PITCAIRN FUNDS, N-1A/A, 2000-07-31

PITCAIRN FUNDS
N-1A/A, 2000-07-31

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<PAGE>

As filed with the U.S. Securities and Exchange Commission on July 28, 2000.
Securities Act File No. 333-37028

Investment Company Act File No. 811-09943
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 2 |X|
Post-Effective Amendment No. __ |_|

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|X|

Amendment No. 2 |X|
(Check appropriate box or boxes)

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

PITCAIRN FUNDS
(Exact Name of Registrant as Specified in Charter)

One Pitcairn Place, Suite 3000
165 Township Line Road
Jenkintown, PA 19046-3593
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (215) 881-6116

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

Alvin A. Clay III
Pitcairn Trust Company
One Pitcairn Place, Suite 3000
165 Township Line Road
Jenkintown, PA 19046-3593

(Name and Address of Agent of Service of Process)

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

Copies of Communications to:
Ruth S. Epstein, Esq.
Dechert
1775 Eye Street, N.W.
Washington, D.C. 20006

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
<PAGE>

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
JULY 28, 2000

-------------------------------------------------------------------------------
PITCAIRN FUNDS
-------------------------------------------------------------------------------

PROSPECTUS

August 4, 2000
DIVERSIFIED VALUE FUND
DIVERSIFIED GROWTH FUND
SELECT VALUE FUND
SELECT GROWTH FUND
SMALL CAP VALUE FUND
SMALL CAP GROWTH FUND
FAMILY HERITAGE-Registered Trademark- FUND
INTERNATIONAL EQUITY FUND
GOVERNMENT/CORPORATE BOND FUND
TAX-EXEMPT BOND FUND

INVESTMENT ADVISER

PITCAIRN INVESTMENT MANAGEMENT
A DIVISION OF PITCAIRN TRUST COMPANY ("PTC")

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE SECURITIES BEING
OFFERED BY THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE AND
COMPLETE. IT IS UNLAWFUL FOR ANYONE TO MAKE ANY REPRESENTATION TO THE CONTRARY.

<PAGE>

HOW TO READ THIS PROSPECTUS

PITCAIRN FUNDS (THE "TRUST") IS A TRUST THAT OFFERS TEN SEPARATE MUTUAL FUNDS
(EACH A "FUND," COLLECTIVELY, "FUNDS") TO INSTITUTIONAL INVESTORS. OF THESE,
EIGHT -THE EQUITY FUNDS-- INVEST PRIMARILY IN EQUITY SECURITIES. THE
REMAINING TWO FUNDS-- THE FIXED INCOME FUNDS - INVEST PRIMARILY IN FIXED
INCOME SECURITIES. THE FUNDS HAVE INDIVIDUAL INVESTMENT GOALS AND STRATEGIES.
THIS PROSPECTUS GIVES YOU IMPORTANT INFORMATION ABOUT EACH OF THE FUNDS THAT
YOU SHOULD KNOW BEFORE INVESTING. PLEASE READ THIS PROSPECTUS AND KEEP IT FOR
FUTURE REFERENCE.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. FOR MORE DETAILED INFORMATION ABOUT EACH
FUND, PLEASE SEE:

PAGE
Introduction -Information Common To All Funds
The Equity Funds
Diversified Value Fund ...............................................
Diversified Growth Fund ..............................................
Select Value Fund ....................................................
Select Growth Fund ...................................................
Small Cap Value Fund .................................................
Small Cap Growth Fund ................................................
Family Heritage-Registered Trademark- Fund ...........................
International Equity Fund ............................................
The Fixed Income Funds
Government/Corporate Bond Fund .......................................
Tax-Exempt Bond Fund .................................................
More Information About Risk ...................................................
Other Information .............................................................
Investment Adviser
Sub-Advisers-Managers ................................................
Shareholder Services Plan .....................................................
Purchasing, Selling And Exchanging Fund Shares ................................
Dividends, Distributions And Taxes ............................................
Additional Information ........................................................

