HARRIS INSIGHT FUNDS TRUST, 497, 1997-05-05

HARRIS INSIGHT FUNDS TRUST
497, 1997-05-05

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This Prospectus offers Institutional shares ("Institutional Shares") of
seventeen investment portfolios advised by Harris Trust and Savings Bank
(collectively, the "Funds"). The Equity Fund, the Short/Intermediate Bond Fund,
the Tax-Exempt Money Market Fund, the Money Market Fund and the Government Money
Market Fund are investment portfolios of HT Insight Funds, Inc., doing business
as Harris Insight Funds (the "Company"). Each other Fund is an investment
portfolio of Harris Insight Funds Trust (the "Trust"). The Company and the Trust
are registered as open-end management investment companies (mutual funds). The
Funds, together with the other investment portfolios of the Trust and the
Company, are known as the Harris Insight Funds.

Please read this Prospectus before investing and keep it on file for future
reference. The Prospectus contains the information that a prospective investor
should know before investing, including how each Fund invests and the many
services available to shareholders.

To learn more about the Funds and their investments, you may obtain a copy of
the Harris Insight Funds' most recent financial report and portfolio listing or
Statement of Additional Information dated May 1, 1997 (the "SAI") simply by
calling (800) 982-8782. The SAI has been filed with the Securities and Exchange
Commission (the "SEC") and (as supplemented from time to time) is incorporated
by reference into this Prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI and other information regarding the
Funds.

THE HARRIS INSIGHT FUNDS ARE A FAMILY OF OPEN-END INVESTMENT COMPANIES COMMONLY
KNOWN AS MUTUAL FUNDS. SHARES OF MUTUAL FUNDS ARE NOT INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. SHARES OF THE FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, HARRIS TRUST AND SAVINGS BANK OR
ANY OTHER BANK OR BANK AFFILIATE.

AN INVESTMENT IN SHARES OF ANY MUTUAL FUND IS SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE CAN BE NO ASSURANCE THAT THE
TAX-EXEMPT MONEY MARKET FUND, THE MONEY MARKET FUND OR THE GOVERNMENT MONEY
MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

May 1, 1997
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Fund Summary...................................................... 3

Expense Summary................................................... 7

Financial Highlights.............................................. 10

Investment Objectives and Policies................................ 14
Equity Funds.............................................. 14
Fixed Income Funds........................................ 18
Money Market Funds........................................ 23

Additional Investment Information................................. 26
Common Investment Policies................................ 26
Investment Limitations.................................... 28
Risk Considerations....................................... 30

Management........................................................ 33

How to Buy Shares................................................. 38

How to Sell Shares................................................ 40

Shareholder Services and Policies................................. 41

How Distributions are Made; Tax Information....................... 43

General Information............................................... 44
Banking Law Matters....................................... 44
How Share Value Is Determined............................. 45
How Performance Is Reported............................... 46
More Information About the Trust and the Company.......... 47

Appendix A: Permitted Investments................................. 49
</TABLE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE SAI AND/OR IN
THE FUNDS' OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE
FUNDS' SHARES AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY JURISDICTION IN WHICH, OR TO
ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.

2
<PAGE>
FUND SUMMARY
-----------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

WHAT ARE THE OBJECTIVES OF THE FUNDS? HOW DO THE FUNDS ATTEMPT TO ACHIEVE THEIR
OBJECTIVES?

Each of the Funds has distinct investment objectives and policies, which are
summarized below in order of descending risk. For more complete information, see
INVESTMENT OBJECTIVES AND POLICIES and ADDITIONAL INVESTMENT INFORMATION.
Although no single Fund is intended to provide a complete or balanced investment
program, each can serve as a component of an investor's investment program.

EQUITY FUNDS

INTERNATIONAL FUND seeks to provide international diversification and
capital appreciation by investing primarily in common stocks of foreign
companies. Current income is a secondary objective.

SMALL-CAP OPPORTUNITY FUND seeks to provide long-term capital appreciation
by investing primarily in equity securities of smaller to medium
capitalization companies that the portfolio management agent believes have
above-average growth potential.

SMALL-CAP VALUE FUND seeks to provide capital appreciation by investing
primarily in equity securities of smaller to medium capitalization companies
that the portfolio management agent believes have above-average growth
potential and appear to be undervalued.

GROWTH FUND seeks to provide capital appreciation and, secondarily, current
income by investing primarily in common stocks and convertible securities of
companies that the portfolio management agent believes have above-average
growth potential.

EQUITY FUND seeks to provide capital appreciation and current income by
investing primarily in common stocks.

EQUITY INCOME FUND seeks to provide current income and, secondarily, capital
appreciation, by investing primarily in common stocks and convertible
securities.

INDEX FUND seeks to provide the return and risk characteristics of the
Standard & Poor's 500 Index, by investing primarily in securities of
companies that comprise that index.

BALANCED FUND seeks to provide current income and capital appreciation by
investing in a balanced portfolio of fixed income and equity securities.

3
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FIXED INCOME FUNDS

CONVERTIBLE SECURITIES FUND seeks to provide capital appreciation and
current income by investing primarily in securities, such as bonds,
debentures, notes, preferred stocks or warrants, that are convertible into
common stocks.

TAX-EXEMPT BOND FUND seeks to provide a high level of current income that is
exempt from federal income tax by investing, under normal market conditions,
at least 80% of its assets in municipal obligations of varying maturities.

BOND FUND seeks to provide a high level of total return, including a
competitive level of current income, by investing primarily in investment
grade debt securities of varying maturities.

INTERMEDIATE TAX-EXEMPT BOND FUND seeks to provide a high level of current
income that is exempt from federal income tax by investing, under normal
market conditions, at least 80% of its assets in municipal obligations with
an intermediate-term average maturity.

SHORT/INTERMEDIATE BOND FUND seeks to provide a high level of total return,
including a competitive level of current income, by investing primarily in
investment grade debt securities with a short/intermediate-term average
maturity.

INTERMEDIATE GOVERNMENT BOND FUND seeks to provide a high level of current
income, consistent with preservation of capital, by investing primarily in
U.S. Government Securities having an intermediate-term average maturity.

MONEY MARKET FUNDS

TAX-EXEMPT MONEY MARKET FUND seeks to provide investors with as high a level
of current income as is consistent with its investment policies, and with
preservation of capital and liquidity, by investing primarily in
high-quality, short-term municipal obligations.

MONEY MARKET FUND seeks to provide investors with as high a level of current
income as is consistent with its investment policies, and with preservation
of capital and liquidity, by investing in a broad range of short-term money
market instruments.

GOVERNMENT MONEY MARKET FUND seeks to provide investors with as high a level
of current income as is consistent with its investment policies, and with
preservation of capital and liquidity, by investing exclusively in
short-term U.S. Government Securities and repurchase agreements backed by
those securities.

WHO MANAGES EACH FUND'S INVESTMENTS?

4
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services for pension, profit-sharing and personal portfolios. As of December 31,
1996, total discretionary trust assets under management totaled approximately
$13.3 billion.

Harris Investment Management, Inc. ("HIM" or the "Portfolio Management Agent")
provides daily portfolio management services for each of the Funds except for
the Tax-Exempt Money Market Fund. As of December 31, 1996, HIM had a staff of
62, including 35 professionals, providing investment expertise to the management
of the Harris Insight Funds and for pension, profit-sharing and institutional
portfolios. As of that date, assets under management were approximately $9.2
billion.

Harris Trust and HIM are subsidiaries of Harris Bankcorp, Inc. See MANAGEMENT.

WHO SHOULD INVEST IN THE FUNDS?

The EQUITY FUNDS -- the International Fund, the Small-Cap Opportunity Fund, the
Small-Cap Value Fund, the Growth Fund, the Equity Fund, the Equity Income Fund,
the Index Fund and the Balanced Fund -- are designed for long-term investors who
can tolerate changes in the value of their investments in return for the
possibility of higher returns. The FIXED INCOME FUNDS -- the Convertible
Securities Fund, the Tax-Exempt Bond Fund, the Bond Fund, the Intermediate
Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund and the Intermediate
Government Bond Fund -- are designed for investors seeking some degree of
current income. The MONEY MARKET FUNDS -- the Tax-Exempt Money Market Fund, the
Money Market Fund and the Government Money Market Fund -- are designed for
conservative investors seeking stability of principal, current income at money
market rates, and liquidity. The Tax-Exempt Bond Fund, the Intermediate
Tax-Exempt Bond Fund and the Tax-Exempt Money Market Fund are specifically
designed for those investors who seek income that is exempt from federal income
tax.

In making your investment decisions, consider your investment goals, your time
horizon to achieve them, and your tolerance for risk. For more information about
each Fund and its investments, see INVESTMENT OBJECTIVES AND POLICIES.

WHAT ADVANTAGES DO THE FUNDS OFFER?

An investment gives the investor benefits customarily available only to large
investors, such as diversification, greater liquidity, professional management,
and relief from bookkeeping, safekeeping of securities and other administrative
details.

WHEN ARE DIVIDENDS PAID?

5
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Intermediate Government Bond Fund are declared daily and paid monthly. Dividends
from each of the Money Market Funds are declared daily and paid monthly. Any net
capital gains will be declared and paid at least annually. See HOW DISTRIBUTIONS
ARE MADE; TAX INFORMATION.

HOW ARE SHARES BOUGHT AND SOLD?

Institutional Shares are offered primarily to institutional investors without a
sales charge. Shares may be bought or sold by mail, by bank wire or through your
broker-dealer or other financial institution. There is no minimum initial or
subsequent investment. See HOW TO BUY SHARES AND HOW TO SELL SHARES.

WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?

There can be no assurance that any Fund will achieve its investment objective or
that the Money Market Funds will be able to maintain a stable net asset value.

The net asset value of each of the Equity Funds and the Fixed Income Funds will
fluctuate based upon changes in the value of the Fund's portfolio securities
and, when shares are sold, an investment may be worth more or less than the
investment's original value. As with any mutual fund, the fundamental risk is
that the value of securities that a Fund holds may decrease. Each Fund's
performance and price per share changes daily based on many factors, including
the perceived quality of the Fund's investments, U.S. and international economic
conditions and general market conditions.

The market value of equity securities is based upon the market's perception of
the issuing company's value. Normally, the values of fixed income securities
vary inversely with changes in prevailing interest rates. However, the potential
for appreciation in mortgage-backed fixed income securities in the event of a
decline in interest rates may be limited or negated by increased principal
prepayments on these securities. Fixed income securities also are subject to
"credit risk" relating to the financial condition of the issuer of the
securities.

Certain investments and investment techniques entail additional risks, such as
investments in foreign issuers, issuers with limited market capitalization,
mortgage- or asset-backed securities, zero coupon securities and options,
futures contracts and forward contracts. The use of leverage by certain Funds
through borrowings, reverse repurchase agreements and other investment
techniques involves additional risks.

The policy of investing in smaller companies employed by the Small-Cap Value
Fund, the Small-Cap Opportunity Fund and the other Funds that invest in small
company securities entails certain risks in addition to those normally
associated with equity securities. Similarly, the International Fund's policy of
investing in foreign securities entails certain risks in addition to those
normally associated with equity securities.

For information about particular risks, see ADDITIONAL INVESTMENT INFORMATION -
RISK CONSIDERATIONS.

6
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EXPENSE SUMMARY

-----------------------------------------------------------------

The following table illustrates information concerning annual fund operating
expenses for Institutional Shares of the Funds. There are no transaction charges
in connection with purchases, redemptions or exchanges of Fund Shares. NONE OF
THE FUNDS HAS ADOPTED A RULE 12B-1 PLAN WITH RESPECT TO THE INSTITUTIONAL SHARES
AND ACCORDINGLY, NO FUND INCURS DISTRIBUTION EXPENSES WITH RESPECT TO THE
INSTITUTIONAL SHARES.

ANNUAL OPERATING EXPENSES (as a percentage of average net assets after
applicable fee waivers and expense reimbursements)*

<TABLE>
<CAPTION>
INVESTMENT RULE 12B-1 OTHER TOTAL OPERATING
ADVISORY FEES FEES EXPENSES EXPENSES
--------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
EQUITY FUNDS
International Fund 1.03% None 0.33% 1.36%
Small-Cap Opportunity Fund 0.98 None 0.22 1.20
Small-Cap Value Fund 0.80 None 0.19 0.99
Growth Fund 0.86 None 0.24 1.10
Equity Fund 0.70 None 0.20 0.90
Equity Income Fund 0.66 None 0.27 0.93
Index Fund 0.21 None 0.24 0.45
Balanced Fund 0.60 None 0.28 0.88

FIXED-INCOME FUNDS
Convertible Securities Fund 0.70 None 0.22 0.92
Tax-Exempt Bond Fund 0.59 None 0.21 0.80
Bond Fund 0.27 None 0.33 0.60
Intermediate Tax-Exempt Bond Fund 0.58 None 0.22 0.80
Short/Intermediate Bond Fund 0.40 None 0.20 0.60
Intermediate Government Bond Fund 0.30 None 0.20 0.50

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 0.11 None 0.18 0.29
Money Market Fund 0.10 None 0.17 0.27
Government Money Market Fund 0.12 None 0.19 0.31
</TABLE>

* The amounts for expenses are based on amounts incurred during the Funds'
most recent fiscal year, except that other expenses for the Balanced Fund,
Small-Cap Value Fund, Convertible Securities Fund and Intermediate
Government Bond Fund are based on estimated expenses and projected assets
for the current fiscal year.

Without fee waivers or expense reimbursements, investment advisory fees and
total operating expenses would be 1.05% and 1.38% for the International
Fund, 1.00% and 1.22% for the Small-Cap Opportunity Fund, 0.90% and 1.14%
for the Growth Fund, 0.70% and 0.97% for the Equity Income Fund, 0.25% and
0.49% for the Index Fund, 0.60% and 0.81% for the Tax-Exempt Bond Fund,
0.65% and 0.98% for the Bond Fund, 0.60% and 0.82% for the Intermediate
Tax-Exempt Bond Fund, and 0.70% and 0.90% for the Short/Intermediate Bond
Fund; and other expenses and total operating expenses would be 0.18% and
0.28% for the Money Market Fund, and 0.20% and 0.32% for the Government
Money Market Fund.

Customers of a financial institution, such as Harris Trust, also may be
charged certain fees and expenses by the institution. These fees may vary
depending on the capacity in which the institution provides fiduciary and
investment services to the particular client (such as trust, estate
settlement, advisory or custodian services).

7
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EXAMPLE

The table below shows what you would pay if you invested $1,000 over the time
frames indicated. The example assumes you reinvested all dividends and that the
average annual return was 5%.

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
EQUITY FUNDS
International Fund $ 14 $ 44 $ 77 $ 168
Small-Cap Opportunity Fund 12 38 66 145
Small-Cap Value Fund 10 32 55 121
Growth Fund 11 35 61 134
Equity Fund 9 29 50 111
Equity Income Fund 9 30 51 114
Index Fund 5 14 25 57
Balanced Fund 9 28 49 108

FIXED-INCOME FUNDS
Convertible Securities Fund 9 29 51 113
Tax-Exempt Bond Fund 8 26 44 99
Bond Fund 6 19 33 75
Intermediate Tax-Exempt Bond Fund 8 26 44 99
Short/Intermediate Bond Fund 6 19 33 75
Intermediate Government Bond Fund 5 16 28 63

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 3 9 16 37
Money Market Fund 3 9 15 34
Government Money Market Fund 3 10 17 39
</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE, WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.

The purpose of the expense tables is to help you understand the various costs
and expenses that an investor in a Fund will bear directly or indirectly. For
more information concerning these costs and expenses, see MANAGEMENT.

8
<PAGE>
This page has been intentionally left blank.

9
<PAGE>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------

The financial highlights on the following pages represent selected data for a
single Institutional Share of each Fund for the periods shown. This information
has been derived from the financial statements audited by Price Waterhouse LLP,
independent accountants. The Funds' financial statements for the year ended
December 31, 1996 and independent accountants' report thereon are included in
the Funds' Annual Report and are incorporated by reference into (are legally a
part of) the Funds' SAI. These financial highlights should be read in
conjunction with the financial statements. Further information about each Fund's
performance is

<TABLE>
<CAPTION>
SMALL-CAP
INTERNATIONAL OPPORTUNITY GROWTH
FUND FUND FUND
------------- ----------- -----------
FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD
02/26/96(1) 02/26/96(1) 02/26/96(1)
TO 12/31/96 TO 12/31/96 TO 12/31/96
------------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 15.04 $ 14.24 $17.01
------------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.128 0.057 0.062
Net Realized and Unrealized Gain on
Investments........................ 0.485 1.998 2.746
------------- ----------- -----------
Total from Investment Operations... 0.613 2.055 2.808
------------- ----------- -----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.125) (0.057) (0.063)
Net Realized Gains................. (0.068) (0.718) (1.065)
------------- ----------- -----------
Total Distributions................ (0.193) (0.775) (1.128)
------------- ----------- -----------
Net Asset Value, End of Period..... $ 15.46 $ 15.52 $18.69
------------- ----------- -----------
------------- ----------- -----------
TOTAL RETURN (4)................... 4.08% 14.49% 16.43%

RATIOS/ SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 109,747 150,306 76,516
Ratios of Expenses to Average Net
Assets (2)(3)...................... 1.36% 1.20% 1.10%
Ratio of Net Investment Income to
Average Net Assets (3)............. 0.99% 0.46% 0.42%
Portfolio Turnover Rate............ 6.72% 46.13% 35.36%
Average Commission Rate (5)........ $ 0.020 $ 0.058 $0.058
</TABLE>

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the annualized expense ratios for the
period ended December 31, 1996 for the International Fund, Small-Cap
Opportunity Fund, Growth Fund, Equity Income Fund, Index Fund, Tax-Exempt
Bond Fund, Bond Fund, Intermediate Tax-Exempt Bond Fund, and
Short/Intermediate Bond Fund would have been 1.38%, 1.22%, 1.14%, 0.97%,
0.49%, 0.81%, 0.98%, 0.82% and 0.90%, respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

(5) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.

10
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contained in the Annual Report, which may be obtained from the Harris Insight
Funds without charge. Financial highlights are not provided for the Small-Cap
Value Fund, the Balanced Fund, the Convertible Securities Fund and the
Intermediate Government Bond Fund because, as of December 31, 1996, those Funds
had not yet commenced operations. Institutional Shares of the Money Market Funds
were formerly known as Class C Shares.

<TABLE>
<CAPTION>
INTERMEDIATE
EQUITY EQUITY TAX-EXEMPT TAX-EXEMPT
FUND INCOME FUND INDEX FUND BOND FUND BOND FUND BOND FUND
----------- ----------- ----------- ----------- ----------- ------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD PERIOD PERIOD PERIOD
02/26/96(1) 02/26/96(1) 02/26/96(1) 02/26/96(1) 04/16/96(1) 02/26/96(1)
TO 12/31/96 TO 12/31/96 TO 12/31/96 TO 12/31/96 TO 12/31/96 TO 12/31/96
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 15.30 $13.34 $ 16.72 $ 10.56 $ 10.00 $ 10.74
----------- ----------- ----------- ----------- ----------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.189 0.270 0.268 0.402 0.425 0.381
Net Realized and Unrealized Gain on
Investments........................ 1.898 1.387 2.104 (0.094) 0.103 (0.124)
----------- ----------- ----------- ----------- ----------- ------------
Total from Investment Operations... 2.087 1.657 2.372 0.308 0.528 0.257
----------- ----------- ----------- ----------- ----------- ------------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.193) (0.269) (0.268) (0.402) (0.425) (0.381)
Net Realized Gains................. (1.664) (0.998) (0.344) (0.216) (0.033) (0.036)
----------- ----------- ----------- ----------- ----------- ------------
Total Distributions................ (1.857) (1.267) (0.612) (0.618) (0.458) (0.417)
----------- ----------- ----------- ----------- ----------- ------------
Net Asset Value, End of Period..... $ 15.53 $13.73 $ 18.48 $ 10.25 $ 10.07 $ 10.58
----------- ----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ----------- ------------
TOTAL RETURN (4)................... 13.66% 12.46% 14.26% 3.04% 5.40% 2.49%

RATIOS/ SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 568,400 31,760 143,954 165,388 43,142 208,690
Ratios of Expenses to Average Net
Assets (2)(3)...................... 0.90% 0.93% 0.45% 0.80% 0.60% 0.79%
Ratio of Net Investment Income to
Average Net Assets (3)............. 1.43% 2.36% 1.85% 4.60% 6.03% 4.28%
Portfolio Turnover Rate............ 75.20% 52.77% 4.71% 61.60% 116.02% 57.23%
Average Commission Rate (5)........ $ 0.056 $0.059 $ 0.038 -- -- --

<CAPTION>
SHORT/
INTERMEDIATE
BOND FUND
------------
FOR THE
PERIOD
02/26/96(1)
TO 12/31/96
------------
<S> <C>
Net Asset Value, Beginning of
Period............................. $10.30
------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.517
Net Realized and Unrealized Gain on
Investments........................ (0.160)
------------
Total from Investment Operations... 0.357
------------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.517)
Net Realized Gains................. 0.000
------------
Total Distributions................ (0.517)
------------
Net Asset Value, End of Period..... $10.14
------------
------------
TOTAL RETURN (4)................... 3.61%(4)
RATIOS/ SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 255,573
Ratios of Expenses to Average Net
Assets (2)(3)...................... 0.60% (3)
Ratio of Net Investment Income to
Average Net Assets (3)............. 6.06% (3)
Portfolio Turnover Rate............ 186.02%
Average Commission Rate (5)........ --
</TABLE>

11
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

-----------------------------------------------------------------

<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND*
-----------------------------------------
FOR THE
YEAR YEAR PERIOD
ENDED ENDED 01/05/94(1)
12/31/96 12/31/95 TO 12/31/94
------------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00
------------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.031 0.035 0.025
------------- ----------- -----------
Total from Investment Operations... 0.031 0.035 0.025
------------- ----------- -----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.031) (0.035) (0.025)
------------- ----------- -----------
Total Distributions................ (0.031) (0.035) (0.025)
------------- ----------- -----------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00
------------- ----------- -----------
------------- ----------- -----------
TOTAL RETURN....................... 3.19% 3.60% 2.56%(4)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 388,404 212,146 237,100
Ratios of Expenses to Average Net
Assets (2)......................... 0.29% 0.29% 0.28%(3)
Ratio of Net Investment Income to
Average Net Assets................. 3.14% 3.52% 2.99%(3)
</TABLE>

* Formerly the Tax-Free Money Market Fund.

** Formerly the Cash Management Fund.

*** Formerly the Government Assets Fund.

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1996 and 1995 and for the period ended December 31, 1994 for
the Tax-Exempt Money Market Fund, Money Market Fund and Government Money
Market Fund would have been 0.29%, 0.29%, 0.30% (annualized), 0.28%, 0.30%,
0.30% (annualized), and 0.32%, 0.32% and 0.31% (annualized), respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

12
<PAGE>

<TABLE>
<CAPTION>
MONEY MARKET FUND** GOVERNMENT MONEY MARKET FUND***
--------------------------------------- ---------------------------------------
FOR THE FOR THE
YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED 01/05/94(1) ENDED ENDED 05/16/94(1)
12/31/96 12/31/95 TO 12/31/94 12/31/96 12/31/95 TO 12/31/94
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.052 0.057 0.039 0.051 0.056 0.028
----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations... 0.052 0.057 0.039 0.051 0.056 0.028
----------- ----------- ----------- ----------- ----------- -----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.052) (0.057) (0.039) (0.051) (0.056) (0.028)
----------- ----------- ----------- ----------- ----------- -----------
Total Distributions................ (0.052) (0.057) (0.039) (0.051) (0.056) (0.028)
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period..... $ 1.00 $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
TOTAL RETURN....................... 5.38% 5.86% 4.08%(4) 5.24% 5.79% 2.82%(4)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 369,417 98,837 31,990 37,169 18,367 9,617
Ratios of Expenses to Average Net
Assets (2)......................... 0.27% 0.29% 0.29%(3) 0.31% 0.31% 0.29%(3)
Ratio of Net Investment Income to
Average Net Assets................. 5.23% 5.69% 4.79%(3) 5.12% 5.62% 4.52%(3)
</TABLE>

13
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
-----------------------------------------------------------------

Each of the Funds has distinct investment objectives and policies, which are set
forth below. Investments that may be made by all of the Funds are listed under
ADDITIONAL INVESTMENT INFORMATION - COMMON INVESTMENT POLICIES. For a further
description of each Fund's investments and investment techniques, see ADDITIONAL
INVESTMENT INFORMATION, APPENDIX A: PERMITTED INVESTMENTS ("Appendix A") and the
SAI. There is no assurance that any Fund will achieve its investment objective
or that the Money Market Funds will be able to maintain a stable net asset
value.

EQUITY FUNDS

INTERNATIONAL FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide international
diversification and capital appreciation. Current income is a secondary
objective.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing in securities that are typical of those comprising the Morgan
Stanley Capital International Europe, Australia, Far East (EAFE) Index.
Securities are selected based on their value as well as the relative
valuation of their base currencies. Thus, the Fund may be more or less
reflective of the EAFE universe at any point in time.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in securities of foreign issuers (i.e., issuers organized
outside the United States or whose principal trading market is outside the
United States). The Fund invests in the securities of issuers located in at
least three foreign countries. The Fund seeks to manage risk through the
diversification of its investments.

The Fund also may invest in exchange rate-related securities, securities
convertible into or exchangeable for foreign equity securities, and
custodial receipts for Treasury securities. In addition, the Fund may engage
in the purchase and sale of foreign currency for hedging purposes.

SMALL-CAP OPPORTUNITY FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide long-term capital
appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller to medium
capitalizations that the Portfolio Management Agent believes are
attractively valued in the market. Market capitalization refers to the total
market value of a company's outstanding shares of common stock. Smaller to
medium capitalization companies are those with market capitalizations, at
the time of the Fund's investment of between $100 million and $2.5 billion.

14
<PAGE>

In investing the Fund's assets, the Portfolio Management Agent follows an
investment management discipline that seeks to identify companies offering
above-average earnings, sales and asset value growth. These securities will
tend to be represented in the Russell 2000 Index.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in securities of smaller to medium capitalization
companies.

SMALL-CAP VALUE FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller to medium
capitalizations that the Portfolio Management Agent believes are
conservatively valued in the marketplace. Market capitalization refers to
the total market value of a company's outstanding shares of common stock.
Smaller to medium capitalization companies are those with market
capitalizations, at the time of the Fund's investment of between $100
million and $2.5 billion.

In managing the Fund's assets, the Portfolio Management Agent seeks to
invest in securities that are undervalued relative to the securities of
comparable companies, as determined by price/earnings ratios, earnings
expectations or other fundamental measures.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in securities of smaller to medium capitalization
companies.

GROWTH FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation and,
secondarily, current income.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing in equity securities that the Portfolio Management Agent believes
are undervalued but represent growth opportunities. The Fund also may invest
in securities issued by medium to larger capitalization companies that
provide returns more closely aligned with the Lipper Growth Fund Index. The
Fund's investment management discipline emphasizes growth in sales, earnings
and asset values.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in equity securities.

EQUITY FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with capital
appreciation and current income.

15
<PAGE>

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of larger capitalization companies
(i.e., companies with market capitalization in excess of $500 million at the
time of the Fund's investment) and is managed to provide equity-based
returns characteristic of these securities. Market capitalization refers to
the total market value of a company's outstanding shares of common stock.
The selected issuers will be representative of those sectors found within
the Standard & Poor's 500 Index (the "S&P 500 Index"). Using both
"quantitative" and "fundamental" analysis, the Portfolio Management Agent
selects investments that it believes will provide returns greater than the
securities comprising the S&P 500 Index over the long-term with a risk level
approximating that of the index, with risk measured by volatility.

The Fund's investments are expected to be diversified among all major
sectors of the market. The Fund's Portfolio Management Agent believes that
an investment process which combines carefully monitored risk control with
an emphasis on value and fundamental research is better suited for long-term
equity investing. The Fund's portfolio is generally comprised of
approximately 50 different issues. Risk is managed by diversification of
investments.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in common stocks of larger capitalization companies.

EQUITY INCOME FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide current income and,
secondarily, capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing in equities that are found within the Standard & Poor's 500 Index
(the "S&P 500 Index"), or other attractive issues. Convertible securities
may also be utilized. The Portfolio Management Agent believes that the
combination of these securities should produce returns that are similar to
the performance of the S&P 500 Index and its corresponding sectors, yet with
a higher income yield.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in common stocks and securities convertible into common
stock. The Fund is managed with a disciplined investment process designed to
maintain a diversified portfolio of high quality equity securities. The Fund
generally emphasizes securities with higher than average dividend yields
and/or stronger than average growth characteristics. The result of this
investment process is a diversified portfolio that the Portfolio Management
Agent believes provides attractive long-term growth potential, while
offering an attractive current yield.

16
<PAGE>
INDEX FUND

INVESTMENT OBJECTIVE. The Index Fund seeks to provide the return and risk
characteristics of the Standard & Poor's 500 Index.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing, under normal market conditions, primarily in securities of
companies that comprise the Standard & Poor's 500 Index (the "S&P 500
Index"), an unmanaged index that emphasizes large capitalization companies.
As of December 31, 1996, the index represented approximately 73% of the
market capitalization of publicly owned stocks in the United States.

The Fund is managed through the use of a "quantitative" or "indexing"
investment discipline, which attempts to duplicate the investment
composition and performance of the S&P 500 Index through statistical
procedures. As a result, the Portfolio Management Agent does not employ
traditional methods of fund investment management, such as selecting
securities on the basis of economic, financial and market analysis. The Fund
seeks quarterly performance within one percentage-point of the performance
of the index (i.e., the percentage return of the index plus or minus%). On
at least a monthly basis, the Portfolio Management Agent compares the Fund's
performance to that of the index. In the event the Fund's performance for
the preceding three-month period does not adequately track the performance
of the index, the Portfolio Management Agent may adjust the Fund's holdings
accordingly.

The Fund seeks to closely match the weight of each security in the portfolio
to its approximate weight in the S&P 500 Index. Although the Fund may not
hold all 500 securities included in the index, it will generally hold at
least 90% of these securities. The Fund also may maintain positions in S&P
500 Index futures contracts. Generally, index futures contracts are
bilateral agreements whereby two parties agree to take or make delivery of
an amount of cash equal to a specified dollar amount times the difference
between the index value at the close of trading of the contract and the
price at which the futures contract is originally struck. As no physical
delivery of securities comprising the index is made, purchasers of index
futures contracts may participate in the performance of the securities
contained in the index without the required capital commitment. The Fund may
use S&P 500 Index futures contracts for several reasons: to simulate full
investment in the index while retaining a cash balance for fund management
purposes, to facilitate trading or to reduce transaction costs.

Standard & Poor's ("S&P") makes no representation or warranty, expressed or
implied, to the purchasers of the Fund or any member of the public regarding
the advisability of investing in either the Index Fund or the ability of the
S&P 500 Index to track general stock market performance. The Fund is not
sponsored, endorsed, sold or promoted by S&P. S&P does not guarantee the
accuracy and/or completeness of the S&P 500 Index or any data included
therein.

17
<PAGE>

Furthermore, S&P makes no warranty, express or implied, as to the results to
be obtained by the Fund, owners of the Fund, any person or any entity from
the use of the S&P 500 Index or any data included therein. S&P makes no
express or implied warranties and expressly disclaims all such warranties of
merchantability or fitness for a particular purpose for use with respect to
the S&P 500 Index or any data included therein.

BALANCED FUND

INVESTMENT OBJECTIVE. The Balanced Fund seeks to provide current income and
capital appreciation by investing in a balanced portfolio of fixed income
and equity securities.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
actively allocating investments between equity and fixed income securities.
Through utilizing this approach, the Fund seeks to provide capital
appreciation similar to larger-capitalization equities, with a portion of
the Fund's total return resulting from investment in fixed income
securities. The Fund seeks to provide an overall return comprising between
40% and 65% of the return of the Standard & Poor's 500 Index (a broad U.S.
stock market index) and between 35% and 60% of the return of the Lehman
Brothers Aggregate Index (a broad U.S. bond market index).

The Fund's investment process considers, on a continuing basis, the
attractiveness of equities versus fixed income securities. Under normal
market conditions, equity securities are expected to comprise between 40%
and 65% of the Fund's total assets and fixed income securities are expected
to comprise at least 25% of the Fund's total assets.

FIXED INCOME FUNDS

CONVERTIBLE SECURITIES FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation and
current income.

INVESTMENT POLICIES. Convertible securities have unique return
characteristics. Convertible securities tend to rise in price when overall
equity markets rise and, conversely, tend to decline relatively less when
interest rates rise. The Fund strives to reflect these unique performance
characteristics while seeking to provide income that is more characteristic
of short/intermediate maturity corporate bonds.

The Fund seeks to achieve its investment objective by investing primarily in
convertible securities, which are bonds, debentures, notes or preferred
stock that are convertible into common stock, or warrants, which are options
to purchase common stock at a specified price.

18
<PAGE>
The Fund also may invest in equity securities of U.S. corporations. The Fund
seeks to diversify among issuers in a manner that will enable the Fund to
minimize the volatility of the Fund's net asset value in erratic or
declining markets. Under normal circumstances, the Fund invests at least 65%
of the value of its total assets in convertible securities.

Under normal market conditions, the Fund will invest without limitation in
convertible securities of U.S. corporations and in Eurodollar securities
convertible into common stocks of U.S. corporations that are rated "B" or
better by Standard & Poor's ("S&P") or "B" ("b" in the case of preferred
stocks) or better by Moody's Investors Service ("Moody's") at the time of
purchase, or, if not rated, considered by the Portfolio Management Agent to
be of comparable quality, except that investment in securities rated "B-" by
S&P or Moody's will be limited to 15% of its total assets. Up to 5% of the
Fund's total assets may be invested in convertible securities that are rated
"CCC" by S&P or "Caa" by Moody's at the time of purchase. Securities that
are rated "BB" or below by S&P or "Ba" or below by Moody's are "high yield"
securities, commonly known as junk bonds. By their nature, convertible
securities may be more volatile in price than higher-rated debt obligations.

The Fund may invest up to 35% of its total assets in "synthetic
convertibles" created by combining separate securities that together possess
the two principal components of a convertible security: fixed income and the
right to acquire equity securities. In addition, the Fund may invest up to
15% of its net assets in convertible securities offered in "private
placements" and other illiquid securities; up to 15% of its total assets in
common stocks; and up to 5% of its net assets in warrants. The Fund may
purchase and sell index and interest rate futures contracts and covered put
and call options on securities and on indices.

In periods of unusual market conditions, when the Portfolio Management Agent
believes that convertible securities would not best serve the Fund's
objectives, the Fund may for defensive purposes invest part or all of its
total assets in (a) U.S. Government Securities; (b) non-convertible debt
obligations of domestic corporations, including bonds, debentures, notes or
preferred stock rated "BBB" or better by S&P or "Baa" or better by Moody's
at the time of purchase, which ordinarily are less volatile in price than
convertible securities and serve to increase diversification of risk; and
(c) short-term money market instruments, including U.S. Government, bank and
commercial obligations with remaining maturities of 397 days or less. During
such periods, the Fund will continue to seek current income but will put
less emphasis on capital appreciation.

RISK FACTORS AND OTHER CONSIDERATIONS RELATING TO LOW-RATED SECURITIES.
Low-rated and comparable unrated securities (a) will likely have some
quality and protective characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk exposures
to adverse

19
<PAGE>
conditions and (b) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation.

The market values of low-rated and comparable unrated securities are less
sensitive to interest rate changes but more sensitive to economic changes or
individual corporate developments than higher-rated securities; they present
a higher degree of credit risk and their yields will fluctuate over time.
During economic downturns or sustained periods of rising interest rates, the
ability of highly leveraged issuers to service debt obligations may be
impaired.

The existence of limited or no established trading markets for low-rated and
comparable unrated securities may result in thin trading of such securities
and diminish the Fund's ability to dispose of such securities or to obtain
accurate market quotations for valuing such securities and calculating net
asset value. The responsibility of the Trust's Board of Trustees to value
such securities becomes greater and judgment plays a greater role in
valuation because there is less reliable objective data available. In
addition, adverse publicity and investor perceptions may decrease the values
and liquidity of low-rated and comparable unrated securities bonds,
especially in a thinly traded market.

A major economic recession would likely disrupt the market for such
securities, adversely affect their value and the ability of issuers to repay
principal and pay interest, and result in a higher incidence of defaults.

The ratings of S&P and Moody's represent the opinions of those organizations
as to the quality of securities. Such ratings are relative and subjective,
not absolute standards of quality and do not evaluate the market risk of the
securities. Although the Fund's Portfolio Management Agent uses these
ratings as a criterion for the selection of securities for the Fund, it also
relies on its own independent analysis to evaluate potential investments for
the Fund. The Fund's achievement of its investment objective may be more
dependent on the Portfolio Management Agent's credit analysis of low-rated
and unrated securities than would be the case for a portfolio of high-rated
securities.

TAX-EXEMPT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income that is exempt from federal income tax.

INVESTMENT POLICIES. The Fund seeks to achieve its objective by investing in
municipal securities with varying maturities. As a result, the Fund seeks to
generate a higher level of income than that of short or intermediate average
maturity municipal bond funds, although it will experience corresponding
higher volatility of principal during periods of changing interest rates.

The Fund attempts to anticipate changes in interest rates, analyzing yield
differentials for different types of bonds, and analyzing credit for
specific

20
<PAGE>
issues and municipalities. As a matter of fundamental policy, the Fund
invests at least 80% of its assets, under normal market conditions, in a
broad range of municipal bonds and other obligations issued by state and
local governments to finance their operations or special projects. These
securities make interest payments that are exempt from federal income tax.

The Fund also may invest in U.S. Government Obligations (as defined in
Appendix A) and securities secured by letters of credit. In addition, the
Fund may purchase and sell covered put and call options on securities and on
indices.

BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of total
return, including a competitive level of current income, by investing
primarily in investment grade debt securities of varying maturities.

INVESTMENT POLICIES. The Fund seeks to provide the higher income generally
associated with a broad range of longer-term bonds typically having 5 to 10
years remaining to maturity. As a result, principal value of these
longer-term bonds is likely to fluctuate more than that of bonds with
shorter maturities.

