbitrage,
"program trading" and other investment strategies might
result in temporary price distortions.
Lending of Portfolio Securities
Each Fund may lend its portfolio securities, up to
5% of its total assets, to broker-dealers or
institutional investors as a means of earning income.
In return, the Funds will receive collateral in cash or
money market instruments. The collateral will be
maintained at all times in an amount equal to at least
100% of the current market value of the loaned
securities. The purpose of such securities lending is
to permit the borrower to use such securities for
delivery to purchasers when such borrower has sold
short. The Funds will continue to receive the
equivalent of the interest or dividends paid by the
issuer of the securities lent. The Funds may also
receive interest on the investment of the collateral or
a fee from the borrower as compensation for the loan.
The Funds may pay reasonable custodial and
administrative fees in connection with a loan. The
Funds will retain the right to call, upon notice, lent
securities. While there may be delays in recovery or
even loss of rights in the collateral should the
borrower fail financially, the Advisor will review the
creditworthiness of the entities to which loans are
made to evaluate those risks.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Investment Objective," prior to
investing the proceeds from sales of Fund shares, to
meet ordinary cash needs and to retain the flexibility
to respond promptly to changes in market and economic
conditions, each Fund may invest up to 35% of its
assets in cash and cash equivalents. Cash equivalents
are short-term fixed income securities issued by
private and governmental institutions which are rated A-
1 or higher by S&P, Prime-1 or higher by Moody's, D-2
or higher by D&P or F-2 or higher by Fitch. Such
securities include, without limitation, the following:
U.S. Government Securities. These securities
include 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. 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.
Certificates of Deposit. These securities
are issued against funds deposited in a U.S. bank
or savings and loan association and are for a
definite period of time, earn a specified rate of
return and are
<PAGE>
normally negotiable. If a
certificate of deposit is non-negotiable, it will
be considered illiquid and will be subject to each
Fund's 5% restriction on investments in illiquid
securities. A certificate of deposit requires the
issuer to pay the amount deposited plus interest
to the holder 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 Funds will not generally be fully insured.
Bank Time Deposits. Bank time deposits 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. There may be
penalties for the early withdrawal of time
deposits, in which case the yields of these
investments will be reduced.
Bankers' Acceptances. Bankers' acceptances
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.
Repurchase Agreements. For this purpose,
repurchase agreements include only those entered
into with respect to obligations of the U.S.
government, its agencies or instrumentalities. In
such a transaction, at the time a Fund purchases
the security, it simultaneously agrees to resell
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 Funds to invest temporarily
available cash. Repurchase agreements may be
considered loans to the seller, collateralized by
the underlying securities. The risk to the Funds
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 Funds are 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 Funds could incur a loss of both
principal and interest. The Advisor 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. The
Advisor 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
Funds. If the seller were to be subject to a
federal bankruptcy proceeding, the ability of the
Funds to liquidate the collateral could be delayed
or impaired because of certain provisions of the
bankruptcy laws.
Commercial Paper. These securities include
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). Master demand
notes are direct lending arrangements between a
Fund and a corporation. There is no secondary
market for such notes; however, they are
redeemable by the Funds at any time. The Advisor
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 a Fund's
liquidity might be impaired if the corporation
were unable to pay principal and interest on
demand.
<PAGE>
DIRECTORS AND OFFICERS
Under the laws of the State of Maryland, the Board
of Directors of the Funds is responsible for managing
the Funds' business and affairs.
Directors and officers of the Funds, together with
information as to their principal business occupations
during at least the last five years, and other
information, are shown below. Each director who is
deemed an "interested person," as defined in the 1940
Act, is indicated by an asterisk.
*David M. Klaskin, President and a Director of the
Funds (DOB 8/6/60).
Mr. Klaskin has been the Chairman of the Advisor
since November 1998 and the Treasurer and Chief
Investment Officer of the Advisor (and its
predecessor) since December 1989. Mr. Klaskin
served as the President of the Advisor (and its
predecessor) from December 1989 until November
1998. Mr. Klaskin has held the same positions
(with the exception of Chief Investment Officer)
for the same time periods with the Funds'
principal distributor, Oak Ridge Investments, Inc.
(the "Distributor"). From May 1982 until December
1989, Mr. Klaskin was a Financial Consultant with
Shearson Lehman Hutton, Chicago, Illinois, where
he was responsible for managing funds for both
individual and institutional clients. Mr. Klaskin
graduated from Indiana University with a B.S. in
Finance in 1982.
*Samuel Wegbreit, Chairman of the Board, Treasurer,
Assistant Secretary and a Director of the Funds (DOB
9/28/57).
Mr. Wegbreit has been the Vice-Chairman of the
Advisor since November 1998 and the Secretary of
the Advisor (and its predecessor) since September
1989. Mr. Wegbreit served as the Chairman of the
Advisor (and its predecessor) from September 1989
until November 1998. Mr. Wegbreit has held the
same positions for the same time periods with the
Distributor. From April 1988 until September
1989, Mr. Wegbreit was self-employed as a
Securities Trader in New York, New York. From
October 1983 until April 1988, Mr. Wegbreit was a
Securities Trader and Vice-President with Morgan
Stanley & Co. in New York, New York. Mr. Wegbreit
graduated from Brown University with a B.S. in
Applied Mathematics in 1979.
Daniel A. Kaplan, a Director of the Funds (DOB 4/5/60).
Mr. Kaplan is a Certified Public Accountant and
the President of Loft Development Corporation, a
real estate development company located in
Chicago, Illinois. Mr. Kaplan has been employed
by Loft Development Corporation since 1986.
A. Charlene Sullivan, Ph.D., a Director of the Funds
(DOB 1/21/49).
Dr. Sullivan has been an Associate Professor of
Finance at Purdue University since 1978.
Angelo Louis Spoto, a Director of the Funds (DOB
4/12/29).
Mr. Spoto has been a private investor since 1990.
Prior to 1990 Mr. Spoto was a Senior Vice
President - Investments with Blunt Ellis & Loewi,
Inc., in Rockford, Illinois. Mr. Spoto has been a
Director of the Funds since January 1999.
John Peters, Secretary of the Funds (11/14/47).
Mr. Peters has been the President of the
Distributor since July 15, 1998. From September
1, 1997 until June 1, 1998, Mr. Peters was
President of Dreman Value Management, Jersey City,
New Jersey. From January 1, 1990 until January 1,
1997, Mr. Peters was the Managing Director of
Kemper Financial Services, Inc.
<PAGE>
Except for Mr. Kaplan, Dr. Sullivan and Mr. Spoto,
the address of all of the above persons is Oak Ridge
Investments, LLC, 10 South LaSalle Street, Suite 1050,
Chicago, Illinois 60603. Mr. Kaplan's address is 641
West Lake Street, Suite 401, Chicago, Illinois 60661;
Dr. Sullivan's address is Purdue University, Krannert
Center, #217, West Lafayette, Indiana 47907; and Mr.
Spoto's address is 355 Hickory Lane, Rockford, Illinois
61107.
As of March 1, 2000, officers and directors of the
Funds beneficially owned 8.88% of the shares of the
Small Cap Fund's then outstanding Class A shares, 9.37%
of the Large Cap Fund's Class A shares and none of the
Small Cap Fund's then outstanding Class C shares.
Directors and officers of the Funds who are
officers, directors, employees or shareholders of the
Advisor or Distributor do not receive any remuneration
from the Funds for serving as directors or officers.
Accordingly, Messrs. Klaskin, Wegbreit and Peters do
not receive any remuneration from the Funds for their
services as directors and/or officers. However,
Messrs. Spoto and Kaplan and Dr. Sullivan received the
following fees in 1999 for their services as directors
of the Funds:
Name Cash Other
Compensation(1) Compensation Total
Daniel A. Kaplan $1,250 $ - $1,250
Angelo L. Spoto $1,250 $ - $1,250
A. Charlene Sullivan $1,250 $ - $1,250
___________________
(1) Each director who is not deemed an "interested
person" of the Funds, as defined in the 1940 Act,
receives $250 per Fund for each Board of Directors
meeting attended by such person. The Board held four
meetings during fiscal 1999.
CODE OF ETHICS
The Funds, the Advisor and the Distributor have
adopted an Amended and Restated Code of Ethics
effective March 1, 2000 (the "Code of Ethics") under
Rule 17 j-1 of the 1940 Act. The Code of Ethics
governs all "Access Persons" of the Funds, the Advisor
and the Distributor. The Code of Ethics is based upon
the principle that directors, officers and employees of
the Funds, the Advisor and the Distributor have a
fiduciary duty to place the interests of each Fund's
shareholders above their own.
The term "Access Person" means (1) any director or
officer of the Funds, the Advisor or the Distributor;
(2) every employee of the Funds or the Advisor or any
company in a control relationship to the Funds or
Advisor, who in connection with his or her regular
functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a
security by the Funds, or whose functions relate to the
making of any recommendations with respect to such
purchases or sales; and (3) any natural person in a
control relationship to the Funds or Advisor who
obtains information concerning recommendations made to
the Funds with regard to the purchase or sale of a
security by the Funds. The Code of Ethics permits
Access Persons to buy or sell securities for their own
accounts, including securities that may be purchased or
held by the Funds, subject to certain restrictions.