<PAGE>

INTRODUCTION - INFORMATION COMMON TO ALL FUNDS

Each Fund operates as a separate mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers (each a
"Manager," collectively, "Managers"), invests that money in securities. Each
Fund has its own investment goal and strategies for reaching that goal. The
Manager invests the assets of each Fund in a way that it believes will help
the Fund achieve its goal.

Investing in a Fund involves risks, as there is no guarantee that a Fund will
achieve its goal. A Manager's judgments about the markets, the economy, or
companies may not correctly anticipate actual market movements, economic
conditions or company performance, and these judgments may affect the return
on your investment. IN FACT, NO MATTER HOW GOOD A JOB A MANAGER DOES, YOU
COULD LOSE MONEY ON YOUR INVESTMENT IN A FUND, JUST AS YOU COULD WITH OTHER
INVESTMENTS. A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY GOVERNMENT AGENCY. The value of your investment
in a Fund is based on the market value of the securities the Fund holds.
These prices can change daily due to economic and other events that affect
particular companies and other issuers. These price movements, sometimes
called volatility, may be greater or lesser depending on the types of
securities a Fund owns and the markets in which they trade. The effect on a
Fund of a change in the value of a single security will depend on the
magnitude of the change and how widely the Fund diversifies its holdings.
Refer to page ___ for "More Information about Risks."

Each Fund selects one or more broad-based securities market indexes for
comparison purposes in reporting performance (sometimes referred to as the
Fund's benchmark). However, the Funds are not sponsored, endorsed, sold or
promoted by the sponsor of any index, and no such sponsor makes any
representations regarding the advisability of investing in any of the Funds.

<PAGE>

DIVERSIFIED VALUE FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a diversified portfolio of equity securities of large
and mid-capitalization companies designed to provide exposure to the value
portion of the U.S. stock market. The Manager selects specific stocks it
believes are undervalued, in companies with a range of risk, capitalization
and industry sector characteristics similar to those included in the
broad-based securities index selected as the Fund's benchmark, with the goal
of outperforming the benchmark.

INVESTMENT STRATEGY

The Diversified Value Fund invests primarily in U.S. common stocks and other
equity securities. Under normal market conditions, the Fund invests at least
80% of its assets in equity securities. The Manager seeks stocks with
attractive valuations within their industries and market sectors. The prices
of value stocks are typically below their true worth, in the Manager's
judgment, compared to other stocks as measured by such traditional
fundamental investment criteria as earnings, book value and dividend paying
ability. Dividend income, if any, is a consideration incidental to the Fund's
goal.

The Fund is diversified as to issuers and industries, and emphasizes
investments in companies that have market capitalization in excess of $1.5
billion. Up to 10% of the Fund's total assets may be invested in other
income-producing securities such as preferred stocks or bonds that are
convertible into common stock. Up to 20% of the Fund's total assets may also
be invested in securities issued by non-U.S. companies. The Fund may engage
in transactions involving "derivative instruments" - - options or futures
contracts and similar instruments - - in order to hedge against fluctuations
in market price of the securities in which the Fund primarily invests, or for
tax management purposes. The Fund may also acquire shares of exchange-traded
funds or similar securities in order to achieve market or industry exposure
pending direct investments in equity securities. An exchange-traded fund is a
pooled investment vehicle, like other mutual funds, that invests in the
securities of other issuers.

The Manager adheres to an investment philosophy that focuses on specific
security selection within a disciplined risk managed portfolio structure. The
Manager conducts in-depth analysis of the financial quality, market
capitalization, cash flow, earnings and revenues of individual companies.

The Fund currently intends to use the Russell 1000-Registered Trademark-
Value Index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark). The
Russell 1000-Registered Trademark- Value Index is an unmanaged index that
measures the performance of those Russell 1000 companies with lower price
to-book ratios and lower forecasted growth values. The Russell
1000-Registered Trademark- Index is an unmanaged index that measures the
performance of the 1,000 largest companies in the Russell 3000-Registered
Trademark- Index, which, in turn, is an

<PAGE>

unmanaged index that includes the 3,000 largest U.S. companies based on total
market capitalization. You cannot invest directly in the Index.