The Fund seeks to achieve its objective by utilizing a highly-disciplined,
quantitative process designed to identify fixed income securities that are
undervalued and are positioned to offer the best relative value to enable
the Fund to benefit from anticipated changes in interest rates.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in bonds. For purposes of this 65% limitation, the term
"bond" shall include debt obligations such as bonds and debentures, U.S.
Government Securities, debt obligations of domestic and foreign
corporations, debt obligations of foreign governments and their political
subdivisions, asset-backed securities, various mortgage-backed securities
(including those issued or collateralized by U.S. Government agencies and
inverse floating rate mortgage-backed securities), other floating/variable
rate obligations, municipal obligations and zero coupon fixed income
securities.

INTERMEDIATE TAX-EXEMPT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income that is exempt from federal income tax.

21
<PAGE>
share price volatility during periods of changing interest rates than
comparable shorter-term funds. Individual portfolio securities will have
varying maturities.

As a matter of fundamental policy, the Fund invests at least 80% of its
assets, under normal market conditions, in a broad range of municipal bonds
and other obligations issued by state and local governments to finance their
operations or special projects. These securities make interest payments that
are exempt from federal income tax.

The Fund's selection of individual securities is based on a number of
factors, including anticipated changes in interest rates, the assessment of
the yield advantages of different classes of bonds, and an independent
analysis of credit quality of individual issues by the Fund's Portfolio
Management Agent.

The Fund also may invest in U.S. Government Obligations and securities
secured by letters of credit. In addition, the Fund may purchase and sell
covered put and call options on securities and on indices.

SHORT/INTERMEDIATE BOND FUND

INVESTMENT POLICIES. The Fund (which was formerly known as Harris Insight
Managed Fixed Income Fund) seeks to provide income and share price
volatility of a 2- to 5-year average maturity taxable bond portfolio. Thus,
it is anticipated that when interest rates rise, share price of the Fund
will tend to fall less than longer-term bond funds and appreciate less when
interest rates fall.

The Fund seeks to achieve its objective by utilizing a combination of
investment disciplines, including the assessment of yield advantages among
different classes of bonds and among different maturities, independent
review by the Portfolio Management Agent of the credit quality of individual
issues, and the analysis by the Portfolio Management Agent of economic and
market conditions affecting the fixed income markets.

22
<PAGE>

Government Securities, debt obligations of domestic and foreign
corporations, debt obligations of foreign governments and their political
subdivisions, asset-backed securities, various mortgage-backed securities
(including those issued or collateralized by U.S. Government agencies and
inverse floating rate mortgage-backed securities), other floating/variable
rate obligations, municipal obligations and zero coupon securities.

The Fund also may hold short-term U.S. Government Obligations, "high-
quality" money market instruments (i.e., those within the two highest rating
categories or, if unrated, determined by the Portfolio Management Agent to
be comparable in quality to instruments so rated) and cash. Such obligations
may include those issued by foreign banks and foreign branches of U.S.
banks. These investments may be in such proportions as, in the Portfolio
Management Agent's opinion, existing circumstances warrant.

The Fund's dollar-weighted average portfolio maturity (or average life with
respect to mortgage-backed and asset-backed securities), under normal market
conditions, will be between 2 and 5 years.

INTERMEDIATE GOVERNMENT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income, consistent with preservation of capital.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in U.S. Government Securities, including mortgage-backed
securities, having an intermediate-term average maturity. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
U.S. Government Securities and in repurchase agreements collateralized by

U.S. Government Securities. The average portfolio maturity (or average life
with respect to mortgage-backed securities) generally will be between 3 and
10 years.

The Fund's investments may include asset-backed securities. In addition, the
Fund may invest in foreign debt securities guaranteed by the U.S.
Government, its agencies or instrumentalities (with respect to 10% of the
Fund's total assets at the time of purchase). The Fund also may write (sell)
covered put and call options, buy covered put and call options, buy and sell
interest rate futures contracts and buy and write covered options on those
futures contracts.

MONEY MARKET FUNDS

TAX-EXEMPT MONEY MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a
level of current income that is exempt from federal income taxes as is
consistent with its investment policies and with preservation of capital and
liquidity.

23
<PAGE>
INVESTMENT POLICIES. The Fund (which was formerly known as Harris Insight
Tax-Free Money Market Fund) invests only in high quality, short-term money
market instruments that are determined by the Adviser, pursuant to
procedures established by the Company's Board of Directors, to be eligible
for purchase and to present minimal credit risks. The Fund invests primarily
in high-quality municipal obligations. Municipal obligations are debt
obligations issued by or on behalf of states, cities, municipalities and
other public authorities. Except for temporary investments in taxable
obligations described below, the Fund will invest only in municipal
obligations that are exempt from federal income taxes in the opinion of bond
counsel. Such obligations include municipal bonds, municipal notes and
municipal commercial paper.

The Fund will not purchase a security (other than a U.S. Government
Security) unless the security is rated by at least two nationally recognized
rating agencies (such as Standard & Poor's or Moody's Investors Service)
within the two highest rating categories assigned to short-term debt
securities (or, if not rated or rated by only one rating agency, is
determined to be of comparable quality). Determinations of comparable
quality shall be made in accordance with procedures established by the
Company's Board of Directors.

The Fund invests only in U.S. dollar-denominated securities that have a
remaining maturity of 397 days or less (as calculated pursuant to Rule 2a-7
under the Investment Company Act of 1940, as amended) and maintains a
dollar-weighted average maturity of 90 days or less. Current income provided
by the securities in which the Fund invests is not likely to be as high as
that provided by securities with longer maturities or lower quality, which
may involve greater risk and price volatility.

Under ordinary market conditions, the Fund will maintain as a fundamental
policy at least 80% of the value of its total assets in obligations that are
exempt from federal income tax and not subject to the alternative minimum
tax. The Fund may, pending the investment of proceeds of sales of its shares
or proceeds from the sale of portfolio securities, in anticipation of
redemptions, or to maintain a "defensive" posture when, in the opinion of
the Adviser, it is advisable to do so because of market conditions, elect to
hold temporarily up to 20% of the current value of its total assets in cash
reserves or invest in securities whose interest income is subject to
taxation.

From time to time, the Fund may invest 25% or more of its assets in
municipal obligations that are related in such a way that an economic,
business or political development or change affecting one of these
obligations would also affect the other obligations, for example, municipal
obligations the interest on which is paid from revenues of similar type
projects or municipal obligations whose issuers are located in the same
state.

24
<PAGE>
MONEY MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a
level of current income as is consistent with its investment policies and
with preservation of capital and liquidity.

INVESTMENT POLICIES. The Fund (which was formerly known as Harris Insight
Cash Management Fund) invests only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures
established by the Company's Board of Directors, to be eligible for purchase
and to present minimal credit risks. The Fund invests in a broad range of
short-term money market instruments, including U.S. Government Securities
and bank and commercial obligations. The commercial paper purchased by the
Fund will consist of U.S. dollar-denominated direct obligations of domestic
and foreign corporate issuers, including bank holding companies.

The Fund will not purchase a security (other than U.S. Government
Securities) unless the security is rated by at least two nationally
recognized rating agencies (such as Standard & Poor's or Moody's Investors
Service) within the two highest rating categories assigned to short-term
debt securities (or, if not rated or rated only by one rating agency, is
determined to be of comparable quality), and not more than 5% of the total
assets of the Fund would be invested in securities in the second highest
rating category. Determinations of comparable quality shall be made in
accordance with procedures established by the Company's Board of Directors.

The Fund also may invest in guaranteed investment contracts ("GICs") issued
by U.S. and Canadian insurance companies, and convertible and
non-convertible debt securities of domestic corporations and of foreign
corporations and governments that are denominated, and pay interest, in U.S.
dollars. In addition, the Fund may invest in tax-exempt municipal
obligations when the yields on such obligations are higher than the yields
on taxable investments. See INVESTMENT OBJECTIVES AND POLICIES - TAX-EXEMPT
MONEY MARKET FUND.

GOVERNMENT MONEY MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a
level of current income as is consistent with its investment policies and
with preservation of capital and liquidity.

25
<PAGE>
INVESTMENT POLICIES. The Fund (formerly known as Harris Insight Government
Assets Fund) invests only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures
established by the Company's Board of Directors, to be eligible for purchase
and to present minimal credit risks. The Fund invests exclusively in U.S.
Government Securities and repurchase agreements backed by those securities.

The Fund invests only in securities that have a remaining maturity of 397
days or less (as calculated pursuant to Rule 2a-7 under the Investment
Company Act of 1940, as amended) and maintains a dollar-weighted average
maturity of 90 days or less. Current income provided by the securities in
which the Fund invests is not likely to be as high as that provided by
securities with longer maturities or lower quality, which may involve
greater risk and price volatility.

The Fund invests in obligations of U.S. Government agencies and
instrumentalities only when the Portfolio Management Agent is satisfied that
the credit risk with respect to the issuer is minimal.

ADDITIONAL INVESTMENT INFORMATION
-----------------------------------------------------------------

Unless otherwise noted, each Fund's investment objective and policies are not
fundamental and may be changed by the Board of Trustees of the Trust (or Board
of Directors of the Company) without approval by the Fund's shareholders.
Investment policies that are designated as fundamental may be changed only with
approval of the holders of a majority of the Fund's outstanding voting
securities. A majority of outstanding voting securities means the lesser of 67%
of the shares present or represented at a shareholders meeting at which the
holders of more than 50% of the outstanding shares are present or represented,
or more than 50% of the outstanding shares.

For a further description of the Funds' investment policies, including
additional fundamental policies, see Appendix A and the SAI.

COMMON INVESTMENT POLICIES

Each Fund may invest in the securities of other investment companies, zero
coupon securities, when-issued securities and forward commitments,
floating/variable rate obligations (and inverse floating rate obligations with
respect to the Fixed Income Funds), as well as commercial paper, short-term
money market instruments and cash equivalents, such as certificates of deposit,
demand and time deposits and banker's acceptance notes. In addition, each Fund
may enter into repurchase agreements. Each Fund also may lend its portfolio
securities in an amount not exceeding one-third of its net assets and may enter
into reverse repurchase agreements.

In addition, each of the Equity Funds may invest in securities purchased in
initial public offerings. Each of the Equity Funds also may invest in foreign
securities,

26
<PAGE>

including American Depository Receipts, European Depository Receipts and, with
respect to 10% (100% for the International Fund) of each Fund's total assets,
debt and equity securities of foreign issuers. Further, each of the Equity Funds
may purchase and sell covered put and call options on securities, index and
interest rate futures contracts and options on futures contracts. The Equity
Funds and the Convertible Securities Fund may invest in warrants.

RATING MATTERS. Each of the Equity Funds and the Fixed Income Funds may invest
in securities convertible into or exchangeable for common stocks or preferred
stocks, as well as U.S. Government Securities and debt obligations of domestic
corporations rated "BBB" or better by Standard & Poor's ("S&P") or "Baa" or
better by Moody's Investors Service ("Moody's"), or that have an equivalent
rating by another nationally recognized statistical rating organization
("NRSRO") at the time of purchase or, if not rated, are considered by the
Portfolio Management Agent to be of comparable quality. Debt obligations rated
in the lowest categories of investment grade (that is, BBB by S&P or Baa by
Moody's) and equivalent securities may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher-grade bonds. The Convertible Securities Fund may invest in
securities that are less than investment grade. SEE INVESTMENT OBJECTIVES AND
POLICIES - CONVERTIBLE SECURITIES FUND.

Each Fund may purchase debt obligations that are not rated if, in the opinion of
the Portfolio Management Agent or Adviser, they are of investment quality at
least comparable to other rated investments that may be purchased by the Fund.
After purchase by a Fund, a security may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund. Neither event will
require a Fund (other than a Money Market Fund) to sell the security unless the
amount of the security exceeds permissible limits. However, the Portfolio
Management Agent will reassess promptly whether the security presents minimal
credit risks and determine whether continuing to hold the security is in the
best interests of the Fund. To the extent that the ratings given by Moody's, S&P
or another NRSRO for securities may change as a result of changes in the rating
systems or due to the corporate reorganization of an NRSRO, each Fund will
attempt to use comparable ratings as standards for its investments in accordance
with the investment objectives and policies of that Fund. The ratings of Moody's
and S&P are more fully described in the Appendix to the SAI. A Money Market Fund
may be required to sell a security downgraded below the minimum required for
purchase, absent a specific finding by the Company's Board of Directors that a
sale is not in the best interests of the Fund.

27
<PAGE>

Portfolio changes also may be made to increase or decrease investments in
anticipation of changes in security prices in general or to provide the cash
necessary for redemptions, distributions to shareholders or other fund
management purposes. Portfolio changes may be made without regard to the length
of time a particular security has been held or the frequency of portfolio
transactions of a Fund (the portfolio turnover rate).

The realization of taxable capital gains and, with respect to equity securities,
the amount of brokerage commissions will tend to increase as the level of
portfolio activity increases. Portfolio turnover rates for the Funds are
included in the Financial Highlights for that Fund. The annual portfolio
turnover rate for the Small-Cap Value Fund is not expected to exceed 100%. The
annual portfolio turnover rate for the Balanced Fund is not expected to exceed
100% with respect to that portion of the Fund investing in equity securities,
and is not expected to exceed 200% with respect to that portion of the Fund
investing in fixed income securities. The annual portfolio turnover rate for
each of the Convertible Securities Fund and the Intermediate Government Bond
Fund is not expected to exceed 100% and 200%, respectively.

The Portfolio Management Agent and the Adviser seek "best execution" for all
portfolio transactions, but a Fund may pay higher than the lowest available
commission rates when the Portfolio Management Agent or Adviser believes it is
reasonable to do so in light of the value of the brokerage, research and other
services provided by the broker effecting the transaction. Purchase and sale
orders for securities on behalf any Fund may be combined with those of other
accounts that the Portfolio Management Agent or Adviser manages, and for which
it has brokerage placement authority, in the interest of seeking the most
favorable overall net results. When the Portfolio Management Agent or Adviser
determines that a particular security should be bought or sold for any of the
Funds and other accounts it manages, the Portfolio Management Agent or Adviser
undertakes to allocate the transactions among the participants equitably. To the
extent permitted by the SEC, the Funds may pay brokerage commissions to certain
affiliated persons. During the last fiscal year, no Fund paid commissions to
these persons.

The Trust, the Company, the Adviser, the Portfolio Management Agent and other
service providers to the Funds have adopted codes of ethics which contain
policies on personal securities transactions by "access persons," including
portfolio managers and investment analysts.

INVESTMENT LIMITATIONS

The Funds have adopted the investment limitations listed below, which are not
fundamental policies unless otherwise noted.

28
<PAGE>

assets in the securities of any one issuer (other than U.S. Government
Securities), except that up to 25% of the value of the total assets of a Fund
(other than the Money Market Fund and the Government Money Market Fund) may be
invested without regard to this limitation. Notwithstanding this policy, each of
the Money Market Fund and the Government Money Market Fund may invest more than
5% of its total assets in the securities of a single issuer for a period of up
to three business days after the purchase thereof, so long as it does not make
more than one such investment at any one time. As a matter of fundamental
policy, no Fund may purchase securities of an issuer if, as a result, with
respect to 75% of its total assets, it would own more than 10% of the voting
securities of such issuer.

CONCENTRATION. Each Fund is prohibited from concentrating its assets in the
securities of issuers in a single industry. As a matter of fundamental policy,
the Funds may not purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase, the
value of its investments in that industry would exceed 25% of the current value
of its total assets. This limitation does not apply to investments in (i)
municipal obligations (for the purpose of this restriction, private activity
bonds shall not be deemed municipal obligations if the payment of principal and
interest on such bonds is the ultimate responsibility of non-governmental
users); (ii) U.S. Government Securities; and (iii) in the case of the Money
Market Fund, bank obligations that are otherwise permitted as investments.

Although not a matter of fundamental policy, the Funds consider the securities
of foreign governments to be a separate industry for purposes of the 25% asset
limitation on investments in the securities of issuers conducting their
principal business activity in the same industry.

BORROWING. As a matter of fundamental policy, no Fund may borrow from banks,
except that a Fund may borrow up to 10% of the current value of its total assets
for temporary purposes only in order to meet redemptions, and these borrowings
may be secured by the pledge of up to 10% of the current value of the Fund's net
assets (but investments may not be purchased while borrowings are in excess of
5% of total assets).

ILLIQUID SECURITIES. Each of the Funds limits its purchase of illiquid
securities. Illiquid securities are securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities and include, among other things,
repurchase agreements not entitling the holder to payment within seven days and
restricted securities (other than those determined to be liquid pursuant to
guidelines established by the Trust's Board of Trustees (and the Company's Board
of Directors)). See Appendix A.

29
<PAGE>
RISK CONSIDERATIONS

THE RISKS OF INVESTING IN EACH FUND VARY DEPENDING UPON THE NATURE OF THE
SECURITIES HELD, AND THE INVESTMENT PRACTICES EMPLOYED, ON ITS BEHALF. THE
FUNDAMENTAL RISK ASSOCIATED WITH THE FUNDS, LIKE OTHER MUTUAL FUNDS THAT INVEST
IN FIXED INCOME AND EQUITY SECURITIES, IS "MARKET RISK." Market risk is the risk
that the market value of a security that a Fund holds will decrease. The market
value of a security may move up and down, sometimes rapidly and unpredictably.
These fluctuations may cause a security to be worth less than it was worth at
the time of purchase. Market risk may apply to a single issuer, industry, sector
of the economy or the market as a whole.

Certain specific risks are described in this section. If you would like to know
more about risks associated with certain types of securities, see Appendix A.

RISKS OF EQUITY SECURITIES. Stock values may fluctuate in response to the
activities of an individual company or in response to general market and/or
economic conditions. Historically, common stocks have provided greater long-term
returns and have entailed greater short-term risks than other types of
securities. Smaller or newer issuers are more likely to realize more substantial
growth or suffer more significant losses than larger or more established
issuers. Investments in these companies can be both more volatile and more
speculative. THE SMALL-CAP OPPORTUNITY FUND AND THE SMALL-CAP VALUE FUND HAVE
HEIGHTENED EXPOSURE TO THESE RISKS DUE TO THEIR POLICY OF INVESTING IN SMALLER
COMPANIES.

RISKS OF FIXED INCOME SECURITIES. The value of fixed income (debt) securities
generally varies inversely with prevailing levels of interest rates: the values
of these securities tend to decrease when interest rates are rising, and
increase when interest rates are declining. Changes in interest rates will
generally cause larger changes in the prices of longer-term securities than in
the prices of shorter-term securities. The risk of market losses attributable to
changes in interest rates is known as "interest rate risk."

Debt securities are subject to "credit risk" relating to the financial condition
of the issuers of the securities. Prices of debt securities may fluctuate based
on changes in the actual and perceived creditworthiness of issuers. The prices
of lower-rated securities often fluctuate more than those of higher-rated
securities.

It is possible that some issuers will not make payments on debt securities held
by a Fund. Investors should be aware that securities offering above-average
yields may involve above-average risks. Securities rated in the lowest
categories of investment grade (that is, BBB by S&P or Baa by Moody's) and
equivalent securities may have speculative characteristics. In adverse economic
or other circumstances, issuers of these securities are more likely to have
difficulty making principal and interest payments than issuers of higher-grade
obligations.

Certain fixed income securities, such as municipal and mortgage-backed
securities, are subject to additional risks. See Appendix A.

30
<PAGE>
RISKS OF INVESTING IN FOREIGN MARKETS. Investments in the securities of foreign
(non-U.S.) issuers may involve risks in addition to those normally associated
with investments in the securities of U.S. issuers. All foreign investments are
subject to risks of foreign political and economic instability, adverse
movements in foreign exchange rates, the imposition or tightening of exchange
controls or other limitations on repatriation of foreign capital, and changes in
foreign governmental attitudes towards private investment, possibly leading to
nationalization, increased taxation or confiscation of foreign investors'
assets.

Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to a
Fund's shareholders; commission rates payable on foreign transactions are
generally higher than in the United States; foreign accounting, auditing and
financial reporting standards differ from those in the United States and,
accordingly, less information may be available about foreign companies than is
available about issuers of comparable securities in the United States; and
foreign securities may trade less frequently and with lower volume and may
exhibit greater price volatility than United States securities. THE
INTERNATIONAL FUND HAS HEIGHTENED EXPOSURE TO THESE RISKS DUE TO ITS POLICY OF
INVESTING PRIMARILY IN THE SECURITIES OF FOREIGN ISSUERS.

RISKS OF FOREIGN CURRENCY. Changes in exchange rates between the U.S. dollar
and a foreign currency also will affect the value in U.S. dollars of the
securities denominated in that currency that are held by the Funds. Exchange
rates are influenced generally by the forces of supply and demand in the foreign
currency markets and by numerous other political and economic events occurring
outside the United States, many of which may be difficult, if not impossible, to
predict.

Income from foreign securities will be received and realized in foreign
currencies, while each Fund is required to compute and distribute income in U.S.
dollars. Accordingly, a decline in the value of a particular foreign currency
against the U.S. dollar occurring after a Fund's income has been earned and
computed in U.S. dollars may require the Fund to liquidate portfolio securities
to acquire sufficient U.S. dollars to make a distribution. Similarly, if the
exchange rate declines between the time that a Fund incurs expenses in U.S.
dollars and the time such expenses are paid, the Fund may be required to
liquidate additional foreign securities to purchase the U.S. dollars required to
meet such expenses. THE INTERNATIONAL FUND HAS HEIGHTENED EXPOSURE TO THESE
RISKS DUE TO ITS POLICY OF INVESTING PRIMARILY IN THE SECURITIES OF FOREIGN
ISSUERS.

31
<PAGE>
securities. Index/structured securities are derivative securities whose value or
performance is linked to other equity securities (such as depository receipts),
currencies, interest rates, indices or other financial indicators.

Some derivatives, such as mortgage-backed and other asset-backed securities, are
in many respects like other fixed income securities, although they may be more
volatile or less liquid than their more traditional counterparts.

There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a Fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.

There are several risks that are associated with derivatives, including
counterparty risk and liquidity risk, which are discussed below. For more
information about the risks associated with certain types of derivatives, see
Appendix A.

BORROWING RISK. Borrowing also involves special risk considerations. Interest
costs on borrowings may fluctuate with changing market rates of interest and may
partially offset or exceed the return earned on the borrowed funds (or on the
assets that were retained rather than sold to meet the needs for which funds
were borrowed). Under adverse market conditions, the Fund might have to sell
portfolio securities to meet interest or principal payments at a time when
fundamental investment considerations would not favor such sales. To the extent
a Fund enters into reverse repurchase agreements, the Fund is subject to risks
that are similar to those associated with borrowing.

COUNTERPARTY RISK. A number of transactions in which a Fund may engage are
subject to the risks of default by the other party to the transaction. When a
Fund engages in repurchase, reverse repurchase, derivative, when-issued, forward
commitment, delayed settlement and securities lending transactions, it relies on
the other party to consummate the transaction. Failure of the other party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price believed to be advantageous.

LIQUIDITY RISK. Certain securities may be difficult or impossible to sell at
the time and the price that the seller would like. The seller may have to lower
the price, sell other securities instead, or forego an investment opportunity,
any of which could have a negative effect on fund management or performance.

INFORMATION RISK. Certain key information about a security or market may be
inaccurate or unavailable, which may limit the investment adviser's ability to
make an appropriate investment decision with regard to the security or market.

OBJECTIVE RISK. Returns from the particular type of security that a Fund
emphasizes in its investments may trail returns from the overall stock or bond
market. For

32
<PAGE>

example, the growth stocks in which the Growth Fund invests tend to go through
periods of relative underperformance and outperformance in comparison to other
types of equity securities. These periods may last for as long as several years.

MANAGEMENT RISK. A strategy used by a Fund's investment adviser may fail to
produce the intended result, which could have a negative effect on fund
performance.

MANAGEMENT
-----------------------------------------------------------------

TRUSTEES AND DIRECTORS

The Trust and the Company are managed under the direction of their governing
Boards of Trustees and Directors, respectively. Each individual listed below is
a member of both the Trust's Board of Trustees and the Company's Board of
Directors. The principal occupation of each individual is also listed below.

<TABLE>
<S> <C>
C. Gary Gerst Chairman of the Board of Trustees and Board of
Directors; Chairman Emeritus, LaSalle Partners,
Ltd. (real estate developer and manager).

Edgar R. Fiedler Senior Fellow and Economic Counsellor, The
Conference Board.

John W. McCarter, Jr. President and Chief Executive Officer, The Field
Museum of Natural History (Chicago); Formerly,
Senior Vice President and Director, Booz-Allen &
Hamilton, Inc. (consulting firm).

Ernest M. Roth Consultant; Retired Senior Vice President and
Chief Financial Officer, Commonwealth Edison
Company.
</TABLE>

INVESTMENT ADVISER

Harris Trust is the investment adviser for each of the Funds pursuant to
Advisory Contracts with the Trust and the Company. Harris Trust, located at 111
West Monroe Street, Chicago, Illinois, is the successor to the investment
banking firm of N.W. Harris & Co. that was organized in 1882 and was
incorporated in 1907 under the present name of the bank. It is an Illinois
state-chartered bank and a member of the Federal Reserve System. At December 31,
1996, Harris Trust had total discretionary trust assets under management of more
than $13.3 billion and was the largest of 25 banks owned by Harris Bankcorp,
Inc. Harris Bankcorp, Inc. is a wholly-owned subsidiary of Bankmont Financial
Corp., which is a wholly-owned subsidiary of Bank of Montreal, a publicly-traded
Canadian banking institution.

As of December 31, 1996, Harris Trust managed more than $10.6 billion in
discretionary personal trust assets, and managed more than $19.2 billion in non-
discretionary trust assets.

33
<PAGE>
With respect to the Tax-Exempt Money Market Fund, the Advisory Contract provides
that Harris Trust shall make investments for the Fund in accordance with its
best judgment. With respect to the remaining Funds, the Advisory Contracts
provide that Harris Trust is responsible for the supervision and oversight of
the Portfolio Management Agent's performance (as discussed below).

The investment advisory fees payable to Harris Trust with respect to each Fund
are based on the average daily net assets of the respective Fund at the
following annual rates:

<TABLE>
<S> <C>
International Fund 1.05%
Small-Cap Opportunity Fund 1.00%
Small-Cap Value Fund 0.80%
Growth Fund 0.90%
Equity Fund 0.70%
Equity Income Fund 0.70%
Index Fund 0.25%
Balanced Fund 0.60%
Convertible Securities Fund 0.70%
Tax-Exempt Bond Fund 0.60%
Bond Fund 0.65%
Intermediate Tax-Exempt Bond Fund 0.60%
Short/Intermediate Bond Fund 0.70%
Intermediate Government Bond Fund 0.65%
Tax-Exempt Money Market Fund 0.14% of each Fund's
first
Money Market Fund $100 million of assets
plus
Government Money Market Fund 0.10% of the Fund's
remaining assets
</TABLE>

PORTFOLIO MANAGEMENT AGENT

Harris Trust has entered into Portfolio Management Contracts with Harris
Investment Management, under which HIM undertakes to furnish investment guidance
and policy direction in connection with the daily portfolio management of all of
the Funds except for the Tax-Exempt Money Market Fund. For the services provided
by HIM, Harris Trust pays HIM the advisory fees it receives from the Funds. As
of December 31, 1996, HIM managed an estimated $9.2 billion in assets.

PORTFOLIO MANAGEMENT

Many persons on the staffs of the Adviser and the Portfolio Management Agent
contribute to the investment management services provided to the Funds. The
following persons, however, are primarily responsible for the day-to-day
investment management of the Funds:

34
<PAGE>

INTERNATIONAL FUND -- Daniel L. Sido. Mr. Sido joined HIM in 1994 and serves as
Senior Partner and Portfolio Manager. He has served as portfolio manager of the
Fund since the Fund commenced operations in February 1996 and has over 13 years
of investment management experience. Prior to joining HIM, he served as
portfolio manager for a trust company, managing equity and fixed income
portfolios.

SMALL-CAP OPPORTUNITY FUND -- Douglas G. Madigan, CFA. Mr. Madigan joined HIM in
1994 and serves as Principal and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in February 1996 and has
over 25 years of academic and applied experience analyzing equities, fixed
income and convertible securities with a number of financial institutions. Prior
to joining HIM, he served as senior portfolio manager for the trust operation of
a large banking institution.

SMALL-CAP VALUE FUND -- Thomas M. Corkill, CFA. Mr. Corkill joined Harris Trust
in 1982 and serves as Partner and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in March 1997 and has 26
years of experience in portfolio management and research.

GROWTH FUND -- James E. Depies, CFA. Mr. Depies joined Harris Trust in 1982 and
serves as Senior Partner and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in February 1996 and has
36 years of investment experience.

EQUITY FUND -- Donald G.M. Coxe. Mr. Coxe joined HIM in 1993 and serves as
Chairman and Chief Strategist. He has served as portfolio manager of the Fund
since February 1996 and has nearly 30 years of institutional investment
management experience. Prior to joining HIM, he served on Wall Street as a
sell-side portfolio strategist advising institutional investors and as chief
executive officer for a Canadian investment counseling firm.

EQUITY INCOME FUND -- Daniel L. Sido. Mr. Sido has served as portfolio manager
of the Fund since the Fund commenced operations in February 1996. For a
description of Mr. Sido, see International Fund above.

INDEX FUND -- Thomas M. Corkill, CFA. Mr. Corkill has served as portfolio
manager of the Fund since the Fund commenced operations in February 1996. For a
description of Mr. Corkill, see Small-Cap Value Fund above.

BALANCED FUND -- C. Thomas Johnson, CFA. Mr. Johnson joined Harris Trust in 1969
and serves as Senior Partner and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in March 1997 and has 28
years of experience in portfolio management.

35
<PAGE>

CONVERTIBLE SECURITIES FUND -- Douglas G. Madigan, CFA. Mr. Madigan has served
as portfolio manager of the Fund since the Fund commenced operations in March
1997. For a description of Mr. Madigan, see Small-Cap Opportunity Fund above.

TAX-EXEMPT BOND FUND -- Kathleen A. Bramlage. Ms. Bramlage joined Harris Trust
in 1993 and serves as Principal and Portfolio Manager. She has served as
portfolio manager of the Fund since the Fund commenced operations in February
1996 and has 14 years of experience managing fixed-income funds, specializing in
tax-exempt and money market securities. Prior to joining Harris Trust, she
served as portfolio manager for a bank proprietary mutual fund complex.

BOND FUND -- Laura Alter and Maureen Svagera. Ms. Alter joined HIM in 1994 and
serves as Senior Partner and Portfolio Manager. She has served as portfolio
manager of the Fund since the Fund commenced operations in April 1996 and has 12
years of experience in the fixed-income investment area. Prior to joining HIM,
she served as portfolio manager for a major mutual fund investment management
firm. Ms. Svagera joined HIM in 1994 and serves as Senior Partner and Portfolio
Manager. She has served as portfolio manager of the Fund since the Fund
commenced operations and has 17 years of experience in the fixed-income markets.
Prior to joining HIM, she spent five years at an investment management firm as
principal/vice president focusing on the mortgage and asset- backed markets.

INTERMEDIATE TAX-EXEMPT BOND FUND -- Kathleen A. Bramlage. She has served as
portfolio manager of the Fund since the Fund commenced operations in February
1996. For a description of Ms. Bramlage, see Tax-Exempt Bond Fund above.

SHORT/INTERMEDIATE BOND FUND -- Laura Alter and Maureen Svagera. Ms. Alter has
served as portfolio manager of the Fund since September 1994. Ms. Svagera has
served as portfolio manager of the Fund since January 1996. For a description of
Ms. Alter and Ms. Svagera, see Bond Fund above.

INTERMEDIATE GOVERNMENT BOND FUND -- Maureen Svagera. Ms. Svagera has served as
portfolio manager of the Fund since the Fund commenced operations in March 1997.
For a description of Ms. Svagera, see Bond Fund above.

ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT

Harris Trust (in this capacity, the "Administrator") is the administrator of the
Funds and, as such, generally assists the Funds in all aspects of their
administration and operation.

36
<PAGE>
accounting services for the Funds. Under these agreements, the Administrator
compensates FDI and PFPC for providing their services. The Administrator, FDI
and PFPC are referred to collectively as the "Administrators."

Harris Trust is also the transfer and dividend disbursing agent of the Funds (in
this capacity, the "Transfer Agent"). The Transfer Agent has entered into
Sub-Transfer Agency Services Agreements with PFPC (the "Sub-Transfer Agent")
whereby the Sub-Transfer Agent performs certain transfer agency and dividend
disbursing agency services.

PNC Bank, N.A. (the "Custodian") serves as custodian of the assets of the Funds.
PFPC and the Custodian are indirect, wholly-owned subsidiaries of PNC Bank Corp.

As compensation for their services, the Administrator, the Transfer Agent and
the Custodian are entitled to receive a combined fee based on the aggregate
average daily net assets of the portfolios of the Company and the Trust, payable
monthly at an annual rate of 0.17% of the first $300 million of average daily
net assets; 0.15% of the next $300 million; and 0.13% of average daily net
assets in excess of $600 million. In addition, the Funds pay a separate fee to
the Sub-Transfer Agent for certain retail sub-transfer agent services and
reimburse the Custodian for various custody transactional expenses.

DISTRIBUTOR

EXPENSES

37
<PAGE>
expenses of the Funds' custodian including those for keeping books and accounts;
expenses of shareholders' meetings and meetings of Boards of Trustees and
Directors; expenses relating to the issuance, registration and qualification of
shares of the Funds; fees of pricing services; organizational expenses; and any
extraordinary expenses. Expenses attributable to each Fund are borne by that
Fund. Other general expenses of the Trust or the Company are allocated among the
Funds in an equitable manner as determined by the Boards of Trustees and
Directors.

HOW TO BUY SHARES
-----------------------------------------------------------------

Institutional Shares are sold to fiduciary and discretionary accounts of
institutions, "institutional investors," Directors, Trustees, officers and
employees of the Company, the Trust, the Adviser, the Portfolio Management
Agent, and the Distributor and the Adviser's investment advisory clients.
"Institutional investors" may include financial institutions (such as banks,
savings institutions and credit unions); pension and profit sharing and employee
benefit plans and trusts; insurance companies; investment companies; investment
advisers; and broker/dealers acting for their own accounts or for the accounts
of such institutional investors.

No sales charge is assessed on purchases of Institutional Shares of the Funds.
Neither the Company nor the Trust imposes any minimum on initial or subsequent
investments.

OPENING AN ACCOUNT. To open an account, complete and sign an application for
Institutional Shares and mail it along with your check. You also may open your
account by wire, as described below. Please be sure to furnish your taxpayer
identification number. (You must also certify whether you are subject to
withholding for failing to report income to the Internal Revenue Service
("IRS")). Investments received without a certified taxpayer identification
number may be returned.

If you are opening an account through a financial institution or other
intermediary, this organization may have different minimum initial and
subsequent investment requirements. Please contact this organization if you have
questions. See BUYING SHARES - THROUGH FINANCIAL INSTITUTIONS below.

BUYING SHARES. Shares may be purchased by any of the following three methods:

1. BY MAIL. Make your check payable to the Fund of your choice. If you are
adding to your existing account, indicate your Fund account number directly on
the check and send to:

Harris Insight Funds
c/o PFPC Inc.
P.O. Box 8952
Wilmington, Delaware 19899-8952

38
<PAGE>

2. BY BANK WIRE. Call the Funds at (800) 625-7073 to initiate your purchase.
Then wire your investment to:

PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3
For Credit to: Harris Insight Funds
85-5093-2950

Re: [Name of Fund] -- Institutional Shares
Account No.:
Account Name:

If you are opening an account, please promptly complete and mail the account
application form to the Funds at the address above under BY MAIL. The Funds
currently do not charge investors for the receipt of wire transfers, although
your bank may charge you for their wiring services.

3. THROUGH FINANCIAL INSTITUTIONS. Shares of any of the Funds may be purchased
through authorized broker-dealers, financial institutions and service agents
with whom the Distributor has a selling agreement, including Harris Trust and
HIM and their affiliates ("Institutions") on any day the Funds are open for
business. See GENERAL PURCHASE INFORMATION. Institutions are responsible for the
prompt transmission of buy, exchange or sell orders.

Each Institution may establish its own terms with respect to the requirement of
a minimum initial investment and minimum subsequent investments. Depending upon
the terms of your account, Institutions may charge account fees for automatic
investment and other services they provide, including account maintenance fees,
compensating balance requirements, or fees based upon account transactions,
assets, or income, which would reduce the your yield or return. Please read this
Prospectus in connection with any information received from your Institution.

GENERAL PURCHASE INFORMATION

The Funds are open for business each day the New York Stock Exchange (the
"Exchange") and the Federal Reserve Bank of Philadelphia are both open for
business (i.e., each weekday other than New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day) ("Fund Business
Day"). Except for the Money Market Funds, each Fund normally calculates its net
asset value ("NAV") and offering price at the close of business of the Exchange,
which is normally 4:00 p.m., Eastern time. Each of the Money Market Funds
normally calculates its NAV on or before 12:00 Noon, Eastern time. Shares are
purchased at the next share price calculated after your investment is received
and accepted.

39
<PAGE>
Orders placed directly with the Funds must be paid for by check or bank wire on
the same day. Payment for the shares purchased through an Institution will not
be due until settlement date, normally three business days after the order has
been executed. The Company and Trust, as applicable, reserve the right to reject
any purchase order.

HOW TO SELL SHARES
-----------------------------------------------------------------

Shares may be sold (redeemed) at their next determined net asset value after
receipt of a proper request by the Funds directly or through any Institution.

1. BY MAIL. Shareholders may sell shares by writing the Funds at the following
address:

Harris Insight Funds
c/o PFPC Inc.
P.O. Box 8952
Wilmington, Delaware 19899-8952

Certain requests for redemption must be signed by the shareholder with signature
guaranteed. See SHAREHOLDER SERVICES AND POLICIES - SIGNATURE GUARANTEES.

2. BY TELEPHONE. If you have chosen the telephone redemption privilege, you may
make a telephone redemption request by calling the Funds at (800) 625-7073 and
providing the your account number, the exact name of your account and your
social security or taxpayer identification number. The Fund then will mail a
check to your account address or, if you have elected the wire redemption
privilege, wire the proceeds on the following business day.