The Code of Ethics requires Access Persons to preclear
most transactions. It also requires Access Persons
(other than independent directors of the Funds) to
report transactions to the Funds' administrator,
Firstar Mutual Fund Services, LLC. Moreover, Access
Persons (other than independent directors of the Funds)
are required, on an annual basis, to disclose all
securities holdings.
The Code of Ethics prohibits Access Persons from
purchasing or selling securities that the Funds
purchased or sold or the Advisor considered purchasing
or selling during the 15-day period immediately before
or after the Access Person's transaction unless the
Access Person executes both the purchase and sale of
such security at the same or lower price as that
received by the applicable Fund. The Code of Ethics
places other limitations on the acquisition of
securities by Access Persons (other than independent
directors of the Funds), such as prohibiting the
purchase of securities in an initial public offering,
restricting the purchase of private placement securities and
<PAGE>
prohibiting Access Persons who act as
portfolio managers from engaging in short-term trading
(purchasing or selling the same security within 60
days).
PRINCIPAL SHAREHOLDERS
As of March 1, 2000, the following persons owned
of record or are known by the Funds to own beneficially
5% or more of the outstanding shares of one or both
classes of shares of the Small Cap or Large Cap Fund:
Class Number Percent Percent
Name and Address Fund of Shares of Shares of Fund of Class
Wexford Clearing Services Corp. Large Cap Class A 20,666.667 12.80% 12.80%
Delaware Charter C/F
Harold Leeper RO
1145 South Park Terrace
Chicago, IL 60605-2021
Wexford Clearing Services Corp. Large Cap Class A 20,096.463 12.45% 12.45%
Prudential Securities C/F
Jacqueline D. Siegel
2367 Wood Path Lane
Highland Park, IL 60035-2045
Wexford Clearing Services Corp. Large Cap Class A 16,666.67 10.33% 10.33%
Richard O. Klaskin
1038 Oak Ridge Drive
Glencoe, IL 60022-1133
Dain Rauscher, Inc. FBO Small Cap Class C 4,770.588 0.62% 7.16%
John L. Kelliher
2512 N. Bosworth #407
Chicago, IL 60614
Lawrence Bernstein and Large Cap Class A 10,113.269 6.27% 6.27%
Joyce Bernstein Jt. Ten.
1833 West Barry Avenue
Chicago, IL 60657-2042
Firstar Trust Company Small Cap Class C 3,534.029 0.46% 5.30%
Custodian for Margaret P. McGuire
IRA Rollover
545 North Eagle Island Road
Kankakee, IL 60901-7551
Wexford Clearing Services Corp. Large Cap Class A 8,333.34 5.16% 5.16%
Delaware Charter C/F
Samuel Wegbreit
394 Chestnut Street
Winnetka, IL 60693-2415
Wexford Clearing Services Corp. Large Cap Class A 8,333.34 5.16% 5.16%
Jonathan Talbot and
Pamela Talbot Jt. Ten.
2244 Sheridan Road
Highland Park, IL 60035-2015
<PAGE>
Based on the foregoing, as of March 1, 2000, no
one owned a controlling interest in the Small Cap or
Large Cap Fund. Shareholders with a controlling
interest could affect the outcome of proxy voting or
the direction of management of the Funds.
INVESTMENT ADVISOR AND DISTRIBUTOR
Background. Prior to July 1997, Oak Ridge
Investments, Inc., the Funds' principal distributor,
also served as the Small Cap Fund's investment advisor
(the Large Cap Fund was not available at that time).
In July 1997, Oak Ridge Investments, LLC succeeded to
Oak Ridge Investments, Inc.'s investment advisory
business. Accordingly, at that time, Oak Ridge
Investments, LLC became the investment advisor to the
Small Cap Fund. Oak Ridge Investments, Inc. continues
to serve as the Funds' principal distributor.
The Advisor is managed and owned by the same
persons who manage and own the Distributor.
Specifically, Mr. Klaskin is the Chairman, Treasurer
and Chief Investment Officer of the Advisor; Mr.
Wegbreit is the Vice-Chairman and Secretary of the
Advisor; and each such person owns shares representing
more than 35% but less than 51% of the Advisor. Mr.
Klaskin also serves as the Chairman and Treasurer of
the Distributor; Mr. Wegbreit also serves as the Vice-
Chairman and Secretary of the Distributor; and each
such person owns shares representing more than 35% but
less than 51% of the Distributor. Mr. Peters is the
President of the Distributor.
Advisor. The Funds' amended and restated
investment advisory agreement is dated as of March 1,
1999 (the "Advisory Agreement"). The term of the
Advisory Agreement began on March 1, 1999 and will
continue in effect for successive periods of one year
if such continuation is approved annually by the Board
of Directors of the Funds or by vote of a majority of
each Fund's outstanding voting securities (as defined
in the 1940 Act). Each annual renewal must also be
approved by the vote of a majority of the Funds'
directors who are not parties to the Advisory Agreement
or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such
approval. The Advisory Agreement was most recently
approved by the directors, including a majority of the
disinterested directors, on November 10, 1999. The
Advisory Agreement is terminable without penalty, on 60
days' written notice by the Board of Directors of the
Funds, by vote of a majority of each Fund's outstanding
voting securities or by the Advisor, and will terminate
automatically in the event of its assignment.
Under the terms of the Advisory Agreement, the
Advisor manages the Funds' investments and business
affairs, subject to the supervision of the Board of
Directors. At its expense, the Advisor provides office
space and all necessary office facilities, equipment
and personnel for managing the investments of the
Funds. Prior to March 1, 1999, the Small Cap Fund paid
the Advisor an annual management fee of 1.00% of the
Fund's average daily net assets attributable to each
class of its shares. Effective March 1, 1999, the
Advisor agreed to reduce its advisory fee to 0.75% of
the Fund's average daily net assets. The Large Cap
Fund pays the Advisor an annual management fee of 0.60%
of its average daily net assets attributable to each
class of its shares. The advisory fee is accrued daily
and paid monthly.
From time to time, the Adviser has waived all or a
portion of its management fee and/or absorbed expenses
for one or both classes of shares of one or both of the
Funds. For the fiscal years ended November 30, 1997,
1998 and 1999, the Advisor agreed to waive its
management fee and/or reimburse operating expenses for
the Small Cap Fund to the extent necessary to ensure
that (i) total operating expenses for the Class A
shares did not exceed 2.00% of average daily net assets
and (ii) total operating expenses for the Class C
shares did not exceed 2.75% of average daily net
assets. For the fiscal years ended November 30, 1997,
1998 and 1999, the Small Cap Fund paid the Advisor net
of waivers $12,006, $32,670 and $47,440, respectively,
for its investment advisory services, and the Advisor
waived $85,111, $102,836 and $74,488, respectively, of
its fee. Of the fees paid in 1997, $11,674 was
attributable to Class A shares and $332 was
attributable to Class C shares; of the fees paid in
1998, $29,835 was attributable to Class A shares and
$2,835 was attributable to Class C shares; of the fees
paid in 1999, $42,269 was attributable to Class A
shares and $5,171 was attributable to Class C shares.
For the period from March 1, 1999 (commencement of
operations) through November 30, 1999, the Large Cap
Fund did not pay any management fee to the Advisor
because the Advisor waived its entire fee. If the
Advisor had not waived its fee, it would have received
$7,865.
<PAGE>
Pursuant to an expense cap agreement dated March
1, 1999 as amended January 6, 2000, the Advisor has
agreed to continue this waiver/reimbursement policy for
both the Small Cap and the Large Cap Fund until April
1, 2001. After April 1, 2001, the Advisor may (but is
not required to) waive all or a portion of its fee
and/or reimburse all or a portion of operating expenses
for one or both classes of shares of one or both of the
Funds.
Distributor. Oak Ridge Investments, Inc., an
affiliate of the Advisor and the Funds, acts as the
principal distributor of the Funds' shares. The
Distributor's principal business address is 10 South
LaSalle Street, Suite 1050, Chicago, Illinois 60603.
Under an amended and restated distribution
agreement dated as of March 1, 1999 (the "Distribution
Agreement"), the Distributor has agreed to use its best
efforts to distribute the Funds' shares. Each Fund's
Class A shares are offered for sale continuously at net
asset value per share plus a maximum initial sales
charge of 4.25% of the offering price. The Small Cap
Fund's Class C shares are offered continuously at net
asset value. Existing shareholders of the Small Cap
Fund's Class A shares as of December 31, 1995 are not
subject to the sales charge on additional purchases of
Small Cap Fund shares. In addition, no sales charge is
imposed on the reinvestment of dividends or capital
gains with respect to both the Small Cap and Large Cap
Funds. Moreover, directors, officers and full-time
employees of the Funds, the Advisor, the Distributor
and affiliates thereof, as well as spouses and family
members of such persons, may purchase Class A shares of
one or both of the Funds at net asset value. Certain
other exceptions to the imposition of the sales charge
apply, as discussed more fully in the Prospectus under
the caption "Your Account - Class A Sales Charge
Waivers." These exceptions are made available to
facilitate ownership of Fund shares by such persons and
because minimal or no sales effort is required with
respect to the categories of investors so excepted.