TAX MANAGEMENT STRATEGY

Selecting individual stocks that appreciate in value and managing those gains
(and any losses) to minimize the impact of taxes on shareholders are ways in
which the Manager may seek to achieve the Fund's goal. The Manager and the Fund
may use one or more of the following tax management strategies (to the extent
consistent with the Fund's investment goal):

- When a portfolio security is sold, selecting the highest cost tax lots to
reduce the amount of the capital gain or to increase the amount of the
capital loss realized;

- Selecting from among portfolio securities that are candidates for sale
those tax lots that have been held for the amount of time necessary to
generate long-term capital gains rather than short-term capital gains;

- Selling securities to realize capital losses that can be offset against
realized capital gains; and

- Favoring lower dividend stocks.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. In addition, a value-oriented
portfolio is generally more volatile than the overall equity market.
Historically, the equity markets have moved in cycles. The value of the
Fund's equity securities may fluctuate from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in value in response to such developments which could
result in a decline in the value of the Fund's shares. These factors
contribute to price volatility, which is the principal risk of investing in
the Fund. In addition, during periods of particularly volatile market
conditions, the Fund may not be able to buy or sell securities at favorable
prices and the Fund may experience losses. The Fund is subject to the risk
that its market segment, mid and large cap equity securities, may
underperform other market segments or the equity markets as a whole. The Fund
may invest in foreign instruments which may be riskier than U.S. investments
for many reasons, including changes in currency exchange rates, unstable
political and economic conditions, a lack of adequate company information,
differences in the way securities markets operate, less secure foreign banks
or securities depositories than those in the United States, and foreign
controls on investment.

The principal risk of investing in value stocks is that they may never reach
what the Manager believes is their full value or that they may even go down
in value. In addition, different types of stocks tend to shift in and out of
favor depending on market and economic conditions, and therefore the Fund's
performance may be lower or higher than that of funds that invest in other
types of equity securities (such as those emphasizing growth stocks).

<PAGE>

PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You would pay these fees directly from your
investment in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<S> <C>
Management Fees 0.70%
Shareholder Service Fees 0.25%
Other Expenses 0.17%
Total Annual Fund Operating Expenses 1.12%
Fee Waiver and/or Expense Reimbursement 0.12%
Net Expenses 1.00%
</TABLE>

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 1.00% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE
This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you redeem all of your shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher
or lower, based on these assumptions , your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$102 $318

</TABLE>

<PAGE>

DIVERSIFIED GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a diversified portfolio of equity securities of large
and mid-capitalization companies designed to provide exposure to the growth
portion of the U.S. stock market. The Manager selects specific stocks it
believes have above-average potential for growth in revenues and earnings, in
companies with a range of risk, capitalization and industry sector
characteristics similar to those included in the broad-based securities index
selected as the Fund's benchmark, with the goal of outperforming the
benchmark.

INVESTMENT STRATEGY

The Diversified Growth Fund invests primarily in U.S. common stocks and other
equity securities. Under normal market conditions, the Fund invests at least
80% of its assets in equity securities. The Manager generally seeks stocks
with above average potential for growth in revenue and earnings, and with
capital appreciation potential. Dividend income, if any, is a consideration
incidental to the Fund's investment goal.

The Fund is diversified as to issuers and industries, and emphasizes
investments in companies that have market capitalization in excess of $1.5
billion. Up to 10% of the Fund's total assets may be invested in other
income-producing securities such as preferred stocks or bonds that are
convertible into common stock. Up to 20% of the Fund's total assets may also
be invested in securities issued by non- U.S. companies. The Fund may engage
in transactions involving "derivative instruments" - - options or futures
contracts and similar instruments - - in order to hedge against fluctuations
in market price of the securities in which the Fund primarily invests, or for
tax management purposes. The Fund may also acquire shares of exchange-traded
funds or similar securities in order to achieve market or industry exposure
pending direct investments in equity securities. An exchange-traded fund is a
pooled investment vehicle, like other mutual funds, that invests in the
securities of other issuers.