3. BY BANK WIRE. If you have chosen the wire redemption privilege, you may
request the Funds to transmit your proceeds by federal funds wire to a bank
account previously designated by you in writing. See GENERAL REDEMPTION
INFORMATION - WIRE REDEMPTION PRIVILEGE below.

4. THROUGH FINANCIAL INSTITUTIONS. If you bought your shares through an
Institution, you may redeem your shares through the Institution. Please contact
the Institution for this service.

GENERAL REDEMPTION INFORMATION

There is no charge for redemptions, but if you bought your shares through an
Institution, the Institution may charge an account-based service fee. A
redemption order received in good order by your Institution or the Funds before
the close of the Exchange and before the close of the Fund Business Day will be
executed at the Fund's net asset value per share next determined on that day. A
redemption order received after the close of the Exchange, or not received by
the Funds prior to the close of the Fund Business Day, will be executed at the
Fund's net asset value next determined on the next Fund Business Day.

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Proceeds of redemption orders received in good order will normally be remitted
within five but not more than seven business days, except that if a redemption
request is made shortly after a recent purchase by check, proceeds will be
distributed once the check used to purchase the Fund's shares clears, which may
take up to 15 days or more after the investment. The proceeds may be more or
less than the amount originally invested and, therefore, a redemption may result
in a gain or loss for federal income tax purposes.

The Funds intend to pay redemption proceeds in cash, but reserve the right to
pay in kind by delivery of investment securities equal in value to the
redemption price to the extent permitted by applicable laws and regulations. In
these cases, you might incur brokerage costs in converting the securities to
cash. The right of any shareholder to receive payment of redemption proceeds may
be suspended, or payment may be postponed, in certain circumstances. These
circumstances include any period when the Exchange is closed (other than
weekends or holidays) or trading on the Exchange is restricted, any period when
an emergency exists and any time the SEC permits mutual funds to postpone
payments for the protection of investors.

WIRE REDEMPTION PRIVILEGE. If the wire redemption privilege has been elected on
the shareholder application, redemption of shares may be requested by telephone,
on any day the Funds and the Transfer Agent are open for business, by calling
the Funds at (800) 625-7073.

The minimum amount that may be wired is $1,000. Otherwise, a check is mailed to
the shareholder's address of record. The Funds reserve the right to change this
minimum or to terminate the privilege. Redemption proceeds normally are
transmitted by wire on the business day after a redemption request is made. For
the Money Market Funds, if a request is received by the Transfer Agent by 12:00
Noon, Eastern time on a day the Funds and the Transfer Agent are open for
business, the redemption proceeds will be transmitted to the shareholder's bank
that same day.

SHAREHOLDER SERVICES AND POLICIES

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EXCHANGING SHARES. YOU CAN EXCHANGE INSTITUTIONAL SHARES OF A FUND FOR
INSTITUTIONAL SHARES OF THE OTHER HARRIS INSIGHT FUNDS OFFERING THOSE SHARES.
Institutional Shares of any of the Funds that you have held for seven days or
more may be exchanged for shares of any other Harris Insight Fund in an
identically registered account, provided that Institutional Shares of the Fund
to be acquired are registered for sale in the your state of residence.

If you would like the ability to exchange shares by telephone, please choose
this option when you complete your application. The Funds reserve the right to
limit the number of exchanges between Funds, to reject any telephone exchange
order

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or otherwise to modify or discontinue exchange privileges at any time upon 60
days' written notice. A capital gain or loss for tax purposes may be realized
upon an exchange, depending upon the cost or other basis of shares redeemed.

SIGNATURE GUARANTEES. A signature guarantee assures that a signature is genuine
and protects shareholders from unauthorized account transfers. In addition to
certain signature requirements, a signature guarantee is required in any of the
following circumstances:

- A redemption check is to be made payable to anyone other than the
shareholder(s) of record.

- A redemption check is to be mailed to an address other than the address of
record.

- A redemption amount is to be wired to a bank other than one previously
authorized.

At the Funds' discretion, signature guarantees also may be required for other
redemptions. Banks, savings and loan associations, trust companies, credit
unions, broker-dealers and member firms of a national securities exchange may
guarantee signatures. Call your financial institution to see if it has this
capability.

TELEPHONE TRANSACTIONS. Investors may buy (by bank wire), sell and exchange
shares by telephone. Shareholders engaging in telephone transactions should be
aware that they may be foregoing some of the security associated with written
requests. A shareholder may bear the risk of any resulting losses from a
telephone transaction. The Funds will employ reasonable procedures to confirm
that telephonic instructions are genuine. If the Funds or their service
providers fail to employ these measures, they may be liable for any losses
arising from unauthorized or fraudulent instructions. In addition, the Funds
reserve the right to record all telephone conversations. Please verify the
accuracy of telephone instructions immediately upon receipt of confirmation
statements.

During times of drastic economic or market changes, telephone redemption and
exchange privileges may be difficult to implement. In the event that you are
unable to reach the Funds by telephone, requests may be mailed or hand-delivered
to the Funds at the address listed in HOW TO SELL SHARES.

REDEMPTION OF SHARES IN SMALLER ACCOUNTS. Because of the high cost of
maintaining small accounts, each Fund reserves the right to redeem all shares in
an account whose value falls below $500 unless this is a result of a decline in
the market value of the shares. Prior to such a redemption, a shareholder will
be notified in writing and permitted 30 days to make additional investments to
raise the account balance to the specified minimum.

SHARE CERTIFICATES. Share certificates are not issued.

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ELIGIBILITY BY STATE. You may only invest in, or exchange into, Institutional
Shares legally available in your jurisdiction of residence.

REPORTS TO SHAREHOLDERS. You will receive an account statement after every
transaction that affects your share balance, except for reinvestments of
dividend and capital gain distributions, or at least annually, as well as a
quarterly consolidated statement. In addition, each year you will receive an
annual and semi-annual report to shareholders of each Fund in which you invest.
If you would like copies of these reports, please call (800) 982-8782.

HOW THE FUNDS MAKE DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
-----------------------------------------------------------------

Dividends of net investment income currently are declared and paid at least
annually by each Fund in accordance with the Fund's dividend policy. Dividends
from the International Fund, the Small-Cap Opportunity Fund and the Small-Cap
Value Fund are declared and paid semi-annually. Dividends from each of the
Growth Fund, the Equity Income Fund, the Equity Fund, the Index Fund, the
Balanced Fund and the Convertible Securities Fund are declared and paid
quarterly. Dividends from the Tax-Exempt Bond Fund, the Bond Fund, the
Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund and the
Intermediate Government Bond Fund are declared daily and paid monthly. Dividends
from each of the Money Market Funds are declared daily and paid monthly. Any net
capital gains will be declared and paid at least annually. Dividend and capital
gain distributions may be invested in additional shares of the same Fund at net
asset value and credited to the shareholder's account on the payment date or
paid in cash (no sales charge is assessed on the reinvestment of dividends or
distributions). Distribution checks and account statements will be mailed
approximately two business days after the payment date.

Each Fund is treated as a separate entity for tax purposes and thus the
provisions of the Internal Revenue Code (the "Code") generally are applied to
each Fund separately, rather than to the Trust or the Company as a whole. As a
result, net capital gains, net investment income, and operating expenses are
determined separately for each Fund. The Trust and the Company intend to qualify
each Fund as a regulated investment company under the Code and to distribute to
the shareholders of each Fund sufficient net investment income and net realized
capital gains of that Fund so that the Fund will not be subject to federal
income taxes.

Dividends (including net short-term capital gains), except "exempt-interest
dividends" (described below), will be taxable to shareholders as ordinary
income.

Distributions of net long-term capital gains, if any, will be taxable as
long-term capital gains, whether received in cash or reinvested in additional
shares, regardless of how long the shareholder has held the shares, and will not
qualify for the dividends-received deductions.

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<PAGE>

A taxable gain or loss also may be realized by a shareholder upon the redemption
or transfer of shares depending on the tax basis of the shares and their price
at the time of the transaction. Any loss realized on a sale or exchange of
shares of a Fund will be disallowed to the extent other shares of that Fund are
acquired within the 61-day period beginning 30 days before and ending 30 days
after disposition of the shares.

Dividends paid by each of the Tax-Exempt Bond Fund, the Intermediate Tax-Exempt
Bond Fund and the Tax-Exempt Money Market Fund (the "Tax-Exempt Funds") out of
tax-exempt interest income earned by the Fund ("exempt-interest dividends")
generally will not be subject to Federal income tax in the hands of the Fund's
shareholders. However, persons who are substantial users or related persons
thereof of facilities financed by private activity bonds held by a Fund may be
subject to Federal income tax on their pro rata share of the interest income
from such bonds and should consult their tax advisers before purchasing shares
of such Fund.

Interest on indebtedness incurred by shareholders to purchase or carry shares of
a Fund generally is not deductible for Federal income tax purposes. Under rules
of the IRS for determining when borrowed funds are used for purchasing or
carrying particular assets, shares of a Fund may be considered to have been
purchased or carried with borrowed funds even though those funds are not
directly linked to the shares. Substantially all of the dividends paid by each
Tax-Exempt Fund are anticipated to be exempt from Federal income taxes.

Shareholders of the Tax-Exempt Funds may be exempt from state and local taxes on
distributions of tax-exempt interest income derived from obligations of the
state and/or municipalities of the state in which they reside but may be subject
to tax on income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in the Fund which may differ
from the Federal income tax consequences described above.

The Trust and the Company, as applicable, will be required to withhold, subject
to certain exemptions, a portion (currently 31%) from dividends paid or credited
to individual shareholders and from redemption proceeds, if a correct taxpayer
identification number, certified when required, is not on file with the Trust
(or the Company) or Transfer Agent.

GENERAL INFORMATION
-----------------------------------------------------------------

BANKING LAW MATTERS

Federal banking laws and regulations generally prohibit federally chartered or
supervised banks from engaging directly in the business of issuing,
underwriting, selling or distributing securities, although subsidiaries of bank
holding companies, such as Harris Trust and HIM, are permitted to purchase and
sell securities upon the order and for the account of their customers.

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Harris Trust and HIM believe that they may perform the services contemplated by
this Prospectus and their respective agreements with the Company and Trust
without violating applicable federal banking laws or regulations. It is noted,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in federal statutes or
regulations and judicial or administrative decisions or interpretations thereof,
could prevent Harris Trust or HIM from continuing to perform, in whole or in
part, these services. If this were to happen, the Funds would seek alternative
sources for these services.

HOW SHARE VALUE IS DETERMINED

Net asset value per share is the value of one share of a Fund, which is
determined on each Fund Business Day. Net asset value per share of each class is
determined by dividing the value of a Fund's net assets (i.e., the value of its
securities and other assets less its liabilities) allocable to that class by the
number of shares of that class outstanding.

The net asset value per share of each of the non-Money Market Funds is
determined at the close of regular trading on the Exchange (currently 4:00 p.m.,
Eastern time) on each Fund Business Day. The value of securities held by the
non-Money Market Funds (other than bonds and debt obligations maturing in 60
days or less) is determined based on the last sale price on the principal
exchange on which the securities are traded as of the time of valuation. In the
absence of any sale on the valuation date, the securities are valued at the
closing bid price. Securities traded only on over-the-counter markets are valued
at closing over-the-counter bid prices. Portfolio securities that are primarily
traded on foreign securities exchanges are generally valued at their closing
values on the exchange. Bonds are valued at the mean of the last bid and asked
prices. In the absence of readily available market quotations (or when, in the
view of the Portfolio Management Agent, available market quotations do not
accurately reflect a security's fair value), securities are valued at their fair
value as determined by the Trust's Board of Trustees or Company's Board of
Directors. Prices used for valuations of securities are provided by independent
pricing services. Debt obligations with remaining maturities of 60 days or less
generally are valued at amortized cost. The amortized cost method involves
valuing a security at its cost and amortizing any discount or premium over the
period until maturity, regardless of the impact of fluctuating interest rates on
the market value of the security.

The net asset value per share of each of the Money Market Funds is determined at
12:00 Noon, Eastern time. In order to maintain a stable net asset value of $1.00
per share, each of the Funds uses the amortized cost method to value its
portfolio securities.

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<PAGE>
HOW PERFORMANCE IS REPORTED

From time to time, each of the Funds may advertise its performance. Performance
may be quoted in terms of total return, yield, effective yield and
tax-equivalent yield. All performance information is based on historical results
and is not intended to indicate future performance.

Total return refers to the amount an investment in a Fund would have earned,
including any increase or decrease in net asset value, over a specified period
of time and assumes the payment of the maximum sales load and the reinvestment
of all dividends and distributions. The total return of each Fund shows what an
investment in Institutional Shares of the Fund would have earned over a
specified period of time (such as one, five or ten years, or the period of time
since commencement of operations, if shorter) assuming that the maximum sales
load was paid and that all distributions and dividends by the Fund were
reinvested on their reinvestment dates during the period less all recurring
fees. When a Fund compares its total return to that of other mutual funds or
relevant indices, its total return also may be computed without reflecting the
sales load so long as the sales load is stated separately in connection with the
comparison.

A Fund's yield is a way of showing the rate of income the Fund earns on its
investments as a percentage of the Fund's share price. To calculate standardized
yield, a Fund divides the interest income it earned from its investments for a
30-day period (net of expenses) by the average number of shares entitled to
receive dividends. The result is then expressed as an annualized percentage rate
based on the Fund's share price at the end of the 30-day period (which period
will be stated in the advertisement). The yield of any investment is generally a
function of portfolio quality and maturity, type of instrument and operating
expenses.

The effective yield is calculated similarly but, when annualized, the income
earned by an investment in shares of the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield,"
which will be calculated only for the Tax-Exempt Funds, refers to the yield on a
taxable investment necessary to produce an after-tax yield equal to a Fund's
tax-exempt yield, and is calculated by increasing the yield shown for the Fund
to the extent necessary to reflect the payment of specified tax rates. Thus, the
tax-equivalent yield for a Fund will always exceed that Fund's yield.

From time to time the Money Market Funds advertise "30-day average yield" and
"monthly average yield." Such yields refer to the average daily income generated
by an investment in such Fund over a 30-day or monthly period, as appropriate
(which period will be stated in the advertisement).

The Funds' advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Inc. and Lipper

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<PAGE>
Analytical Services, Inc. The comparative material found in the Funds'
advertisements, sales literature or reports to shareholders may contain
performance ratings. That material is not to be considered an indication of
future performance. All performance information for a Fund is calculated on a
class basis. In addition, a Fund may use a benchmark securities index as a
measure of the Fund's performance. The Balanced Fund may measure performance
using a composite of securities indices to reflect that Fund's policy of
investing in both equity and fixed income securities. The Funds may from time to
time advertise a comparison of their performance against relevant indices.

MORE INFORMATION ABOUT THE TRUST AND THE COMPANY

The Trust is an open-end management investment company which was organized on
December 6, 1995 as a business trust under the laws of the Commonwealth of
Massachusetts. The Trust offers shares of beneficial interest, $.001 par value,
for sale to the public. Currently, the Trust has 12 portfolios in operation. The
Board has authorized each Fund of the Trust to issue two classes of shares,
Class A Shares and Institutional Shares.

The Company, which was incorporated in Maryland on September 16, 1987, is an
open-end management investment company. The authorized capital stock of the
Company consists of 10,000,000,000 shares having a par value of $.001 per share.
Currently, the Company has seven portfolios in operation, including two
portfolios not offered in this Prospectus: Harris Insight Hemisphere Free Trade
Fund and Harris Insight Convertible Fund. The Company's Board has authorized the
Funds of the Company to issue two classes of shares, Class A and Institutional
Shares, except with respect to Harris Insight Convertible Fund, which offers a
single class.

Class A Shares of the Funds, which are offered primarily to retail investors,
are sold with front-end sales charge (except with respect to the Money Market
Funds) and bear additional expenses. In the future, the Board of Trustees of the
Trust and the Board of Directors of the Company may authorize the issuance of
shares of additional investment portfolios and additional classes of shares of
any portfolio. Different classes of shares of a single portfolio may bear
different sales charges and other expenses (including distribution fees) which
may affect their relative performance. Information regarding other classes of
shares may be obtained by calling the Funds at (800) 982-8782 or from any
institution that makes available shares of the Funds. All shares of the Trust
and all shares of the Company have equal voting rights and will be voted in the
aggregate, and not by class, except where voting by class is required by law or
where the matter involved affects only one class. A more detailed statement of
the voting rights of shareholders is contained in the SAI. All shares of the
Trust and all shares of the Company, when issued, will be fully paid and
non-assessable.

As of April 1, 1997, Harris Trust owned of record all or substantially all of
the Institutional Shares of the Funds and, for purposes of the 1940 Act, may
have been

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<PAGE>

deemed to control the Funds. Harris Trust has indicated that it holds its shares
on behalf of various client accounts and not as beneficial owner. From time to
time, certain shareholders may own a large percentage of the shares of a Fund.
Accordingly, those shareholders may be able to greatly affect (if not determine)
the outcome of a shareholder vote.

The Trust and the Company may dispense with annual meetings of shareholders in
any year in which Trustees and Directors are not required to be elected by
shareholders. It is anticipated generally that shareholder meetings will be held
only when specifically required by federal or state law. Shareholders have
available certain procedures for the removal of Trustees and Directors.

There is a possibility that the Trust might become liable for any misstatement,
inaccuracy or incomplete disclosure in this Prospectus concerning the Company.
Likewise, there is a possibility that the Company might become liable for any
misstatement, inaccuracy or incomplete disclosure in this Prospectus concerning
the Trust.

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable for the trust's obligations. However,
the risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which both the trust itself was unable
to meet its obligations and inadequate insurance existed. To guard against this
risk, the Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for acts or obligations of the Trust and provides for
indemnification out of Trust property of any shareholder held personally liable
for obligations of the Trust.

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APPENDIX A: PERMITTED INVESTMENTS
-----------------------------------------------------------------

ASSET-BACKED SECURITIES. The Equity Funds, the Short/Intermediate Bond Fund,
the Bond Fund, the Intermediate Government Bond Fund, the Intermediate Tax-
Exempt Bond Fund, the Tax-Exempt Bond Fund and the Money Market Fund may
purchase asset-backed securities, which represent direct or indirect
participations in, or are secured by and payable from, assets other than
mortgage-backed assets such as motor vehicle installment sales contracts,
installment loan contracts, leases of various types of real and personal
property and receivables from revolving credit (credit card) agreements. In
accordance with guidelines established by the Boards of Trustees and Directors,
asset-backed securities may be considered illiquid securities and, therefore,
may be subject to a Fund's 15% (10% with respect to the Equity Fund, the
Short/Intermediate Bond Fund and the Money Market Funds) limitation on such
investments. Asset-backed securities, including adjustable rate asset-backed
securities, have yield characteristics similar to those of mortgage-backed
securities and, accordingly, are subject to many of the same risks, including
prepayment risk.

Assets are securitized through the use of trusts and special purpose
corporations that issue securities that are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of
principal and interest may be guaranteed up to certain amounts and for a certain
time period by a letter of credit issued by a financial institution.
Asset-backed securities do not always have the benefit of a security interest in
collateral comparable to the security interests associated with mortgage-backed
securities. As a result, the risk that recovery on repossessed collateral might
be unavailable or inadequate to support payments on asset-backed securities is
greater for asset-backed securities than for mortgage-backed securities. In
addition, because asset-backed securities are relatively new, the market
experience in these securities is limited and the market's ability to sustain
liquidity through all phases of an interest rate or economic cycle has not been
tested.

BANK OBLIGATIONS. A Fund may invest in obligations of bank obligations,
including negotiable certificates of deposit, bankers' acceptances and time
deposits of U.S. banks (including savings banks and savings associations),
foreign branches of U.S. banks, foreign banks and their non-U.S. branches
(Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and
wholly-owned banking-related subsidiaries of foreign banks.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Certificates of deposit and
fixed time deposits, which are

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<PAGE>

payable at the stated maturity date and bear a fixed rate of interest, generally
may be withdrawn on demand but may be subject to early withdrawal penalties
which could reduce the Fund's yield. Deposits subject to early withdrawal
penalties or that mature in more than seven days are treated as illiquid
securities if there is no readily available market for the securities. A Fund's
investments in the obligations of foreign banks and their branches, agencies or
subsidiaries may be obligations of the parent, of the issuing branch, agency or
subsidiary, or both.

The profitability of the banking industry is largely dependent upon the
availability and cost of funds to finance lending operations and the quality of
underlying bank assets. In addition, domestic and foreign banks are subject to
extensive but different government regulation which may limit the amount and
types of their loans and the interest rates that may be charged. Obligations of
foreign banks involve somewhat different investment risks from those associated
with obligations of U.S. banks. See "Foreign Securities."

COMMON AND PREFERRED STOCK. The Equity Funds and the Convertible Securities
Fund may invest in common and preferred stock. Common stockholders are the
owners of the company issuing the stock and, accordingly, usually have the right
to vote on various corporate governance matters such as mergers. They are not
creditors of the company, but rather, upon liquidation of the company, are
entitled to their pro rata share of the company's assets after creditors
(including fixed income security holders) and, if applicable, preferred
stockholders are paid. Preferred stock is a class of stock having a preference
over common stock as to dividends or upon liquidation. A preferred stockholder
is a shareholder in the company and not a creditor of the company as is a holder
of the company's fixed income securities. Dividends paid to common and preferred
stockholders are distributions of the earnings or other surplus of the company
and not interest payments, which are expenses of the company. Equity securities
owned by a Fund may be traded in the over-the-counter market or on a securities
exchange and may not be traded every day or in the volume typical of securities
traded on a major U.S. national securities exchange. As a result, disposition by
a Fund of a portfolio security to meet redemptions by shareholders or otherwise
may require the Fund to sell the security at less than the reported value of the
security, to sell during periods when disposition is not desirable, or to make
many small sales over a lengthy period of time. The market value of all
securities, including equity securities, is based upon the market's perception
of value and not necessarily the book value of an issuer or other objective
measure of a company's worth.

CONVERTIBLE SECURITIES. The Equity Funds, the Convertible Securities Fund and
the Bond Fund may invest in convertible preferred stock and bonds, which are
fixed income securities that are convertible into common stock at a specified
price or conversion ratio. Because these securities have the characteristics of
both fixed income and equity securities, they sometimes are called "hybrid"
securities. In general, the value of a convertible security is the higher of its
investment value (its

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value as a fixed income security) and its conversion value (the value of the
underlying shares of common stock if the security is converted). As a fixed
income security, the value of a convertible security generally increases when
interest rates decline and generally decreases when interest rates rise. The
value of convertible securities, however, is also influenced by the value of the
underlying common stock. Thus, convertible securities ordinarily will provide
opportunities for producing both current income and longer-term capital
appreciation. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinate to any
nonconvertible fixed income securities.

EXCHANGE RATE-RELATED SECURITIES. The International Fund may invest in
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-Related
Securities"). The interest payable on these securities generally is paid at
rates higher than most other similarly rated securities in recognition of the
foreign currency risk component of Exchange Rate-Related Securities.

Investments in Exchange Rate-Related Securities entail certain risks. There is
the possibility of significant changes in rates of exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related Security is
linked. In addition, there is no assurance that sufficient trading interest to
create a liquid secondary market will exist for a particular Exchange
Rate-Related Security due to conditions in the debt and foreign currency
markets.

FLOATING AND VARIABLE RATE SECURITIES. Each Fund may purchase securities having
a floating or variable rate of interest. These securities pay interest at rates
that are adjusted periodically according to a specified formula, usually with
reference to a some interest rate index or market interest rate. These
adjustments tend to decrease the security's price sensitivity to changes in
interest rates. Certain of these obligations may carry a demand feature that
would permit the holder to tender them back to the issuer at par value prior to
maturity. Each Fund will limit its purchases of floating and variable rate
obligations to those of the same quality as it otherwise is allowed to purchase.
Similar to fixed rate debt instruments, variable and floating rate instruments
are subject to changes in value based on changes in market interest rates or
changes in the issuer's creditworthiness.

Certain variable rate securities pay interest at a rate that varies inversely to
prevailing short-term interest rates (sometimes referred to as inverse
floaters). For example, upon reset the interest rate payable on a security may
go down when the underlying index has risen. During periods when short-term
interest rates are relatively low as compared to long-term interest rates, a
Fund may attempt to enhance its yield by purchasing inverse floaters. Certain
inverse floaters may have an interest rate reset mechanism that multiplies the
effects of changes in the underlying index. While this form of leverage may
increase the security's yield, it may also increase the volatility of the
security's market value.

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A floating or variable rate instrument may be subject to the Fund's percentage
limitation on illiquid securities if there is no reliable trading market for the
instrument or if the Fund may not demand payment of the principal amount within
seven days.

FOREIGN EXCHANGE CONTRACTS AND FOREIGN CURRENCY FORWARD CONTRACTS. When
investing in foreign securities a Fund usually effects currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market. The Fund incurs foreign exchange expenses in converting
assets from one currency to another.

Each of the Equity Funds may enter into forward foreign currency exchange
contracts for the purchase or sale of a fixed quantity of a foreign currency at
a future date ("Forward Contracts"). A Fund may enter into Forward Contracts for
"hedging" purposes -- either to "lock in" the U.S. dollar price of the
securities denominated in a foreign currency or the U.S. dollar value of
interest and dividends to be paid on such securities, or to hedge against the
possibility that the currency of a foreign country in which a Fund has
investments may suffer a decline against the U.S. dollar -- or for non-hedging
purposes. By entering into Forward Contracts, a Fund may be required to forego
the benefits of advantageous changes in exchange rates and, in the case of
Forward Contracts entered into for non-hedging purposes, the Fund may sustain
losses which will reduce its gross income. A Fund also may enter into a Forward
Contract on one currency in order to hedge against risk of loss arising from
fluctuations in the value of a second currency (referred to as a "cross hedge")
if, in the judgment of the Portfolio Management Agent, a reasonable degree of
correlation can be expected between movements in the values of the two
currencies. Forward Contracts are traded over-the-counter, and not on organized
commodities or securities exchanges. As a result, such contracts operate in a
manner distinct from exchange-traded instruments, and their use involves certain
risks beyond those associated with transactions in futures contracts or options
traded on exchanges.

FOREIGN SECURITIES. The International Fund may invest in dollar-denominated and
non-dollar-denominated foreign equity and debt securities. Each of the other
Equity Funds may invest up to 10% of its total assets in dollar-denominated
foreign equity and debt securities. Each of the Equity Funds also may invest in
American Depository Receipts ("ADRs") and European Depository Receipts ("EDRs").
ADRs are certificates issued by a U.S. depository (usually a bank) and represent
a specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. EDRs are typically issued by foreign banks and
trust companies (although they also may be issued by U.S. banks or trust
companies) and evidence ownership of underlying securities issued by either a
foreign or a U.S. corporation.

The Short/Intermediate Bond Fund and the Bond Fund (each with respect to 20% of
its total assets) as well as the Money Market Fund may invest in non-convertible
(and convertible in the case of the Bond Fund) debt of foreign banks, foreign

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corporations and foreign governments which obligations are denominated in and
pay interest in U.S. dollars. The Convertible Securities Fund may invest in
dollar-denominated Eurodollar securities convertible into the common stock of
domestic corporations. The Government Fund may invest in dollar-denominated
Eurodollar securities that are guaranteed by the U.S. Government or its agencies
or instrumentalities. Investments in foreign securities involve certain
considerations that are not typically associated with investing in domestic
securities. For example, investments in foreign securities typically involve
higher transaction costs than investments in U.S. securities. Foreign
investments may have risks associated with currency exchange rates, political
instability, less complete financial information about the issuers and less
market liquidity than domestic securities. Future political and economic
developments, possible imposition of withholding taxes on income, seizure or
nationalization of foreign holdings, establishment of exchange controls or the
adoption of other governmental restrictions might adversely affect the payment
of principal and interest on foreign obligations. In addition, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements and to different accounting, auditing and recordkeeping
requirements than domestic banks.

GUARANTEED INVESTMENT CONTRACTS. The Short/Intermediate Bond Fund, the Bond
Fund and the Money Market Fund may invest in guaranteed investment contracts
("GICs") issued by U.S. and Canadian insurance companies. GICs require a Fund to
make cash contributions to a deposit fund of an insurance company's general
account. The insurance company then makes payments to the Fund based on
negotiated, floating or fixed interest rates. A GIC is a general obligation of
the issuing insurance company and not a separate account. The purchase price
paid for a GIC becomes part of the general assets of the insurance company, and
the contract is paid from the insurance company's general assets. Generally,
GICs are not assignable or transferable without the permission of the issuing
insurance companies, and an active secondary market in GICs does not currently
exist.

ILLIQUID SECURITIES AND RESTRICTED SECURITIES. Each Fund may invest up to 15%
(10% with respect to the Equity Fund, the Short/Intermediate Bond Fund and the
Money Market Funds) of its net assets in securities that are considered
illiquid. Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 ("restricted securities"),
securities which are otherwise not readily marketable, such as over-the-counter
options, and repurchase agreements not entitling the holder to payment of
principal in seven days. Under the supervision of the Trust's Board of Trustees
(or the Company's Board of Directors), the Portfolio Management Agent or Adviser
determines and monitors the liquidity of portfolio securities.

Repurchase agreements and time deposits that do not provide for payment to the
Fund within seven days after notice or which have a term greater than seven days
are deemed illiquid securities for this purpose unless such securities are
variable

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<PAGE>
amount master demand notes with maturities of nine months or less or unless the
Portfolio Management Agent or Adviser has determined that an adequate trading
market exists for such securities or that market quotations are readily
available.

Limitations on resale may have an adverse effect on the marketability of
portfolio securities and a Fund might also have to register restricted
securities in order to dispose of them, resulting in expense and delay. A Fund
might not be able to dispose of restricted or other securities promptly or at
reasonable prices and might thereby experience difficulty satisfying
redemptions. There can be no assurance that a liquid market will exist for any
security at any particular time.

These securities may be determined to be liquid in accordance with guidelines
established by the Trust's Board of Trustees (or the Company's Board of
Directors). These guidelines take into account trading activity in the
securities and the availability of reliable pricing information, among other
factors. The Board of Trustees or Directors monitors implementation of these
guidelines on a periodic basis.

INDEX FUTURES CONTRACTS; OPTIONS ON INDICES; OPTIONS ON SECURITIES. The Equity
Funds, the Convertible Securities Fund, the Bond Fund, the Tax-Exempt Bond Fund,
the Intermediate Tax-Exempt Bond Fund and the Intermediate Government Bond Fund
may attempt to reduce the risk of investment in securities by hedging a portion
of its portfolio through the use of futures contracts on indices and options on
such indices traded on national securities exchanges. These Funds also may
attempt to reduce the risk of investment in debt securities by hedging a portion
of its portfolio through the use of interest rate futures and options on such
futures contracts. Except for the Index Fund, a Fund will use futures contracts
and options on such futures contracts only as a hedge against anticipated
changes in the values of securities held in its portfolio or in the values of
securities that it intends to purchase. The Index Fund also may use S&P 500
Index futures contracts to simulate full investment in the underlying index
while retaining a cash balance for liquidity purposes.

Each Fund may invest in covered put and covered call options and may write
covered put and covered call options on securities in which it may invest
directly and that are traded on registered domestic securities exchanges or
over-the-counter.

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<PAGE>

The use of index and interest rate futures contracts and options may expose a
Fund to additional risks and transaction costs. Risks inherent in the use of
such instruments include: (1) the risk that interest rates, securities prices or
currency markets will not move in the direction that the portfolio manager
anticipates; (2) the existence of an imperfect correlation between the price of
such instruments and movements in the prices of the securities, interest rates
or currencies being hedged; (3) the fact that skills needed to use these
strategies are different than those needed to select portfolio securities; (4)
the possible inability to close out certain hedged positions may result in
adverse tax consequences; (5) the possible absence of a liquid secondary market
for any particular instrument and possible exchange-imposed price fluctuation
limits, either of which may make it difficult or impossible to close out a
position when desired; (6) the leverage risk, that is, the risk that adverse
price movements in an instrument can result in a loss substantially greater than
a Fund's initial investment in that instrument (in some cases, the potential
loss is unlimited); and (7) particularly in the case of privately-negotiated
instruments, the risk that the counterparty will fail to perform its
obligations, which could leave a Fund worse off than if it had not entered into
the position.

When a Fund invests in index and interest rate futures contracts and options, it
may be required to segregate cash or other appropriate assets to "cover" the
Fund's position. Assets segregated or set aside generally may not be disposed of
so long as a Fund maintains the positions requiring segregation or cover.
Segregating assets could diminish a Fund's return due to the opportunity losses
of foregoing other potential investments with the segregated assets. See
"Investment Strategies" in the SAI.

INVESTMENT COMPANY SECURITIES. In connection with the management of its daily
cash positions, each Fund may invest in securities issued by investment
companies that invest in short-term, debt securities (which may include
municipal obligations that are exempt from federal income taxes) and which seek
to maintain a $1.00 net asset value per share. Each non-Money Market Fund, other
than the Equity Fund and the Short/Intermediate Bond Fund, also may invest in
securities issued by investment companies that invest in securities in which the
Fund could invest directly.

Securities of investment companies may be acquired by any of the Funds within
the limits prescribed by the 1940 Act. These limit each such Fund so that: (i)
not more than 5% of its total assets will be invested in the securities of any
one investment company; (ii) not more than 10% of its total assets will be
invested in the aggregate in securities of investment companies as a group; and
(iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund or by the Trust or the Company as a whole. As
a shareholder of another investment company, a Fund would bear, along with other
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the advisory and
other expenses that a Fund bears directly in connection with its own operations.

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LETTERS OF CREDIT. Debt obligations, including municipal obligations,
certificates of participation, commercial paper and other short-term
obligations, may be backed by an irrevocable letter of credit of a bank. Only
banks that, in the opinion of the Portfolio Management Agent or Adviser, are of
investment quality comparable to other permitted investments of a Fund, may be
used for letter of credit-backed investments.

LOANS OF PORTFOLIO SECURITIES. Each Fund (except the Money Market Funds) may
lend to brokers, dealers and financial institutions securities from its
portfolio representing up to one-third of the Fund's net assets. However, such
loans may be made only if cash or cash equivalent collateral, including letters
of credit, marked-to-market daily and equal to at least 100% of the current
market value of the securities loaned (including accrued interest and dividends
thereon) plus the interest payable to the Fund with respect to the loan is
maintained by the borrower in a segregated account. In determining whether to
lend a security to a particular broker, dealer or financial institution, the
Portfolio Management Agent will consider all relevant facts and circumstances,
including the creditworthiness of the broker, dealer or financial institution.
No Fund will enter into any portfolio security lending arrangement having a
duration longer than one year. Any securities that a Fund may receive as
collateral will not become part of the Fund's portfolio at the time of the loan
and, in the event of a default by the borrower, the Fund will, if permitted by
law, dispose of such collateral except for such part thereof that is a security
in which the Fund is permitted to invest. During the time securities are on
loan, the borrower will pay the Fund any accrued income on those securities, and
the Fund may invest the cash collateral and earn additional income or receive an
agreed upon fee from the borrower. Loans of securities by a Fund will be subject
to termination at the Fund's or the borrower's option. Each Fund may pay
reasonable administrative and custodial fees in connection with a securities
loan and may pay a negotiated fee to the borrower or the placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with the Trust, the Company, the Adviser, the Portfolio Management Agent or the
Distributor.

MORTGAGE-BACKED SECURITIES. The Equity Funds, the Bond Fund, the
Short/Intermediate Bond Fund and the Intermediate Government Bond Fund may
invest in mortgage-backed securities, including collateralized mortgage
obligations ("CMOs") and Government Stripped Mortgage-Backed Securities.
Mortgage-backed securities represent an interest in a pool of mortgages
originated by lenders such as commercial banks, savings associations and
mortgage bankers and brokers. Mortgage- backed securities may be issued by
government-related entities or by non-governmental entities such as special
purpose trusts created by banks, savings associations, private mortgage
insurance companies or mortgage bankers. U.S. Government- related
mortgage-backed securities may be issued or guaranteed by the U.S. Government or
one of its agencies and backed by the full faith and credit of the U.S.
Government, or supported primarily or solely by the creditworthiness of the
issuing U.S. Government agency or other entity.

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<PAGE>
CMOs are types of bonds secured by an underlying pool of mortgages or mortgage
pass-through certificates that are structured to direct payments on underlying
collateral to different series or classes of obligations. Government Stripped
Mortgage-Backed Securities are mortgage-backed securities issued or guaranteed
by Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), or Federal Home Loan Mortgage Corporation ("FHLMC"). These
securities represent beneficial ownership interests in either periodic principal
distributions ("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as the case may be.
The certificates underlying the Government Stripped Mortgage-Backed Securities
represent all or part of the beneficial interest in pools of mortgage loans.

Even if the U.S. Government or one of its agencies guarantees principal and
interest payments of a mortgage-backed security, the market price of a mortgage-
backed security is not insured and may be subject to market volatility. When
interest rates decline, mortgage-backed securities experience higher rates of
prepayment because the underlying mortgages are refinanced to take advantage of
the lower rates. The prices of mortgage-backed securities may not increase as
much as prices of other debt obligations when interest rates decline, and
mortgage-backed securities may not be an effective means of locking in a
particular interest rate. In addition, any premium paid for a mortgage-backed
security may be lost if the security is prepaid. When interest rates rise,
mortgage-backed securities experience lower rates of prepayment. This has the
effect of lengthening the expected maturity of a mortgage-backed security. As a
result, prices of mortgage-backed securities may decrease more than prices of
other debt obligations when interest rates rise.

MUNICIPAL OBLIGATIONS. The Balanced Fund, the Tax-Exempt Bond Fund, the Bond
Fund, the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund
and the Tax-Exempt Money Market Fund may invest in municipal obligations.
Municipal obligations include municipal bonds, municipal notes and municipal
commercial paper. These securities may be issued by or on behalf of states,
territories and possessions of the U.S., the District of Columbia, and their
respective authorities, agencies, instrumentalities and political subdivisions.
Municipal bonds generally have a maturity at the time of issuance of up to 30
years. Municipal notes are intended to fulfill the short-term capital needs of
the issuer and generally have maturities at the time of issuance of three years
or less. Municipal commercial paper is a debt obligation with an effective
maturity or put date of 270 days or less that is issued to finance seasonal
working capital needs or as short-term financing in anticipation of longer-term
debt.