Any sales charges which are assessed become the
property of the Distributor. With respect to Class A
shares, the Distributor may pay a portion of the
applicable initial sales charge due upon the purchase
of such shares to the broker-dealer, if any, involved
in the trade as follows:
Portion of Initial
Dollar Amount of Initial Sales Sales Charge Paid
Shares Purchased Charge(1) to Broker-Dealer (1), (2)
Less than $50,000 4.25% 4.00%
$50,000 but less than $100,000 3.75% 3.50%
$100,000 but less than $250,000 3.25% 3.00%
$250,000 but less than $500,000 2.25% 2.00%
$500,000 but less than $1,000,000 1.75% 1.50%
$1,000,000 or more 1.00% 0.90%
__________________________
(1) Reflected as a percentage of the offering price of
Class A shares. The offering price is the sum of
the net asset value per share plus the initial
sales charge indicated in the table (the "Offering
Price").
(2) At the discretion of the Distributor, all sales
charges may at times be paid to the broker-dealer,
if any, involved in the trade. A broker-dealer
paid all or substantially all of the sales charge
may be deemed an "underwriter" under the
Securities Act.
Pursuant to the terms of the Distribution
Agreement, the Distributor 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 distribution of Fund shares.
Certain of these expenses may be reimbursed pursuant to
the terms of the Rule 12b-1 distribution plans
discussed below.
As compensation for its services under the
Distribution Agreement, the Distributor may retain all
or a portion of (i) the initial sales charge from
purchases of Class A shares and (ii) the Rule 12b-1
fees payable with respect to the Class A and Class C
shares (as described under "Distribution Plans,"
below). For the fiscal years ended November 30, 1997,
1998 and 1999, the aggregate dollar amount of initial
sales charges imposed on purchases of the Small Cap
Fund's Class A shares was $15,152, $22,276 and $1,655,
respectively, and the aggregate dollar amount of Rule
12b-1 fees incurred with respect to the Small Cap
Fund's Class A and Class C
<PAGE>
shares was $1,003, $23,445
and $49,650, respectively. During this period, the
Distributor retained the following amounts of the Small
Cap Fund's Class A sales charge and the Rule 12b-1
fees: 1997 - $11,998 and $0; 1998 - $19,757 and
$14,730; and 1999 $1,607 and $30,333. For the period
from March 1, 1999 (commencement of operations) through
November 30, 1999, the aggregate dollar amount of
initial sales charges imposed on purchases of the Large
Cap Fund's Class A shares was $610 and the aggregate
dollar amount of Rule 12b-1 fees incurred with respect
to the Large Cap Fund's Class A and Class C shares was
$3,265 and $44, respectively. During this period, the
Distributor retained $610 of the Large Cap Fund's Class
A sales charge and $3,290 of the Large Cap Fund's Rule
12b-1 fees.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, the Advisor is
responsible for decisions to buy and sell securities
for the Funds and for the placement of the Funds'
securities business, the negotiation of the commissions
to be paid on such transactions and the allocation of
portfolio brokerage and principal business. Trades may
be done with brokers, dealers and, on occasion,
issuers. Remuneration for trades may include
commissions, dealer spreads, mark-ups and mark-downs.
In executing transactions on behalf of the Funds,
the Advisor has no obligation to deal with any
particular broker or dealer. Rather, the Advisor seeks
the best qualitative execution. The best net price is
an important factor, but the Advisor also considers the
full range and quality of the broker's services, as
described below. Recognizing the value of the range of
services, the Funds may not pay the lowest commission
or spread available on a particular transaction.
Brokerage will not be allocated based on the sale of
the Funds' shares.
Pursuant to guidelines adopted by the Funds' Board
of Directors and in accordance with the rules of the
SEC, the Distributor, which is an affiliate of the
Advisor, may serve as a broker to the Funds; however,
in order for the Distributor to effect any portfolio
transactions for the Funds on an exchange, the
commissions, fees or other remuneration received by the
Distributor must be reasonable and fair compared to the
commissions, fees or other remuneration paid to other
brokers in connection with comparable transactions
involving similar securities being purchased or sold on
any exchange during a comparable period of time. This
standard allows the Distributor to receive no more than
the remuneration which would be expected to be received
by an unaffiliated broker in a commensurate arm's-
length transaction.
The aggregate amount of brokerage commissions paid
by the Small Cap Fund for the fiscal years ended
November 30, 1997, 1998 and 1999 was $8,501, $21,597
and $24,698, respectively. Of these total brokerage
commissions, the Distributor received $8,021, $16,657
and $23,688 in 1997, 1998 and 1999, respectively.
Accordingly, for the year ended November 30, 1999, 96%
of the aggregate brokerage commissions paid by the
Small Cap Fund were paid to the Distributor, and 24% of
the aggregate dollar amount of the Small Cap Fund's
transactions involving the payment of commissions were
effected through the Distributor. The aggregate amount
of brokerage commissions paid by the Large Cap Fund for
the period from March 1, 1999 (commencement of
operations) through November 30, 1999, was $3,191. Of
this total, the Distributor received $2,584.
Accordingly, for the period ended November 30, 1999,
81% of the aggregate brokerage commissions paid by the
Large Cap Fund were paid to the Distributor, and 68% of
the aggregate dollar amount of the Large Cap Fund's
transactions involving the payment of commissions were
effected through the Distributor. During fiscal 1999,
the Funds did not acquire any stock of their regular
brokers or dealers.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("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 (i) 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;
(ii) furnishing analyses and reports concerning
issuers, industries, securities, economic factors and
trends, portfolio strategy and the performance of
accounts; and (iii) effecting securities transactions
and performing functions incidental thereto (such as
clearance, settlement and custody).
<PAGE>
In selecting brokers or dealers, the Advisor
considers investment and market information and other
research, such as economic, securities and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm might charge if
the Advisor 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 or dealer to the Funds. The
Advisor believes that the research information received
in this manner provides the Funds with benefits by
supplementing the research otherwise available to them.
Such higher commissions will not, however, be paid by
the Funds unless (i) the Advisor determines in good
faith that the amount is reasonable in relation to the
services in terms of the particular transaction or in
terms of the Advisor's overall responsibilities with
respect to the accounts, including the Funds, as to
which it exercises investment discretion; (ii) such
payment is made in compliance with the provisions of
Section 28(e) and other applicable state and federal
laws; and (iii) in the opinion of the Advisor, the
total commissions paid by the Funds are reasonable in
relation to the benefits to the Funds over the long-
term. In addition, such higher commissions will not be
paid by the Funds with respect to portfolio
transactions in which the Distributor is serving as
broker to the Funds. The Small Cap Fund did not pay
brokerage commissions for the fiscal years ended
November 30, 1997, 1998 and 1999 for transactions for
which research services were provided. For the period
ended November 30, 1999, the Large Cap Fund did not pay
brokerage commissions for transactions for which
research services were provided.
The Advisor places portfolio transactions for
other advisory accounts in addition to the Funds.
Research services furnished by firms through which the
Funds effect securities transactions may be used by the
Advisor in servicing all of its accounts; that is, not
all of such services may be used by the Advisor in
connection with the Funds. The Advisor believes it is
not possible to measure separately the benefits from
research services to each of the accounts (including
the Funds) 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 or dealer paid by each
account for brokerage and research services will vary.
However, the Advisor believes such costs to the Funds
will not be disproportionate to the benefits received
by the Funds on a continuing basis. The Advisor seeks
to allocate portfolio transactions equitably whenever
concurrent decisions are made to purchase or sell
securities by the Funds 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 Funds. There can be no assurance that
a particular purchase or sale opportunity will be
allocated to the Funds. In making such allocations
between the Funds and other advisory accounts, the main
factors considered by the Advisor 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.
ADMINISTRATOR AND FUND ACCOUNTANT
Pursuant to separate administration and fund
accounting agreements dated as of December 1, 1995, as
amended (the "Administration Agreement" and "Fund
Accounting Agreement," respectively), Firstar Mutual
Fund Services, LLC ("Firstar") provides administrative
and fund accounting services to the Funds. Under these
Agreements, Firstar calculates the daily net asset
value of each class of shares of each Fund; prepares
and files all federal and state tax returns; oversees
the Funds' insurance relationships; participates in the
preparation of registration statements, proxy
statements and reports; prepares compliance filings
relating to the registration of the Funds' shares
pursuant to state securities laws; compiles data for
and prepares notices to the SEC; prepares financial
statements for annual and semi-annual reports; monitors
the Funds' expense accruals and performs securities
valuations; monitors compliance with the Funds'
investment policies; and generally assists in the
Funds' administrative operations. For the foregoing
services and for the fiscal years ended November 30,
1997, 1998 and 1999, Firstar received $30,955, $36,415
and $70,833, respectively, under the Administration
Agreement and $26,161, $26,071 and $50,754,
respectively, under the Fund Accounting Agreement.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
As custodian of the Funds' assets, Firstar Bank,
N.A., 777 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, has custody of all securities and cash of the
Funds, delivers and receives payment for securities
<PAGE>
sold, receives and pays for securities purchased,
collects income from investments, if any, and performs
other duties, all as directed by the officers of the
Funds.