The Fund currently intends to use the Russell 1000-Registered Trademark-
Growth Index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark). The
Russell 1000-Registered Trademark- Growth Index measures the performance of
those Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. You cannot invest directly in the Index.

<PAGE>

TAX MANAGEMENT STRATEGY

Selecting individual stocks that appreciate in value and managing those gains
(and any losses) to minimize the impact of taxes on shareholders are ways in
which the Manager may seek to achieve the Fund's goal. The Manager and the
Fund may use one or more of the following tax management strategies (to the
extent consistent with the Fund's investment goal):

- When a portfolio security is sold, selecting the highest cost tax lots to
reduce the amount of the capital gain or to increase the amount of the
capital loss realized;

- Selling securities to realize capital losses that can be offset against
realized capital gains; and

- Favoring lower dividend stocks.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. In addition, a growth-oriented
portfolio is generally more volatile than the overall equity market.
Historically, the equity markets have moved in cycles. The value of the
Fund's equity securities may fluctuate from day to day. Individual companies
may report poor results or be negatively affected by industry and/or economic
trends and developments. The prices of securities issued by such companies
may suffer a decline in value in response to such developments, which could
result in a decline in the value of the Fund's shares. These factors
contribute to price volatility, which is the principal risk of investing in
the Fund. In addition, during periods of particularly volatile market
conditions, the Fund may not be able to buy or sell securities at favorable
prices, and the Fund may experience losses. The Fund is subject to the risk
that its market segment, mid and large cap equity securities, may
underperform other market segments or the equity markets as a whole. The Fund
may invest in foreign instruments which may be riskier than U.S. investments
for many reasons, including changes in currency exchange rates, unstable
political and economic conditions, a lack of adequate company information,
differences in the way securities markets operate, less secure foreign banks
or securities depositories than those in the United States, and foreign
controls on investment.

The principal risk of growth stocks is that investors expect growth
companies to increase their earnings at a certain rate that is generally
higher than the rate expected for non-growth companies. If these expectations
are not met, the market price of the stock may decline significantly, even if
earnings show an absolute increase. Growth company stocks also typically lack
the dividend yield that can cushion stock prices in market downturns.

<PAGE>

PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You would pay these fees directly from your
investment in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

* SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 1.00% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$102 $318

</TABLE>
<PAGE>

SELECT VALUE FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a portfolio of U.S. equity securities that the Manager
believes are priced below their true worth. The Fund will be non-diversified
for purposes of the Investment Company Act of 1940, as amended (the "1940
Act"). It will tend to be focused in a smaller number of securities than may
be the case for a typical diversified value fund.

INVESTMENT STRATEGY

The Select Value Fund invests primarily in U.S. common stocks and other
equity securities. Under normal market conditions, the Fund invests at least
80% of its assets in equity securities. The Manager generally seeks stocks
believed to be priced by the market below their true worth.

The Fund emphasizes investments in companies that have market capitalization
of at least $1.5 billion. Up to 10% of the Fund's total assets may be
invested in other income-producing securities, such as preferred stocks or
bonds, that are convertible into common stock. Up to 10% of the Fund's total
assets may also be invested in securities issued by non- U.S. companies. The
Fund may engage in transactions involving "derivative instruments" - -
options or futures contracts and similar instruments - - in order to hedge
against fluctuations in market price of the securities in which the Fund
primarily invests, or for tax management purposes. The Fund may also acquire
shares of exchange-traded funds or similar securities in order to achieve
market or industry exposure pending direct investments in equity securities.
An exchange-traded fund is a pooled investment vehicle, like other mutual
funds, that invests in the securities of other issuers.