The two principal classifications of municipal obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a

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<PAGE>
special excise tax or from other specific revenue sources such as the user of
the facility being financed. Revenue securities include private activity bonds
(also known as industrial revenue bonds), which may be purchased only by the
Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund and which are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of private activity bonds is usually directly related to the credit
standing of the corporate user of the facility involved.

Municipal notes are generally issued in anticipation of the receipt of tax
funds, the proceeds of bond placements or other revenues. The ability of an
issuer to make payments is therefore dependent on these tax receipts, proceeds
from bond sales or other revenues, as the case may be. The municipal notes in
which the Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund may
invest include tax anticipation notes, bond anticipation notes, and revenue
anticipation notes (which generally are issued in anticipation of various
seasonal revenues).

The Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund may invest in
municipal leases. Municipal leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation is ordinarily backed by the municipality's covenant
to budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non- appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure may
prove difficult.

REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. Each Fund may purchase
portfolio securities subject to the seller's agreement to repurchase them at a
mutually agreed upon time and price, which includes an amount representing
interest on the purchase price. A Fund may enter into repurchase agreements only
with respect to obligations that could otherwise be purchased by the Fund. The
seller will be required to maintain in a segregated account for the Fund cash or
cash equivalent collateral equal to at least 100% of the repurchase price
(including accrued interest). Default or bankruptcy of the seller would expose a
Fund to possible loss because of adverse market action, delays in connection
with the disposition of the underlying obligations or expenses of enforcing its
rights.

The Equity Funds and the Fixed Income Funds may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker-dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve

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the risk that the market value of the securities sold by a Fund may decline
below the repurchase price. A Fund would pay interest on amounts obtained
pursuant to a reverse repurchase agreement.

A Fund may not enter into a repurchase agreement or reverse repurchase
agreements if, as a result, more than 15% (10% with respect to the Equity Fund,
the Short/Intermediate Bond Fund and the Money Market Funds) of the Fund's net
assets would be invested in repurchase agreements or reverse repurchase
agreements with a maturity of more than seven days and in other illiquid
securities. The Funds will enter into repurchase agreements and reverse
repurchase agreements only with registered broker-dealers and commercial banks
that meet guidelines established by the Trust's Board of Trustees (or the
Company's Board of Directors).

SECURITIES WITH PUTS. In order to maintain liquidity, the Equity Funds, the
Tax-Exempt Bond Fund, the Bond Fund, the Intermediate Tax-Exempt Bond Fund, the
Short/Intermediate Bond Fund, the Intermediate Government Bond Fund, and the
Money Market Funds may enter into puts with respect to portfolio securities with
banks or broker-dealers that, in the opinion of the Portfolio Management Agent
or Adviser present minimal credit risks. The ability of these Funds to exercise
a put will depend on the ability of the bank or broker-dealer to pay for the
underlying securities at the time the put is exercised. In the event that a bank
or broker-dealer defaults on its obligation to repurchase an underlying
security, the Fund might be unable to recover all or a portion of any loss
sustained by having to sell the security elsewhere.

STAND-BY COMMITMENTS. The Balanced Fund, the Tax-Exempt Bond Fund and the
Intermediate Tax-Exempt Bond Fund may purchase municipal securities together
with the right to resell them to the seller or a third party at an agreed-upon
price or yield within specified periods prior to their maturity dates. Such a
right to resell is commonly known as a stand-by commitment, and the aggregate
price which a Fund pays for securities with a stand-by commitment may increase
the cost, and thereby reduce the yield, of the security. The primary purpose of
this practice is to permit a Fund to be as fully invested as practicable in
municipal securities while preserving the necessary flexibility and liquidity to
meet unanticipated redemptions. The Balanced Fund will acquire stand-by
commitments solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes. Stand-by commitments
acquired by a Fund will be valued at zero in determining the Fund's net asset
value. Stand-by commitments involve certain expenses and risks, including the
inability of the issuer of the commitment to pay for the securities at the time
the commitment is exercised, non-marketability of the commitment, and
differences between the maturity of the underlying security and the maturity of
the commitment.

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<PAGE>
U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in U.S. Government
Obligations, which consist of bills, notes and bonds issued by the U.S.
Treasury. They are direct obligations of the U.S. Government and differ
primarily in the length of their maturities.

U.S. GOVERNMENT SECURITIES. Each of the Funds may invest in U.S. Government
Securities. As used in this Prospectus, the term U.S. Government Securities
means obligations issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored enterprises. The U.S. Government Securities in
which a Fund may invest include U.S. Treasury securities and obligations issued
or guaranteed by U.S. Government agencies and instrumentalities and backed by
the full faith and credit of the U.S. Government, such as those guaranteed by
the Small Business Administration or issued by the Government National Mortgage
Association. In addition, the U.S. Government Securities in which the Funds may
invest include securities supported primarily or solely by the creditworthiness
of the issuer, such as securities of the Federal National Mortgage Association,
the Federal Home Loan Mortgage Corporation and the Tennessee Valley Authority.
There is no guarantee that the U.S. Government will support securities not
backed by its full faith and credit. Accordingly, although these securities have
historically involved little risk of loss of principal if held to maturity, they
may involve more risk than securities backed by the U.S. Government's full faith
and credit.

WARRANTS. The Equity Funds and the Convertible Securities Fund may invest in
warrants, which are options to purchase an equity security at a specified price
(usually representing a premium over the applicable market value of the
underlying equity security at the time of the warrant's issuance) and usually
during a specified period of time. Unlike convertible securities and preferred
stocks, warrants do not pay a fixed dividend. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein).

WHEN-ISSUED, DELAYED DELIVERY AND FORWARD COMMITMENT SECURITIES. Each Fund may
purchase securities (including securities issued pursuant to an initial public
offering) on a "when-issued," "delayed delivery" or "forward commitment" basis,
in which case delivery and payment normally take place within 45 days after the
date of the commitment to purchase. A Fund will make a commitment to purchase
securities on a when-issued basis only with the intention of actually acquiring
the securities, but may sell them before the settlement date, if deemed
advisable. The Funds do not earn income on such securities until settlement and
bear the risk of market value fluctuations in between the purchase and
settlement dates. New issues of stocks and bonds, private placements and
Government Securities may be sold in this manner.

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ZERO COUPON SECURITIES. Each of the Funds may invest in zero coupon securities.
Zero coupon securities are debt securities that are issued and traded at a
discount and do not entitle the holder to any periodic payments of interest
prior to maturity. Zero coupon securities include separately traded principal
and interest components of securities issued or guaranteed by the U.S. Treasury.
These components are traded independently under the U.S. Treasury's Separate
Trading of Registered Interest and Principal of Securities ("STRIPS") program or
as Coupons Under Book Entry Safekeeping ("CUBES").

The International Fund, the Intermediate Government Bond Fund, and the Money
Market Funds may invest in other types of related zero coupon securities
commonly known as "stripped" securities. For instance, a number of banks and
brokerage firms separate the principal and interest portions of U.S. Treasury
securities and sell them separately in the form of receipts or certificates
representing undivided interests in these instruments. These instruments are
generally held by a bank in a custodial or trust account on behalf of the owners
of the securities and are known by various names, including Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs") and Certificates of
Accrual on Treasury Securities ("CATS"). Stripped securities also may be issued
by corporations and municipalities. Stripped securities will normally be
considered illiquid investments and will be acquired subject to the limitations
on illiquid investments.

Zero coupon securities are sold at original issue discount and pay no interest
to holders prior to maturity, but a Fund holding a zero coupon security must
include a portion of the original issue discount of the security as income.
Because of this, zero coupon securities may be subject to greater fluctuation of
market value than the other debt securities in which the Funds may invest. The
Funds distribute all of their net investment income, and may have to sell
portfolio securities to distribute imputed income, which may occur at a time
when the Portfolio Management Agent or Adviser would not have chosen to sell
such securities and which may result in a taxable gain or loss.

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INVESTMENT ADVISER, ADMINISTRATOR,
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603

PORTFOLIO MANAGEMENT AGENT
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603

SUB-ADMINISTRATOR AND ACCOUNTING
SERVICES AGENT, SUB-TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809

SUB-ADMINISTRATOR AND DISTRIBUTOR
Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109

CUSTODIAN
PNC Bank, N.A.
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19101

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103

LEGAL COUNSEL
Bell, Boyd & Lloyd
Three First National Plaza
Chicago, Illinois 60602-4207
<PAGE>

This Prospectus offers Class A shares ("Class A Shares") of seventeen investment
portfolios advised by Harris Trust and Savings Bank (collectively, the "Funds").
The Equity Fund, the Short/Intermediate Bond Fund, the Tax-Exempt Money Market
Fund, the Money Market Fund and the Government Money Market Fund are investment
portfolios of HT Insight Funds, Inc., doing business as Harris Insight Funds
(the "Company"). Each other Fund is an investment portfolio of Harris Insight
Funds Trust (the "Trust"). The Company and the Trust are registered as open-end
management investment companies (mutual funds). The Funds, together with the
other investment portfolios of the Trust and the Company, are known as the
Harris Insight Funds.

May 1, 1997
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Fund Summary...................................................... 3

Expense Summary................................................... 7

Financial Highlights.............................................. 10

Investment Objectives and Policies................................ 20
Equity Funds.............................................. 20
Fixed Income Funds........................................ 24
Money Market Funds........................................ 30

Additional Investment Information................................. 32
Common Investment Policies................................ 33
Investment Limitations.................................... 35
Risk Considerations....................................... 36

Management........................................................ 40

How to Buy Shares................................................. 45

How to Sell Shares................................................ 49

Shareholder Services and Policies................................. 50

How the Funds Make Distributions to Shareholders; Tax
Information..................................................... 52

General Information............................................... 54
Banking Law Matters....................................... 54
How Share Value Is Determined............................. 54
How Performance Is Reported............................... 55
More Information About the Trust and the Company.......... 56

Appendix A: Permitted Investments................................. 58
</TABLE>

2
<PAGE>
FUND SUMMARY
-----------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained in this Prospectus.

WHAT ARE THE OBJECTIVES OF THE FUNDS? HOW DO THE FUNDS ATTEMPT TO ACHIEVE THEIR
OBJECTIVES?

EQUITY FUNDS

INTERNATIONAL FUND seeks to provide international diversification and
capital appreciation by investing primarily in common stocks of foreign
companies. Current income is a secondary objective.

EQUITY FUND seeks to provide capital appreciation and current income by
investing primarily in common stocks.

EQUITY INCOME FUND seeks to provide current income and, secondarily, capital
appreciation, by investing primarily in common stocks and convertible
securities.

INDEX FUND seeks to provide the return and risk characteristics of the
Standard & Poor's 500 Index, by investing primarily in securities of
companies that comprise that index.

BALANCED FUND seeks to provide current income and capital appreciation by
investing in a balanced portfolio of fixed income and equity securities.

FIXED INCOME FUNDS

3
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TAX-EXEMPT BOND FUND seeks to provide a high level of current income that is
exempt from federal income tax by investing, under normal market conditions,
at least 80% of its assets in municipal obligations of varying maturities.

BOND FUND seeks to provide a high level of total return, including a
competitive level of current income, by investing primarily in investment
grade debt securities of varying maturities.

MONEY MARKET FUNDS

WHO MANAGES EACH FUND'S INVESTMENTS?

Harris Trust and Savings Bank ("Harris Trust" or the "Adviser") serves as the
investment adviser for each Fund. Harris Trust and its predecessors have
provided investment management services to clients for over 100 years. In
addition to the services it performs for the Funds, Harris Trust provides
investment management services for pension, profit-sharing and personal
portfolios. As of December 31, 1996, total discretionary trust assets under
management totaled approximately $13.3 billion.

4
<PAGE>

staff of 62, including 35 professionals, providing investment expertise to the
management of the Harris Insight Funds and for pension, profit-sharing and
institutional portfolios. As of that date, assets under management were
approximately $9.2 billion.

Harris Trust and HIM are subsidiaries of Harris Bankcorp, Inc. See MANAGEMENT.

WHO SHOULD INVEST IN THE FUNDS?

WHAT ADVANTAGES DO THE FUNDS OFFER?

WHEN ARE DIVIDENDS PAID?

Dividends from the International Fund, the Small-Cap Opportunity Fund and the
Small-Cap Value Fund are declared and paid semi-annually. Dividends from the
Growth Fund, the Equity Income Fund, the Equity Fund, the Index Fund, the
Balanced Fund and the Convertible Securities Fund are declared and paid
quarterly. Dividends from the Tax-Exempt Bond Fund, the Bond Fund, the
Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund and the
Intermediate Government Bond Fund are declared daily and paid monthly. Dividends
from each of the Money Market Funds are declared daily and paid monthly. Any net
capital gains will be declared and paid at least annually. See HOW DISTRIBUTIONS
ARE MADE; TAX INFORMATION.

HOW ARE SHARES BOUGHT AND SOLD?

Class A Shares are offered through this Prospectus at a price equal to their net
asset value plus any applicable sales charge.

5
<PAGE>
Shares may be bought or sold by mail, by bank wire or through your broker-dealer
or other financial institution. The minimum initial investment in Class A Shares
is $1,000. The minimum subsequent investment is $50. See HOW TO BUY SHARES and
HOW TO SELL SHARES.

WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?

There can be no assurance that any Fund will achieve its investment objective or
that the Money Market Funds will be able to maintain a stable net asset value.

For information about particular risks, see ADDITIONAL INVESTMENT INFORMATION -
RISK CONSIDERATIONS.

6
<PAGE>
EXPENSE SUMMARY
-----------------------------------------------------------------

The following tables illustrate information concerning shareholder transaction
expenses and annual fund operating expenses for Class A Shares of the Funds.
Shareholder transaction expenses are charges you pay when you buy, sell or hold
shares of a Fund. Annual operating expenses are factored into each Fund's share
price and are not charged directly to shareholder accounts.

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
EQUITY FIXED-INCOME MONEY MARKET
FUNDS FUNDS FUNDS
----------- ----------------- -------------------
<S> <C> <C> <C>
Maximum Sales Load Imposed on Purchases 4.50% 4.50% None
</TABLE>

ANNUAL OPERATING EXPENSES (as a percentage of average net assets after
applicable fee waivers and expense reimbursements)*

<TABLE>
<CAPTION>
INVESTMENT TOTAL OPERATING
ADVISORY FEES RULE 12B-1 FEES OTHER EXPENSES EXPENSES
---------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
EQUITY FUNDS
International Fund 1.03% 0.25% 0.33% 1.61%
Small-Cap Opportunity Fund 0.98 0.25 0.22 1.45
Small-Cap Value Fund 0.80 0.25 0.19 1.24
Growth Fund 0.86 0.25 0.24 1.35
Equity Fund 0.70 0.25 0.20 1.15
Equity Income Fund 0.66 0.25 0.27 1.18
Index Fund 0.21 0.25 0.24 0.70
Balanced Fund 0.60 0.25 0.28 1.13
FIXED-INCOME FUNDS
Convertible Securities Fund 0.70 0.25 0.22 1.17
Tax-Exempt Bond Fund 0.59 0.25 0.21 1.05
Bond Fund 0.27 0.25 0.33 0.85
Intermediate Tax-Exempt Bond Fund 0.58 0.25 0.22 1.05
Short/Intermediate Bond Fund 0.40 0.25 0.20 0.85
Intermediate Government Bond Fund 0.30 0.25 0.20 0.75
MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 0.11 0.24 0.18 0.53
Money Market Fund 0.10 0.25 0.17 0.52
Government Money Market Fund 0.12 0.23 0.19 0.54
</TABLE>

* The amounts for expenses are based on amounts incurred during the Funds'
most recent fiscal year, except that other expenses for the Small-Cap Value
Fund, Balanced Fund, Convertible Securities Fund and Intermediate
Government Bond Fund are based on estimated expenses and projected assets
for the current fiscal year.
Without fee waivers or expense reimbursements, investment advisory fees and
total operating expenses would be 1.05% and 1.63% for the International
Fund, 1.00% and 1.47% for the Small-Cap Opportunity Fund, 0.90% and 1.39%
for the Growth Fund, 0.70% and 1.22% for the Equity Income Fund, 0.25% and
0.74% for the Index Fund, 0.60% and 1.06% for the Tax-Exempt Bond Fund,
0.65% and 1.23% for the Bond Fund, 0.60% and 1.07% for the Intermediate
Tax-Exempt Bond Fund, and 0.70% and 1.15% for the Short/Intermediate Bond
Fund; and Rule 12b-1 fees, other expenses and total operating expenses
would be 0.35%, 0.18% and 0.64% for the Tax-Exempt Money Market Fund,
0.35%, 0.18% and 0.63% for the Money Market Fund, and 0.35%, 0.20% and
0.67% for the Government Money Market Fund.
Customers of a financial institution, such as Harris Trust, also may be
charged certain fees and expenses by the institution. These fees may vary
depending on the capacity in which the institution provides fiduciary and
investment services to the particular client (such as trust, estate
settlement, advisory or custodian services).

7
<PAGE>

EXAMPLE

The table below shows what you would pay if you invested $1,000 over the time
frames indicated. The example assumes you reinvested all dividends and that the
average annual return was 5%.

<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
EQUITY FUNDS
International Fund $ 61 $ 95 $ 131 $ 232
Small-Cap Opportunity Fund 59 89 121 211
Small-Cap Value Fund 57 83 110 188
Growth Fund 58 86 116 200
Equity Fund 56 80 105 178
Equity Income Fund 56 81 107 182
Index Fund 52 66 82 128
Balanced Fund 56 79 104 176

FIXED-INCOME FUNDS
Convertible Securities Fund 56 80 106 181
Tax-Exempt Bond Fund 55 77 100 167
Bond Fund 53 71 90 145
Intermediate Tax-Exempt Bond Fund 55 77 100 167
Short/Intermediate Bond Fund 53 71 90 145
Intermediate Government Bond Fund 52 68 85 134

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 5 17 30 66
Money Market Fund 5 17 29 65
Government Money Market Fund 6 17 30 68
</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE, WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.

8
<PAGE>

(This Page Intentionally Left Blank)

9
<PAGE>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------

The financial highlights on the following pages represent selected data for a
single Class A Share of each Fund for the periods shown. This information has
been derived from the financial statements audited by Price Waterhouse LLP,
independent accountants. The Funds' financial statements for the year ended
December 31, 1996 and independent accountants' report thereon are included in
the Funds' Annual Report and are incorporated by reference into (are legally a
part of)

the Funds' SAI. The financial highlights should be read in conjunction with the

<TABLE>
<CAPTION>
SMALL-CAP
OPPORTUNITY GROWTH
INTERNATIONAL FUND FUND
FUND ---------- ----------
------------- FOR THE FOR THE -----------------------
FOR THE PERIOD PERIOD
PERIOD 04/19/96(1) 04/19/96(1) YEAR YEAR
03/13/96(1) TO TO ENDED ENDED
TO 12/31/96 12/31/96 12/31/96 12/31/96 12/31/95
------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $14.69 $14.25 $16.49 $13.99 $11.28
------------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.091 0.032 0.030 0.451 0.229
Net Realized and Unrealized
Gain/(Loss)
on Investments................... 0.860 1.996 3.273 2.926 3.827
------------- ---------- ---------- ---------- ----------
Total from Investment Operations... 0.951 2.028 3.303 3.377 4.056
------------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.113) (0.050) (0.038) (0.173) (0.232)
Net Realized Gains................. (0.068) (0.718) (1.065) (1.664) (1.114)
------------- ---------- ---------- ---------- ----------
Total Distributions................ (0.181) (0.768) (1.103) (1.837) (1.346)
------------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period..... $15.46 $15.51 $18.69 $15.53 $13.99
------------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ----------
TOTAL RETURN (4)(5)................ 6.48% 14.29% 19.95% 24.15% 36.26%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 597 443 397 7,792 61,256
Ratios of Expenses to Average Net
Assets (2)....................... 1.61%(3) 1.45%(3) 1.35%(3) 0.94% 0.96%
Ratio of Net Investment Income to
Average Net Assets............... 0.35%(3) 0.10%(3) 0.17%(3) 1.47% 1.75%
Portfolio Turnover Rate............ 6.72% 46.13% 35.36% 75.20% 75.93%
Average Commission Rate (6)........ $0.020 $0.058 $0.058 $0.056 --
</TABLE>

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the annualized expense ratios for the
period ended December 31, 1996 for the International Fund, Small-Cap
Opportunity Fund and Growth Fund would have been 1.63%, 1.47% and 1.39%,
respectively. Without the voluntary waiver of fees, the expense ratios for
the years ended December 31, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and
the period ended December 31, 1988 for the Equity Fund would have been
0.97%, 0.92%, 0.96%, 0.98%, 1.01%, 1.21%, 1.47% and 1.41% (annualized),
respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

(5) Sales load is not reflected in total return.

(6) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.

10
<PAGE>

financial statements. Further information about each Fund's performance is
contained in the Annual Report, which may be obtained from the Harris Insight
Funds without charge. Financial highlights are not provided for the Small-Cap
Value Fund, the Balanced Fund, the Convertible Securities Fund and the
Intermediate Government Bond Fund because, as of December 31, 1996, those Funds
had not yet commenced operations.

<TABLE>
<CAPTION>
EQUITY FUND
--------------------------------------------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR YEAR YEAR YEAR 02/26/88(1)
ENDED ENDED ENDED ENDED ENDED ENDED TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
------- ---------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 12.86 $11.57 $12.08 $10.05 $11.22 $10.58 $10.00
------- ---------- ---------- ---------- ---------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.263 0.197 0.267 0.282 0.323 0.347 0.265
Net Realized and Unrealized
Gain/(Loss)
on Investments................... (0.514) 1.904 0.703 2.418 (1.203) 2.573 0.555
------- ---------- ---------- ---------- ---------- ----------- ----------
Total from Investment Operations... (0.251) 2.101 0.970 2.700 (0.880) 2.920 0.820
------- ---------- ---------- ---------- ---------- ----------- ----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.263) (0.204) (0.290) (0.280) (0.290) (0.450) (0.240)
Net Realized Gains................. (1.066) (0.607) (1.190) (0.390) -- (1.830) --
------- ---------- ---------- ---------- ---------- ----------- ----------
Total Distributions................ (1.329) (0.811) (1.480) (0.670) (0.290) (2.280) (0.240)
------- ---------- ---------- ---------- ---------- ----------- ----------
Net Asset Value, End of Period..... $ 11.28 $12.86 $11.57 $12.08 $10.05 $11.22 $10.58
------- ---------- ---------- ---------- ---------- ----------- ----------
------- ---------- ---------- ---------- ---------- ----------- ----------
TOTAL RETURN (4)(5)................ (2.05)% 18.23% 8.19% 27.29% (7.78)% 27.81% 8.23%(4)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 38,920 47,241 31,809 34,150 24,649 15,885 24,524
Ratios of Expenses to Average Net
Assets (2)....................... 0.90% 0.93% 0.96% 0.98% 1.00% 1.00% 1.00%(3)
Ratio of Net Investment Income to
Average Net Assets............... 1.94% 1.59% 2.16% 2.52% 3.29% 2.95% 3.03%(3)
Portfolio Turnover Rate............ 87.83% 57.31% 63.79% 77.85% 52.27% 42.00% 33.03%
Average Commission Rate (6)........ -- -- -- -- -- -- --
</TABLE>

11
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

-----------------------------------------------------------------

<TABLE>
<CAPTION>
INTERMEDIATE
EQUITY TAX-EXEMPT TAX-EXEMPT
INCOME FUND INDEX FUND BOND FUND BOND FUND BOND FUND
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
FOR THE FOR THE FOR THE FOR THE FOR THE
PERIOD PERIOD PERIOD PERIOD PERIOD
04/18/96(1) 04/19/96(1) 10/02/96(1) 04/22/96(1) 03/13/96(1)
TO 12/31/96 TO 12/31/96 TO 12/31/96 TO 12/31/96 TO 12/31/96
----------- ----------- ----------- ----------- ------------
Net Asset Value, Beginning of Period.............. $ 13.02 $ 16.35 $10.33 $ 9.99 $10.55
----------- ----------- ----------- ----------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income............................. 0.179 0.188 0.105 0.402 0.084
Net Realized and Unrealized Gain/
(Loss) on Investments........................... 1.732 2.511 0.136 0.113 0.066
----------- ----------- ----------- ----------- ------------
Total from Investment Operations.................. 1.911 2.699 0.241 0.515 0.150
----------- ----------- ----------- ----------- ------------
LESS DISTRIBUTIONS:
Net Investment Income............................. (0.213) (0.225) (0.105) (0.402) (0.084)
Net Realized Gains................................ (0.998) (0.344) (0.216) (0.033) (0.036)
----------- ----------- ----------- ----------- ------------
Total Distributions............................... (1.211) (0.569) (0.321) (0.435) (0.120)
----------- ----------- ----------- ----------- ------------
Net Asset Value, End of Period.................... $ 13.72 $ 18.48 $10.25 $ 10.07 $10.58
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
TOTAL RETURN (4)(5)............................... 14.67% 16.56% 2.34% 5.27% 1.44%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000).................. 298 150 38 130 --
Ratios of Expenses to Average Net Assets (2)...... 1.18%(3) 0.70%(3) 1.05%(3) 0.85%(3) 1.04%(3)
Ratio of Net Investment Income to Average Net
Assets........................................... 2.11%(3) 1.60%(3) 4.35%(3) 5.87%(3) 4.33%(3)
Portfolio Turnover Rate........................... 52.77% 4.71% 61.60% 116.02% 57.23%
Average Commission Rate (6)....................... $ 0.059 $ 0.038 -- -- --
</TABLE>

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the annualized expense ratios for the
period ended December 31, 1996 for the Equity Income Fund, Index Fund,
Tax-Exempt Bond Fund, Bond Fund and Intermediate Tax-Exempt Bond Fund would
have been 1.19%, 0.74%, 1.06%, 1.23% and 1.07%, respectively. Without the
voluntary waiver of fees, the expense ratios for the years ended December
31, 1996, 1995, 1994, 1993 and 1992, and the period ended December 31, 1991
for the Short/Intermediate Bond Fund would have been 0.92%, 0.96%, 0.92%,
0.94%, 0.93% and 1.01% (annualized), respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

(5) Sales load is not reflected in total return.

(6) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.

12
<PAGE>

<TABLE>
<CAPTION>
SHORT/INTERMEDIATE BOND FUND
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE
YEAR YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED 04/01/91(1)
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 TO 12/31/91
- -------------- -------------- -------------- -------------- -------------- --------------
$ 10.38 $ 9.66 $ 10.34 $ 10.22 $ 10.57 $ 10.00
- -------------- -------------- -------------- -------------- -------------- --------------
0.594 0.588 0.559 0.563 0.630 0.474
(0.247) 0.720 (0.694) 0.435 (0.087) 0.601
- -------------- -------------- -------------- -------------- -------------- --------------
0.347 1.308 (0.135) 0.998 0.543 1.075
- -------------- -------------- -------------- -------------- -------------- --------------
(0.587) (0.588) (0.545) (0.564) (0.631) (0.475)
-- -- -- (0.314) (0.262) (0.030)
- -------------- -------------- -------------- -------------- -------------- --------------
(0.587) (0.588) (0.545) (0.878) (0.893) (0.505)
- -------------- -------------- -------------- -------------- -------------- --------------
$ 10.14 $ 10.38 $ 9.66 $ 10.34 $ 10.22 $ 10.57
- -------------- -------------- -------------- -------------- -------------- --------------
- -------------- -------------- -------------- -------------- -------------- --------------
3.51% 13.88% (1.29)% 9.91% 5.28% 11.04%(4)

4,432 51,814 44,333 74,057 71,848 44,313
0.62% 0.60% 0.60% 0.60% 0.60% 0.60%(3)
5.59% 5.91% 5.29% 5.32% 6.07% 6.60%(3)
186.02% 194.94% 140.99% 215.07% 133.78% 108.70%
-- -- -- -- -- --
</TABLE>

13
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

-----------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.029 0.033 0.023
------- ------- -------
Total from Investment Operations... 0.029 0.033 0.023
------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.029) (0.033) (0.023)
------- ------- -------
Total Distributions................ (0.029) (0.033) (0.023)
------- ------- -------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
------- ------- -------
TOTAL RETURN....................... 2.94% 3.31% 2.30%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 178,849 170,570 123,501
Ratios of Expenses to Average Net
Assets (2)......................... 0.53% 0.56% 0.54%
Ratio of Net Investment Income to
Average
Net Assets....................... 2.89% 3.25% 2.20%
</TABLE>

* Formerly the Tax-Free Money Market Fund.

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and period
ended December 31, 1988, would have been 0.64%, 0.65%, 0.65%, 0.71%, 0.73%,
0.75%, 0.78%, 0.82% and 0.85% (annualized), respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

14
<PAGE>

<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND*
---------------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR YEAR YEAR 02/09/88(1)
ENDED ENDED ENDED ENDED ENDED TO
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.020 0.025 0.041 0.053 0.058 0.043
------- ------- ------- ------- ------- -------
Total from Investment Operations... 0.020 0.025 0.041 0.053 0.058 0.043
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.020) (0.025) (0.041) (0.053) (0.058) (0.043)
------- ------- ------- ------- ------- -------
Total Distributions................ (0.020) (0.025) (0.041) (0.053) (0.058) (0.043)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
TOTAL RETURN....................... 1.99% 2.54% 4.16% 5.51% 5.91% 4.39%(4)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 168,440 152,821 157,693 136,117 112,674 103,192
Ratios of Expenses to Average Net
Assets (2)......................... 0.54% 0.62% 0.49% 0.47% 0.43% 0.51%(3)
Ratio of Net Investment Income to
Average
Net Assets....................... 1.97% 2.50% 4.08% 5.38% 5.76% 4.81%(3)
</TABLE>

15
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

-----------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.050 0.054 0.037
------- ------- -------
Total from Investment Operations... 0.050 0.054 0.037
------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.050) (0.054) (0.037)
------- ------- -------
Total Distributions................ (0.050) (0.054) (0.037)
------- ------- -------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
------- ------- -------
TOTAL RETURN....................... 5.11% 5.58% 3.79%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 461,213 423,588 530,366
Ratios of Expenses to Average Net
Assets (2)......................... 0.52% 0.56% 0.55%
Ratio of Net Investment Income to
Average
Net Assets....................... 5.00% 5.42% 3.79%
</TABLE>

* Formerly the Cash Management Fund.

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, would have been 0.63%, 0.65%, 0.65%, 0.72%,
0.73%, 0.74%, 0.78%, 0.85% amd 0.87% (annualized) respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

16
<PAGE>

<TABLE>
<CAPTION>
MONEY MARKET FUND*
------------------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR YEAR YEAR 02/10/88(1)
ENDED ENDED ENDED ENDED ENDED TO
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.027 0.034 0.057 0.077 0.086 0.064
------- ------- ------- ------- ------- ----------
Total from Investment Operations... 0.027 0.034 0.057 0.077 0.086 0.064
------- ------- ------- ------- ------- ----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.027) (0.034) (0.057) (0.077) (0.086) (0.064)
------- ------- ------- ------- ------- ----------
Total Distributions................ (0.027) (0.034) (0.057) (0.077) (0.086) (0.064)
------- ------- ------- ------- ------- ----------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ----------
------- ------- ------- ------- ------- ----------
TOTAL RETURN....................... 2.69% 3.41% 5.87% 7.94% 9.01% 6.59%(4)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 348,984 383,280 263,419 153,934 172,439 112,144
Ratios of Expenses to Average Net
Assets (2)......................... 0.57% 0.60% 0.71% 0.67% 0.58% 0.46%(3)
Ratio of Net Investment Income to
Average
Net Assets....................... 2.66% 3.34% 5.69% 7.66% 8.60% 7.15%(3)
</TABLE>

17
<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

-----------------------------------------------------------------

<TABLE>
<CAPTION>
---------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94
------- ------- -------
<S> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.049 0.054 0.037
------- ------- -------
Total from Investment Operations... 0.049 0.054 0.037
------- ------- -------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.049) (0.054) (0.037)
------- ------- -------
Total Distributions................ (0.049) (0.054) (0.037)
------- ------- -------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00
------- ------- -------
------- ------- -------
TOTAL RETURN....................... 5.00% 5.51% 3.72%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 206,073 264,426 229,619
Ratios of Expenses to Average Net
Assets (2)......................... 0.54% 0.57% 0.60%
Ratio of Net Investment Income to
Average
Net Assets....................... 4.89% 5.36% 3.62%
</TABLE>

* Formerly the Government Assets Fund.

(1) Date commenced operations.

(2) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, would have been 0.67%, 0.67%, 0.66%, 0.70%,
0.70%, 0.78%, 0.83%, 0.88% and 0.99% (annualized), respectively.

(3) Annualized.

(4) Total returns for periods less than one year are not annualized.

18
<PAGE>

<TABLE>
<CAPTION>
GOVERNMENT MONEY MARKET FUND*
------------------------------------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR YEAR YEAR 02/11/88(1)
ENDED ENDED ENDED ENDED ENDED TO
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income.............. 0.026 0.033 0.055 0.075 0.084 0.061
------- ------- ------- ------- ------- ----------
Total from Investment Operations... 0.026 0.033 0.055 0.075 0.084 0.061
------- ------- ------- ------- ------- ----------
LESS DISTRIBUTIONS:
Net Investment Income.............. (0.026) (0.033) (0.055) (0.075) (0.084) (0.061)
------- ------- ------- ------- ------- ----------
Total Distributions................ (0.026) (0.033) (0.055) (0.075) (0.084) (0.061)
------- ------- ------- ------- ------- ----------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ----------
------- ------- ------- ------- ------- ----------
TOTAL RETURN....................... 2.62% 3.42% 5.67% 7.78% 8.80% 6.27%(4)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000)... 263,909 140,134 632,663 87,098 35,751 43,870
Ratios of Expenses to Average Net
Assets (2)......................... 0.61% 0.66% 0.71% 0.52% 0.40% 0.54%(3)
Ratio of Net Investment Income to
Average
Net Assets....................... 2.57% 3.34% 5.45% 7.49% 8.45% 7.24%(3)
</TABLE>

19
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
-----------------------------------------------------------------

EQUITY FUNDS

INTERNATIONAL FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide international
diversification and capital appreciation. Current income is a secondary
objective.

SMALL-CAP OPPORTUNITY FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide long-term capital
appreciation.

20
<PAGE>
In investing the Fund's assets, the Portfolio Management Agent follows an
investment management discipline that seeks to identify companies offering
above-average earnings, sales and asset value growth. These securities will
tend to be represented in the Russell 2000 Index.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in securities of smaller to medium capitalization
companies.

SMALL-CAP VALUE FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller to medium
capitalizations that the Portfolio Management Agent believes are
conservatively valued in the marketplace. Market capitalization refers to
the total market value of a company's outstanding shares of common stock.
Smaller to medium capitalization companies are those with market
capitalizations, at the time of the Fund's investment of between $100
million and $2.5 billion.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in securities of smaller to medium capitalization
companies.

GROWTH FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation and,
secondarily, current income.

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in equity securities.

EQUITY FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with capital
appreciation and current income.

21
<PAGE>

Under normal circumstances, the Fund invests at least 65% of the value of
its total assets in common stocks of larger capitalization companies.

EQUITY INCOME FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide current income and,
secondarily, capital appreciation.

22
<PAGE>
INDEX FUND

INVESTMENT OBJECTIVE. The Index Fund seeks to provide the return and risk
characteristics of the Standard & Poor's 500 Index.

The Fund is managed through the use of a "quantitative" or "indexing"
investment discipline, which attempts to duplicate the investment
composition and performance of the S&P 500 Index through statistical
procedures. As a result, the Portfolio Management Agent does not employ
traditional methods of fund investment management, such as selecting
securities on the basis of economic, financial and market analysis. The Fund
seeks quarterly performance within one percentage-point of the performance
of the index (i.e., the percentage return of the index plus or minus1%). On
at least a monthly basis, the Portfolio Management Agent compares the Fund's
performance to that of the index. In the event the Fund's performance for
the preceding three-month period does not adequately track the performance
of the index, the Portfolio Management Agent may adjust the Fund's holdings
accordingly.

23
<PAGE>

BALANCED FUND

INVESTMENT OBJECTIVE. The Balanced Fund seeks to provide current income and
capital appreciation by investing in a balanced portfolio of fixed income
and equity securities.

FIXED INCOME FUNDS

CONVERTIBLE SECURITIES FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation and
current income.

24
<PAGE>
The Fund also may invest in equity securities of U.S. corporations. The Fund
seeks to diversify among issuers in a manner that will enable the Fund to
minimize the volatility of the Fund's net asset value in erratic or
declining markets. Under normal circumstances, the Fund invests at least 65%
of the value of its total assets in convertible securities.

The Fund may invest up to 35% of its total assets in "synthetic
convertibles" created by combining separate securities that together possess
the two principal components of a convertible security: fixed income and the
right to acquire equity securities. In addition, the Fund may invest up to
15% of its net assets in convertible securities offered in "private
placements" and other illiquid securities; up to 15% of its total assets in
common stocks; and up to 5% of its net assets in warrants. The Fund also may
write (sell) covered put and call options, buy covered put and call options,
buy and sell interest rate futures contracts and buy and write covered
options on those futures contracts.

25
<PAGE>
are outweighed by large uncertainties or major risk exposures to adverse
conditions and (b) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation.

TAX-EXEMPT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income that is exempt from federal income tax.

26
<PAGE>
The Fund attempts to anticipate changes in interest rates, analyzing yield
differentials for different types of bonds, and analyzing credit for
specific issues and municipalities. As a matter of fundamental policy, the
Fund invests at least 80% of its assets, under normal market conditions, in
a broad range of municipal bonds and other obligations issued by state and
local governments to finance their operations or special projects. These
securities make interest payments that are exempt from federal income tax.

In addition, the Fund may invest in U.S. Government Obligations (as defined
in Appendix A) and securities secured by letters of credit. The Fund also
may write (sell) covered put and call options, buy covered put and call
options, buy and sell interest rate futures contracts and buy and write
covered options on those futures contracts.

BOND FUND

27
<PAGE>

Securities, debt obligations of domestic and foreign corporations, debt
obligations of foreign governments and their political subdivisions,
asset-backed securities, various mortgage-backed securities (including those
issued or collateralized by U.S. Government agencies and inverse floating
rate mortgage-backed securities), other floating/variable rate obligations,
municipal obligations and zero coupon debt securities.

INTERMEDIATE TAX-EXEMPT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income that is exempt from federal income tax.