Firstar Mutual Fund Services, LLC, 615 East
Michigan Street, Third Floor, Milwaukee, Wisconsin
53202, an affiliate of Firstar Bank, N.A., acts as
transfer agent and dividend-disbursing agent for the
Funds.
DISTRIBUTION PLANS
Description of Plans
The Funds have adopted plans pursuant to Rule 12b-
1 under the 1940 Act for each class of shares (the
"Class A Plan" and the "Class C Plan") pursuant to
which certain distribution and/or service fees are paid
to the Distributor. Under the Class A Plan, each Fund
is required to pay the Distributor a distribution fee
for the promotion and distribution of the Class A
shares of 0.25% per annum of the average daily net
assets of the relevant Fund attributable to the Class A
shares. The Class C Plan requires each Fund to pay the
Distributor (i) a distribution fee of 0.75% per annum
of the average daily net assets of the relevant Fund
attributable to the Class C shares, and (ii) a service
fee for personal services provided to shareholders
and/or the maintenance of shareholder accounts of 0.25%
per annum of the average daily net assets of the
relevant Fund attributable to the Class C shares.
Under both plans, the Distributor is authorized to, in
turn, pay all or a portion of the fee it receives from
the Funds to any securities dealer, financial
institution or any other person (the "Recipient") who
renders assistance in distributing or promoting the
sale of Fund shares or, with respect to the Class C
shares only, who provide certain shareholder services
to the holders of such class of 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
Funds' shares and, with respect to the Class C shares
only, for any of its shareholder servicing expenses
incurred in connection with servicing the holders of
such class of shares.
Both the Class A Plan and the Class C Plan are
"compensation plans" which means that the fees paid by
the Funds under the plans are intended to compensate
(rather than reimburse) the Distributor (and
Recipients, as applicable) for services rendered and
commission fees borne. Accordingly, payments under the
plans are based on a percentage of average daily net
assets attributable to each class of shares of each
Fund regardless of the amount of expenses actually
incurred, which means that distribution and service
related fees payable under the plans may be more or
less than distribution and service related expenses.
However, neither plan allows for the payment of
distribution and/or service fees in later periods that
relate to expenses incurred in prior periods.
Payment of the distribution and/or service fee is
made quarterly. The aggregate payments by each Fund
under the Class A Plan to the Distributor and all
Recipients may not exceed 0.25% (on an annualized
basis) of the relevant Fund's average net assets
attributable to the Class A shares for that quarter,
and the aggregate payments by each Fund under the Class
C Plan to the Distributor and all Recipients may not
exceed 1.00% (on an annualized basis) of the relevant
Fund's average net assets attributable to the Class C
shares for that quarter.
From time to time, the Distributor may engage in
activities which jointly promote the sale of shares of
one or both classes of shares of one or both of the
Funds, the costs of which may not be readily
identifiable as related to any one class or Fund.
Generally, the expenses attributable to joint
distribution activities will be allocated between each
class of shares of each Fund on the basis of its
respective net assets, although the Board of Directors
may allocate such expenses in any other manner it deems
fair and equitable.
Both plans, and a form of Rule 12b-1 Related
Agreement, have been approved by a majority of the
Board of Directors, including a majority of the members
of the Board who are not "interested persons" of the
Funds as defined in the 1940 Act and who have no direct
or indirect financial interest in the operation of the
plans or any Rule 12b-1 Related Agreement (the
"Disinterested Directors") voting separately.
Each 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 Funds' Board of
Directors, and of the Disinterested Directors, cast in
person at a meeting called for
<PAGE>
the purpose of voting on
the plan, or the Rule 12b-1 Related Agreement, as
applicable. In addition, both plans, and any Rule
12b-1 Related Agreement, may be terminated with respect
to either or both classes of either or both Funds at
any time, without penalty, by vote of a majority of the
outstanding voting securities of the applicable class
of the applicable Fund, or by vote of a majority of
Disinterested Directors (on not more than 60 days'
written notice in the case of the Rule 12b-1 Related
Agreement only).
Amounts Expensed Under the Plans
For the fiscal year ended November 30, 1999, the
Small Cap Fund paid out $33,341 under the Class A Plan
and $16,309 under the Class C Plan. Of the $49,650
expensed, $1,700 was spent on printing and mailing
prospectuses to other than current shareholders, $0 was
spent on advertising and $17,617 was spent on dealer
compensation. The Distributor retained $30,333 of the
amounts expensed under the Class A and Class C Plans.
For the fiscal year ended November 30, 1999, the Large
Cap Fund paid out $3,265 under the Class A Plan and $44
under the Class C Plan. Of the $3,309 expensed, $19
was spent on printing and mailing prospectuses to other
than current shareholders, $0 was spent on advertising
and $0 was spent on dealer compensation. The
Distributor retained $3,290 of the amounts expensed
under the Class A and Class C Plans.
Interests of Certain Persons
With the exception of the Advisor, in its capacity
as the Funds' investment advisor, and the Distributor,
in its capacity as principal distributor of Fund
shares, no "interested person" of the Funds, as defined
in the 1940 Act, and no director of the Funds who is
not an "interested person" has or had a direct or
indirect financial interest in either the Class A or
the Class C Plan or any Rule 12b-1 Related Agreement.
Benefits to the Funds
Small Cap Fund. The Small Cap Fund's Class A Plan
has been in effect since January 1, 1996. The benefits
to the holders of the Small Cap Fund's Class A shares
resulting from the implementation of the Class A Plan
include providing Recipients with incentives to promote
the sale of such shares, which in turn has resulted in
an increase in assets under management with respect to
the Class A shares. This increase has benefited the
holders of the Class A shares by providing the class
with a larger asset base over which to spread expenses.
The Small Cap Fund's Class C Plan has been in
effect since March 1, 1997. The Board of Directors
believes that the Class C Plan has provided the holders
of Class C shares with certain benefits, including an
enhanced level of personal service from Recipients who
receive service fees from the Small Cap Fund under the
Class C Plan. The Board also believes that over time,
the Class C Plan will help to increase the size of the
class, thereby providing the class with a larger asset
base over which to spread expenses.
Large Cap Fund. The Large Cap Fund's Class A and
Class C Plans have been in effect since March 1, 1999.
In deciding whether to approve these plans, the Board
of Directors determined, in the exercise of its
business judgment, that it is reasonably likely that
the plans will benefit the Large Cap Fund and its
future shareholders in at least one or more ways.
Specifically, the Board concluded that the Distributor
and any Recipients would have little or no incentive to
incur promotional expenses on behalf of the Large Cap
Fund if a Rule 12b-1 plan were not in place to
compensate them, thus making the adoption of these
plans important to the viability of the Fund. In
addition, the Board determined that the payment of
service fees to these persons (with respect to the
Class C Plan only) should motivate them to provide an
enhanced level of personal services to holders of Class
C shares, which would, of course, benefit such
shareholders. Finally, the adoption of these plans
will likely lead to an increase in assets under
management, given the enhanced marketing efforts on the
part of the Distributor and Recipients to sell Large
Cap Fund shares. While the Board of Directors
recognizes that the Advisor will benefit from such an
increase since its fees are based upon a percentage of
assets, the increase in assets should also benefit the
Large Cap Fund and its shareholders by reducing the per
share operating expenses of the Fund which should
result since the Fund's fixed expenses will be spread
over a larger asset base. While there can be no
assurance that the expenditure of Fund assets to
finance the distribution of the Large Cap Fund's 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,
<PAGE>
it will be able to evaluate the benefit of such expenditures
in deciding whether to continue the Class A and Class C plans
for the Large Cap Fund.
PURCHASE, EXCHANGE AND PRICING OF SHARES
Purchase of Shares
Each Fund is comprised of two classes: Class A
and Class C. As discussed above under the heading
"Investment Advisor and Distributor - Distributor," the
Class A shares are offered and sold subject to an
initial sales charge (with certain exceptions), while
the Class C shares are offered and sold without being
subject to an initial sales charge. Please see "Your
Account" in the Prospectus for more information.
The Funds offer an Automatic Investment Plan
("AIP"), which is a method of using dollar cost
averaging. Dollar cost averaging is an investment
strategy that involves investing a fixed amount of
money at regular time intervals. 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. A
program of regular investment cannot ensure a profit or
protect against a loss from declining markets.
The AIP allows you to make regular, systematic
investments in either or both of the Fund's Class A or
Class C shares from your bank checking account. The
minimum initial investment for investors using the AIP
is $100. If you elect this option, all dividends and
capital gains distributions will automatically be
reinvested in Fund shares. To establish the AIP,
complete the appropriate section in the account
application. Under certain circumstances (such as
discontinuation of the AIP before the minimum initial
investment is reached, or, after reaching the minimum
initial investment, the account balance is reduced to
less than $500), the Funds reserve the right to close
your account. Prior to closing any account for failure
to reach the minimum initial investment, the Funds will
give you written notice and 60 days in which to
reinstate the AIP or otherwise reach the minimum
initial investment. Your account may be closed during
periods of declining share prices.
Under the AIP, you may choose to make investments
on the fifth and/or twentieth day of each month in
amounts of $100 or more. There is no service fee
charged by the Funds for participating in the AIP.
However, a service fee of $20 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 Funds in writing or by telephone of your
intention to terminate the plan, you close your bank
account or in any manner prevent withdrawal of funds
from the designated checking account. You can set up
the AIP with most financial institutions.
Exchange of Shares
You may exchange Class A shares of one Fund with
Class A shares of the other Fund. The value of the
shares to be exchanged will be the net asset value next
determined after receipt of instructions for exchange;
the price of the shares being purchased will be the net
asset value (plus the initial sales charge, if
applicable) next determined after receipt of
instructions for exchange.
The Funds reserve the right to modify or terminate
the exchange privilege at any time. Call the Transfer
Agent at 1-800-407-7298 to request instructions for an
exchange. An exchange is not a tax-free transaction.
Pricing of Shares
The Class A shares of each Fund are offered to the
public at the Offering Price, which is the sum of the
net asset value per share (next computed after the time
the purchase application and funds are received in
proper order by the Transfer Agent) and the applicable
initial sales charge. The Class C shares of each Fund
are offered to the public at their net asset value
(next computed after the time the purchase application
and funds are received in proper order by the Transfer
Agent) without any initial sales charge. The Class C
shares of the Large Cap Fund are not currently
available.
<PAGE>
As previously noted, the initial sales charge may
be waived for certain individuals and institutions due
to anticipated economies of scale in sales efforts and
expenses. For more information, please see "Your
Account - Class A Sales Charge Waivers" in the
Prospectus.
The net asset value per share for each class of
shares of each Fund is determined as of the close of
trading (generally 4:00 p.m. Eastern Time) on each day
the New York Stock Exchange (the "NYSE") is open for
business. Purchase orders and redemption requests
received on a day the NYSE is open for trading, prior
to the close of trading 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. A Fund is not required to
calculate its net asset value on days during which the
Fund receives no orders to purchase or redeem shares.
Net asset value per share for each class of shares of
each Fund is calculated by taking the fair value of the
total assets per class, including interest or dividends
accrued, but not yet collected, less all liabilities,
and dividing by the total number of shares outstanding
in that class. 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 average of the most recent bid and asked
prices. 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 or its delegate. The Board of Directors
may approve the use of pricing services to assist the
Funds in the determination of net asset value. Short-
term fixed income securities held by the Funds are
generally valued on an amortized cost basis.
TAXATION OF THE FUNDS
Each Fund intends to qualify annually for
treatment as a "regulated investment company" under
Subchapter M of the Internal Revenue Code, as amended,
and, if so qualified, will not be liable for federal
income taxes to the extent earnings are distributed to
shareholders on a timely basis. In the event a Fund
fails to qualify as a "regulated investment company,"
it will be treated as a regular corporation for federal
income tax purposes. Accordingly, the disqualifying
Fund would be subject to federal income taxes and any
distributions that it makes would be taxable and non-
deductible by the Fund. What this means for
shareholders of such Fund is that the cost of investing
in the Fund would increase. Under these circumstances,
it would be more economical for shareholders to invest
directly in securities held by the Fund, rather than
invest indirectly in such securities through the Fund.
PERFORMANCE INFORMATION
The historical performance or return of the Funds
may be shown in the form of various performance
figures, including average annual total return, total
return and cumulative total return. The Funds'
performance figures are based upon historical results
and are not necessarily representative of future
performance. Factors affecting the Funds' 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
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments in a class of shares over a
specified period of time, assuming the reinvestment of
all dividends and distributions. 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
therefore represent the aggregate percentage or dollar
value change over the period.
<PAGE>
The average annual total return of each class of
shares of each 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.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000)
("initial investment") in a class of shares of a Fund
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.
With respect to the Funds' Class A shares only, this
calculation reflects the deduction of the maximum 4.25%
initial sales charge. In addition, the calculation
assumes that all income and capital gains dividends
paid by the Funds have been reinvested at the net asset
value of the applicable class of shares 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 average annual total returns for the Class A
shares of the Small Cap Fund for the fiscal year ended
November 30, 1999, the five year period ended November
30, 1999 and since inception (January 3, 1994) were
12.43%, 16.52% and 14.73%, respectively. The average
annual total returns for the Class C shares of the
Small Cap Fund for the fiscal year ended November 30,
1999 and since inception (March 1, 1997) were 16.58%
and 9.21%, respectively.
The total return for the Class A shares of the
Large Cap Fund for the period from March 1, 1999
through November 30, 1999 was (0.60)%. The total
return for the Class C shares for the Large Cap Fund
for the period from April 26, 1999 through November 25,
1999 was 2.27%.
Comparisons
From time to time, in marketing and other fund
literature, the performance of one or both classes of
shares of one or both of the Funds 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. Each class of shares of each Fund will be
compared to Lipper's appropriate fund category; that
is, by fund objective and portfolio holdings.
The Funds' performance may also be compared to the
performance of other mutual funds tracked 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.
<PAGE>
Evaluations of Fund performance made by
independent sources may also be used in advertisements
concerning the Funds, including reprints of or
selections from editorials or articles about the Funds.
Sources for Fund performance and articles about the
Funds 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 Funds may also compare the performance of one
or both of their classes of shares to a wide variety of
indices and measures of inflation, including the
Russell 2000 Stock Index (for the Small Cap Fund) and
the S&P 500 Stock Index (for the Large Cap Fund).
There are differences and similarities between the
investments that the Funds may purchase and the
investments measured by these indices.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202, have been selected
as the independent accountants for the Funds.
FINANCIAL STATEMENTS
The following audited financial statements of the
Small Cap Fund are incorporated herein by reference to
the Corporation's Annual Report for the year ended
November 30, 1999 as filed with the SEC on February 3,
2000:
(a) Schedule of Investments as of November 30, 1999.
(b) Statement of Assets and Liabilities as
of November 30, 1999.
(c) Statement of Operations for the year
ended November 30, 1999.
(d) Statement of Changes in Net Assets for
the years ended November 30, 1998 and 1999.
(e) Financial Highlights for the Class A
shares for the years ended November 30,
1995, 1996, 1997, 1998 and 1999; and
Financial Highlights for the Class C
shares for the period March 1, 1997
(commencement of operations) to November
30, 1997, and for the years ended
November 30, 1998 and 1999.
(f) Notes to Financial Statements.
(g) Report of Independent Accountants dated
January 6, 2000.
The following audited financial statements of the
Large Cap Fund are incorporated herein by reference to
the Corporation's Annual Report for the period from
March 1, 1999 (commencement of operations) through
November 30, 1999:
(a) Schedule of Investments as of November 30, 1999.
(b) Statement of Assets and Liabilities as of November 30, 1999.
(c) Statement of Operations for the period ended
November 30, 1999.
(d) Statement of Changes in Net Assets for the period
ended November 30, 1999.
(e) Financial Highlights for the Class A shares for
the period March 1, 1999 (commencement of operations)
to November 30, 1999; and Financial Highlights for the
Class C shares for the period April 26, 1999
(commencement of operations) to November 25, 1999.
<PAGE>
(f) Notes to Financial Statements.
(g) Report of Independent Accountants dated January 6, 2000.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
See "Exhibit Index."
Item 24. Persons Controlled by or under Common Control with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 25. 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 26. Business and Other Connections of Investment Advisor
Besides serving as investment advisor to the
Registrant and other private accounts, Oak Ridge
Investments, LLC (the "Advisor") is not currently and
has not during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature, although the Advisor's predecessor,
Oak Ridge Investments, Inc., was not only an investment
advisor but also a broker-dealer. Information
regarding the business, profession, vocation or
employment of a substantial nature of the Advisor's
directors and officers is hereby incorporated by
reference to the information contained under "Fund
Management and Distribution - Management" in the
Prospectus and "Directors and Officers" in the
Statement of Additional Information.
Item 27. Principal Underwriters
(a) None.
(b) The principal business address of Oak Ridge
Investments, Inc. (the "Distributor"), the
Registrant's principal underwriter, is 10
South LaSalle Street, Suite 1050, Chicago,
Illinois 60603. Information relating to
directors and officers of the Distributor is
hereby incorporated by reference to the
information contained under "Directors and
Officers" in the Statement of Additional
Information.
(c) None.
Item 28. 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, as amended, and the rules
promulgated thereunder, are in the possession of Oak
Ridge Investments, LLC, Registrant's investment
advisor, at Registrant's corporate offices, except
records held and
<PAGE>
maintained by Firstar Bank, N.A., 777 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202 and
Firstar Mutual Fund Services, LLC, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, relating to the
former's function as custodian and the latter's
function as transfer agent, administrator and fund
accountant.
Item 29. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 30. Undertakings.
(a) Registrant undertakes to furnish without
charge a copy of its Annual Report to each person to
whom a Statement of Additional Information is delivered
if the person is not a shareholder of the Funds at the
time the Statement of Additional Information is so
delivered.