INVESTMENT POLICIES. The Fund seeks to achieve its objective by investing in
municipal securities with a dollar-weighted average portfolio maturity,
under normal market conditions, of between 3 and 10 years. The Portfolio
Management Agent believes that this income will generally be higher than
that provided by shorter term municipal funds, although the Fund will
reflect greater share price volatility during periods of changing interest
rates than comparable shorter-term funds. Individual portfolio securities
will have varying maturities.

In addition, the Fund may invest in U.S. Government Obligations and
securities secured by letters of credit. The Fund also may write (sell)
covered put and call options, buy covered put and call options, buy and sell
interest rate futures contracts and buy and write covered options on those
futures contracts.

SHORT/INTERMEDIATE BOND FUND

28
<PAGE>
anticipated that when interest rates rise, share price of the Fund will tend
to fall less than longer-term bond funds and appreciate less when interest
rates fall.

The Fund may invest in a broad range of fixed income obligations, including
fixed and variable rate bonds, debentures, U.S. Government Securities, and
Government Stripped Mortgage-Backed Securities. The Fund also may invest in
U.S. Government Securities placed into irrevocable trusts and evidenced by a
trust receipt. Under normal circumstances, the Fund invests at least 65% of
the value of its total assets in bonds. For purposes of this 65% limitation,
the term "bond" shall include debt obligations such as bonds and debentures,
U.S. Government Securities, debt obligations of domestic and foreign
corporations, debt obligations of foreign governments and their political
subdivisions, asset- backed securities, various mortgage-backed securities
(including those issued or collateralized by U.S. Government agencies and
inverse floating rate mortgage- backed securities), other floating/variable
rate obligations, municipal obligations and zero coupon debt securities.

The Fund's dollar-weighted average portfolio maturity (or average life with
respect to mortgage-backed and asset-backed securities), under normal market
conditions, will be between 2 and 5 years.

INTERMEDIATE GOVERNMENT BOND FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide a high level of current
income, consistent with preservation of capital.

29
<PAGE>

U.S. Government Securities. The average portfolio maturity (or average life
with respect to mortgage-backed securities) generally will be between 3 and
10 years.

MONEY MARKET FUNDS

TAX-EXEMPT MONEY MARKET FUND

INVESTMENT POLICIES. The Fund (which was formerly known as Harris Insight
Tax-Free Money Market Fund) invests only in high quality, short-term money
market instruments that are determined by the Adviser, pursuant to
procedures established by the Company's Board of Directors, to be eligible
for purchase and to present minimal credit risks. The Fund invests primarily
in high-quality municipal obligations. Municipal obligations are debt
obligations issued by or on behalf of states, cities, municipalities and
other public authorities. Except for temporary investments in taxable
obligations described below, the Fund will invest only in municipal
obligations that are exempt from federal income taxes in the opinion of bond
counsel. Such obligations include municipal bonds, municipal notes and
municipal commercial paper.

30
<PAGE>

MONEY MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a
level of current income as is consistent with its investment policies and
with preservation of capital and liquidity.

31
<PAGE>

securities in the second highest rating category. Determinations of
comparable quality shall be made in accordance with procedures established
by the Company's Board of Directors.

GOVERNMENT MONEY MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a
level of current income as is consistent with its investment policies and
with preservation of capital and liquidity.

INVESTMENT POLICIES. The Fund (formerly known as Harris Insight Government
Assets Fund) invests only in high quality, short-term money market
instruments that are determined by the Adviser, pursuant to procedures
established by the Company's Board of Directors, to be eligible for purchase
and to present minimal credit risks. The Fund invests exclusively in U.S.
Government Securities and repurchase agreements backed by those securities.

The Fund invests in obligations of U.S. Government agencies and
instrumentalities only when the Portfolio Management Agent is satisfied that
the credit risk with respect to the issuer is minimal.

ADDITIONAL INVESTMENT INFORMATION
-----------------------------------------------------------------

32
<PAGE>

For a further description of the Funds' investment policies, including
additional fundamental policies, see Appendix A and the SAI.

COMMON INVESTMENT POLICIES

Each Fund may invest in the securities of other investment companies, zero
coupon securities, when-issued securities and forward commitments,
floating/variable rate obligations (and inverse floating rate obligations with
respect to the Fixed Income Funds), as well as commercial paper, short-term
money market instruments and cash equivalents, such as certificates of deposit,
demand and time deposits and banker's acceptance notes. Each Fund may also enter
into repurchase agreements. Each Fund also may lend its portfolio securities in
an amount not exceeding one-third of its net assets and may enter into reverse
repurchase agreements.

In addition, each of the Equity Funds may invest in securities purchased in
initial public offerings. Each of the Equity Funds also may invest in foreign
securities, including American Depository Receipts, European Depository Receipts
and, with respect to 10% (100% for the International Fund) of each Fund's total
assets, debt and equity securities of foreign issuers. Further, each of the
Equity Funds may purchase and sell covered put and call options on securities,
index and interest rate futures contracts and options on futures contracts. The
Equity Funds and the Convertible Securities Fund may invest in warrants.

RATING MATTERS. Each of the Equity Funds and the Fixed Income Funds may invest
in securities convertible into or exchangeable for common stocks or preferred
stocks, as well as U.S. Government Securities and debt obligations of domestic
corporations rated "BBB" or better by Standard & Poor's ("S&P") or "Baa" or
better by Moody's Investors Service ("Moody's"), or that have an equivalent
rating by another nationally recognized statistical rating organization
("NRSRO") at the time of purchase or, if not rated, are considered by the
Portfolio Management Agent to be of comparable quality. Debt obligations rated
in the lowest categories of investment grade (that is, BBB by S&P or Baa by
Moody's) and equivalent securities may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case
with higher-grade bonds. The Convertible Securities Fund may invest in
securities that are less than investment grade. See INVESTMENT OBJECTIVES AND
POLICIES - CONVERTIBLE SECURITIES FUND.

33
<PAGE>
will reassess promptly whether the security presents minimal credit risks and
determine whether continuing to hold the security is in the best interests of
the Fund. To the extent that the ratings given by Moody's, S&P or another NRSRO
for securities may change as a result of changes in the rating systems or due to
the corporate reorganization of an NRSRO, each Fund will attempt to use
comparable ratings as standards for its investments in accordance with the
investment objectives and policies of that Fund. The ratings of Moody's and S&P
are more fully described in the Appendix to the SAI. A Money Market Fund may be
required to sell a security downgraded below the minimum required for purchase,
absent a specific finding by the Company's Board of Directors that a sale is not
in the best interests of the Fund.

PORTFOLIO TRANSACTIONS. Portfolio securities of each Fund are kept under
continuing supervision and changes may be made whenever, in the judgment of the
Portfolio Management Agent (or Adviser in the case of the Tax-Exempt Money
Market Fund), a security no longer seems to meet the objective of the Fund.
Portfolio changes also may be made to increase or decrease investments in
anticipation of changes in security prices in general or to provide the cash
necessary for redemptions, distributions to shareholders or other fund
management purposes. Portfolio changes may be made without regard to the length
of time a particular security has been held or the frequency of portfolio
transactions of a Fund (the portfolio turnover rate).

34
<PAGE>

allocate the transactions among the participants equitably. To the extent
permitted by the SEC, the Funds may pay brokerage commissions to certain
affiliated persons. During the last fiscal year, no Fund paid commissions to
these persons.

INVESTMENT LIMITATIONS

The Funds have adopted the investment limitations listed below, which are not
fundamental policies unless otherwise noted.

DIVERSIFICATION. Each Fund is diversified as that terms is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). As a matter of
fundamental policy, no Fund may invest more than 5% of the current value of its
total assets in the securities of any one issuer (other than U.S. Government
Securities), except that up to 25% of the value of the total assets of a Fund
(other than the Money Market Fund and the Government Money Market Fund) may be
invested without regard to this limitation. Notwithstanding this policy, each of
the Money Market Fund and the Government Money Market Fund may invest more than
5% of its total assets in the securities of a single issuer for a period of up
to three business days after the purchase thereof, so long as it does not make
more than one such investment at any one time. As a matter of fundamental
policy, no Fund may purchase securities of an issuer if, as a result, with
respect to 75% of its total assets, it would own more than 10% of the voting
securities of such issuer.

BORROWING. As a matter of fundamental policy, no Fund may borrow from banks,
except that a Fund may borrow up to 10% of the current value of its total assets
for

35
<PAGE>

temporary purposes only in order to meet redemptions, and these borrowings may
be secured by the pledge of up to 10% of the current value of the Fund's net
assets (but investments may not be purchased while borrowings are in excess of
5% of total assets).

RISK CONSIDERATIONS

Certain specific risks are described in this section. If you would like to know
more about risks associated with certain types of securities, see Appendix A.

RISKS OF FIXED INCOME SECURITIES. The value of fixed income (debt) securities
generally varies inversely with prevailing levels of interest rates: the values
of these

36
<PAGE>

securities tend to decrease when interest rates are rising, and increase when
interest rates are declining. Changes in interest rates will generally cause
larger changes in the prices of longer-term securities than in the prices of
shorter-term securities. The risk of market losses attributable to changes in
interest rates is known as "interest rate risk."

Certain fixed income securities, such as municipal and mortgage-backed
securities, are subject to additional risks. See Appendix A.

RISKS OF INVESTING IN FOREIGN MARKETS. Investments in the securities of foreign
(non-U.S.) issuers may involve risks in addition to those normally associated
with investments in the securities of U.S. issuers. All foreign investments are
subject to risks of foreign political and economic instability, adverse
movements in foreign exchange rates, the imposition or tightening of exchange
controls or other limitations on repatriation of foreign capital, and changes in
foreign governmental attitudes towards private investment, possibly leading to
nationalization, increased taxation or confiscation of foreign investors'
assets.

37
<PAGE>
influenced generally by the forces of supply and demand in the foreign currency
markets and by numerous other political and economic events occurring outside
the United States, many of which may be difficult, if not impossible, to
predict.

RISKS OF DERIVATIVE SECURITIES. To the extent permitted by its investment
objectives and policies, each of the Funds may invest in securities that are
commonly referred to as "derivatives." Generally, a derivative is a financial
instrument whose value is based on, or "derived" from, a traditional security,
asset, or market index. Certain derivative securities are more accurately
described as "index/structured" securities. Index/structured securities are
derivative securities whose value or performance is linked to other equity
securities (such as depository receipts), currencies, interest rates, indices or
other financial indicators.

38
<PAGE>
investment considerations would not favor such sales. To the extent a Fund
enters into reverse repurchase agreements, the Fund is subject to risks that are
similar to those associated with borrowing.

OBJECTIVE RISK. Returns from the particular type of security that a Fund
emphasizes in its investments may trail returns from the overall stock or bond
market. For example, the growth stocks in which the Growth Fund invests tend to
go through periods of relative underperformance and outperformance in comparison
to other types of equity securities. These periods may last for as long as
several years.

MANAGEMENT RISK. A strategy used by a Fund's investment adviser may fail to
produce the intended result, which could have a negative effect on fund
performance.

39
<PAGE>
MANAGEMENT
-----------------------------------------------------------------

TRUSTEES AND DIRECTORS

<TABLE>
<S> <C>
C. Gary Gerst Chairman of the Board of Trustees and Board of
Directors; Chairman Emeritus, LaSalle Partners,
Ltd. (real estate developer and manager).

Edgar R. Fiedler Senior Fellow and Economic Counsellor, The
Conference Board.

John W. McCarter, Jr. President and Chief Executive Officer, The Field
Museum Natural History (Chicago); Formerly,
Senior Vice President and Director, Booz-Allen &
Hamilton, Inc. (consulting firm).

Ernest M. Roth Consultant; Retired Senior Vice President and
Chief Financial Officer, Commonwealth Edison
Company.
</TABLE>

INVESTMENT ADVISER

As of December 31, 1996, Harris Trust managed more than $10.6 billion in
discretionary personal trust assets, and managed more than $19.2 billion in non-
discretionary trust assets.

With respect to the Tax-Exempt Money Market Fund, the Advisory Contract provides
that Harris Trust shall make investments for the Fund in accordance with its
best judgment. With respect to the remaining Funds, the Advisory Contracts
provide that Harris Trust is responsible for the supervision and oversight of
the Portfolio Management Agent's performance (as discussed below).

40
<PAGE>
The investment advisory fees payable to Harris Trust with respect to each Fund
are based on the average daily net assets of the respective Fund at the
following annual rates:

<TABLE>
<S> <C> <C>
International Fund 1.05%
Small-Cap Opportunity Fund 1.00%
Small-Cap Value Fund 0.80%
Growth Fund 0.90%
Equity Fund 0.70%
Equity Income Fund 0.70%
Index Fund 0.25%
Balanced Fund 0.60%
Convertible Securities Fund 0.70%
Tax-Exempt Bond Fund 0.60%
Bond Fund 0.65%
Intermediate Tax-Exempt Bond Fund 0.60%
Short/Intermediate Bond Fund 0.70%
Intermediate Government Bond Fund 0.65%
Tax-Exempt Money Market Fund 0.14% of each Fund's
-- first
Money Market Fund $100 million of assets
-- plus
Government Money Market Fund -- 0.10% of the Fund's
-- remaining assets
</TABLE>

PORTFOLIO MANAGEMENT AGENT

PORTFOLIO MANAGEMENT

41
<PAGE>

EQUITY FUND -- Donald G. M. Coxe. Mr. Coxe joined HIM in 1993 and serves as
Chairman and Chief Strategist. He has served as portfolio manager of the Fund
since February 1996 and has nearly 30 years of institutional investment
management experience. Prior to joining HIM, he served on Wall Street as a
sell-side portfolio strategist advising institutional investors and as chief
executive officer for a Canadian investment counseling firm.

42
<PAGE>

1996 and has 14 years of experience managing fixed-income funds, specializing in
tax-exempt and money market securities. Prior to joining Harris Trust, she
served as portfolio manager for a bank proprietary mutual fund complex.

ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT

Harris Trust (in this capacity, the "Administrator") is the administrator of the
Funds and, as such, generally assists the Funds in all aspects of their
administration and operation.

The Administrator has a Sub-Administration Agreement with Funds Distributor,
Inc. ("FDI"), whereby FDI performs certain administrative services for the
Funds. The Administrator has Sub-Administration and Accounting Services
Agreements with PFPC Inc. ("PFPC"), whereby PFPC performs certain administrative
and accounting services for the Funds. Under these agreements, the Administrator
compensates FDI and PFPC for providing their services. The Administrator, FDI
and PFPC are referred to collectively as the "Administrators."

43
<PAGE>
PNC Bank, N.A. (the "Custodian") serves as custodian of the assets of the Funds.
PFPC and the Custodian are indirect, wholly-owned subsidiaries of PNC Bank Corp.

DISTRIBUTOR

Funds Distributor, Inc. (the "Distributor") has entered into Distribution
Agreements with the Trust and the Company pursuant to which it has the
responsibility for distributing shares of the Funds. Fees for services rendered
by the Distributor are paid by the Administrator. The Distributor bears the cost
of printing and mailing prospectuses to potential investors and any advertising
expenses incurred by it in connection with the distribution of shares, subject
to the terms of the Service Plans described below, if implemented pursuant to
contractual arrangements between the Trust or the Company and the Distributor
and approved by the Board of Trustees of the Trust or the Board of Directors of
the Company.

SERVICE PLAN

Under each Fund's Service Plan relating to Class A Shares, the Fund bears the
costs and expenses connected with advertising and marketing the Fund's shares
and pays the fees of financial institutions (which may include banks),
securities dealers and other industry professionals, such as investment
advisers, accountants and estate planning firms (collectively, "Service Agents")
for servicing activities, as described below, at a rate up to 0.25% (0.35% with
respect to the Money Market Funds) per annum of the average daily net asset
value of the Fund's Class A Shares. From their own resources, Harris Trust and
HIM from time to time may voluntarily pay fees to certain Service Agents. The
Administrators and the Distributor may act as Service Agents and receive fees
under a Service Plan.

Servicing activities provided by Service Agents to their customers investing in
the Funds may include establishing and maintaining shareholder accounts and
records; processing purchase and redemption transactions; answering customer
inquiries; assisting customers in changing dividend options, account
designations and addresses; sub-accounting; investing customer cash account
balances automatically in Fund shares; providing periodic account balance
statements and integrating these statements with those of other transactions and
balances in the customer's

44
<PAGE>
other accounts serviced by the Service Agent; arranging for bank wires; and
performing other services to the extent permitted by applicable statute, rule or
regulation.

EXPENSES

Except for certain expenses borne by the Distributor, Harris Trust, or HIM, the
Trust and the Company bear all costs of their operations, including the
compensation of their Trustees or Directors who are not affiliated with Harris
Trust, HIM or the Distributor or any of their affiliates; advisory and
administration fees; payments pursuant to any Service Plan (with respect to only
Class A Shares); interest charges; taxes; fees and expenses of independent
accountants, legal counsel, transfer agent and dividend disbursing agent;
expenses of preparing and printing prospectuses (except the expense of printing
and mailing prospectuses used for promotional purposes, unless otherwise payable
pursuant to a Service Plan), shareholders' reports, notices, proxy statements
and reports to regulatory agencies; insurance premiums and certain expenses
relating to insurance coverage; trade association membership dues; brokerage and
other expenses connected with the execution of portfolio securities
transactions; fees and expenses of the Funds' custodian including those for
keeping books and accounts; expenses of shareholders' meetings and meetings of
Boards of Trustees and Directors; expenses relating to the issuance,
registration and qualification of shares of the Funds; fees of pricing services;
organizational expenses; and any extraordinary expenses. Expenses attributable
to each Fund are borne by that Fund. Other general expenses of the Trust or the
Company are allocated among the Funds in an equitable manner as determined by
the Boards of Trustees and Directors.

HOW TO BUY SHARES
-----------------------------------------------------------------

OPENING AN ACCOUNT. To open an account, complete and sign an application for
Class A Shares and mail it along with your check. You also may open your account
by wire, as described below. Please be sure to furnish your taxpayer
identification number. (You must also certify whether you are subject to
withholding for failing to report income to the Internal Revenue Service
("IRS")). Investments received without a certified taxpayer identification
number may be returned.

If you register your account as belonging to multiple owners (e.g., as joint
tenants), you must provide specific authorization on your application in order
for us to accept instructions from a single owner. Otherwise, all owners will
have to agree to any transactions that involve the account.

45
<PAGE>
MINIMUM INVESTMENTS. The Funds have the following minimum investments:

<TABLE>
<S> <C>
To open an account $ 1,000
To open a retirement account 250
To add to an existing account 50
Investing through an Automatic Investment Plan 50
</TABLE>

BUYING SHARES. Shares may be purchased by investing automatically (see
AUTOMATIC INVESTING below) or by any of the following three methods:

1. BY MAIL. Make your check payable to the Fund of your choice. If you are
adding to your existing account, indicate your Fund account number directly on
the check and send to:

Harris Insight Funds
c/o PFPC Inc.
P.O. Box 8952
Wilmington, Delaware 19899-8952

2. BY BANK WIRE. Call the Funds at (800) 625-7073 to initiate your purchase.
Then wire your investment to:

PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3
For Credit to: Harris Insight Funds
85-5093-2950

Re: [Name of Fund] -- Class A Shares
Account No.:
Account Name:

3. THROUGH FINANCIAL INSTITUTIONS. Shares of any of the Funds may be purchased
through authorized broker-dealers, financial institutions and service agents
with whom the Distributor has a selling agreement, including Harris Trust and
HIM and their affiliates ("Institutions"), on any day the Funds are open for
business. See GENERAL PURCHASE INFORMATION. Institutions are responsible for the
prompt transmission of buy, exchange or sell orders.

46
<PAGE>
Each Institution may establish its own terms with respect to the requirement of
a minimum initial investment and minimum subsequent investments. Depending upon
the terms of your account, Institutions may charge account fees for automatic
investment and other services they provide, including account maintenance fees,
compensating balance requirements, or fees based upon account transactions,
assets, or income, which would reduce the your yield or return. Please read this
Prospectus in connection with any information received from your Institution.

AUTOMATIC INVESTING. Automatic investing is an easy way to add to your Harris
Insight Funds and can help you achieve your financial goals as simply and
conveniently as possible. Through the Harris Insight Funds Automatic Investment
Plan you can have as little as $50 a month electronically withdrawn from your
checking account and invested in the Fund of your choice. This feature can be
established when you open your account. For more information or to receive an
application, please call (800) 982-8792.

GENERAL PURCHASE INFORMATION

The Funds are open for business each day that both of the New York Stock
Exchange (the "Exchange") and the Federal Reserve Bank of Philadelphia are open
for business (i.e., each weekday other than New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day) ("Fund
Business Day"). Except for the Money Market Funds, each Fund normally calculates
its net asset value ("NAV") and offering price at the close of business of the
Exchange, which is normally 4:00 p.m., Eastern time. Each of the Money Market
Funds normally calculates its NAV on or before 12:00 Noon, Eastern time. Shares
are purchased at the next share price calculated after your investment is
received and accepted.

Orders placed directly with the Funds must be paid for by check or bank wire on
the same day. Payment for the shares purchased through an Institution will not
be due until settlement date, normally three business days after the order has
been executed. The Company and Trust, as applicable, reserve the right to reject
any purchase order.

SALES CHARGES

Class A Shares of the Funds (except for the Money Market Funds) are sold with a
sales load of up to 4.50% (applied when your investment is made). There are ways
to reduce or eliminate this charge, however. See REDUCED SALES CHARGES below.

When Class A Shares of the Funds are purchased through an Institution, the
Distributor reallows a portion of the sales charge to the Institution, except as
described below. No sales charge is assessed on the reinvestment of
distributions.

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Sales charges for Class A Shares of the Funds are as follows:

<TABLE>
<CAPTION>
SALES CHARGE DEALER
AS % OF ALLOWANCE
NET AMOUNT AS % OF
AMOUNT OF PURCHASE SALES CHARGES INVESTED OFFERING PRICE
---------------- --------------- ----------------

No sales charge is assessed on Class A Shares that are purchased directly from
the Funds (i.e., not purchased through an Institution). In addition, no sales
charge is assessed on purchases by: (a) any bank, trust company, or other
institution acting on behalf of a fiduciary customer account or any other trust
account (including a pension, profit-sharing or other employee benefit trust
created pursuant to a plan qualified under Section 401 of the Internal Revenue
Code of 1986, as amended); (b) any individual with an investment account or
relationship with HIM; (c) directors, trustees or officers of the Trust or
Company; (d) any director, current or retired employee of Harris Bankcorp, Inc.
or any of its affiliates or an immediate family member of such individual
(spouses and children under 21); (e) any broker, dealer or agents who has a
sales agreement with the Distributor, and their employees (and the immediate
family members of such individuals); and (f) any financial institution,
financial planner, employee benefit plan consultant or registered investment
adviser acting for the account of a client.

REDUCED SALES CHARGES

An investor in a Fund may be entitled to reduced sales charges. To qualify for a
reduced sales charge, you must notify the Funds at the time of purchase. If you
invest through an Institution, you should notify the Institution, which in turn
must notify the Funds. Programs that allow for reduced sales charges may be
changed or eliminated at any time.

RIGHT OF ACCUMULATION. The Right of Accumulation allows an investor to combine
the amount invested in Class A Shares of a Fund with the total net asset value
of Class A Shares currently purchased or already owned by that investor of other
non-Money Market Funds of the Trust and the Company to determine the applicable
sales charge. To obtain such discount, the purchaser must provide sufficient
information at the time of purchase to permit verification that the purchase
qualifies for the reduced sales charge, and confirmation of the order is subject
to such verification. The Right of Accumulation may be modified or discontinued
at any time by the Funds with respect to all Class A Shares purchased
thereafter.

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LETTER OF INTENT. A Letter of Intent allows an investor to purchase Class A
Shares of the non-Money Market Funds of the Trust and the Company over a
13-month period at reduced sales charges based on the total amount intended to
be purchased plus the total net asset value of Class A Shares already owned.
Each investment made during the period receives the reduced sales charge
applicable to the total amount of the intended investment. If such amount is not
invested within the period, the investor must pay the difference between the
sales charges applicable to the purchases made and the charges previously paid.

HOW TO SELL SHARES

-----------------------------------------------------------------

Shares may be sold (redeemed) at their next determined net asset value after
receipt of a proper request by the Funds directly or through any Institution.

1. BY MAIL. Shareholders may sell shares by writing the Funds at the following
address:

Harris Insight Funds
c/o PFPC Inc.
P.O. Box 8952
Wilmington, Delaware 19899-8952

Certain requests for redemption must be signed by the shareholder with signature
guaranteed. See SHAREHOLDER SERVICES AND POLICIES - SIGNATURE GUARANTEES.

4. THROUGH FINANCIAL INSTITUTIONS. If you bought your shares through an
Institution, you may redeem your shares through the Institution. Please contact
the Institution for this service.

GENERAL REDEMPTION INFORMATION

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<PAGE>
Fund's net asset value per share next determined on that day. A redemption order
received after the close of the Exchange, or not received by the Funds prior to
the close of the Fund Business Day, will be executed at the Fund's net asset
value next determined on the next Fund Business Day.

SYSTEMATIC WITHDRAWAL PLAN. You can arrange for periodic, automatic redemptions
from your account. For more information or to sign up for this service, please
call (800) 982-8782.

SHAREHOLDER SERVICES AND POLICIES
-----------------------------------------------------------------

EXCHANGING SHARES. YOU CAN EXCHANGE CLASS A SHARES OF A FUND FOR CLASS A SHARES
OF THE OTHER HARRIS INSIGHT FUNDS OFFERING THOSE SHARES. Class A Shares of any
of the Funds that you have held for seven days or more may be exchanged for
shares of

50
<PAGE>

any other Harris Insight Fund in an identically registered account, provided
that Class A Shares of the Fund to be acquired are registered for sale in the
your state of residence, on the following terms: Class A Shares of the non-Money
Market Funds of the Trust and the Company may be exchanged for Class A Shares of
one another and for Class A Shares of each of the Money Market Funds of the
Company, all at respective net asset values. In addition, Class A Shares of a
Fund that have been acquired by exchange pursuant to this privilege may be
re-exchanged for Class A Shares of the Fund in which they were originally
invested at the Funds' respective net asset values.

Procedures applicable to redemption of a Fund's shares are also applicable to
exchanging shares. If you would like the ability to exchange shares by
telephone, please choose this option when you complete your application. The
Funds reserve the right to limit the number of exchanges between Funds, to
reject any telephone exchange order or otherwise to modify or discontinue the
exchange privilege at any time upon 60 days' written notice. A capital gain or
loss for tax purposes may be realized upon an exchange, depending upon the cost
or other basis of shares redeemed.

- A redemption check is to be made payable to anyone other than the
shareholder(s) of record.

- A redemption check is to be mailed to an address other than the address of
record.

- A redemption amount is to be wired to a bank other than one previously
authorized.

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<PAGE>
During times of drastic economic or market changes, telephone redemption and
exchange privileges may be difficult to implement. In the event that you are
unable to reach the Funds by telephone, requests may be mailed or hand-delivered
to the Funds at the address listed in HOW TO SELL SHARES.

REDEMPTION OF SHARES IN SMALLER ACCOUNTS. Because of the high cost of
maintaining small accounts, each Fund reserves the right to redeem all shares in
an account whose value falls below $500 ($250 in the case of a retirement
account) unless this is a result of a decline in the market value of the shares.
Prior to such a redemption, a shareholder will be notified in writing and
permitted 30 days to make additional investments to raise the account balance to
the specified minimum.

SHARE CERTIFICATES. Share certificates are not issued.

ELIGIBILITY BY STATE. You may only invest in, or exchange into, Class A Shares
legally available in your jurisdiction of residence.

CHECKWRITING. A checkwriting privilege is available to shareholders of the
Money Market Funds. For more information or to receive a checkwriting
application, please call (800) 982-8782.

HOW THE FUNDS MAKE DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION
-----------------------------------------------------------------

52
<PAGE>
sales charge is assessed on the reinvestment of dividends or distributions).
Distribution checks and account statements will be mailed approximately two
business days after the payment date.

Dividends (including net short-term capital gains), except "exempt-interest
dividends" (described below), will be taxable to shareholders as ordinary
income.

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<PAGE>
income derived from the municipal securities of other jurisdictions.
Shareholders are advised to consult with their tax advisers concerning the
application of state and local taxes to investments in the Fund which may differ
from the Federal income tax consequences described above.

GENERAL INFORMATION
-----------------------------------------------------------------

BANKING LAW MATTERS

Harris Trust and HIM believe that they may perform the services contemplated by
this Prospectus and their respective agreements with the Company and Trust
without violating applicable federal banking laws or regulations. It is noted,
however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in federal statutes or
regulations and judicial or administrative decisions or interpretations thereof,
could prevent Harris Trust or HIM from continuing to perform, in whole or in
part, these services. If this were to happen, the Funds would seek alternative
sources for these services.

HOW SHARE VALUE IS DETERMINED

54
<PAGE>
valuation date, the securities are valued at the closing bid price. Securities
traded only on over-the-counter markets are valued at closing over-the-counter
bid prices. Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at their closing values on the exchange. Bonds
are valued at the mean of the last bid and asked prices. In the absence of
readily available market quotations (or when, in the view of the Portfolio
Management Agent, available market quotations do not accurately reflect a
security's fair value), securities are valued at their fair value as determined
by the Trust's Board of Trustees or Company's Board of Directors. Prices used
for valuations of securities are provided by independent pricing services. Debt
obligations with remaining maturities of 60 days or less generally are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.

HOW PERFORMANCE IS REPORTED

Total return refers to the amount an investment in a Fund would have earned,
including any increase or decrease in net asset value, over a specified period
of time and assumes the payment of the maximum sales load and the reinvestment
of all dividends and distributions. The total return of each Fund shows what an
investment in Class A Shares of the Fund would have earned over a specified
period of time (such as one, five or ten years, or the period of time since
commencement of operations, if shorter) assuming that the maximum sales load was
paid and that all distributions and dividends by the Fund were reinvested on
their reinvestment dates during the period less all recurring fees. When a Fund
compares its total return to that of other mutual funds or relevant indices, its
total return also may be computed without reflecting the sales load so long as
the sales load is stated separately in connection with the comparison.

55
<PAGE>
the Fund's share price at the end of the 30-day period (which period will be
stated in the advertisement). The yield of any investment is generally a
function of portfolio quality and maturity, type of instrument and operating
expenses.

The Funds' advertisements may reference ratings and rankings among similar
mutual funds by independent evaluators such as Morningstar, Inc. and Lipper
Analytical Services, Inc. The comparative material found in the Funds'
advertisements, sales literature or reports to shareholders may contain
performance ratings. That material is not to be considered an indication of
future performance. All performance information for a Fund is calculated on a
class basis. In addition, a Fund may use a benchmark securities index as a
measure of the Fund's performance. The Balanced Fund may measure performance
using a composite of securities indices to reflect that Fund's policy of
investing in both equity and fixed income securities. The Funds may from time to
time advertise a comparison of their performance against relevant indices.

MORE INFORMATION ABOUT THE TRUST AND THE COMPANY

56
<PAGE>
Harris Insight Convertible Fund. The Company's Board has authorized the Funds of
the Company to issue two classes of shares, Class A and Institutional Shares,
except with respect to Harris Insight Convertible Fund, which offers a single
class.

Institutional Shares of the Funds, which are offered only to certain classes of
investors, do not impose any sales charges or bear any sales, marketing or
distribution expenses. In the future, the Board of Trustees of the Trust and the
Board of Directors of the Company may authorize the issuance of shares of
additional investment portfolios and additional classes of shares of any
portfolio. Different classes of shares of a single portfolio may bear different
sales charges and other expenses (including distribution fees) which may affect
their relative performance. Information regarding other classes of shares may be
obtained by calling the Funds at (800) 982-8782 or from any institution that
makes available shares of the Funds. All shares of the Trust and all shares of
the Company have equal voting rights and will be voted in the aggregate, and not
by class, except where voting by class is required by law or where the matter
involved affects only one class. A more detailed statement of the voting rights
of shareholders is contained in the SAI. All shares of the Trust and all shares
of the Company, when issued, will be fully paid and non-assessable.

As of April 1, 1997, Harris Trust owned of record all or substantially all of
the Institutional Shares of the Funds and, for purposes of the 1940 Act, may be
have been deemed to control the Funds. Harris Trust has indicated that it holds
its shares on behalf of various client accounts and not as beneficial owner.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

57
<PAGE>
APPENDIX A: PERMITTED INVESTMENTS
-----------------------------------------------------------------

58
<PAGE>

59
<PAGE>
value as a fixed income security) and its conversion value (the value of the
underlying shares of common stock if the security is converted). As a fixed
income security, the value of a convertible security generally increases when
interest rates decline and generally decreases when interest rates rise. The
value of convertible securities, however, is also influenced by the value of the
underlying common stock. Thus, convertible securities ordinarily will provide
opportunities for producing both current income and longer-term capital
appreciation. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinate to any
nonconvertible fixed income securities.

60
<PAGE>

61
<PAGE>
corporations and foreign governments which obligations are denominated in and
pay interest in U.S. dollars. The Convertible Securities Fund may invest in
dollar-denominated Eurodollar securities convertible into the common stock of
domestic corporations. The Government Fund may invest in dollar-denominated
Eurodollar securities that are guaranteed by the U.S. Government or its agencies
or instrumentalities. Investments in foreign securities involve certain
considerations that are not typically associated with investing in domestic
securities. For example, investments in foreign securities typically involve
higher transaction costs than investments in U.S. securities. Foreign
investments may have risks associated with currency exchange rates, political
instability, less complete financial information about the issuers and less
market liquidity than domestic securities. Future political and economic
developments, possible imposition of withholding taxes on income, seizure or
nationalization of foreign holdings, establishment of exchange controls or the
adoption of other governmental restrictions might adversely affect the payment
of principal and interest on foreign obligations. In addition, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements and to different accounting, auditing and recordkeeping
requirements than domestic banks.

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<PAGE>
amount master demand notes with maturities of nine months or less or unless the
Portfolio Management Agent or Adviser has determined that an adequate trading
market exists for such securities or that market quotations are readily
available.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 ("restricted securities"),
securities which are otherwise not readily marketable, such as over-the-counter
options, and repurchase agreements not entitling the holder to payment of
principal in seven days.

The Funds may purchase Rule 144A securities sold to institutional investors
without registration under the Securities Act of 1933 and commercial paper
issued in reliance upon the exemption in Section 4(2) of the Securities Act of
1933, for which an institutional market has developed. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on the issuer's ability to honor a demand for repayment
of the unregistered security. A security's contractual or legal restrictions on
resale to the general public or to certain institutions may not be indicative of
the liquidity of the security. These securities may be determined to be liquid
in accordance with guidelines established by the Trust's Board of Trustees (or
the Company's Board of Directors). These guidelines take into account trading
activity in the securities and the availability of reliable pricing information,
among other factors. The Board of Trustees or Directors monitors implementation
of these guidelines on a periodic basis.

63
<PAGE>

will not move in the direction that the portfolio manager anticipates; (2) the
existence of an imperfect correlation between the price of such instruments and
movements in the prices of the securities, interest rates or currencies being
hedged; (3) the fact that skills needed to use these strategies are different
than those needed to select portfolio securities; (4) the possible inability to
close out certain hedged positions may result in adverse tax consequences; (5)
the possible absence of a liquid secondary market for any particular instrument
and possible exchange-imposed price fluctuation limits, either of which may make
it difficult or impossible to close out a position when desired; (6) the
leverage risk, that is, the risk that adverse price movements in an instrument
can result in a loss substantially greater than a Fund's initial investment in
that instrument (in some cases, the potential loss is unlimited); and (7)
particularly in the case of privately-negotiated instruments, the risk that the
counterparty will fail to perform its obligations, which could leave a Fund
worse off than if it had not entered into the position.

LETTERS OF CREDIT. Debt obligations, including municipal obligations,
certificates of participation, commercial paper and other short-term
obligations, may be

64
<PAGE>
backed by an irrevocable letter of credit of a bank. Only banks that, in the
opinion of the Portfolio Management Agent or Adviser, are of investment quality
comparable to other permitted investments of a Fund, may be used for letter of
credit-backed investments.

MORTGAGE-BACKED SECURITIES. The Equity Funds, the Bond Fund, the
Short/Intermediate Bond Fund and the Intermediate Government Bond Fund may
invest in mortgage-backed securities, including collateralized mortgage
obligations ("CMOs") and Government Stripped Mortgage-Backed Securities.
Mortgage-backed securities represent an interest in a pool of mortgages
originated by lenders such as commercial banks, savings associations and
mortgage bankers and brokers. Mortgage-backed securities may be issued by
government-related entities or by non-governmental entities such as special
purpose trusts created by banks, savings associations, private mortgage
insurance companies or mortgage bankers. U.S. Government-related mortgage-backed
securities may be issued or guaranteed by the U.S. Government or one of its
agencies and backed by the full faith and credit of the U.S. Government, or
supported primarily or solely by the creditworthiness of the issuing U.S.
Government agency or other entity.

CMOs are types of bonds secured by an underlying pool of mortgages or mortgage
pass-through certificates that are structured to direct payments on underlying

65
<PAGE>
collateral to different series or classes of obligations. Government Stripped
Mortgage-Backed Securities are mortgage-backed securities issued or guaranteed
by Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), or Federal Home Loan Mortgage Corporation ("FHLMC"). These
securities represent beneficial ownership interests in either periodic principal
distributions ("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as the case may be.
The certificates underlying the Government Stripped Mortgage-Backed Securities
represent all or part of the beneficial interest in pools of mortgage loans.

66
<PAGE>
special excise tax or from other specific revenue sources such as the user of
the facility being financed. Revenue securities include private activity bonds
(also known as industrial revenue bonds), which may be purchased only by the
Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund and which are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of private activity bonds is usually directly related to the credit
standing of the corporate user of the facility involved.

The Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond Fund may invest in
municipal leases. Municipal leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing power is
pledged, a lease obligation is ordinarily backed by the municipality's covenant
to budget for, appropriate and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Although "non-appropriation" lease obligations are secured by
the leased property, disposition of the property in the event of foreclosure may
prove difficult.

67
<PAGE>
the risk that the market value of the securities sold by a Fund may decline
below the repurchase price. A Fund would pay interest on amounts obtained
pursuant to a reverse repurchase agreement.