(b) Registrant undertakes to furnish a copy of
its Annual Report to each person to whom a Prospectus
is delivered, 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 certifies that it meets all of the
requirements for effectiveness under Rule 485(b) under
the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 10 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 10th day of
March, 2000.
OAK RIDGE 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. 10 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 Director, March 10, 2000
- --------------------- Treasurer and Assistant Secretary
Samuel Wegbreit (principal financial and accounting
officer)
/s/ David M. Klaskin Director and President March 10, 2000
- --------------------- (principal executive officer)
David M. Klaskin
/s/ Daniel A. Kaplan Director March 10, 2000
- --------------------
Daniel A. Kaplan
/s/ A. Charlene Sullivan Director March 15, 2000
- ------------------------
Dr. A. Charlene Sullivan
/s/ Angelo Spoto Director March 10, 2000
- -----------------------
Angelo Spoto
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(a.1) Articles of Amendment dated as of March 1, 1999 to Registrant's
Articles of Incorporation.(1)
(a.2) Articles Supplementary dated as of March 1, 1999 to Registrant's
Articles of Incorporation.(1)
(a.3) Articles of Amendment dated as of March 2, 1998 to Registrant's
Articles of Incorporation.(2)
(a.4) Articles of Amendment dated as of
February 26, 1997 to Registrant's
Articles of Incorporation.(2)
(a.5) Articles Supplementary dated as of
February 26, 1997 to Registrant's
Articles of Incorporation.(2)
(a.6) Registrant's Articles of Incorporation
dated October 15, 1993.(2)
(b) Registrant's Amended and Restated
By-Laws.(2)
(c) None.
(d.1) Amended and Restated Investment Advisory
Agreement with Oak Ridge Investments, LLC
dated as of March 1, 1999.(1)
(d.2) Expense Cap/Reimbursement Agreement dated
as of March 1, 1999.(1)
(d.3) Amendment to Expense Cap/Reimbursement
Agreement dated as of January 6, 2000.
(e.1) Amended and Restated Distribution
Agreement with Oak Ridge Investments,
Inc. dated as of March 1, 1999.(1)
(e.2) Amended and Restated Form of Dealer
Agreement.(1)
(f) None.
(g.1) Custodian Agreement with Firstar Trust
Company dated December 1, 1995.(3)
(g.2) Addendum to Custodian Agreement effective
September 30, 1998.(1)
(g.3) Amendment to Custodian Agreement dated
January 7, 1999.(1)
(h.1) Transfer Agent Agreement with Firstar
Trust Company dated December 1, 1995.(3)
(h.2) Fund Administration Servicing Agreement
with Firstar Trust Company dated December 1, 1995.(3)
(h.3) Fund Accounting Servicing Agreement with
Firstar Trust Company dated December 1, 1995.(3)
<PAGE>
(h.4) Addendum to Firstar Servicing Agreements
effective September 30, 1998.(1)
(h.5) Amendment to Firstar Fund Administration
Servicing Agreement dated January 7, 1999.(1)
(h.6) Amendment to Fund Accounting Servicing
Agreement dated January 7, 1999.(1)
(h.7) Amendment to Transfer Agent Agreement
dated January 7, 1999.(1)
(i) Opinion and Consent of Godfrey & Kahn, S.C.(2)
(j) Consent of PricewaterhouseCoopers LLP.
(k) None.
(l) Subscription Agreements.(2)
(m.1) Amended and Restated Class A Rule 12b-1
Distribution Plan.(1)
(m.2) Amended and Restated Class C Rule 12b-1
Distribution and Servicing Plan.(1)
(n) Amended and Restated Rule 18f-3 Multiple
Class Plan.(1)
(o) Reserved
(p) Amended and Restated Code of Ethics
Effective March 1, 2000.
______________________
(1) Incorporated by reference to Registrant's Post-
Effective Amendment No. 9 to its Registration
Statement on Form N-1A as filed with the Securities
and Exchange Commission on March 1, 1999.
(2) Incorporated by reference to Registrant's Post-
Effective Amendment No. 7 to its Registration
Statement on Form N-1A as filed with the Securities
and Exchange Commission on March 20, 1998.
(3) Incorporated by reference to Registrant's Post-
Effective Amendment No. 4 to its Registration
Statement on Form N-1A as filed with the Securities
and Exchange Commission on December 26, 1995.
Exhibit d.3
AMENDMENT TO EXPENSE CAP/REIMBURSEMENT AGREEMENT
This Amendment to the Expense Cap/Reimbursement
Agreement entered into as of the 1st day of March 1999
(the "Agreement") is entered into as of the 6th day of
January 2000, between Oak Ridge Investments, LLC (the
"Adviser") and Oak Ridge Funds, Inc. (the "Company") on
behalf of the Oak Ridge Small Cap Equity Fund and the
Oak Ridge Large Cap Equity Fund, each referred to
herein as a "Fund."
WHEREAS, the Agreement provides that it shall
terminate on April 1, 2000 unless extended by the
mutual agreement of the parties, as provided for in an
amendment to the Agreement;
WHEREAS, the parties to the Agreement wish to
extend the term of the Agreement until April 1, 2001.
WHEREAS, the Agreement provides that the Adviser
may recover amounts waived or reimbursed for a period
of up to three (3) years from the date the Adviser
reduced its compensation and/or assumed expenses for a
Fund;
WHEREAS, the parties wish to clarify that it is
and has been the intent of the parties that the Adviser
may only recover waived or reimbursed expenses during
the three year period to the extent that a Fund's
expense ratio before waivers and reimbursements does
not exceed (i) 2.00% of the Fund's total operating
expenses with respect to a Fund's Class A shares and
(ii) 2.75% of the Fund's total operating expenses with
respect to a Fund's Class C shares, based on such
Fund's average daily net assets on an annual basis.
NOW THEREFORE, the parties agree as follows:
Pursuant to this Amendment, the Agreement shall
terminate on April 1, 2001, unless extended by the
mutual agreement of the parties, as provided for in a
further amendment to the Agreement.
The Adviser may only recover waived or reimbursed
expenses during the three year recovery period to the
extent that a Fund's expenses ratio before waivers and
reimbursements does not exceed (i) 2.00% of the Fund's
total operating expenses with respect to a Fund's Class
A shares and (ii) 2.75% of the Fund's total operating
expenses with respect to a Fund's Class C shares, based
on such Fund's average daily net assets on an annual
basis.
Moreover, the recovery by the Adviser of any
amounts waived or reimbursed shall be determined on an
annual basis calculated during the three-year recovery
period.
All other provisions of the Agreement shall remain
in full force and effect.
<PAGE>
OAK RIDGE INVESTMENTS, LLC
By: /s/ David Klaskin
----------------------
David Klaskin
OAK RIDGE FUNDS, INC.
By: /s/ Samuel Wegbreit
------------------------
Samuel Wegbreit
1
Exhibit j
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in
this Registration Statement on Form N-1A of our report
dated January 6, 2000, relating to the financial
statements and financial highlights which appears in
the November 30, 1999 Annual Report to Shareholders of
the Oak Ridge Small Cap Equity Fund and the Oak Ridge
Large Cap Equity Fund (comprising the Oak Ridge Funds,
Inc.), which is also incorporated by reference into the
Registration Statement. We also consent to the
references to us under the headings "Financial
Highlights of the Funds" and "Independent Accountants"
in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
March 17, 2000
Exhibit p
AMENDED AND RESTATED CODE OF ETHICS
Effective March 1, 2000
For Access Persons of
Oak Ridge Funds, Inc.
Oak Ridge Investments, Inc.
and
Oak Ridge Investments, LLC
I. DEFINITIONS
A. "Act" means the Investment Company Act of
1940, as amended.
B. "Fund" means Oak Ridge Funds, Inc.
C. "Access person" means (i) any director,
officer or advisory person of the Fund or Oak
Ridge Investments, LLC (the "Adviser") and
(ii) any director or officer of Oak Ridge
Investments, Inc. (the "Principal
Underwriter").
D. "Administrator" means the entity responsible
for the Fund's administrative operations.
Firstar Mutual Fund Services, LLC currently
occupies this position.
E. "Advisory person" means: (i) any employee of
the Fund or the Adviser or (of any company in
a control relationship to the Fund or
Adviser), who, in connection with his or her
regular functions or duties, makes,
participates in, or obtains information
regarding the purchase or sale of a security
by the Fund, or whose functions relate to the
making of any recommendations with respect to
such purchases or sales; and (ii) any natural
person in a control relationship to the Fund
or Adviser who obtains information concerning
recommendations made to the Fund with regard
to the purchase or sale of a security by the
Fund.
F. A security is "being considered for purchase
or sale" when a recommendation to purchase or
sell a security has been made and
communicated and, with respect to the person
making the recommendation, when such person
seriously considers making such a
recommendation.
G. "Beneficial ownership" shall be interpreted
in the same manner as it would be in
determining whether a person is subject to
the provisions of Section 16 of the
Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated
thereunder, except that the determination of
direct or indirect beneficial ownership shall
apply to all securities which an access
person has or acquires. As a general matter,
"beneficial ownership" will be attributed to
an access person in all instances where the
person (i) possesses the ability to purchase
or sell the security (or the ability to
direct the disposition of the security); (ii)
possesses the voting power (including the
power to vote or to direct the voting)
<PAGE>
over such security; or (iii) receives any benefits
substantially equivalent to those of ownership.
Although the following is not an exhaustive
list, a person generally would be regarded to
be the beneficial owner of the following:
(i) securities held in the person's own
name;
(ii) securities held with another in
joint tenancy, as tenants in
common, or in other joint
ownership arrangements;
(iii) securities held by a bank or
broker as nominee or custodian on
such persons' behalf or pledged as
collateral for a loan;
(iv) securities held by members of the
person's immediate family sharing
the same household if the person is
a custodian, guardian or otherwise
has controlling influence over the
purchase, sale, or voting of such
securities ("immediate family"
means any child, stepchild,
grandchild, parent, stepparent,
grandparent, spouse, sibling,
mother-in-law, father-in-law, son-
in-law, daughter-in-law, brother-in-
law, or sister-in-law, including
adoptive relationships);
(v) securities held by a relative not
residing in the person's home if
the person is a custodian,
guardian, or otherwise has
controlling influence over the
purchase, sale, or voting of such
securities;
(vi) securities held by a trust of which
the person serves as a trustee and
in which the person has a pecuniary
interest (including pecuniary
interests by virtue of performance
fees and by virtue of holdings by
the person's immediate family);
(vii) securities held by a trust in
which the person is a beneficiary
and has or shares the power to make
purchase or sale decisions;
(viii) securities held by a general
partnership or limited partnership
in which the person is a general
partner; and
(ix) securities owned by a corporation
which is directly or indirectly
controlled by, or under common
control with, such person.
Any uncertainty as to whether an access
person beneficially owns a security should be
brought to the attention of the President of
the Fund. Such questions will be resolved in
accordance with, and this definition is
subject to, the definition of "beneficial
owner" found in Rules 16a-1(a)(2) and (5)
promulgated under the Securities Exchange Act
of 1934.
<PAGE>
H. "Control" shall have the same meaning as that
set forth in Section 2(a)(9) of the Act. As
a general matter, "control" means the power
to exercise a controlling influence. The
"power to exercise a controlling influence"
is intended to include situations where there
is less than absolute and complete domination
and includes not only the active exercise of
power, but also the latent existence of
power. Anyone who beneficially owns, either
directly or through one or more controlled
entities, more than 25% of the voting
securities of any entity shall be presumed to
control such entity.
I. "Disinterested director" means a director of
the Fund who is not an "interested person" of
the Fund within the meaning of Section
2(a)(19) of the Act.
J. "Purchase or sale of a security" includes,
among other things, the writing of an option
to purchase or sell a security.
K. "Security" shall have the meaning set forth
in Section 2(a)(36) of the Act and shall
include: common stocks, preferred stocks,
debt securities; options on and warrants to
purchase common stocks, preferred stocks or
debt securities; shares of closed-end
investment companies, futures, commodities
and Related Securities. "Related Securities"
are instruments and securities that are
related to, but not the same as, a security.
For example, a Related Security may be
convertible into a security, or give its
holder the right to purchase the security.
The term "security" also includes private
investments, including oil and gas ventures,
real estate syndicates and other investments
which are not publicly traded. It shall not
include shares of registered open-end
investment companies, direct obligations of
the Government of the United States, high
quality short-term debt instruments, bankers'
acceptances, bank certificates of deposit,
commercial paper, and such other money market
instruments as designated by the Fund's Board
of Directors.
II. GENERAL FIDUCIARY PRINCIPLES
In addition to the specific principles enunciated
in this Code of Ethics, all access persons shall
be governed by the following general fiduciary
principles:
A. The duty at all times to place the interests
of shareholders above all others;
B. The requirement that all personal securities
transactions be conducted consistent with
this Code of Ethics and in such a manner as
to avoid any actual or potential conflict of
interest or any abuse of an individual's
position of trust and responsibility; and
C. The fundamental standard that no access
person should take inappropriate advantage of
their position.
<PAGE>
III. EXEMPTED TRANSACTIONS
The provisions of Sections IV, V and VI of this
Code of Ethics shall not apply to:
(i) Purchases or sales effected in any
account over which the access person has
no direct or indirect influence or
control (e.g., a blind trust);
(ii) Purchases or sales of securities which
are not eligible for purchase or sale by
the Fund;
(iii) Purchases or sales which are non-
volitional on the part of either the
access person or the Fund;
(iv) Purchases which are part of an automatic
dividend reinvestment plan;
(v) Purchases effected upon the exercise of
rights issued by an issuer pro rata to
all holders of a class of its
securities, to the extent such rights
were acquired from such issuer, and
sales of such rights so acquired; and
(vi) Purchases or sales which receive the
prior approval of the President of the
Fund because they are only remotely
potentially harmful to the Fund because
they would be very unlikely to affect a
highly institutional market, or because
they clearly are not related
economically to the securities to be
purchased, sold or held by the Fund.
IV. PROHIBITED ACTIVITIES
A. No access person shall purchase or sell,
directly or indirectly, any security in which
he or she has, or by reason of such
transaction acquires, any direct or indirect
beneficial ownership and which he or she
knows or should have known that during the 15-
day period immediately before or after the
access person's transaction, the Fund
purchased or sold the security or the Fund or
Adviser considered purchasing or selling the
security. However, an access person may
purchase or sell the same securities as the
Fund provided the access person executes both
the purchase and sale of such security at the
same or worse price as that received by the
Fund.
With the exception of the Fund's disinterested directors:
B. No access person shall acquire any securities
in an initial public offering.
C. No access person shall acquire securities
pursuant to a private placement without prior
approval from the Fund's Board of Directors.
In determining whether approval should be
granted, the Board of Directors should
consider:
(i) whether the investment opportunity
should be reserved for the Fund and
its shareholders; and
<PAGE>
(ii) whether the opportunity is being
offered to an individual by virtue
of his or her position with the
Fund.
The Fund must maintain a record of any
decision, and the reasons supporting the
decision, to approve the acquisition by an
access person for at least five years after
the end of the fiscal year in which the
approval is granted. In the event approval
is granted, the access person must disclose
the investment when he or she plays a
material role in the Fund's subsequent
consideration of an investment in the issuer.
In such circumstances, the Fund's decision to
purchase securities of the issuer will be
subject to an independent review by
investment personnel with no personal
interest in the issuer.
D. No access person who acts as a portfolio
manager for the Fund shall profit from the
purchase and sale, or sale and purchase, of
the same, or equivalent, securities within
sixty (60) calendar days unless the security
is purchased and sold by the Fund within
sixty (60) calendar days and the access
person complies with Section IV.A. Any
profits realized on such short-term trades
must be disgorged by the access person;
provided, however, that the Board of
Directors may make exceptions to this
prohibition on a case-by-case basis in
situations where no abuse is involved, and
the equities strongly support an exception.
This prohibition shall not apply to purchases
and sales, or sales and purchases of broad
based stock index options.
E. No access person shall receive any gift or
other thing of more than de minimis value
from any person or entity that does business
with or on behalf of the Fund.
F. No access person shall serve on the board of
directors of a publicly traded company
without prior authorization from the Fund's
Board of Directors based upon a determination
that the board service would not be
inconsistent with the interests of the Fund
and its shareholders. In the event the board
service is authorized, access persons serving
as directors must be isolated from those
making investment decisions through a
"Chinese wall."
V. POLICY ON SECURITY OWNERSHIP
In addition to the prohibitions contained in
Section IV hereof, it is the general policy of the
Fund that no access person shall have any direct
or indirect beneficial ownership of any security
which is also owned by the Fund unless said access
person complies with Section IV.A. Upon the
discovery by the Fund or any access person that an
access person has direct or indirect beneficial
ownership of a security which is also owned by the
Fund, such access person shall promptly report
such fact to the President of the Fund, and may be
required to divest himself or herself of such
ownership if the President determines that any
significant conflict of interest or potential
conflict of interest exists as a result of such
ownership. This policy enumerated in this Section
V shall not apply to disinterested directors.
<PAGE>
VI. PRECLEARANCE
A. Advance clearance is required for all
personal securities transactions. A
form provided for advance clearance is
attached hereto as Appendix 1.
Clearance requests should be submitted
in writing in duplicate to Mr. Sam
Wegbreit, or in his absence, Mr. David
Klaskin, who may approve or disapprove
such transactions on the grounds of
compliance with this Code of Ethics or
otherwise. Approval shall only be given
when the person giving it has determined
that the intended transaction does not
fall within any of the prohibitions of
this Code. One copy of the clearance
request will be returned to the access
person showing approval or disapproval
and one copy will be retained by Mr.
Wegbreit.
B. The trade authorization is effective
until the earlier of (i) its revocation
(ii) the close of business on the second
trading day after the authorization is
granted (for example, if authorization
is provided on a Monday, it is effective
until the close of business on
Wednesday), or (iii) the access person
learns that the information in the trade
request is not accurate. If the trade
is not executed within that period, a
new advance authorization must be
obtained before the transaction is
placed.