68
<PAGE>
U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in U.S. Government
Obligations, which consist of bills, notes and bonds issued by the U.S.
Treasury. They are direct obligations of the U.S. Government and differ
primarily in the length of their maturities.

69
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INVESTMENT ADVISER, ADMINISTRATOR,
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603

PORTFOLIO MANAGEMENT AGENT
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603

SUB-ADMINISTRATOR AND ACCOUNTING
SERVICES AGENT, SUB-TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809

SUB-ADMINISTRATOR AND DISTRIBUTOR
Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109

CUSTODIAN
PNC Bank, N.A.
Broad & Chestnut Streets
Philadelphia, Pennsylvania 19101

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103

LEGAL COUNSEL
Bell, Boyd & Lloyd
Three First National Plaza
Chicago, Illinois 60602-4207
<PAGE>

HARRIS INSIGHT-Registered Trademark- FUNDS

STATEMENT OF ADDITIONAL INFORMATION
60 State Street, Suite 1300, Boston, Massachusetts 02109
Telephone: (800) 982-8782

May 1, 1997

The Harris Insight Funds Trust (the "Trust") is an open-end, diversified
management investment company that currently offers a selection of twelve
investment portfolios. HT Insight Funds, Inc. d/b/a Harris Insight Funds (the
"Company") is an open-end, diversified management investment company that
currently offers a selection of seven investment portfolios. The twelve
portfolios of the Trust and five of the seven portfolios of the Company
(collectively, the "Funds") are detailed in this Statement of Additional
Information. The investment objectives of the Funds are described in the
Prospectus. See "Investment Objectives and Policies." The Funds are as
follows:

- Harris Insight International Fund (the "International Fund")
- Harris Insight Small-Cap Opportunity Fund (the "Small-Cap Fund")
- Harris Insight Small-Cap-Value Fund (the "Small-Cap Value Fund")
- Harris Insight Growth Fund (the "Growth Fund")
- Harris Insight Equity Fund (the "Equity Fund")
- Harris Insight Equity Income Fund (the "Equity Income Fund")
- Harris Insight Index Fund (the "Index Fund")
- Harris Insight Balanced Fund (the "Balanced Fund")
- Harris Insight Convertible Securities Fund (the "Convertible
Securities Fund")
- Harris Insight Tax-Exempt Bond Fund (the "Tax-Exempt Fund")
- Harris Insight Bond Fund (the "Bond Fund")
- Harris Insight Intermediate Tax-Exempt Bond Fund (the "Intermediate
Tax-Exempt Fund")
- Harris Insight Short/Intermediate Bond Fund (the "Short/Intermediate
Bond Fund")
- Harris Insight Intermediate Government Bond Fund (the "Government Fund")
- Harris Insight Tax-Exempt Money Market Fund (the "Tax-Exempt Money Fund")
- Harris Insight Money Market Fund (the "Money Fund")
- Harris Insight Government Money Market Fund (the "Government Money
Fund")

Each of the Trust's twelve Funds has two classes of shares, Class A Shares
and Institutional Shares. Each of the five Funds of the Company described in
this Statement of Additional Information also have two classes of shares, Class
A Shares and Institutional Shares.

This Statement of Additional Information is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Funds'
related Prospectuses dated May 1, 1997 and any supplement thereto (the
"Prospectuses"). This Statement of Additional Information contains additional
information that should be read in conjunction with each of the Prospectuses,
additional copies of which may be obtained without charge from the Company's and
the Trust's distributor, Funds Distributor, Inc., by writing or calling the
Funds at the address or telephone number given above.

<PAGE>

TABLE OF CONTENTS

PAGE

Investment Strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Service Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Calculation of Yield and Total Return. . . . . . . . . . . . . . . . . . . . 32
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . . . 36
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Capital Stock and Beneficial Interest. . . . . . . . . . . . . . . . . . . . 41
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1

<PAGE>
INVESTMENT STRATEGIES

ASSET-BACKED SECURITIES. Asset-backed securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pool of assets, or as debt instruments, which are
also known as collateralized obligations and are generally issued as the debt of
a special purpose entity organized solely for the purpose of owning such assets
and issuing such debt. Asset-backed securities are often backed by a pool of
assets representing the obligations of a number of different parties. Payments
of principal and interest may be guaranteed up to certain amounts and for a
certain time period by a letter of credit issued by a financial institution
unaffiliated with the entities issuing the securities.

The estimated life of an asset-backed security varies with the prepayment
experience with respect to the underlying debt instruments. The rate of such
prepayments, and hence the life of the asset-backed security, will be primarily
a function of current market interest rates, although other economic and
demographic factors may be involved.

CONVERTIBLE SECURITIES. Because they have the characteristics of both
fixed-income securities and common stock, convertible securities sometimes are
called "hybrid" securities. Convertible bonds, debentures and notes are debt
obligations offering a stated interest rate; convertible preferred stocks are
senior securities offering a stated dividend rate. Convertible securities will
at times be priced in the market like other fixed income securities: that is,
their prices will tend to rise when interest rates decline and will tend to fall
when interest rates rise. However, because a convertible security provides an
option to the holder to exchange the security for either a specified number of
the issuer's common shares at a stated price per share or the cash value of such
common shares, the security market price will tend to fluctuate in relationship
to the price of the common shares into which it is convertible. Thus,
convertible securities ordinarily will provide opportunities both for producing
current income and longer-term capital appreciation. Because convertible
securities are usually viewed by the issuer as future common stock, they are
generally subordinated to other senior securities and therefore are rated one
category lower than the issuer's non-convertible debt obligations or preferred
stock. Securities rated "B" or "CCC" (or "Caa") are regarded as having
predominantly speculative characteristics with respect to the issuer's capacity
to pay interest and repay principal, with "B" indicating a lesser degree of
speculation than "CCC" (or "Caa"). While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposures to adverse conditions. Securities rated "CCC"
(or "Caa") have a currently identifiable vulnerability to default and are
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, they are not likely to have the
capacity to pay interest and repay principal.

While the market values of low-rated and comparable unrated securities tend
to react less to fluctuations in interest rate levels than the market values of
higher-rated securities, the market values of certain low-rated and comparable
unrated securities also tend to be more sensitive to individual corporate
developments and changes in economic conditions than higher-rated securities.
In addition, low-rated securities and comparable unrated securities generally
present a higher degree of credit risk, and yields on such securities will
fluctuate over time. Issuers of low-rated and comparable unrated securities are
often highly leveraged and may not have more traditional

<PAGE>

methods of financing available to them so that their ability to service their
debt obligations during an economic downturn or during sustained periods of
rising interest rates may be impaired. The risk of loss due to default by such
issuers is significantly greater because low-rated and comparable unrated
securities generally are unsecured and frequently are subordinated to the prior
payment of senior indebtedness. A Fund may incur additional expenses to the
extent that it is required to seek recovery upon a default in the payment of
principal or interest on its portfolio holdings. The existence of limited
markets for low-rated and comparable unrated securities may diminish the Fund's
ability to obtain accurate market quotations for purposes of valuing such
securities and calculating its net asset value.

Fixed-income securities, including low-rated securities and comparable
unrated securities, frequently have call or buy-back features that permit their
issuers to call or repurchase the securities from their holders, such as a Fund.
If an issuer exercises these rights during periods of declining interest rates,
the Fund may have to replace the security with a lower yielding security, thus
resulting in a decreased return to the Fund.

To the extent that there is no established retail secondary market for
low-rated and comparable unrated securities, there may be little trading of such
securities in which case the responsibility of the Trust's Board of Trustees or
the Company's Board of Directors, as the case may be, to value such securities
becomes more difficult and judgment plays a greater role in valuation because
there is less reliable, objective data available. In addition, a Fund's ability
to dispose of the bonds may become more difficult. Furthermore, adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of high yield bonds, especially
in a thinly traded market.

The market for certain low-rated and comparable unrated securities is
relatively new and has not weathered a major economic recession. The effect
that such a recession might have on such securities is not known. Any such
recession, however, could likely disrupt severely the market for such securities
and adversely affect the value of such securities. Any such economic downturn
also could adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon and could result in a higher incidence
of defaults.

FLOATING AND VARIABLE RATE OBLIGATIONS. Harris Investment Management, Inc.
("HIM" or the "Portfolio Management Agent") or Harris Trust and Savings Bank
("Harris Trust" or the "Investment Adviser") with respect to the Tax-Exempt
Money Market Fund will monitor, on an ongoing basis, the ability of an issuer of
a floating or variable rate demand instrument to pay principal and interest on
demand. A Fund's right to obtain payment at par on a demand instrument could be
affected by events occurring between the date the Fund elects to demand payment
and the date payment is due that may affect the ability of the issuer of the
instrument to make payment when due, except when such demand instrument permits
same day settlement. To facilitate settlement, these same day demand instruments
may be held in book entry form at a bank other than the Funds' custodian subject
to a sub-custodian agreement between the bank and the Funds' custodian.

The floating and variable rate obligations that the Funds may purchase
include certificates of participation in such obligations purchased from banks.
A certificate of participation gives a Fund an undivided interest in the
underlying obligations in the proportion that the Fund's interest bears to

<PAGE>

the total principal amount of the obligation. Certain certificates of
participation may carry a demand feature that would permit the holder to tender
them back to the issuer prior to maturity. The Money Market Funds may invest in
certificates of participation even if the underlying obligations carry stated
maturities in excess of thirteen months upon compliance with certain conditions
contained in a rule of the Securities and Exchange Commission (the
"Commission"). The income received on certificates of participation in
tax-exempt municipal obligations constitutes interest from tax-exempt
obligations.

FOREIGN SECURITIES. As discussed in the Prospectus, investing in foreign
securities generally represents a greater degree of risk than investing in
domestic securities, due to possible exchange rate fluctuations, less publicly
available information, more volatile markets, less securities regulation, less
favorable tax provisions, war or expropriation. As a result of its investments
in foreign securities, a Fund may receive interest or dividend payments, or the
proceeds of the sale or redemption of such securities, in the foreign currencies
in which such securities are denominated.

The International Fund may purchase non-dollar securities denominated in
the currency of countries where the interest rate environment as well as the
general economic climate provide an opportunity for declining interest rates and
currency appreciation. If interest rates decline, such non-dollar securities
will appreciate in value. If the currency also appreciates against the dollar,
the total investment in such non-dollar securities would be enhanced further.
(For example, if United Kingdom bonds yield 14% during a year when interest
rates decline causing the bonds to appreciate by 5% and the pound rises 3%
versus the dollar, then the annual total return of such bonds would be 22%.
This example is illustrative only.) Conversely, a rise in interest rates or
decline in currency exchange rates would adversely affect the Fund's return.

Investments in non-dollar securities are evaluated primarily on the
strength of a particular currency against the dollar and on the interest rate
climate of that country. Currency is judged on the basis of fundamental
economic criteria (e.g., relative inflation levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. In addition to the foregoing, interest rates are
evaluated on the basis of differentials or anomalies that may exist between
different countries.

FORWARD CONTRACTS. Forward Contracts may be entered into by the Equity
Fund, the Equity Income Fund, the Growth Fund, the Small-Cap Opportunity Fund,
the Small-Cap Value Fund, the Index Fund, the International Fund and the
Balanced Fund (collectively, the "Equity Funds") for hedging purposes as well as
for non-hedging purposes. Forward Contracts may also be entered into for "cross
hedging" as noted in the Prospectus. Transactions in Forward Contracts entered
into for hedging purposes will include forward purchases or sales of foreign
currencies for the purpose of protecting the dollar value of securities
denominated in a foreign currency or protecting the dollar equivalent of
interest or dividends to be paid on such securities. By entering into such
transactions, however, the Fund may be required to forego the benefits of
advantageous changes in exchange rates. A Fund may also enter into transactions
in Forward Contracts for other than hedging purposes which presents greater
profit potential but also involves increased risk. For example, if the Adviser
believes that the value of a particular foreign currency will increase or
decrease relative to the value of the U.S. dollar, a Fund may purchase or sell
such currency, respectively, through a Forward Contract. If the expected
changes in the value of the currency occur, a Fund will realize

<PAGE>

profits which will increase its gross income. Where exchange rates do not move
in the direction or to the extent anticipated, however, a Fund may sustain
losses which will reduce its gross income. Such transactions, therefore, could
be considered speculative.

The Equity Funds have established procedures consistent with statements
by the Commission and its staff regarding the use of Forward Contracts by
registered investment companies, which require the use of segregated assets
or "cover" in connection with the purchase and sale of such contracts. In
those instances in which a Fund satisfies this requirement through
segregation of assets, it will maintain, in a segregated account, cash, cash
equivalents or high grade debt securities, which will be marked to market on
a daily basis, in an amount equal to the value of its commitments under
Forward Contracts.

GOVERNMENT SECURITIES. Government securities consist of obligations
issued or guaranteed by the U.S. Government, its agencies, instrumentalities
or sponsored enterprises ("Government Securities"). Obligations of the
United States Government agencies and instrumentalities are debt securities
issued by United States Government-sponsored enterprises and federal
agencies. Some of these obligations are supported by: (a) the full faith
and credit of the United States Treasury (such as Government National
Mortgage Association participation certificates); (b) the limited authority
of the issuer to borrow from the United States Treasury (such as securities
of the Federal Home Loan Bank); (c) the discretionary authority of the United
States Government to purchase certain obligations (such as securities of the
Federal National Mortgage Association); or (d) the credit of the issuer only.
In the case of obligations not backed by the full faith and credit of the
United States, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment. In cases where United
States Government support of agencies or instrumentalities is discretionary,
no assurance can be given that the United States Government will provide
financial support, since it is not lawfully obligated to do so.

INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. All Equity Funds, the
Convertible Securities Fund, the Bond Fund, the Government Bond Fund, the
Intermediate Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund may invest in
interest rate futures contracts and options on such contracts that are traded on
a domestic exchange or board of trade. Such investments may be made by a Fund
solely for the purpose of hedging against changes in the value of its portfolio
securities due to anticipated changes in interest rates and market conditions,
and not for purposes of speculation. A public market exists for interest rate
futures contracts covering a number of debt securities, including long-term
United States Treasury Bonds, ten-year United States Treasury Notes, three-month
U.S. Treasury Bills and three-month domestic bank certificates of deposit.
Other financial futures contracts may be developed and traded. The purpose of
the acquisition or sale of an interest rate futures contract by a Fund, as the
holder of municipal or other debt securities, is to protect the Fund from
fluctuations in interest rates on securities without actually buying or selling
such securities.

Unlike the purchase or sale of a security, no consideration is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
a Fund will be required to deposit with the broker an amount of cash or cash
equivalents equal to approximately 10% of the contract amount (this amount is
subject to change by the board of trade on which the contract is traded and
members of such board of trade may charge a higher amount). This amount is
known as initial margin and is in the nature of a performance bond or good faith
deposit on the contract which is returned to the

<PAGE>

Fund upon termination of the futures contract, assuming that all contractual
obligations have been satisfied. Subsequent payments, known as variation
margin, to and from the broker, will be made on a daily basis as the price of
the index fluctuates making the long and short positions in the futures contract
more or less valuable, a process known as marking-to-market. At any time prior
to the expiration of the contract, a Fund may elect to close the position by
taking an opposite position, which will operate to terminate the Fund's existing
position in the futures contract.

A Fund may not purchase or sell futures contracts or purchase options on
futures contracts if, immediately thereafter, more than one-third of its net
assets would be hedged, or the sum of the amount of margin deposits on the
Fund's existing futures contracts and premiums paid for options would exceed
5% of the value of the Fund's total assets. When a Fund enters into futures
contracts to purchase an index or debt security or purchase call options, an
amount of cash, U.S. government securities or other appropriate assets equal
to the national market value of the underlying contract will be deposited and
maintained in a segregated account with the Fund's custodian to collateralize
the positions, thereby insuring that the use of the contract is unleveraged.

Although a Fund will enter into futures contracts only if an active market
exists for such contracts, there can be no assurance that an active market will
exist for the contract at any particular time. Most domestic futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading session. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not limit potential
losses because the limit may prevent the liquidation of unfavorable positions.
It is possible that futures contract prices could move to the daily limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures traders to
substantial losses. In such event, it will not be possible to close a futures
position and, in the event of adverse price movements, a Fund would be required
to make daily cash payments of variation margin. In such circumstances, an
increase in the value of the portion of the portfolio being hedged, if any, may
partially or completely offset losses on the futures contract. As described
above, however, there is no guarantee the price of municipal bonds or of other
debt securities will, in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures contract.

If a Fund has hedged against the possibility of an increase in interest
rates adversely affecting the value of municipal bonds or other debt securities
held in its portfolio and rates decrease instead, the Fund will lose part or all
of the benefit of the increased value of the securities it has hedged because it
will have offsetting losses in its futures positions. In addition, in such
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may, but
will not necessarily, be at increased prices which reflect the decline in
interest rates. A Fund may have to sell securities at a time when it may be
disadvantageous to do so.

<PAGE>

In addition, the ability of a Fund to trade in futures contracts and
options on futures contracts may be materially limited by the requirements of
the Internal Revenue Code of 1986, as amended (the "Code"), applicable to a
regulated investment company. See "Federal Income Taxes" below.

A Fund may purchase put and call options on interest rate futures contracts
which are traded on a domestic exchange or board of trade as a hedge against
changes in interest rates, and may enter into closing transactions with respect
to such options to terminate existing positions. There is no guarantee such
closing transactions can be effected.

Options on futures contracts, as contrasted with the direct investment in
such contracts, give the purchaser the right, in return for the premium paid, to
assume a position in futures contracts at a specified exercise price at any time
prior to the expiration date of the options. Upon exercise of an option, the
delivery of the futures position by the writer of the option to the holder of
the option will be accompanied by delivery of the accumulated balance in the
writer's futures margin account, which represents the amount by which the market
price of the futures contract exceeds, in the case of a call, or is less than,
in the case of a put, the exercise price of the option on the futures contract.
The potential loss related to the purchase of an option on interest rate futures
contracts is limited to the premium paid for the option (plus transaction
costs). Because the value of the option is fixed at the point of sale, there
are no daily cash payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily and that change
would be reflected in the net asset value of a Fund.

There are several risks in connection with the use of interest rate futures
contracts and options on such futures contracts as hedging devices. Successful
use of these derivative securities by a Fund is subject to the Portfolio
Management Agent's ability to predict correctly movements in the direction of
interest rates. Such predictions involve skills and techniques which may be
different from those involved in the management of long-term municipal bond
portfolio. There can be no assurance that there will be a correlation between
price movements in interest rate futures, or related options, on the one hand,
and price movements in the municipal bond or other debt securities which are the
subject to the hedge, on the other hand. Positions in futures contracts and
options on futures contracts may be closed out only on an exchange or board of
trade that provides an active market, therefore, there can be no assurance that
a liquid market will exist for the contract or the option at any particular
time. Consequently, a Fund may realize a loss on a futures contract that is not
offset by an increase in the price of the municipal bonds or other debt
securities being hedged or may not be able to close a futures position in the
event of adverse price movements. Any income earned from transactions in
futures contracts and options on futures contracts will be taxable.
Accordingly, it is anticipated that such investments will be made only in
unusual circumstances, such as when the Portfolio Management Agent anticipates
an extreme change in interest rates or market conditions.

See additional risk disclosure below under "Index Futures Contracts and
Options on Index Futures Contracts."

LETTERS OF CREDIT. Debt obligations, including municipal obligations,
certificates of participation, commercial paper and other short-term
obligations, may be backed by an irrevocable letter of credit of a bank that
assumes the obligation for payment of principal and interest in the

<PAGE>

event of default by the issuer. Only banks that, in the opinion of the
Portfolio Management Agent, or the Investment Adviser with respect to the
Tax-Exempt Money Market Fund, are of investment quality comparable to other
permitted investments of a Fund, may be used for letter of credit backed
investments.

LOANS OF PORTFOLIO SECURITIES. Each Fund, except the Money Market Funds,
may lend to brokers, dealers and financial institutions securities from its
portfolio representing up to one-third of the Fund's net assets if cash or cash
equivalent collateral, including letters of credit, marked-to-market daily and
equal to at least 100% of the current market value of the securities loaned
(including accrued interest and dividends thereon) plus the interest payable to
the Fund with respect to the loan is maintained by the borrower with the Fund in
a segregated account. In determining whether to lend a security to a particular
broker, dealer or financial institution, the Portfolio Management Agent will
consider all relevant facts and circumstances, including the creditworthiness of
the broker, dealer or financial institution. No Fund will enter into any
portfolio security lending arrangement having a duration of longer than one
year. Any securities that a Fund may receive as collateral will not become part
of the Fund's portfolio at the time of the loan and, in the event of a default
by the borrower, the Fund will, if permitted by law, dispose of such collateral
except for such part thereof that is a security in which the Fund is permitted
to invest. During the time securities are on loan, the borrower will pay the
Fund any accrued income on those securities, and the Fund may invest the cash
collateral and earn additional income or receive an agreed upon fee from a
borrower that has delivered cash equivalent collateral. Loans of securities by
a Fund will be subject to termination at the Fund's or the borrower's option.
Each Fund may pay reasonable administrative and custodial fees in connection
with a securities loan and may pay a negotiated fee to the borrower or the
placing broker. Borrowers and placing brokers may not be affiliated, directly
or indirectly, with the Company, the Trust, the Investment Adviser, the
Portfolio Management Agent or the Distributor.

MORTGAGE-RELATED SECURITIES. All Equity Funds, the Short/Intermediate
Fund, the Bond Fund and the Government Fund may invest in mortgage-backed
securities, including collateralized mortgage obligations ("CMOs") and
Government Stripped Mortgage-Backed Securities. The Government Fund may
purchase such securities only if they represent interests in an asset-backed
trust collateralized by the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA"), or the Federal
Home Loan Mortgage Corporation ("FHLMC").

CMOs are types of bonds secured by an underlying pool of mortgages or
mortgage pass-through certificates that are structured to direct payments on
underlying collateral to different series or classes of the obligations. To the
extent that CMOs are considered to be investment companies, investments in such
CMOs will be subject to the percentage limitations described under "Investment
Company Securities" in the Prospectus.

Government Stripped Mortgage-Backed Securities are mortgage-backed
securities issued or guaranteed by GNMA, FNMA, or FHLMC. These securities
represent beneficial ownership interests in either periodic principal
distributions ("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as the case

<PAGE>

may be. The certificates underlying the Government Stripped Mortgage-Backed
Securities represent all or part of the beneficial interest in pools of mortgage
loans.

Mortgage-backed securities provide a monthly payment consisting of interest
and principal payments. Additional payments may be made out of unscheduled
repayments of principal resulting from the sale of the underlying residential
property, refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-related securities may tend to increase due
to refinancing of mortgages as interest rates decline. Prompt payment of
principal and interest on GNMA mortgage pass-through certificates is backed by
the full faith and credit of the United States. FNMA guaranteed mortgage
pass-through certificates and FHLMC participation certificates are solely the
obligations of those entities but are supported by the discretionary authority
of the U.S. Government to purchase the agencies' obligations.

Investments in interest-only Government Stripped Mortgage-Backed Securities
will be made in order to enhance yield or to benefit from anticipated
appreciation in value of the securities at times when the Portfolio Management
Agent believes that interest rates will remain stable or increase. In periods
of rising interest rates, the value of interest-only Government Stripped
Mortgage-Backed Securities may be expected to increase because of the diminished
expectation that the underlying mortgages will be prepaid. In this situation
the expected increase in the value of interest-only Government Stripped
Mortgage-Backed Securities may offset all or a portion of any decline in value
of the portfolio securities of the Fund. Investing in Government Stripped
Mortgage-Backed Securities involves the risks normally associated with investing
in mortgage-backed securities issued by government or government-related
entities. In addition, the yields on interest-only and principal-only
Government Stripped Mortgage-Backed Securities are extremely sensitive to the
prepayment experience on the mortgage loans underlying the certificates
collateralizing the securities. If a decline in the level of prevailing
interest rates results in a rate of principal prepayments higher than
anticipated, distributions of principal will be accelerated, thereby reducing
the yield to maturity on interest-only Government Stripped Mortgage-Backed
Securities and increasing the yield to maturity on principal-only Government
Stripped Mortgage-Backed Securities. Conversely, if an increase in the level of
prevailing interest rates results in a rate of principal prepayments lower than
anticipated, distributions of principal will be deferred, thereby increasing the
yield to maturity on interest-only Government Stripped Mortgage-Backed
Securities and decreasing the yield to maturity on principal-only Government
Stripped Mortgage-Backed Securities. Sufficiently high prepayment rates could
result in a Fund's not fully recovering its initial investment in an
interest-only Government Stripped Mortgage-Backed Security. Government Stripped
Mortgage-Backed Securities are currently traded in an over-the-counter market
maintained by several large investment banking firms. There can be no assurance
that a Fund will be able to effect a trade of a Government Stripped
Mortgage-Backed Security at a time when it wishes to do so.

MUNICIPAL LEASES. Each of the Intermediate Tax-Exempt Bond Fund and the
Tax-Exempt Bond Fund may acquire participations in lease obligations or
installment purchase contract obligations (hereinafter collectively called
"lease obligations") of municipal authorities or entities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate, and make the
payments due under the lease obligation.

<PAGE>

However, certain lease obligations contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. In addition to the "non-appropriation" risk, these
securities represent a relatively new type of financing that has not yet
developed the depth of marketability associated with more conventional bonds.
In the case of a "non-appropriation" lease, a Fund's ability to recover under
the lease in the event of non-appropriation or default will be limited solely to
the repossession of the leased property in the event foreclosure might prove
difficult.

In evaluating the credit quality of a municipal lease obligation and
determining whether such lease obligation will be considered "liquid," the
Portfolio Management Agent will consider: (1) whether the lease can be canceled;
(2) what assurance there is that the assets represented by the lease can be
sold; (3) the strength of the lessee's general credit (e.g., its debt,
administrative, economic, and financial characteristics); (4) the likelihood
that the municipality will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to the operations of
the municipality (e.g., the potential for an "event of non-appropriation"); and,
(5) the legal recourse in the event of failure to appropriate.

MUNICIPAL OBLIGATIONS. As discussed in the applicable Prospectus, the
Balanced Fund, the Short/Intermediate Bond Fund, the Bond Fund, the Intermediate
Tax-Exempt Bond Fund, the Tax-Exempt Bond Fund and the Tax-Exempt Money Market
Fund may invest in tax exempt obligations to the extent consistent with each
Fund's investment objective and policies. Notes sold as interim financing in
anticipation of collection of taxes, a bond sale or receipt of other revenues
are usually general obligations of the issuer.

TANS. An uncertainty in a municipal issuer's capacity to raise taxes as a
result of such events as a decline in its tax base or a rise in delinquencies
could adversely affect the issuer's ability to meet its obligations on
outstanding TANs. Furthermore, some municipal issuers mix various tax proceeds
into a general fund that is used to meet obligations other than those of the
outstanding TANs. Use of such a general fund to meet various obligations could
affect the likelihood of making payments on TANs.

BANS. The ability of a municipal issuer to meet its obligations on its
BANs is primarily dependent on the issuer's adequate access to the longer term
municipal bond market and the likelihood that the proceeds of such bond sales
will be used to pay the principal of, and interest on, BANs.

RANS. A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an issuer's
ability to meet its obligations on outstanding RANs. In addition, the
possibility that the revenues would, when received, be used to meet other
obligations could affect the ability of the issuer to pay the principal of, and
interest on, RANs.

The Short/Intermediate Bond Fund, the Balanced Fund, the Bond Fund, the
Intermediate Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund may also invest
in: (1) municipal bonds having a maturity at the time of issuance of up to 40
years that are rated at the date of purchase "Baa" or better by

<PAGE>

Moody's Investors Service ("Moody's") or "BBB" or better by Standard & Poor's
("S&P"); (2) municipal notes having maturities at the time of issuance of 15
years or less that are rated at the date of purchase "MIG 1" OR "MIG 2" (or
"VMIG 1" or "VMIG 2" in the case of an issue having a variable rate with a
demand feature) by Moody's or "SP-1+," "SP-1," or "SP-2" by S&P; and (3)
municipal commercial paper with a stated maturity of one year or less that is
rated at the date of purchase "P-2" or better by Moody's or "A-2" or better by
S&P.

PUT AND CALL OPTIONS. All Equity Funds, the Convertible Securities Fund,
the Bond Fund, the Government Bond Fund, the Intermediate Tax-Exempt Bond Fund
and the Tax-Exempt Bond Fund may invest in covered put and covered call options
and write covered put and covered call options on securities in which they may
invest directly and that are traded on registered domestic securities exchanges.
The writer of a call option, who receives a premium, has the obligation, upon
exercise of the option, to deliver the underlying security against payment of
the exercise price during the option period. The writer of a put, who receives
a premium, has the obligation to buy the underlying security, upon exercise, at
the exercise price during the option period.

These Funds each may write put and call options on securities only if they
are "covered," and such options must remain "covered" as long as the Fund is
obligated as a writer. A call option is "covered" if a Fund owns the underlying
security or its equivalent covered by the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or for
additional cash consideration if held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also covered if a Fund holds on a share-for-share or equal principal
amount basis a call on the same security as the call written where the exercise
price of the call held is equal to or less than the exercise price of the call
written or greater than the exercise price of the call written if the difference
is maintained by the Fund in cash, Treasury bills or appropriate assets in a
segregated account with its custodian. A put option is "covered" if a Fund
maintains cash, Treasury bills, or other appropriate assets with a value
equal to the exercise price in a segregated account with its custodian, or owns
on a share-for-share or equal principal amount basis a put on the same security
as the put written where the exercise price of the put held is equal to or
greater than the exercise price of the put written.

The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater current return than would be realized
on the underlying securities alone. In return for the premium, a Fund would
give up the opportunity for profit from a price increase in the underlying
security above the exercise price so long as the option remains open, but
retains the risk of loss should the price of the security decline. Upon
exercise of a call option when the market value of the security exceeds the
exercise price, a Fund would receive less total return for its portfolio than it
would have if the call had not been written, but only if the premium received
for writing the option is less than the difference between the exercise price
and the market value. Put options are purchased in an effort to protect the
value of a security owned against an anticipated decline in market value. A Fund
may forego the benefit of appreciation on securities sold or be subject to
depreciation on securities acquired pursuant to call or put options,
respectively, written by the Fund. A Fund may experience a loss if the value of
the securities remains at or below the exercise price, in the case of a call
option, or at or above the exercise price, in the case of a put option.

<PAGE>

Each Fund may purchase put options in an effort to protect the value of a
security owned against an anticipated decline in market value. Exercise of a
put option will generally be profitable only if the market price of the
underlying security declines sufficiently below the exercise price to offset the
premium paid and the transaction costs. If the market price of the underlying
security increases, a Fund's profit upon the sale of the security will be
reduced by the premium paid for the put option less any amount for which the put
is sold.

The staff of the Commission has taken the position that purchased options
not traded on registered domestic securities exchanges and the assets used as
cover for written options not traded on such exchanges are illiquid securities.
The Trust and the Company have agreed that, pending resolution of the issue,
each of the Funds will treat such options and assets as subject to such Fund's
limitation on investment in securities that are not readily marketable.

Writing of options involves the risk that there will be no market in which
to effect a closing transaction. An exchange-traded option may be closed out
only on an exchange that provides a secondary market for an option of the same
series, and there is no assurance that a liquid secondary market on an exchange
will exist.

REPURCHASE AGREEMENTS. A Fund may purchase portfolio securities subject to
the seller's agreement to repurchase them at a mutually agreed upon time and
price, which includes an amount representing interest on the purchase price. A
Fund may enter into repurchase agreements only with respect to obligations that
could otherwise be purchased by the Fund. The seller will be required to
maintain in a segregated account for the Fund cash or cash equivalent collateral
equal to at least 100% of the repurchase price (including accrued interest).
Default or bankruptcy of the seller would expose a Fund to possible loss because
of adverse market action, delays in connection with the disposition of the
underlying obligations or expenses of enforcing its rights.

A Fund may not enter into a repurchase agreement if, as a result, more
than 15% (10% with respect to the Equity Fund, the Short/Intermediate Fund
and the Money Market Funds) of the market value of the Fund's total net
assets would be invested in repurchase agreements with a maturity of more
than seven days and in other illiquid securities. A Fund will enter into
repurchase agreements only with registered broker/dealers and commercial
banks that meet guidelines established by the Board of Directors or Board of
Trustees, as the case may be.

Certain of the Funds may enter into reverse repurchase agreements, which
are detailed in the Prospectus.

SECURITIES WITH PUTS. A put is not transferable by a Fund, although a Fund
may sell the underlying securities to a third party at any time. If necessary
and advisable, any Fund may pay for certain puts either separately, in cash or
by paying a higher price for portfolio securities that are acquired subject to
such a put (thus reducing the yield to maturity otherwise available for the same
securities). The Funds expect, however, that puts generally will be available
without the payment of any direct or indirect consideration.

<PAGE>

All Equity Funds, the Short/Intermediate Bond Fund, the Bond Fund, the
Government Fund, the Intermediate Tax-Exempt Bond Fund, the Tax-Exempt Fund,
the Government Money Fund, the Money Fund and the Tax-Exempt Money Fund
intend to enter into puts solely to maintain liquidity and do not intend to
exercise their rights thereunder for trading purposes. The puts will only be
for periods substantially less than the life of the underlying security. The
acquisition of a put will not affect the valuation by a Fund of the
underlying security. The actual put will be valued at zero in determining
net asset value in the case of the Money Market Funds. Where a Fund pays
directly or indirectly for a put, its costs will be reflected as an
unrealized loss of the period during which the put is held by the Fund and
will be reflected in realized gain or loss when the put is exercised or
expires. If the value of the underlying security increases, the potential for
unrealized or realized gain is reduced by the cost of the put. The maturity
of a municipal obligation purchased by a Fund will not be considered
shortened by any put to which the obligation is subject.

INDEX FUTURES CONTRACTS AND OPTIONS ON INDEX FUTURES CONTRACTS. All
Equity Funds, the Convertible Securities Fund, the Bond Fund, the Government
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund may attempt to
reduce the risk of investment in equity and other securities by hedging a
portion of its portfolio through the use of futures contracts on indices and
options on such indices traded on national securities exchanges. Each of
these Funds may hedge a portion of its portfolio by selling index futures
contracts to limit exposure to decline. During a market advance or when the
Portfolio Management Agent anticipates an advance, a Fund may hedge a portion
of its portfolio by purchasing index futures or options on indices. This
affords a hedge against the Fund's not participating in a market advance at a
time when it is not fully invested and serves as a temporary substitute for
the purchase of individual securities that may later by purchased in a more
advantageous manner. The Index Fund may maintain Standard & Poor's 500 Index
futures contracts to simulate full investment in that index while retaining a
cash position for fund management purposes, to facilitate trading or to
reduce transaction costs. A Fund will sell options on indices only to close
out existing hedge positions.

A securities index assigns relative weightings to the securities in the
index, and the index generally fluctuates with changes in the market values of
these securities. A securities index futures contract is an agreement in which
one party agrees to deliver to the other an amount of cash equal to a specific
dollar amount times the difference between the value of a specific securities
index at the close of the last trading day of the contract and the price at
which the agreement is made. Unlike the purchase or sale of an underlying
security, no consideration is paid or received by a Fund upon the purchase or
sale of a securities index futures contract. When the contract is executed, each
party deposits with a broker or in a segregated custodial account a percentage
of the contract amount which may be as low as 5%, called the "initial margin."
During the term of the contract, the amount of this deposit is adjusted based on
the current value of the futures contract by payments of variation margin to or
from the broker or segregated account.

Municipal bond index futures contracts, which are based on an index of 40
tax-exempt, municipal bonds with an original issue size of at least $50 million
and a rating of A or higher by S&P or A or higher by Moody's, began trading in
mid-1985. No physical delivery of the underlying municipal bonds in the index
is made. The Fund may utilize any such contracts and associated put and call
options for which there is an active trading market.

<PAGE>

Except for the Index Fund, a Fund will use index futures contracts only
as a hedge against changes resulting from market conditions in the values of
securities held in the Fund's portfolio or which it intends to purchase and
where the transactions are economically appropriate to the reduction of risks
inherent in the ongoing management of the Fund. A Fund will sell index
futures only if the amount resulting from the multiplication of the then
current level of the indices upon which its futures contracts which would be
outstanding, do not exceed one-third of the value of the Fund's net assets.
Also, a Fund may not purchase or sell index futures if, immediately
thereafter, the sum of the premiums paid for unexpired options on futures
contracts and margin deposits on the Fund's outstanding futures contracts
would exceed 5% of the market value of the Fund's total assets. When a Fund
purchases index futures contracts, it will deposit an amount of cash and cash
equivalents equal to the market value of the futures contracts in a
segregated account with its custodian.

There are risks that are associated with the use of futures contracts for
hedging purposes. The price of a futures contract will vary from day to day and
should parallel (but not necessarily equal) the changes in price of the
underlying securities that are included in the index. The difference between
these two price movements is called "basis." There are occasions when basis
becomes distorted. For instance, the increase in value of the hedging
instruments may not completely offset the decline in value of the securities in
the portfolio. Conversely, the loss in the hedged position may be greater than
the capital appreciation that a Fund experiences in its securities positions.
Distortions in basis are more likely to occur when the securities hedged are not
part of the index covered by the futures contract. Further, if market values do
not fluctuate, a Fund will sustain a loss at least equal to the commissions on
the financial futures transactions.

All investors in the futures market are subject to initial margin and
variation margin requirements. Rather than providing additional variation
margin, an investor may close out a futures position. Changes in the initial and
variation margin requirements may influence an investor's decision to close out
the position. The normal relationship between the securities and futures markets
may become distorted if changing margin requirements do not reflect changes in
value of the securities. The margin requirements in the futures market are
substantially lower than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary basis distortion.

In the futures market, it may not always be possible to execute a buy or
sell order at the desired price, or to close out an open position due to market
conditions limits on open positions, and/or daily price fluctuation limits.
Each market establishes a limit on the amount by which the daily market price of
a futures contract may fluctuate. Once the market price of a futures contract
reaches its daily price fluctuation limit, positions in the commodity can be
neither taken nor liquidated unless traders are willing to effect trades at or
within the limit. The holder of a futures contract (including a Fund) may
therefore be locked into its position by an adverse price movement for several
days or more, which may be to its detriment. If a Fund could not close its open
position during this period, it would continue to be required to make daily cash
payments of variation margin. The risk of loss to a Fund is theoretically
unlimited when it writes (sells) a futures contract because it is obligated to
settle for the value of the contract unless it is closed out, regardless of
fluctuations in the price of the underlying index. When a Fund purchases a put
option or call

<PAGE>

option, however, unless the option is exercised, the maximum risk of loss to the
Fund is the price of the put option or call option purchased.