VII. REPORTING
A. Except for the transactions set forth in
Section III, all securities transactions in
which an access person has a direct or
indirect beneficial ownership interest will
be monitored by the Fund's Administrator.
B. With the exception of disinterested
directors, every access person shall report
to the Administrator the information
described in Section VII(E) of this Code of
Ethics with respect to the transactions in
any security in which such access person has,
or by reason of such transaction acquires,
any direct or indirect beneficial ownership
in the security; provided, however, that an
access person shall not be required to make a
report with respect to transactions effected
for any account over which such person does
not have any direct or indirect influence or
control.
C. Every access person shall report to the
Administrator the information described in
Section VII(E) of this Code even if such
access person has no personal securities
transactions to report for the reporting
period.
D. A disinterested director of the Fund need
only report a transaction in a security if
such director, knew or, in the ordinary
course of fulfilling his or her official
duties as a director of the Fund, should have
known that, during the 15-day period
immediately before or after the date of the
transaction by the director, such security
was purchased or sold by the Fund or was
being considered by the Fund or the Adviser
for purchase or sale by the Fund or the
Adviser.
<PAGE>
E. Every report required to be made by this
Section of this Code of Ethics shall be made
not later than ten (10) days after the end of
the calendar quarter in which the transaction
to which the report relates was effected, and
shall contain the following information:
(i) The date of the transaction, the
title, the interest rate and
maturity date (if applicable), and
the number of shares, and the
principal amount of each security
involved;
(ii) The nature of the transaction
(i.e., purchase, sale or any other
type of acquisition or
disposition);
(iii) The price of the security at
which the transaction was effected;
and
(iv) The name of the broker, dealer or
bank with or through whom the
transaction was effected.
The determination date for timely compliance
with this Section is the date the report is
received by the Administrator, which date
must be recorded on the report.
F. Any report filed pursuant to this Section may
contain a statement that the report shall not
be construed as an admission by the person
making such report that he or she has any
direct or indirect beneficial ownership in
the security to which the report relates.
G. With the exception of disinterested
directors, every access person shall direct
his or her brokers to supply to the
Administrator, on a timely basis, duplicate
copies of all personal securities
transactions and copies of periodic
statements for all securities accounts in
which such access person has a beneficial
ownership interest. Attached hereto as
Appendix 2 is a form letter that may be used
to request such documents from the respective
broker, dealer, or bank. It is the
responsibility of the access person to make
sure that his or her broker does in fact send
the Administrator the duplicate confirmations
and the duplicate statements. These forms,
confirmations and statements will be
maintained in strictest confidence by the
Administrator.
H. In addition to the reporting requirements,
every access person with the exception of
disinterested directors, shall also disclose
to the Administrator all personal securities
holdings within ten (10) days of such
person's commencement of employment. Such
disclosures shall be made on the form
attached hereto at Appendix 3.
I. In addition to the above reporting
requirements, every access person with the
exception of disinterested directors shall
disclose to the Administrator all personal
securities holdings in an annual report which
reflects such person's securities
<PAGE>
holdings as of June 30th. Such annual report must be
received by the Administrator no later than July 31st of each year.
VIII. COMPLIANCE WITH THE CODE OF ETHICS
A. All access persons shall certify annually
that:
(i) They have read and understand the Code
of Ethics and recognize that they are
subject thereto; and
(ii) They have complied with the requirements
of the Code of Ethics and disclosed or
reported all personal securities
transactions required to be disclosed or
reported pursuant to the Code.
B. The Administrator, in conjunction with the
Fund's legal counsel, shall prepare a
quarterly report to the Fund's board of
directors which shall:
(i) Summarize existing procedures concerning
personal investing and recommend any
changes in the procedures;
(ii) Identify any violations; and
(iii) Identify any recommended changes in
existing restrictions or procedures
based upon the Fund's experience under
its Code of Ethics, evolving industry
practices, or developments in laws or
regulations.
C. The quarterly reports shall be summarized in
an annual report to the Fund's Board of
Directors and shall include a certification
from the Fund, Adviser and Principal
Underwriter stating that the respective
entity has adopted procedures reasonably
necessary to prevent its access persons from
violating this Code of Ethics.
IX. SANCTIONS
Upon discovering a violation of this Code of
Ethics, the Board of Directors of the Fund may
impose such sanctions as it deems appropriate,
including, among other sanctions, a letter of
censure or suspension, or termination of the
employment of the violator.
<PAGE>
Appendix 1
TRADE AUTHORIZATION REQUEST FOR ACCESS PERSONS
1. Name of Access Person:
2. If different than (1), name of the person in
whose account the trade will occur:
3. Relationship of (2) to (1):
4. Name of Security:
5. Maximum number of shares or units to be purchased
or sold or amount of bond:
6. Check if applicable: Purchase Market Order
Sale Limit Order (Limit Order Price: )
7. In connection with the foregoing transaction, I
hereby make the foregoing representations and
warranties:
(a) I do not possess any material nonpublic
information regarding the Security or the issuer of the
Security.
(b) To my knowledge:
(1) The Securities [are / are not] (circle one)
held by the Fund;
(2) There are no outstanding purchase or sell
orders for this Security by the Fund; and
(3) None of the Securities (or equivalent
securities) are actively being considered for purchase
or sale by the Fund.
(c) The Securities are not being acquired in an
initial public offering.
(d) If I am a Portfolio Manager and I am
purchasing these Securities, I have not directly
or indirectly (through any member of my Immediate
Family, any account in which I have a Beneficial
Interest or otherwise) sold these Securities (or
equivalent securities) in the prior 60 days.
(e) If I am a Portfolio Manager and I am selling
these Securities, I have not directly or
indirectly (through any member of my Immediate
Family, any account in which I have a Beneficial
Interest or otherwise) purchased these Securities
(or equivalent securities) in the prior 60 days.
(f) I have read the Code of Ethics within the
prior 12 months and believe that the proposed
trade fully complies with the requirements of the
Code.
- ---------------------------------- ------------------------------
Access Person Print Name
CERTIFICATION OF ACCESS PERSON DESIGNEE
The undersigned hereby certifies that the above Access
Person (a) directly instructed me to complete this Form
on his or her behalf, (b) to the best of my knowledge,
was out of the office at the time of such instruction
and has not returned, and (c) confirmed to me that the
representations and warranties contained in this form
are accurate.
- ----------------------------------- ------------------------------
Access Person Designee Print Name
AUTHORIZATION
Authorized By: _____________________ Date: ____________ Time: ______
<PAGE>
Appendix 2
Form of Letter to Broker, Dealer or Bank
[DATE]
<Broker Name and Address>
Subject: Account #____________________________
Dear _________________________:
You are requested to send duplicate confirmations
of individual transactions as well as duplicate
periodic statements for the above-referenced account to
Firstar Mutual Fund Services, LLC. Please address the
confirmations and statements directly to:
Oak Ridge Funds, Inc.
c/o Ms. Victoria Kampa
Firstar Mutual Fund Services, LLC
615 E. Michigan Street
Milwaukee, WI 53202
Your cooperation is most appreciated. If you have
any questions regarding these requests, please contact
me or Mr. Sam Wegbreit of Oak Ridge at (312) 857-1040.
Sincerely,
<Name of Access Person>
cc: Mr. Sam Wegbreit
<PAGE>
Appendix 3
PERSONAL SECURITIES HOLDINGS
In accordance with Section VII(H) of the Code of
Ethics, please provide a list of all securities in
which you have a beneficial interest.
(1) Name of Access Person:
(2) If different than (1), name of the person
in whose name the account is held:
(3) Relationship of (2) to (1):
(4) Broker at which Account is maintained:
(5) Account Number:
(6) Contact person at Broker and phone number:
(7) For each account, attach the most recent account
statement listing securities in that account. If
you have a beneficial interest in securities that
are not listed in an attached account statement,
list them below:
Name of Security Quantity Value Custodian
1.
2.
3.
4.
5.
(Attach separate sheet if necessary)
I certify that this form and the attached
statements (if any) constitute all of the securities in
which I have a beneficial interest.
-----------------------------------
Access Person Signature
Dated: ____________________ -----------------------------------
Print Name
<PAGE>
Appendix 4
ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS
I acknowledge that I have received the Amended and
Restated Code of Ethics effective as of March 1, 2000,
and represent:
1. In accordance with Section VII of the Code of
Ethics, I will report all securities transactions in
which I have a beneficial interest, except for
transactions exempt from reporting under Section III of
the Code of Ethics.
2. I will comply with the Code of Ethics in all
other respects.
_________________________________
Access Person Signature
__________________________________
Print Name
Dated:____________________
<PAGE>
Appendix 5
ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE OF ETHICS
I certify that during the past year:
1. In accordance with Section VII of the Code of
Ethics, I have reported all securities transactions in
which I have a beneficial interest except for
transactions exempt from reporting under Section III
and except to the extent disclosed on an attached
schedule.
2. I have complied with the Code of Ethics in all
other respects.
3. I have read and understand the Code of Ethics
and recognize that I am subject to the Code of Ethics.
_________________________________
Access Person Signature
__________________________________
Print Name
Dated:____________________