Options on securities indices are similar to options on securities except
that, rather than the right to take or make delivery of securities at a
specified price, an option on a securities index gives the holder the right to
receive, upon exercise of the option, an amount of cash if the closing level of
the securities index upon which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
This amount of cash is equal to the difference between the closing price of the
index and the exercise price of the option expressed in dollars times a
specified multiple (the "multiplier"). The writer of the option is obligated,
in return for the premium received, to make delivery of this amount. Unlike
options on securities, all settlements are in cash, and gain or loss depends on
price movements in the securities market generally (or in a particular industry
or segment of the market) rather than price movements in individual securities.

Except as described below, a Fund will write call options on indices only
if on such date it holds a portfolio of securities at least equal to the
value of the index times the multiplier times the number of contracts. When
a Fund writes a call option on a broadly based stock market index, it will
segregate or put into escrow with its custodian, or pledge to a broker as
collateral for the option, "qualified securities" with a market value at the
time the option is written of not less than 100% of the current index value
times the multiplier times the number of contracts. If a Fund has written an
option on an industry or market segment index, it will segregate, escrow, or
pledge "qualified securities," all of which are stocks of issuers in such
industry or market segment, with a market value at the time the option is
written of not less than 100% of the current index value times the multiplier
times the number of contracts. These stocks will include stocks that
represent at least 50% of the weighting of the industry or market segment
index and will represent at least 50% of a Fund's holdings in that industry
or market segment. No individual security will represent more than 15% of
the amount segregated, pledged or escrowed in the case of broadly based stock
market index options or 25% of this amount in the case of industry or market
segment index options. If at the close of business on any day the market
value of the qualified securities so segregated, escrowed or pledged falls
below 100% of the current index value times the multiplier times the number
of contracts, a Fund will segregate, escrow or pledge an amount in cash,
Treasury bills or other appropriate assets equal in value to the difference.
In addition, when a Fund writes a call on an index that is in-the-money at the
time the call is written, a Fund will segregate with its custodian or pledge
to the broker as collateral cash, U.S. Government or other appropriate assets
equal in value to the amount by which the call is in-the-money times the
multiplier times the number of contracts. Any amount segregated pursuant to
the foregoing sentence may be applied to a Fund's obligation to segregate
additional amounts in the event that the market value of the qualified
securities falls below 100% of the current index value times the multiplier
times the number of contracts. A "qualified security" is an equity security
that is listed on a national securities exchange or traded on the National
Association of Securities Dealers Automated Quotation System against which
the Equity Fund has not written a stock call option. However, if a Fund owns
a call on the same index as the call written where the exercise price of the
call owned is equal to or less than the exercise price of the call written,
or greater than the call written if the difference is maintained by the Fund
in

<PAGE>

cash, Treasury bills or other appropriate assets in a segregated account
with its custodian, it will not be subject to the requirements described in this
paragraph.

A Fund's successful use of index futures contracts and options on indices
depends upon the Portfolio Management Agent's ability to predict the direction
of the market and is subject to various additional risks. The correlation
between movements in the price of the index future and the price of the
securities being hedged is imperfect and the risk from imperfect correlation
increases as the composition of a Fund's portfolio diverges from the composition
of the relevant index. In addition, if a Fund purchases futures to hedge
against market advances before it can invest in a security in an advantageous
manner and the market declines, the Fund might create a loss on the futures
contract. Particularly in the case of options on stock indices, a Fund's
ability to establish and maintain positions will depend on market liquidity. In
addition, the ability of a Fund to close out an option depends on a liquid
secondary market. The risk of loss to a Fund is theoretically unlimited when it
writes (sells) a futures contract because a Fund is obligated to settle for the
value of the contract unless it is closed out, regardless of fluctuations in the
underlying index. There is no assurance that liquid secondary markets will exist
for any particular option at any particular time.

Although no Fund has a present intention to invest 5% or more of its assets
in index futures and options on indices, a Fund has the authority to invest up
to 25% of its net assets in such securities.

See additional risk disclosure above under "Interest Rate Futures Contracts
and Related Options".

WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (DELAYED-DELIVERY).
When-issued purchases and forward commitments (delayed-delivery) are commitments
by a Fund to purchase or sell particular securities with payment and delivery to
occur at a future date (perhaps one or two months later). These transactions
permit the Fund to lock-in a price or yield on a security, regardless of future
changes in interest rates.

When a Fund agrees to purchase securities on a when-issued or forward
commitment basis, PNC Bank, N.A. (the "Custodian") will segregate on the books
of the Fund the liquid assets of the Fund. Normally, the Custodian will set
aside portfolio securities to satisfy a purchase commitment, and in such a case
the Fund may be required subsequently to place additional assets in the separate
account in order to ensure that the value of the account remains equal to the
amount of the Fund's commitments. Because a Fund's liquidity and ability to
manage its portfolio might be affected when it sets aside cash or portfolio
securities to cover such purchase commitments, the Investment Adviser expects
that its commitments to purchase when-issued securities and forward commitments
will not exceed 25% of the value of a Fund's total assets absent unusual market
conditions.

A Fund will purchase securities on a when-issued or forward commitment
basis only with the intention of completing the transaction and actually
purchasing the securities. If deemed advisable as a matter of investment
strategy, however, a Fund may dispose of or renegotiate a commitment after it is
entered into, and may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. In these cases the
Fund may realize a capital gain or loss for federal income tax purposes.

<PAGE>

When a Fund engages in when-issued and forward commitment transactions, it
relies on the other party to consummate the trade. Failure of such party to do
so may result in the Fund's incurring a loss or missing an opportunity to obtain
a price considered to be advantageous.

The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the market value of
a Fund starting on the day the Fund agrees to purchase the securities. A Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date.

ZERO COUPON SECURITIES. A zero coupon security, which may be purchased by
each of the Funds, is a debt obligation that does not entitle the holder to any
periodic payments of interest prior to maturity and therefore is issued and
traded at a discount from its face amount. Zero coupon securities may be
created by separating the interest and principal components of securities issued
or guaranteed by the United States Government or one of its agencies or
instrumentalities or issued by private corporate issuers. These securities may
not be issued or guaranteed by the United States Government. Typically, an
investment brokerage firm or other financial intermediary holding the security
has separated ("stripped") the unmatured interest coupons from the underlying
principal. The holder may then resell the stripped securities. The stripped
coupons are sold separately from the underlying principal, usually at a deep
discount because the buyer receives only the right to receive a fixed payment on
the security upon maturity and does not receive any rights to reinvestment of
periodic interest (cash) payments. Because the rate to be earned on these
reinvestments may be higher or lower than the rate quoted on the interest-paying
obligations at the time of the original purchase, the investor's return on
investments is uncertain even if the securities are held to maturity. This
uncertainty is commonly referred to as reinvestment risk. With zero coupon
securities, however, there are no cash distributions to reinvest, so investors
bear no reinvestment risk if they hold the zero coupon securities to maturity;
holders of zero coupon securities, however, forego the possibility of
reinvesting at a higher yield than the rate paid on the originally issued
security. With both zero coupon securities and interest-paying securities there
is no reinvestment risk on the principal amount of the investment. When held to
maturity, the entire return from such instruments is determined by the
difference between such instrument's purchase price and its value at maturity.
Because interest on zero coupon securities is not paid on a current basis, the
values of securities of this type are subject to greater fluctuations than are
the values of securities that distribute income regularly. In addition, a Fund's
investment in zero coupon securities will result in special tax consequences.
Although zero coupon securities do not make interest payments, for tax purposes,
a portion of the difference between the security's maturity value and its
purchase price is imputed income to a Fund each year. Under the federal tax laws
applicable to investment companies, a Fund will not be subject to tax on its
income if it pays annual dividends to its shareholders substantially equal to
all the income received from, and imputed to, its investments during the year.
Because imputed income must be paid to shareholders annually, a Fund may need to
borrow money or sell securities to meet certain dividend and redemption
obligations. In addition, the sale of securities by a Fund may increase its
expense ratio and decrease its rate of return.

<PAGE>

RATINGS

After purchase by the Funds, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Funds. Neither
event will require the Funds to sell such security unless the amount of such
securities exceeds permissible limits established in the Prospectuses. However,
the Portfolio Management Agent will reassess promptly whether the security
presents minimal credit risks and determine whether continuing to hold the
security is in the best interests of the Fund. A Money Market Fund may be
required to sell a security downgraded below the minimum required for purchase,
absent a specific finding by the Company's Board of Directors that a sale is not
in the best interests of the Fund. To the extent the ratings given by any
nationally recognized statistical rating organization may change as a result of
changes in such organizations or in their rating systems, the Funds will attempt
to use comparable ratings as standards for investments in accordance with the
investment policies contained in the Prospectuses and in this Statement of
Additional Information.

For additional information on ratings, see Appendix A to this Statement of
Additional Information.

INVESTMENT RESTRICTIONS

NO FUND MAY:

(1) issue senior securities or borrow money (except that each Fund may
borrow from banks up to 10% of the current value of such Fund's net assets for
temporary purposes only in order to meet redemptions, and these borrowings may
be secured by the pledge of not more than 10% of the current value of the Fund's
total assets, but investments may not be purchased by such Fund while, with
respect to the Equity Fund, the Short/Intermediate Bond Fund and the Money
Market Funds, any such borrowing exists and, with respect to the remaining
Funds, any aggregate borrowings in excess of 5% exist);

(2) pledge or mortgage its assets (except that each Fund may pledge its
assets as described in (1) above and (i) to secure letters of credit solely for
the purpose of participating in a captive insurance company sponsored by the
Investment Company Institute to provide fidelity and directors' and officers'
liability insurance or (ii) to a broker for the purpose of collateralizing
investments, such as stock index futures contracts and put options);

(3) make loans, except loans of portfolio securities and except that each
Fund may purchase or hold a portion of an issue of publicly distributed bonds,
debentures or other obligations, purchase negotiable certificates of deposit and
bankers' acceptances and enter into repurchase agreements with respect to its
portfolio securities;

(4) if such Fund is the Equity Fund, the Short/Intermediate Bond Fund or a
Money Market Fund, invest an amount in excess of 10% of the current value of
such Fund's net assets in repurchase agreements having maturities of more than
seven days, variable amount master demand notes having notice periods of more
than seven days, fixed time deposits that are subject to withdrawal

<PAGE>

penalties and have maturities of more than seven days, securities that are not
readily marketable and other illiquid securities (including certain GICs and
BICs);

(5) purchase or sell real estate (other than securities secured by real
estate or interests therein, securities backed by mortgages or securities issued
by companies that invest in real estate or interests therein), real estate
limited partnerships, commodities or commodity contracts (except (i) with
respect to the Short/Intermediate Bond Fund, the Equity Fund and the Money
Market Funds, stock index futures and options on stock indices, (ii) with
respect to the International Fund, futures, options, options on futures and
forward contracts, and (iii) with respect to the remaining Funds, futures,
options and options on futures);

(6) purchase securities on margin (except (i) with respect to the Equity
Fund, the Short/Intermediate Bond Fund and the Money Market Funds, for
short-term credits necessary for the clearance of transactions and margin
payments in connection with transactions in stock index futures contracts, and
(ii) with respect to the remaining Funds, for short-term credits necessary for
the clearance of transactions and margin payments in connection with
transactions in futures, options and options on futures) or make short sales of
securities;

(7) underwrite securities of other issuers, except to the extent that the
purchase of municipal obligations or other permitted investments directly from
the issuer thereof or from an underwriter for an issuer and the later
disposition of such securities in accordance with any Fund's investment program
may be deemed to be an underwriting;

(8) make investments for the purpose of exercising control or management;
or

(9) if the Fund is the Short/Intermediate Bond Fund, the Equity Fund or a
Money Market Fund, purchase securities of other investment companies, except
securities of certain money market funds in accordance with the respective
Fund's investment objectives and policies and to the extent permissible under
the Investment Company Act of 1940, as amended (the "1940 Act"), and except in
connection with a merger, consolidation, acquisition, spin-off or
reorganization.

In addition, the MONEY MARKET FUNDS MAY NOT write, purchase, or sell puts,
calls, warrants or options or any combinations thereof, except that these Funds
may purchase securities with put rights in order to maintain liquidity, nor may
they purchase equity securities or securities convertible into equity
securities, except as provided in investment restriction number 9.

In addition, the EQUITY FUND MAY NOT invest in securities of companies that
have been in business less than three years.

In addition, the SHORT/INTERMEDIATE FUND MAY NOT invest more than 5%
in securities of issuers that have been in business less than three years. (For
purposes of the above-described investment limitation, issuers include
predecessors, sponsors, controlling persons, general partners, guarantors and
originators of underlying assets which have less than three years of continuous
operation or relevant business experience.)

<PAGE>

Each of the foregoing investment restrictions is a fundamental policy of
each of the Funds that may be changed only when permitted by law and approved by
the holders of a majority of such Fund's outstanding voting securities, as
described under "Capital Stock and Beneficial Interest."

Whenever any investment restriction states a maximum percentage of a Fund's
assets, it is intended that if the percentage limitation is met at the time the
action is taken, subsequent percentage changes resulting from fluctuating asset
values will not be considered a violation of such restrictions, except that at
no time may the value of the illiquid securities held by a Money Market Fund
exceed 10% of the Fund's total assets.

For purposes of these investment restrictions as well as for purposes of
diversification under the 1940 Act, the identification of the issuer of a
municipal obligation depends on the terms and conditions of the obligation. If
the assets and revenues of an agency, authority, instrumentality or other
political subdivision are separate from those of the government creating the
subdivision and the obligation is backed only by the assets and revenues of the
subdivision, such subdivision would be regarded as the sole issuer. Similarly,
in the case of a "private activity bond," if the bond is backed only by the
assets and revenues of the non-governmental user, the non-governmental user
would be deemed to be the sole issuer. If in either case the creating government
or another entity guarantees an obligation, the guarantee would be considered a
separate security and be treated as an issue of such government or entity.

MANAGEMENT

TRUSTEES, DIRECTORS AND OFFICERS

The principal occupations of the Trustees and executive officers of the
Trust and the Directors and executive officers of the Company for the past five
years and their ages are listed below. The address of each, unless otherwise
indicated, is 60 State Street, Suite 1300 Boston, Massachusetts 02109.

C. GARY GERST, TRUSTEE AND DIRECTOR; CHAIRMAN OF THE BOARD OF DIRECTORS AND
CHAIRMAN OF THE BOARD OF TRUSTEES - 200 East Randolph Drive, Floor 43, Chicago,
Illinois 60601. Age 58. Chairman Emeritus since 1993 and formerly Co-Chairman,
LaSalle Partners Ltd. (real estate developer and manager). Director, Trustee or
Partner, LaSalle Street Fund Inc., LaSalle Street Fund Inc. of Delaware, DEL-LPL
Limited Partnership and DEL-LPAML Limited Partnership.

EDGAR R. FIEDLER, TRUSTEE AND DIRECTOR - 845 Third Avenue, New York, New York
10022. Age 68. Senior Fellow and Economic Counsellor, The Conference Board;
Director or Trustee, The Stanley Works, Emerging Mexico Fund, The AARP
Investment Program from Scudder, The Scudder Funds, The Scudder Institutional
Funds, Scudder Pathway Series, The Brazil Fund and Zurich American Insurance
Company (U.S. subsidiary of Zurich Insurance). Formerly Assistant Secretary of
the Treasury for Economic Policy (1971-1975).

JOHN W. McCARTER, JR., TRUSTEE AND DIRECTOR - Roosevelt Road at Lakeshore Drive,
Chicago, Illinois 60605. Age 59. President and Chief Executive Officer, The
Field Museum of Natural History since October 1, 1996. Senior Vice President
and former Director of Booz-Allen &

<PAGE>

Hamilton, Inc. (consulting firm) from April 1987 to April 1, 1997; Director of
W.W. Grainger, Inc. and A.M. Castle, Inc.

ERNEST M. ROTH, TRUSTEE AND DIRECTOR - 205 Abingdon Avenue, Kenilworth, Illinois
60043. Age 70. Consultant since 1992. Formerly, Senior Vice President and Chief
Financial Officer, Commonwealth Edison Company. Director of LaRabida Children's
Hospital and Chairman of LaRabida Children's Foundation.

RICHARD W. INGRAM, President, Treasurer and Chief Financial Officer. Age 41.
Executive Vice President and Director of Client Services and Treasury
Administration of Funds Distributor, Inc. Senior Vice President of Premier
Mutual Fund Services, Inc., an affiliate of Funds Distributor ("Premier
Mutual"), and an officer of certain investment companies advised or administered
by J.P. Morgan, Dreyfus Corporation ("Dreyfus"), Waterhouse Asset Management,
Inc. ("Waterhouse") and RCM Capital Management L.L.C. ("RCM") or their
respective affiliates. From March 1994 to November 1995, Mr. Ingram was Vice
President and Division Manager of First Data Investor Services Group, Inc. From
1989 to 1994, Mr. Ingram was Vice President, Assistant Treasurer and Tax
Director - Mutual Funds of The Boston Company, Inc.

JOHN E. PELLETIER, Vice President and Secretary. Age 32. Senior Vice
President, General Counsel, Secretary and Clerk of Funds Distributor, Inc. and
Premier Mutual, and an officer of certain investment companies advised or
administered by J.P. Morgan, Dreyfus, Waterhouse and RCM or their respective
affiliates. From February 1992 to April 1994, Mr. Pelletier served as Counsel
of The Boston Company Advisors, Inc. From August 1990 to February 1992, Mr.
Pelletier was employed as an associate at Ropes & Gray.

Trustees of the Trust and Directors of the Company receive from the Trust
and the Company, respectively, an annual fee in addition to a fee for each Board
of Trustees or Directors meeting, as the case may be, and Board committee
meeting attended and are reimbursed for all out-of-pocket expenses relating to
attendance at meetings.

The following table summarizes the compensation paid by the Company to the
Directors of the Company and paid by the Trust to the Trustees of the Trust for
the fiscal year ended December 31, 1996:

<PAGE>

<TABLE>
<CAPTION>
Aggregate Pension or Estimated Total
Aggregate Compensation Retirement Benefit Annual Compensation
Compensation from the Accrued as Part of Benefits Upon from the Fund
Name of Person, Position from the Trust Company Fund Expenses Retirement Complex*
- --------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
C. Gary Gerst, $6,447 $27,678 None None $34,125
Chairman, Director and Trustee

Edgar R. Fiedler, $5,059 (1) $23,441 (1) None None $28,500
Director and Trustee

John W. McCarter, Jr. $5,059 $23,441 None None $28,500
Director and Trustee

Ernest M. Roth, $5,059 $23,441 None None $28,500
Director and Trustee

</TABLE>

- --------------------------

* "Fund Complex" includes the Company and the Trust.

(1) For the period June 1988 through December 31, 1996, the total amount of
compensation (including interest) payable or accrued for Mr. Fiedler was
$188,539 pursuant to the Company's Deferred Compensation Plan for its
independent Directors.

As of April 1, 1997, the principal holders of the Institutional and Class A
Shares of each Fund of the Company and the Trust were as follows:

The principal holder of Institutional Shares of the International Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
11,184,437.780 shares, equal to 99.991% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were Harris Trust and
Savings Bank, Chicago, Illinois 60690; Carlos and Louise Garin, Bosque De Las
Lomas, Canada; Northern Trust, Chicago, Illinois 60675 and National Financial
Services Corp., New York, New York, 10008, which held of record 7,432.918;
7,318.293; 4,906.843 and 2,950.081 shares, respectively, equal to 18.580%;
18.294%; 12.266% and 7.374%, respectively of the outstanding Class A Shares of
the Fund.

The principal holder of Institutional Shares of the Small-Cap Opportunity
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
11,406,910.571 Shares, equal to 99.994% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were National Financial
Services Corp., New York, New York 10008 and Northern Trust, Chicago, Illinois
60675, which held of record 7,140.307 and 5,003.508 shares, respectively, equal
to 16.989% and 11.905%, respectively, of the outstanding Class A Shares of the
Fund.

The principal holder of Institutional Shares of the Growth Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which owned 4,190,729.771
shares, equal to 99.956% of the outstanding Institutional Shares of the Fund.
The principal holders of Class A Shares were Jerome Weinstein, Chicago, Illinois
60625; Anne L. Markese, Arlington Heights, Illinois 60004; Mary J. Buller,
Lombard, Illinois 60148; Merbank & Company, Vicksbury, Missouri 39180; National
Financial Services Corp., New York, New York 10008; Michael P. Galvin,
Washington, D.C.

<PAGE>

20036 and James J. Dempsey, Oak Park, Illinois 60301, which held of record
5,145.867; 2,802.097; 1,723.996; 1,713.323; 1,628.417; 1,611.772 and 1,608.479
shares, respectively, equal to 16.191%; 8.816%; 5.424%; 5.391%; 5.124%; 5.071%
and 5.061%, respectively, of the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Equity Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which owned 36,012,072.553
shares, equal to 93.418% of the outstanding Institutional Shares of the Fund.
The principal holders of Class A Shares were Eastern Illinois University
Foundation, Weehaukin, New York 07087 and National Financial Services Corp., New
York, New York 10008, which held of record 234,900.729 and 213,782.388 shares,
respectively, equal to 44.524% and 40.521%, respectively, of the outstanding
Class A Shares of the Fund.

The principal holder of Institutional Shares of the Equity Income Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
2,309,697.500 shares, equal to 99.952% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were FDI Distribution
Services, Inc., Boston, Massachusetts 02109; Jerome Weinstein, Chicago, Illinois
60625; Merbank & Company, Vicksbury, Missouri 39180; James J. Dempsey, Oak Park,
Illinois 60301 and Mary J. Buller, Lombard, Illinois 60148, which held of record
7,421.289; 7,024.596; 4,098.654; 1,935.241 and 1,551.197 shares, respectively,
equal to 30.875%; 29.225%; 17.052%; 8.051% and 6.454%, respectively, of the
outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Index Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which owned 8,558,347.583
shares, equal to 98.019% of the outstanding Institutional Shares of the Fund.

The principal holder of Institutional Shares of the Balanced Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
4,450,015.632 shares, equal to 100% of the outstanding Institutional Shares of
the Fund.

The principal holder of Institutional Shares of the Convertible Securities
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, who owned
1,991,754.895 shares, equal to 100% of the outstanding Institutional Shares of
the Fund. The principal holder of Class A Shares was Anita M. Schmidt, Chicago,
Illinois 60659 who held of record 34.130 shares, respectively, equal to 98.126%,
of the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Tax-Exempt Bond Fund
was Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
16,450,305.711 shares, equal to 98.882% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were Harris Trust and
Savings Bank, Chicago, Illinois 60690 and National Financial Services Corp., New
York, New York 10008, which held of record 3,517.391 and 595.272 shares,
respectively, equal to 85.428% and 14.458%, respectively, of the outstanding
Class A Shares of the Fund.

The principal holder of Institutional Shares of the Bond Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which owned 6,255,367.476
shares, equal to 98.009% of the outstanding Institutional Shares of the Fund.
The principal holders of Class A Shares were Harris

<PAGE>

Trust and Savings Bank, Chicago, Illinois 60690; National Financial Services
Corp., New York, New York 10008 and Carlos and Louise Garin, Bosque De Las Lomas
Canada, which held of record 9,131.217; 7037.257 and 5,740.002 shares,
respectively, equal to 39.834%; 30.698% and 25.040%, respectively, of the
outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Intermediate Tax-Exempt
Bond Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which
owned 1,211.738 shares, equal to 99.617% of the outstanding Institutional Shares
of the Fund. The principal holder of Class A Shares was Harris Trust and
Savings Bank, Chicago, Illinois 60690, which held of record 19,200,884.904,
equal to 99.933%, of the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Short/Intermediate Bond
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
26,083,405.706 shares, equal to 97.994% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were Eastern Illinois
University Foundation, Weehaukin, NY 07087; National Financial Services Corp.,
New York, New York 10008; Harris Trust and Savings Bank, Chicago, Illinois 60690
and Illinois Institute of Technology, Boston, Massachusetts 02209, which held of
record 277,662.233; 63,766.881; 58,762.795 and 27,855.846 shares, respectively,
equal to 62.219%; 14.289%; 13.168% and 6.242%, respectively, of the outstanding
Class A Shares of the Fund.

The principal holder of Institutional Shares of the Intermediate Government
Bond Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which
owned 5,977,402.971 shares, equal to 100% of the outstanding Institutional
Shares of the Fund.

The principal holder of Institutional Shares of the Tax-Exempt Money Market
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which owned
416,394,517.370 shares, equal to 97.504% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were Harris Trust and
Savings Bank, Chicago, Illinois 60690; National Financial Services Corp., New
York, New York 10008 and Harris Bank Hinsdale, Hinsdale, Illinois 60521, which
held of record 146,792,266.710; 13,347,194.240 and 10,518,627.770 shares,
respectively, equal to 82.572%; 7.508% and 5.917%, respectively, of the
outstanding Class A Shares of the Fund.

The principal holders of Institutional Shares of the Money Market Fund were
Harris Trust and Savings Bank, Chicago, Illinois 60690, and Swift Energy
Company, Houston, Texas 77060 which owned 461,775,945.950 and 35,303,242.050
shares, respectively, equal to 81.233% and 6.210%, respectively, of the
outstanding Institutional Shares of the Fund. The principal holders of Class A
Shares were Harris Trust and Savings Bank, Chicago, Illinois 60690; National
Financial Services Corp., New York, New York 10008 and Harris Bank Hinsdale,
Hinsdale, Illinois 60521, which held of record

<PAGE>

346,124,191.180; 41,734,209.680 and 32,774,473.760 shares, respectively, equal
to 71.771%; 8.654% and 6.796%, respectively, of the outstanding Class A Shares
of the Fund.

The shareholders described above have indicated that they each hold their
shares on behalf of various accounts and not as beneficial owners. To the
extent that any shareholder is the beneficial owner of more than 25% of the
outstanding shares of any Fund, such shareholder may be deemed to be a "control
person" of that Fund for purposes of the 1940 Act.

As of April 1, 1997, Directors and officers of the Company as a group
beneficially owned less than 1% of the outstanding shares of each of the
Company's Funds.

As of April 1, 1997, Trustees and officers of the Trust as a group
beneficially owned less than 1% of the outstanding shares of the Trust's Funds.

INVESTMENT ADVISER AND PORTFOLIO MANAGEMENT AGENT. Each of the Funds is
advised by Harris Trust. With respect to the Tax-Exempt Money Market Fund, the
Advisory Contract with Harris Trust provides that Harris Trust is responsible
for all Fund purchase and sale transactions and that Harris Trust shall furnish
to the Fund investment guidance and policy direction in connection with the
daily portfolio management of the Fund. With respect to Funds other than the
Tax-Exempt Money Market Fund, Harris Trust has entered into Portfolio Management
Contracts with HIM under which HIM is responsible for all Fund purchase and sale
transactions and for providing all such daily portfolio management services to
such Funds. Under the Portfolio Management Contracts, Harris Trust remains
responsible for the supervision and oversight of HIM's performance.

Harris Trust or HIM provides to the Funds, among other things, money market
security and fixed income research, analysis and statistical and economic data
and information concerning interest rate and security market trends, portfolio
composition and credit conditions. HIM analyzes key financial ratios that
measure the growth, profitability, and leverage of issuers in order to help
maintain a portfolio of above-average quality. Emphasis placed on a particular
type of security will depend on an interpretation of underlying economic,
financial and security trends. The selection and performance of securities is
monitored by a team of analysts dedicated to evaluating the quality of each
portfolio holding.

The Advisory Contract and the Portfolio Management Contract with respect to
the Equity Income Fund, the Growth Fund, the Small-Cap Opportunity Fund, the
Small-Cap Value Fund, the Index Fund, the International Fund, the Balanced Fund,
the Convertible Securities Fund, the Bond Fund, the Government Bond Fund, the
Intermediate Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund will continue in
effect for a period of two years from February 23, 1996, and thereafter from
year to year provided the continuance is approved annually (i) by the holders of
a majority of the respective Fund's outstanding voting securities or by the
Board of Trustees and (ii) by a majority of the Trustees of the Trust who are
not parties to the Advisory Contract or the Portfolio Management Contract or
"interested persons" (as defined in the 1940 Act) of any such party. Such
Advisory Contract may be terminated on 60 days' written notice by either party
and will terminate automatically if assigned. With respect to the remaining
Funds, the Advisory Contracts and, with respect to the remaining Funds other
than the Tax-Exempt Money Market Fund, the Portfolio Management Contracts will
continue in effect from year to year, provided that such continuance is
specifically approved as described in

<PAGE>

the immediately preceding paragraph.

PORTFOLIO MANAGEMENT. The skilled teams behind the Harris Insight Funds
believe that consistent investment performance requires discipline, focus,
knowledge, and excellent informational resources.

The money management philosophy that HIM employs focuses on two key
points:

- - Active management is a key component of superior performance.
- - A systematic investment process may increase both consistency and levels of
relative performance.

Experience and creativity, combined with technological support, are most
likely to result in successful investment decisions. HIM offers investors that
powerful combination for managing their money. More importantly, instead of
relying on individual stars to manage its mutual funds, HIM has established a
strong professional team of seasoned portfolio managers and analysts. Together,
they take a quantitatively-driven approach to investing, focusing on their
investors' needs, concerns and investment goals.

HIM is a leader in the application of analytic techniques used in the
selection of portfolios. HIM's equity investment process focuses on maintaining
a well-diversified portfolio of stocks whose prices are determined to be
attractively ranked based upon their future potential.

After identifying the appropriate type of universe for each Fund - whether
the stocks are issued by large, established companies, or by smaller firms - HIM
gathers fundamental, quality and liquidity data. A multi-factor model then
ranks and/or scores the stocks. Stocks which fail to meet HIM's hurdles are
removed from further consideration.

Attractive stocks are periodically identified and added to the portfolio,
while those that have become unattractive are systematically replaced. Fund
portfolio managers, in conjunction with HIM's experienced research analysts,
play a role throughout the process.

HIM actively manages taxable and tax-exempt fixed income securities using a
highly disciplined, quantitatively-based investment process. This enables HIM
to create portfolios of fixed income securities that it believes are undervalued
based upon their future potential. HIM seeks securities in specific industries
or areas of the country that, it believes, offer the best value and stand to
benefit from anticipated changes in interest rates.

Using quantitative models that attempt to ensure competitive results in
both rising and falling markets, bond portfolio managers select securities
within different industries while managing interest rate risk. These
quantitative models have the ability to measure changes in the economy, changes
in the prices of various goods and services, and changes in interest rates.
Potential purchases are finally reviewed with regard to their suitability,
credit assessment and the impact to the overall portfolio.

<PAGE>

The following table shows the dollar amount of fees payable to the
Investment Adviser for its services with respect to each Fund, the amount of fee
that was waived by the Investment Adviser, if any, and the actual fee received
by the Investment Adviser. This data is for the past three fiscal years or
shorter period if the Fund has been in operation for a shorter period.

<TABLE>
<CAPTION>
Gross Advisory Fee Advisory Fee Voluntarily Waived Net Advisory Fee
($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996 1994 1995 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Government Money Market Fund 274,034 335,725 292,088 -- -- -- 274,034 335,725 292,088

Money Market Fund 490,129 675,821 825,619 -- -- -- 490,129 675,821 825,619

Tax-Exempt Money Market Fund 238,488 454,684 667,922 -- -- -- 238,488 454,684 667,922

Short/Intermediate Bond Fund 411,562 327,473 1,594,951 191,603 166,376 684,243 219,959 161,097 910,708

Bond Fund -- -- 148,028 -- -- 88,847 -- -- 59,181

Intermediate Tax-Exempt Bond -- -- 1,120,322 -- -- 32,722 -- -- 1,087,600
Fund

Tax-Exempt Fund -- -- 829,656 -- -- 26,205 -- -- 803,451

Equity Fund 332,754 365,839 3,549,319 4,974 -- -- 327,780 365,839 3,549,319

Equity Income Fund -- -- 182,866 -- -- 9,997 -- -- 172,869

Growth Fund -- -- 529,786 -- -- 20,952 -- -- 508,834

Small-Cap Fund -- -- 1,137,914 -- -- 23,743 -- -- 1,114,171

Index Fund -- -- 280,516 -- -- 41,424 -- -- 239,092

International Fund -- -- 934,699 -- -- 17,146 -- -- 917,553
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

ADMINISTRATOR. Harris Trust serves as the Funds' administrator
("Administrator") pursuant to Administration Agreements with the Company and the
Trust and in that capacity generally assists the Funds in all aspects of their
administration and operation. The Administrator has entered into a
Sub-Administration Agreement with Funds Distributor, Inc. ("Funds Distributor")
and Sub-Administration and Accounting Services Agreements with PFPC Inc.
("PFPC") (the "Sub-Administrators") on behalf of the Company and the Trust.
Funds Distributor has agreed to furnish officers for the Company and the Trust;
provide corporate secretarial services; prepare and file various reports with
the appropriate regulatory agencies; and prepare various materials required by
the Commission. PFPC has agreed to furnish officers for the Company and the
Trust; provide accounting and bookkeeping services for the Funds, including the
computation of each Fund's net asset value, net income and realized capital
gains, if any; and prepare various materials required by any state securities
commission having jurisdiction over the Company or the Trust.

The following table shows the dollar amount of fees payable to the
Administrator for its services with respect to each Fund, the amount of fee that
was waived by the Administrator, if any, and the actual fee received by the
Administrator. The data is for the past three fiscal years or shorter period if
the Fund has been in operation for a shorter period.

<PAGE>

Administration Fee ($) Reduction by Administrator ($) Net Administration Fee ($)
- ----------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996 1994 1995 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Government Money Market Fund 344,470 387,112 289,773 47,850 23,691 23,295 296,620 363,421 266,478

Money Market Fund 626,149 830,325 878,336 84,652 51,396 73,647 541,497 778,929 804,689

Tax-Exempt Money Market Fund 299,659 542,065 717,310 41,434 34,194 -- 258,225 507,871 717,310

Short/Intermediate Bond Fund 72,911 56,091 260,768 10,645 3,707 -- 62,266 52,384 260,768

Bond Fund -- -- 24,268 -- -- -- -- -- 24,268

Intermediate Tax-Exempt Bond -- -- 201,598 -- -- -- -- -- 201,598
Fund

Tax-Exempt Bond Fund -- -- 155,225 -- -- -- -- -- 155,225

Equity Fund 58,754 63,669 573,867 8,608 3,826 -- 50,146 59,843 573,867

Equity Income Fund -- -- 28,389 -- -- -- -- -- 28,389

Growth Fund -- -- 64,717 -- -- -- -- -- 64,717

Small-Cap Opportunity Fund -- -- 126,884 -- -- -- -- -- 126,884

Index Fund -- -- 125,126 -- -- -- -- -- 125,126

International Fund -- -- 109,741 -- -- -- -- -- 109,741

</TABLE>

DISTRIBUTOR. Funds Distributor, Inc. (the "Distributor") has entered into
a Distribution Agreement with the Company and with the Trust, as the case may
be, pursuant to which it has the responsibility of distributing shares of the
Funds. For the period ended December 31, 1996, fees for services rendered by
the Distributor were paid by the Co-Administrators and the Administrator.

The following table shows the dollar amount of sales charges payable to the
Distributor with respect to sales of Class A Shares of each Fund and the amount
of sales charges retained by the Distributor and not reallowed to other persons.
The data is for the past three fiscal years or shorter period if the Fund has
been in operation for a shorter period. There were no sales charges payable to
the Distributor with respect to the Funds not mentioned below.

Aggregate Underwriting Amount Retained by
Commissions ($) Funds Distributor, Inc. ($) Amount Reallowed ($)
---------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996 1994 1995 1996
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short/Intermediate Bond Fund 225 272 4,365 12 17 280 213 255 4,085
Equity Fund 9,622 3,489 12,647 532 188 728 9,090 3,301 11,919
Growth Fund -- -- 452 -- -- 27 -- 425
Small-Cap Opportunity Fund -- -- 1,402 -- -- 84 -- 1,318
Index Fund -- -- 247 -- -- 13 -- 234
International Fund -- -- 225 -- -- 13 -- 212

</TABLE>

OTHER INFORMATION PERTAINING TO DISTRIBUTION, ADMINISTRATION,
SUB-ADMINISTRATION, CUSTODIAN, TRANSFER AGENCY AND SUB-TRANSFER AGENCY
AGREEMENTS. Harris Trust serves as the transfer agent and dividend disbursing
agent ("Transfer Agent") of the Funds pursuant to Transfer Agency Services
Agreements with the Company and the Trust. The Transfer Agent has entered into
Sub-Transfer Agency Services Agreements with PFPC (the "Sub-Transfer Agent") on
behalf of the

<PAGE>

Company and the Trust. PFPC is an affiliate of PNC Bank, N.A., the Custodian
for the Company and the Trust. PFPC and PNC Bank, N.A. are not affiliates of
Funds Distributor, Harris Trust or HIM.

SERVICE PLANS

As indicated in the Prospectuses, the Funds have adopted Service Plans
under Section 12(b) of the 1940 Act and Rule 12b-1 promulgated thereunder ("Rule
12b-1"). With respect to the Money Market Funds, the Service Plans only relate
to Class A Shares of each such Fund. With respect to the remaining Funds (the
"Non-Money Market Funds"), the Service Plans only relate to Class A Shares of
each such Fund. Each Service Plan has been adopted by the Board of Trustees or
Directors, as the case may be, including a majority of the Trustees or Directors
who were not "interested persons" (as defined by the 1940 Act) of the Trust or
the Company, and who had no direct or indirect financial interest in the
operation of the Service Plan or in any agreement related to the Plan (the
"Qualified Trustees" or "Qualified Directors", as the case may be). Each
Service Plan will continue in effect from year to year if such continuance is
approved by a majority vote of both the Trustees of the Trust or the Directors
of the Company, as the case may be, and the Qualified Trustees or Directors.
Agreements related to the Service Plans must also be approved by such vote of
the Trustees or Directors and the Qualified Directors or Qualified Trustees.
The Service Plans will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of a majority
of the outstanding voting securities of the proper Fund. No Service Plan may be
amended to increase materially the amounts payable to Service Agents without the
approval of a majority of the outstanding voting securities of the proper Fund,
and no material amendment to a Service Plan may be made except by a majority of
both the Trustees of the Trust or Directors of the Company, as the case may be,
and the Qualified Trustees or Directors.

Each Service Plan requires that certain service providers furnish to the
Trustees or Directors, as the case may be, and the Trustees or Directors shall
review, at least quarterly, a written report of the amounts expended (and
purposes therefore) under such Service Plan. Rule 12b-1 also requires that the
selection and nomination of the Trustees or Directors who are not "interested
persons" of the Trust or the Company, respectively, be made by such
disinterested Trustees or Directors.

SERVICE PLAN - MONEY MARKET FUNDS. Each Money Market Fund has entered into
an agreement with each institution ("Service Organization") which purchases
Class A Shares on behalf of its customers ("Customers"). In the case of Class
A Shares, the Service Organization is required to provide shareholder support
services to its Customers who beneficially own such Shares in consideration of
the payment of up to 0.35% (on an annualized basis) of the average daily net
asset value of that Money Market Fund's Class A Shares held by the Service
Organization for the benefit of Customers. Support services will include: (i)
aggregating and processing purchase and redemption requests from Customers and
placing net purchase and redemption orders with the Money Market Fund's
Distributor; (ii) processing dividend payments from the Money Market Fund on
behalf of Customers; (iii) providing information periodically to Customers
showing their positions in the Money Market Fund's shares; (iv) arranging for
bank wires; (v) responding to Customer inquiries relating to the services
performed by the Service Organization and handling correspondence; (vi)
forwarding shareholder communications from the Money Market Fund (such as
proxies, shareholder reports, annual and semi-annual financial statements, and
dividend,

<PAGE>

distribution and tax notices) to Customers; (vii) acting as shareholder of
record and nominee; (viii) arranging for the reinvestment of dividend payments;
and (ix) other similar account administrative services. In addition, the
Service Organization will provide assistance in connection with the distribution
of shares to Customers, including the forwarding to Customers of prospectuses,
sales literature and advertising materials provided by the Distributor of
shares.

In addition, a Service Organization, at its option, may also provide to its
holders of Class A (a) a service that invests the assets of their other
accounts with the Service Organization in the Money Market Fund's shares (sweep
program); (b) sub-accounting with respect to shares owned beneficially or the
information necessary for sub-accounting; and (c) checkwriting services.

There is no Service Plan in existence with respect to the Institutional
Shares of the Money Market Funds.

SERVICE PLAN - NON-MONEY MARKET FUNDS. Each Non-Money Market Fund
(i.e. the Equity Fund, the Equity Income Fund, the Growth Fund, the Small-Cap
Fund, the Index Fund, the International Fund, the Balanced Fund, the
Convertible Securities Fund, the Short/Intermediate Fund, the Bond Fund,
the Government Bond Fund, the Intermediate Tax-Exempt Fund and the
Tax-Exempt Fund) bears the costs and expenses in connection with
advertising and marketing the Fund's Class A Shares and pays the fees of
financial institutions (which may include banks), securities dealers and
other industry professionals, such as investment advisors, accountants and
estate planning firms (collectively, "Service Agents") for servicing
activities, as described below, at a rate of up to 0.25% per annum of the
value of the Fund's average daily net assets with respect to its Class A
Shares.

Servicing activities provided by Service Agents to their customers
investing in Class A Shares of the Non-Money Market Funds may include, among
other things, one or more of the following: establishing and maintaining
shareholder accounts and records; processing purchase and redemption
transactions; answering customer inquiries regarding the Fund; assisting
customers in changing dividend options; account designations and addresses;
performing sub-accounting; investing customer cash account balances
automatically in Fund shares; providing periodic statements showing a customer's
account balance and integrating such statements with those of other transactions
and balances in the customer's other accounts serviced by the Service Agent;
arranging for bank wires; distribution and such other services as a Fund may
request, to the extent the Service Agent is permitted by applicable statute,
rule or regulation.

There is no Service Plan in existence with respect to the Institutional
Shares of the Non-Money Market Funds.

The following table shows Service Organization fees paid to Harris Trust
with respect to each Fund for the period ended December 31, 1996.

<PAGE>

- -----------------------------------------------------------------------------------------------------

Shareholder Servicing Plan Shareholder Servicing Plan Fees
Fees Paid ($) Waived ($)
(after fee waivers)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Government Money Market Fund 502,246 255,183

Money Market Fund 1,171,011 457,792

Tax-Exempt Money Market Fund 446,105 187,894

Short/Intermediate Bond Fund 5,554 --

Bond Fund 65 --

Tax-Exempt Bond Fund 2 --

Equity Fund 9,326 --

Equity Income Fund 310 --

Growth Fund 315 --

Small-Cap Opportunity Fund 292 --

Index Fund 121 --

International Fund 512 --

- -----------------------------------------------------------------------------------------------------
</TABLE>

CALCULATION OF YIELD AND TOTAL RETURN

The Company makes available various yield quotations with respect to shares
of each class of shares of the Money Market Funds. Each of these amounts was
calculated based on the 7-day period ended December 31, 1996, by calculating the
net change in value, exclusive of capital changes, of a hypothetical account
having a balance of one share at the beginning of the period, dividing the net
change in value by the value of the account at the beginning of the base period
to obtain the base period return, and multiplying the base period return by
365/7, with the resulting yield figure carried to the nearest hundredth of one
percent. The net change in value of an account consists of the value of
additional shares purchased with dividends from the original share plus
dividends declared on both the original share and any such additional shares
(not including realized gains or losses and unrealized appreciation or
depreciation) less applicable expenses. Effective yield quotations for Class A
Shares and Institutional Shares of each of the Money Market Funds are also made
available. These amounts are calculated in a similar fashion to yield, except
that the base period return is compounded by adding 1, raising the sum to a
power equal to 365 divided by 7, and subtracting 1 from the result, according to
the following formula:

EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7] -1

Current yield for all of the Money Market Funds will fluctuate from time to
time, unlike bank deposits or other investments that pay a fixed yield for a
stated period of time, and does not provide a basis for determining future
yields.

<PAGE>

The yields of the Institutional and Class A Shares of each of the following
Money Market Funds for the 7-day period ended December 31, 1996:

Current Yield Effective Yield
Institutional Class A Institutional Class A
<S> <C> <C> <C> <C>
Government Money Market Fund 5.17% 4.94% 5.30% 5.06%
Money Market Fund 5.42% 5.14% 5.57% 5.27%
Tax-Exempt Money Market Fund 3.53% 3.30% 3.59% 3.35%

</TABLE>

Class A Shares of the Money Market Funds bear the expenses of fees paid to
Service Organizations. As a result, at any given time, the net yield of Class A
Shares could be up to 0.35% lower than the net yield of Institutional Shares of
the Money Market Funds.

From time to time each of the Money Market Funds may advertise its "30-day
average yield" and its "monthly average yield." Such yields refer to the average
daily income generated by an investment in such Fund over a 30-day period, as
appropriate, (which period will be stated in the advertisement).

The yields of Class A Shares and Institutional Shares of each of the
following Money Market Funds for the 30-day period ended December 31, 1996:

30-day Yield
Institutional Class A
Government Money Market Fund 5.11% 4.88%
Money Market Fund 5.35% 5.07%
Tax-Exempt Money Market Fund 3.25% 3.02%

A standardized "tax-equivalent yield" may be quoted for the Tax-Exempt
Money Fund, the Tax-Exempt Fund and the Intermediate Tax-Exempt Fund, which
is computed by: (a) dividing the portion of the Fund's yield (as calculated
above) that is exempt from Federal income tax by one minus a stated Federal
income rate; and (b) adding the figure resulting from (a) above to that
portion, if any, of the yield that is not exempt from federal income tax.
For the 7-day period ended December 31, 1996, the effective tax equivalent
yield of the Class A Shares and Institutional Shares of the Tax-Exempt Money
Fund was 4.65% and 4.99%, respectively. For the 30-day period ended December
31, 1996, the 30-day tax equivalent yield for the Class A Shares and
Institutional Shares of the Tax-Exempt Bond Fund and the Institutional Shares
of the Intermediate Tax-Exempt Bond Fund were 5.61%, 6.24% and 5.81%,
respectively, based on a stated tax rate of 28%.

The Trust or the Company, as the case may be, makes available 30-day yield
quotations with respect to Class A Shares and Institutional Shares of the
Non-Money Market Funds. As required by regulations of the Commission, the 30-day
yield is computed by dividing a Fund's net investment income per share earned
during the period by the net asset value on the last day of the period. The
average daily number of shares outstanding during the period that are eligible
to receive dividends is used in determining the net investment income per share.
Income is computed by totaling the interest earned on all debt obligations
during the period and subtracting from that amount the total

<PAGE>

of all recurring expenses incurred during the period. The 30-day yield is then
annualized assuming semi-annual reinvestment and compounding of net investment
income.

The following table shows 30-day yields for the period ended December 31,
1996, for Class A Shares and Institutional Shares of the Non-Money Market Funds:

30-day Yield
-----------------------------
Institutional Class A
------------- ---------
Short/Intermediate Bond Fund 6.11% 5.59%
Bond Fund 6.13% 5.61%
Intermediate Tax-Exempt Bond Fund 4.18% --
Tax-Exempt Bond Fund 4.49% 4.04%
Equity Fund 1.53% 1.21%
Equity Income Fund 2.05% 1.70%
Growth Fund 0.41% 0.14%
Small-Cap Opportunity Fund 0.08% -0.16%
Index Fund 1.69% 1.36

The Trust or the Company, as the case may be, also makes available total
return quotations for Class A and Institutional Shares of each of the Non-Money
Market Funds.

The following table shows average annual total return for the one year,
five year, ten year and since inception periods (or shorter period if the Fund
has been in operation for a shorter period) ended December 31, 1996 for Class A
Shares and Institutional Shares of the Non-Money Market Funds. The actual date
of the commencement of each Fund's operations, or the commencement of the
offering of each Class' Shares, is listed in the Funds' financial statements.

1 Year 5 Year 10 Year Inception to 12/31/96
---------------------- ---------------------- ---------------------- ----------------------
Institutional Class A Institutional Class A Institutional Class A Institutional Class A
(%) (%) (%) (%) (%) (%) (%) (%)
------------- ------- ------------- -------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Short/Intermediate Bond Fund -- -1.16 -- 5.15 -- -- 3.61 6.38

Bond Fund -- -- -- -- -- -- 5.40 0.54

Intermediate Tax-Exempt Bond Fund 3.11 -2.06 5.28 3.99 5.60 4.82 5.93 5.20

Tax-Exempt Bond Fund 3.76 -1.22 6.14 4.90 6.44 5.68 8.26 7.57

Equity Fund -- 18.56 -- 15.14 -- -- 13.66 14.39

Equity Income Fund 17.95 12.33 -- -- -- -- 17.12 15.04

Growth Fund 28.92 22.81 -- -- -- -- 16.28 14.88

Small-Cap Opportunity Fund 18.80 13.20 14.64 13.31 14.59 13.77 15.03 14.30

Index Fund 22.71 16.96 -- -- -- -- 15.71 14.31

International Fund 5.11 0.17 6.35 5.14 -- -- 5.33 4.59

</TABLE>

Each of these amounts is computed by assuming a hypothetical initial
investment of $10,000 and reflects the imposition of the maximum sales charge.
It is assumed that all of the dividends and

<PAGE>

distributions by each Fund over the specified period of time were reinvested.
It was then assumed that at the end of the specified period, the entire amount
was redeemed. The average annual total return was then calculated by
calculating the annual rate required for the initial investment to grow to the
amount that would have been received upon redemption.

The Funds may also calculate an aggregate total return which reflects the
cumulative percentage change in value over the measuring period. The aggregate
total return can be calculated by dividing the amount received upon redemption
by the initial investment and subtracting one from the result. The following
table shows aggregate total return for the one year, five year, ten year and
since inception (if less than ten years) periods ended December 31, 1996 for
Class A Shares and Institutional Shares of the Non-Money Market Funds:

1 Year 5 Year 10 Year Inception to 12/31/96
---------------------- ---------------------- ---------------------- ----------------------
Institutional Class A Institutional Class A Institutional Class A Institutional Class A
(%) (%) (%) (%) (%) (%) (%) (%)
------------- ------- ------------- ------- ------------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Short/Intermediate Bond Fund -- (1.16) -- 28.55 -- -- -- 42.78

Bond Fund -- -- -- -- -- -- -- 0.54

Intermediate Tax-Exempt Bond Fund -- (2.06) -- 21.62 -- 60.10 -- 74.66

Tax-Exempt Bond Fund -- (1.22) -- 26.99 -- 73.82 -- 140.21

Equity Fund -- 18.56 -- 102.40 -- -- -- 228.92

Equity Income Fund -- 12.33 -- -- -- -- -- 52.32

Growth Fund -- 22.81 -- -- -- -- -- 92.43

Small-Cap Opportunity Fund -- 13.20 -- 86.75 -- 263.42 -- 395.17

Index Fund -- 16.96 -- -- -- -- -- 87.93

International Fund -- 0.17 -- 28.51 -- -- -- 56.19

</TABLE>

Current yield and total return for the Non-Money Market Funds will
fluctuate from time to time, unlike bank deposits or other investments which pay
a fixed yield for a stated period of time, and do not provide a basis for
determining future yields. Yield (or total return) is a function of portfolio
quality, composition, maturity and market conditions as well as expenses
allocated to the Funds.

Performance data of the Funds may be compared to those of other mutual
funds with similar investment objectives and to other relevant indices, such as
those prepared by Salomon Brothers Inc. or Lehman Brothers Inc., or any of their
affiliates or to ratings prepared by independent services or other financial or
industry publications that monitor the performance of mutual funds. For example,
such data is reported in national financial publications such as IBC/Donoghue's
Money Fund Report and Bank Rate Monitor (for money market deposit accounts
offered by the 50 leading banks and thrift institutions in the top five
metropolitan statistical areas), Money Magazine, Forbes, Barron's, The Wall
Street Journal and The New York Times, reports prepared by Lipper Analytical
Services and publications of a local or regional nature. Performance information
may be quoted numerically or may be presented in a table, graph or other
illustrations. All performance information

<PAGE>

advertised by the Funds is historical in nature and is not intended to represent
or guarantee future results.

In addition, investors should recognize that changes in the net asset value
of shares of the Non-Money Market Funds will affect the yield of such Funds for
any specified period, and such changes should be considered together with each
such Fund's yield in ascertaining the Fund's total return to shareholders for
the period. Yield information for all of the Funds may be useful in reviewing
the performance of the Fund and for providing a basis for comparison with
investment alternatives. The yield of a Fund, however, may not be comparable to
other investment alternatives because of differences in the foregoing variables
and differences in the methods used to value portfolio securities, compute
expenses and calculate yield.

PERFORMANCE OF COMMON AND COLLECTIVE TRUST FUNDS. The Convertible
Securities Fund, Intermediate Government Bond Fund, Small-Cap Value Fund
Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund, Index Fund, Small-Cap
Opportunity Fund, Equity Income Fund, Growth Fund and International Fund
commenced operations upon the investment of a substantial amount of assets
invested from collective and common trust funds operated by Harris Trust. If a
Fund's predecessor fund was operated with investment policies substantially
similar to those of the Fund, the Fund may include in quotations of its
performance the performance history of the predecessor fund in accordance with
interpretations of the Commission and as appropriate. Because collective and
common trust funds usually have an effective expense ratio of zero, in order not
to overstate performance, a predecessor fund's performance included in any
quotation of the Fund's performance will be calculated as if the predecessor
fund had operated with an expense ratio equal to the Fund's estimated expense
ratio for its first year of operations.

DETERMINATION OF NET ASSET VALUE

As described under "Determination of Net Asset Value" in the Prospectuses,
net asset value per share is determined at least as often as each day that the
Federal Reserve Board of Philadelphia and the New York Stock Exchange are open,
i.e., each weekday other than New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day , Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day (each, a
"Holiday").

As also indicated under "Determination of Net Asset Value" in the
Prospectuses, each of the Money Market Funds uses the amortized cost method to
determine the value of its portfolio securities pursuant to Rule 2a-7 under the
1940 Act ("Rule 2a-7"). The amortized cost method involves valuing a security
at its cost and amortizing any discount or premium over the period until
maturity, regardless of the impact of fluctuating interest rates on the market
value of the security. While this method provides certainty in valuation, it
may result in periods during which the value, as determined by amortized cost,
is higher or lower than the price that a Fund would receive if the security were
sold. During these periods the yield to a shareholder may differ somewhat from
that which could be obtained from a similar fund that uses a method of valuation
based upon market prices. Thus, during periods of declining interest rates, if
the use of the amortized cost method resulted in a lower value of a Fund's
portfolio on a particular day, a prospective investor in that Fund would be able
to obtain a somewhat higher yield than would result from investments in a fund

<PAGE>

using solely market values, and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.

Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, each of the Money Market Funds must maintain a dollar-weighted
average portfolio maturity of 90 days or less, purchase securities having
remaining maturities (as defined in Rule 2a-7) of thirteen months or less and
invest only in securities determined by the Board of Directors to meet the
quality and minimal credit risk requirements of Rule 2a-7. The maturity of an
instrument is generally deemed to be the period remaining until the date when
the principal amount thereof is due or the date on which the instrument is to be
redeemed. Rule 2a-7, however, provides that the maturity of an instrument may
be deemed shorter in the case of certain instruments, including certain variable
and floating rate instruments subject to demand features. Pursuant to Rule
2a-7, the Board is required to establish procedures designed to stabilize, to
the extent reasonably possible, the price per share of each of the Money Market
Funds as computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the portfolio holdings of each of the Money Market
Funds by the Board of Directors, at such intervals as it may deem appropriate,
to determine whether a Fund's net asset value calculated by using available
market quotations deviates from $1.00 per share based on amortized cost. The
extent of any deviation will be examined by the Board of Directors. If such
deviation exceeds 1/2 of 1%, the Board will promptly consider what action, if
any, will be initiated. In the event the Board determines that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders, the Board will take such corrective action as it
regards as necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or establishing a net asset
value per share by using available market quotations.

PORTFOLIO TRANSACTIONS

The Trust or the Company, as the case may be, has no obligation to deal
with any dealer or group of dealers in the execution of transactions in
portfolio securities. Subject to policies established by the Trust's Board of
Trustees and the Company's Board of Directors, as the case may be, Harris Trust,
with respect to the Tax-Exempt Money Market Fund, and HIM, with respect to all
other Funds, are responsible for each Fund's portfolio decisions and the placing
of portfolio transactions. In placing orders, it is the policy of the Company
to obtain the best results taking into account the dealer's general execution
and operational facilities, the type of transaction involved and other factors
such as the dealer's risk in positioning the securities involved. While Harris
Trust and HIM generally seek reasonably competitive spreads or commissions, the
Funds will not necessarily be paying the lowest spread or commission available.

Purchases and sales of securities for the fixed income Funds and the Money
Market Funds will usually be principal transactions. Portfolio securities
normally will be purchased or sold from or to dealers serving as market makers
for the securities at a net price. Each of the Funds will also purchase
portfolio securities in underwritten offerings and will, on occasion, purchase
securities directly from the issuer. Generally, municipal obligations and
taxable money market securities are traded on a net basis and do not involve
brokerage commissions. The cost of executing a Fund's portfolio securities
transactions will consist primarily of dealer spreads, and underwriting
commissions. Under the 1940 Act, persons affiliated with the Company or the
Trust are prohibited

<PAGE>

from dealing with the Company or the Trust as a principal in the purchase and
sale of securities unless an exemptive order allowing such transactions is
obtained from the Commission.

Harris Trust or HIM may, in circumstances in which two or more dealers are
in a position to offer comparable results for a Fund, give preference to a
dealer that has provided statistical or other research services to such adviser.
By allocating transactions in this manner, Harris Trust and/or HIM are able to
supplement their own research and analysis with the views and information of
other securities firms. Information so received will be in addition to, and not
in lieu of, the services required to be performed under the Advisory and
Portfolio Management Contracts, and the expenses of such adviser will not
necessarily be reduced as a result of the receipt of this supplemental research
information. Furthermore, research services furnished by dealers through whom
Harris Trust or HIM effect securities transactions for a Fund may be used by
Harris Trust or HIM in servicing its other accounts, and not all of these
services may be used by Harris Trust or HIM in connection with advising the
Funds.

The following table shows total brokerage commissions and the total dollar
amount of transactions on which commissions were paid. This information is for
the past three fiscal years (or shorter if the Fund has been in operation for a
shorter period).

Total Brokerage Commissions ($) Total Dollar Amount of Transactions ($)
--------------------------------------- -------------------------------------------
1994 1995 1996 1994 1995 1996
------- -------- -------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Equity Fund 113,552 118,896 990,841 82,318,090 80,699,744 810,758,972

Equity Income Fund -- -- 38,375 -- -- 31,623,167

Growth Fund -- -- 66,607 -- -- 48,648,376

Small-Cap Opportunity Fund -- -- 271,499 -- -- 124,656,326

Index Fund -- -- 16,300 -- -- 20,433,355

International Fund -- -- 33,29 -- -- 13,237,746

</TABLE>

With respect to transactions directed to brokers because of research
services provided, the following table shows total brokerage commissions and the
total dollar amount of transactions on which commissions were paid. This
information is for the past three fiscal years.

Total Brokerage Commissions Total Dollar Amount of Transactions on which
(Research-related) ($) Commissions were paid (Research-related) ($)
----------------------------------- --------------------------------------------
1994 1995 1996 1994 1995 1996
------ ------ ------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Equity Fund 59,958 55,932 12,210 42,856,997 21,429,156 8,635,049

</TABLE>

Purchases and sales of securities on a securities exchange are effected
through brokers who charge a negotiated commission for their services. Orders
may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Harris Investors Direct, Inc. ("HID").

<PAGE>

In the over-the-counter market, securities are generally traded on a "net" basis
with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
that includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. The Funds will not deal with
the Distributor or HID in any transaction in which either one acts as principal
except as may be permitted by the Commission.

In placing orders for portfolio securities of the Funds, HIM is required to
give primary consideration to obtaining the most favorable price and efficient
execution. This means that HIM will seek to execute each transaction at a price
and commission, if any, that provide the most favorable total cost or proceeds
reasonably attainable in the circumstances. While HIM will generally seek
reasonably competitive spreads or commissions, the Funds will not necessarily be
paying the lowest spread or commission available. Commission rates are
established pursuant to negotiations with the broker based on the quality and
quantity of execution services provided by the broker in the light of generally
prevailing rates. The allocation of orders among brokers and the commission
rates paid are reviewed periodically by the Board of Trustees and Board of
Directors.

Subject to the above considerations, HID may act as a main broker for the
Funds. For it to effect any portfolio transactions for the Funds, the
commissions, fees or other remuneration received by it 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 a securities exchange during a comparable period of
time. This standard would allow HID to receive no more than the remuneration
that would be expected to be received by an unaffiliated broker on a
commensurate arm's-length transaction. Furthermore, the Trustees of the Trust
and the Directors of the Company, including a majority who are not "interested"
Trustees or Directors, as the case may be, have adopted procedures that are
reasonably designed to provide that any commissions, fees or other remuneration
paid to either one are consistent with the foregoing standard. Brokerage
transactions with either one are also subject to such fiduciary standards as may
be imposed upon each of them by applicable law.

FEDERAL INCOME TAXES

The Prospectuses describe generally the tax treatment of distributions by
the Trust and the Company, as the case may be. This section of the Statement of
Additional Information includes additional information concerning federal taxes.

Each Fund is treated as a separate entity for federal income tax purposes
and thus the provisions of the Code generally are applied to each Fund
separately, rather than to the Trust or the Company as a whole.

Qualification as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code") generally requires, among other things,
that (a) at least 90% of the Fund's annual gross income (without offset for
losses) be derived from interest, payments with respect to securities loans,
dividends and gains from the sale or other disposition of stocks, securities or
options thereon and certain other income including, but not limited to, gains
from futures contracts; (b) the Fund derives less than 30% of its gross income
from gains (without offset for losses) from

<PAGE>

the sale or other disposition of stocks, securities or options thereon and
certain futures contracts held for less than three months; and (c) the Fund
diversifies its holdings so that, at the end of each quarter of the taxable
year, (i) at least 50% of the market value of the Fund's assets is represented
by cash, government securities and other securities, with such other securities
limited in respect of any one issuer to an amount not greater than 5% of each
Fund's assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities). As a regulated
investment company, each Fund will not be subject to federal income tax on its
net investment income and net capital gains distributed to its shareholders,
provided that it distributes to its shareholders at least 90% of its net
investment income (including net short-term capital gains) earned in each year
and, in the case of the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Fund and the Tax-Exempt Bond Fund, that it distributes to its
shareholders at least 90% of its net tax-exempt income (including net short-term
capital gains). In addition, the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Bond Fund and the Tax-Exempt Fund intend that at least 50% of
the value of its total assets at the close of each quarter of its taxable year
will consist of obligations the interest on which is exempt from federal income
tax, so that such Funds will qualify under the Code to pay "exempt-interest
dividends."

As described in the relevant Prospectus, certain of the Funds may invest in
municipal bond index futures contracts and options on interest rate futures
contracts. The Funds do not anticipate that these investment activities will
prevent the Funds from qualifying as regulated investment companies. As a
general rule, these investment activities will increase or decrease the amount
of long-term and short-term capital gains or losses realized by a Fund and,
accordingly, will affect the amount of capital gains distributed to the Fund's
shareholders.

For Federal income tax purposes, gain or loss on the futures contracts and
options described above (collectively referred to as "section 1256 contracts")
is taxed pursuant to a special "mark-to-market" system. Under the
mark-to-market system, a Fund may be treated as realizing a greater or lesser
amount of gains or losses than actually realized. As a general rule, gain or
loss on section 1256 contracts is treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss, and, accordingly, the mark-to-market
system will generally affect the amount of capital gains or losses taxable to a
Fund and the amount of distributions taxable to a shareholder. Moreover, if a
Fund invests in both section 1256 contracts and offsetting positions in such
contracts, then the Fund might not be able to receive the benefit of certain
recognized losses for an indeterminate period of time. Each Fund expects that
its activities with respect to section 1256 contracts and offsetting positions
in such contracts (a) will not cause it or its shareholders to be treated as
receiving a materially greater amount of capital gains or distributions than
actually realized or received and (b) will permit it to use substantially all of
the losses of the Fund for the fiscal years in which the losses actually occur.

Each Fund (except the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Fund and the Tax-Exempt Fund to the extent of this tax-exempt
interest) will generally be subject to an excise tax of 4% of the amount of
any income or capital gains distributed to shareholders on a basis such that
such income or gain is not taxable to shareholders in the calendar year in
which it was earned by the Fund. Each Fund intends that it will distribute
substantially all of its net investment income and net capital gains in
accordance with the foregoing requirements, and, thus, expects not to be

<PAGE>

subject to the excise tax. Dividends declared by a Fund in October, November or
December payable to shareholders of record on a specified date in such a month
and paid in the following January will be treated as having been paid by the
Fund and received by shareholders on December 31 of the calendar year in which
declared.

Income received by a Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of a Fund's assets to be invested in
various countries is not known.

Gains or losses on sales of securities by a Fund generally will be
long-term capital gains or losses if the securities have been held by it for
more than one year, except in certain cases where the Fund acquires a put or
writes a call thereon. Other gains or losses on the sale of securities will be
short-term capital gains or losses.

In the case of the Growth Fund, the Equity Fund, the Small-Cap
Fund, the Small-Cap Value Fund, the Equity Income Fund, the Index Fund, the
International Fund, the Balanced Fund, the Convertible Securities Fund, the Bond
Fund, the Government Fund, the Intermediate Tax-Exempt Fund and the
Tax-Exempt Fund, if securities are sold by the Fund pursuant to the
exercise of a call option written by it, such Fund will add the premium received
to the sale price of the securities delivered in determining the amount of gain
or loss on the sale. If securities are purchased by the Fund pursuant to the
exercise of a put option written by it, the Fund will subtract the premium
received from its cost basis in the securities purchased. The requirement that
a Fund derive less than 30% of its gross income from gains from the sale of
securities held for less than three months may limit a Fund's ability to write
options.

If, in the opinion of the Trust or the Company, as the case may be,
ownership of its shares has or may become concentrated to an extent that could
cause the Trust or the Company to be deemed a personal holding company within
the meaning of the Code, the Trust or the Company may require the redemption of
shares or reject any order for the purchase of shares in an effort to prevent
such concentration.

CAPITAL STOCK AND BENEFICIAL INTEREST

The authorized capital stock of the Company consists of an aggregate of
10,000,000,000 shares ("Shares"), par value of $.001 per share currently
classified as follows: "Government Money Market Fund - Class A," consisting of
1,000,000,000 Shares, "Government Money Market Fund -

<PAGE>

Institutional Shares," consisting of 500,000,000 Shares, "Money Market Fund -
Class A," consisting of 1,300,000,000 Shares, "Money Market Fund - Institutional
Shares," consisting of 1,050,000,000 Shares, "Tax-Exempt Money Market Fund -
Class A," consisting of 500,000,000 Shares, "Tax-Exempt Money Market Fund -
Institutional Shares," consisting of 1,000,000,000 Shares, "Class D," referred
to as the Harris Insight Convertible Fund, consisting of 100,000,000 Shares,
"Equity Fund - Class A," consisting of 100,000,000 Shares, "Equity Fund -
Institutional Shares" consisting of 100,000,000 Shares, "Short/Intermediate Bond
Fund - Class A," consisting of 100,000,000 Shares, "Short/Intermediate Bond Fund
- - Institutional Shares," consisting of 100,000,000 Shares, "Class G," referred
to as the Harris Insight Intermediate Municipal Income Fund, consisting of
50,000,000 Shares, "Prime Reserve Fund - Class A," consisting of 200,000,000
Shares, "Prime Reserve Fund - Class B," consisting of 700,000,000 Shares, "Prime
Reserve Fund - Institutional Shares," consisting of 300,000,000 Shares,
"Hemisphere Free Trade Fund - Class A," consisting of 50,000,000 Shares and
"Hemisphere Free Trade Fund - Institutional Shares, consisting of 50,000,000
Shares.

The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, $.001 par
value, and to create one or more classes of these shares. Pursuant thereto, the
Trustees have authorized the issuance of two classes of shares, Class A Shares
and Institutional Shares, for each of the twelve Funds of the Trust.

Generally, all shares of the Trust and all shares of the Company have equal
voting rights with other shares of the Trust or the Company, respectively, and
will be voted in the aggregate, and not by class, except where voting by class
is required by law or where the matter involved affects only one class. As used
in the Prospectuses and in this Statement of Additional Information, the term
"majority," when referring to the approvals to be obtained from shareholders in
connection with general matters affecting the Funds (e.g., election of Trustees
or Directors and ratification of independent accountants), means the vote of the
lesser of (i) 67% of the Trust's or the Company's shares represented at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy, or (ii) more than 50% of the Trust's or the Company's
outstanding shares. The term "majority," when referring to the approvals to be
obtained from shareholders in connection with matters affecting a single Fund or
any other single Fund (e.g., annual approval of advisory contracts), means the
vote of the lesser of (i) 67% of the shares of the Fund represented at a meeting
if the holders of more than 50% of the outstanding shares of the Fund are
present in person or by proxy or (ii) more than 50% of the outstanding shares of
the Fund. Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held.

Each share of a Fund represents an equal proportionate interest in that
Fund with each other share of the same Fund and is entitled to such dividends
and distributions out of the income earned on the assets belonging to that Fund
as are declared in the discretion of the Trust's Board of Trustees or the
Company's Board of Directors, as the case may be. Notwithstanding the
foregoing, each class of shares of each Fund bears exclusively the expense of
fees paid to Service Organizations with respect to that class of shares. In the
event of the liquidation or dissolution of the Trust or the Company (or a Fund),
shareholders of each Fund (or the Fund being dissolved) are entitled to receive
the assets attributable to that Fund that are available for distribution, and a
distribution of any general assets not attributable to a particular Fund that
are available for distribution in such

<PAGE>

manner and on such basis as the Trustees or the Directors, as the case may be,
in their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Trust or the Company, as
the case may be.

OTHER

The Registration Statement, including the Prospectuses, the Statement of
Additional Information and the exhibits filed therewith, may be examined at the
office of the Commission in Washington, D.C. Statements contained in the
Prospectuses or this Statement of Additional Information as to the contents of
any contract or other document referred to herein or in the Prospectuses are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

CUSTODIAN

As the Funds' custodian, PNC Bank, N.A., among other things, maintains a
custody account or accounts in the name of each Fund, receives and delivers all
assets for each Fund upon purchase and upon sale or maturity, collects and
receives all income and other payments and distributions on account of the
assets of each Fund, and pays all expenses of each Fund.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP has been selected as the independent accountants for
both the Trust and the Company. Price Waterhouse LLP's address is 30 South
17th Street, Philadelphia, Pennsylvania 19103.

EXPERTS

The financial statements incorporated by reference into the Prospectuses
and Statement of Additional Information have been incorporated by reference in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of that firm as experts in auditing and accounting.

FINANCIAL STATEMENTS

The Financial Statements for the year ended December 31, 1996 including the
notes thereto, have been audited by Price Waterhouse LLP and are incorporated by
reference in the Statement of Additional Information from the Annual Report of
the Company dated December 31, 1996.

44
<PAGE>

APPENDIX A

Description of Bond Ratings

The following summarizes the highest four ratings used by Standard & Poor's
("S&P") for corporate and municipal debt:

AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from AAA issues only in a small degree.

A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those
in higher rated categories.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

The following summarizes the highest four ratings used by Moody's Investors
Service ("Moody's") for corporate and municipal long-term debt:

Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

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A - Bonds that are rated A possess many favorable investment
attributes and are to be considered upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility
to impairment sometime in the future.

Baa - Bonds that are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Moody's applies numerical modifiers (1, 2 and 3) with respect to corporate
bonds rated Aa, A and Baa. The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category. With regard to municipal bonds, those
bonds in the Aa, A and Baa groups which Moody's believes possess the strongest
investment attributes are designated by the symbols Aa1, A1 or Baa1,
respectively.

The following summarizes the highest four ratings used by Duff & Phelps
Credit Rating Co. ("D&P") for bonds:

AAA - Debt rated AAA is of the highest credit quality. The risk
factors are considered to be negligible, being only slightly more than
for risk-free U.S. Treasury debt.

AA - Debt rated AA is of high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time
because of economic conditions.

A - Bonds that are rated A have protection factors which are average
but adequate. However risk factors are more variable and greater in
periods of economic stress.

BBB - Bonds that are rated BBB have below average protection factors
but are still considered sufficient for prudent investment.
Considerable variability in risk during economic cycles.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.

The following summarizes the ratings used by IBCA Limited and IBCA Inc.
("IBCA") for bonds:

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Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal and
interest is substantial, such that adverse changes in business,
economic or financial conditions are unlikely to increase investment
risk significantly.

IBCA also assigns a rating to certain international and U.S. banks. An
IBCA bank rating represents IBCA's current assessment of the strength
of the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual
rating system comprised of Legal Ratings and Individual Ratings. In
addition, IBCA assigns banks Long and Short-Term Ratings as used in
the corporate ratings discussed above. Legal Ratings, which range in
gradation from 1 through 5, address the question of whether the bank
would receive support provided by central banks or shareholders if it
experienced difficulties, and such ratings are considered by IBCA to
be a prime factor in its assessment of credit risk. Individual
Ratings, which range in gradations from A through E, represent IBCA's
assessment of a bank's economic merits and address the question of how
the bank would be viewed if it were entirely independent and could not
rely on support from state authorities or its owners.

Description of Municipal Notes Ratings

The following summarizes the two highest ratings used by Moody's for short-
term notes and variable rate demand obligations:

MIG-1/VMIG-1. Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows,
superior liquidity support or demonstrated broad-based access to the
market for refinancing.

MIG-2/VMIG-2. Obligations bearing these designations are of high
quality with margins of protection ample although not as large as in
the preceding group.

The following summarizes the two highest ratings by Standard & Poor's for
short-term municipal notes:

SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
are given a "plus" (+) designation.

SP-2 - Satisfactory capacity to pay principal and interest.

The three highest rating categories of D&P for short-term debt are Duff 1,
Duff 2, and Duff 3. D&P employs three designations, Duff 1+, Duff 1 and Duff 1-,
within the highest rating category. Duff 1+ indicates highest certainty of
timely payment. Short-term liquidity, including internal

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operating factors and/or access to alternative sources of funds, is judged to be
"outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations." Duff 1 indicates very high certainty of timely payment. Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are considered to be minor. Duff 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small. Duff 2 indicates good
certainty of timely payment. Liquidity factors and company fundamentals are
sound. Although ongoing funding needs may enlarge total financing requirements,
access to capital markets is good. Risk factors are small. Duff 3 indicates
satisfactory liquidity and other protection factors qualify issue as to
investment grade. Risk factors are larger and subject to more variation.
Nevertheless, timely payment is expected.

D&P uses the fixed-income ratings described above under "Description of
Bond Ratings" for tax-exempt notes and other short-term obligations.

Description of Commercial Paper Ratings

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted in A-1+. Capacity for timely payment
on commercial paper rated A-2 is satisfactory but the relative degree of safety
is not as high as for issues designated A-1.

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

The highest rating of D&P for commercial paper is Duff 1. D&P employs three
designations, Duff 1 plus, Duff 1 and Duff 1 minus, within the highest rating
category.

Duff 1 plus indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or ready access to
alternative sources of funds, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations" Duff 1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
strong fundamental protection factors. Risk factors are considered to be minor.
Duff 1 minus indicates high certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors are
very small.

The following summarizes the highest ratings used by Fitch for short-term
obligations:

F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.

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F-1 securities possess exceptionally strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated F-1+.

Commercial paper rated A-1 by Standard & Poor's indicates that the degree
of safety regarding timely payment is strong. Those issued determined to
possess extremely strong safety characteristics are denoted A-1+.

D&P uses the short-term ratings described above for commercial paper.

Fitch uses the short-term ratings described above for commercial paper.

Thomson BankWatch, Inc. ("TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.

BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.

The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned.

The TBW Short-Term Ratings specifically assess the likelihood of an
untimely payment of principal or interest.

TBW-1 The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.

TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated
"TBW-1".

TBW-3 The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external)
than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered
adequate.

TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

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