The Fund currently intends to use the Russell 1000-Registered Trademark-
Value Index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark). The
Russell 1000-Registered Trademark- Value Index is an unmanaged index that
measures the performance of those Russell 1000 companies with lower price
to-book ratios and lower forecasted growth values. The Russell
1000-Registered Trademark- Index is an unmanaged index that measures the
performance of the 1000 largest companies in the Russell 3000-Registered
Trademark- Index, which in turn is an unmanaged index that includes the
3,000 largest U.S. companies based on total market capitalization. You cannot
invest directly in the Index.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. Historically, the equity markets
have moved in cycles. The value of the Fund's equity securities may fluctuate
from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in value
in response to such developments which could result in a decline in the value
of the Fund's shares. These factors contribute to price volatility, which is
the principal risk of investing in the Fund. In addition, during periods of
particularly volatile market conditions, the Fund may not be able to buy or
sell securities at favorable prices and the Fund may experience losses. The
Fund is subject to the risk that its market segment, mid

<PAGE>

and large cap equity securities, may underperform other market segments or
the equity markets as a whole. The Fund may invest in foreign instruments
which may be riskier than U.S. investments for many reasons, including
changes in currency exchange rates, unstable political and economic
conditions, a lack of adequate company information, differences in the way
securities markets operate, less secure foreign banks or securities
depositories than those in the United States, and foreign controls on
investment.

The Fund is a non-diversified fund, which means it may invest a greater
percentage of its assets than other funds in the securities of a limited
number of issuers. However, the Fund will be subject to certain
diversification requirements imposed by the Internal Revenue Code. The use of
a focused investment strategy may increase the volatility of the Fund's
investment performance, as the Fund may be more susceptible to risks
associated with a single economic, political or regulatory event than a
diversified portfolio. If the securities in which the Fund invests perform
poorly, the Fund could incur greater losses than it would have had it been
invested in a greater number of securities.

PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You would pay these fees directly from your
investment in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>

<S> <C>
Management Fees 0.70%
Shareholder Service Fees 0.25%
Other Expenses 0.22%
Total Annual Fund Operating Expenses 1.17%
Fee Waiver and/or Expense Reimbursement 0.17%
Net Expenses 1.00%

</TABLE>

* SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 1.00% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated and that
you redeem all of your shares at the end of those periods. The Example also
assumes that your investment has a 5% return each year and that the Fund's
operating expenses remain the same. Although your actual costs may be higher
or lower, based on these assumptions, your costs would be:

1 YEAR 3 YEARS
<S> <C>
$102 $318

</TABLE>

<PAGE>

SELECT GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a portfolio of U.S. equity securities that the Manager
believes have above-average potential for growth in revenues and earnings,
and with capital appreciation potential. The Fund will be non-diversified for
purposes of the Investment Company Act of 1940, as amended (the "1940 Act").
It will tend to invest in a smaller number of securities than may be the case
for a typical diversified growth fund.

INVESTMENT STRATEGY

The Select Growth Fund invests primarily in U.S. common stocks and other
equity securities. Under normal market conditions, the Fund invests at least
80% of its assets in equity securities. The Manager generally seeks stocks
with above average potential for growth in revenue and earnings, and with
capital appreciation potential. In addition, the Manager looks for companies
that have a leadership position or proprietary niche that appears to be
sustainable, that demonstrate a clear mission in an understandable business,
that exhibit financial strength and that are valued reasonably in relation to
comparable companies in the market.

The Fund emphasizes investments in companies that have market capitalization
of at least $5 billion. Up to 20% of the Fund's total assets may also be
invested in securities issued by non- U.S. companies. The Fund may engage in
transactions involving "derivative instruments" - - options or futures
contracts and similar instruments - - in order to hedge against fluctuations
in market price of the securities in which the Fund primarily invests, or for
tax management purposes. The Fund may also acquire shares of exchange-traded
funds or similar securities in order to achieve market or industry exposure
pending direct investments in equity securities. An exchange-traded fund is a
pooled investment vehicle, like other mutual funds, that invests in the
securities of other issuers.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. Historically, the equity markets
have moved in cycles. The value of the Fund's equity securities may fluctuate
from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in value
in response to such developments which could result in a decline in the value
of the Fund's shares. These factors contribute to price volatility,

<PAGE>

which is the principal risk of investing in the Fund. In addition, during
periods of particularly volatile market conditions, the Fund may not be able
to buy or sell securities at favorable prices and the Fund may experience
losses. The Fund is subject to the risk that its market segment, mid and
large cap equity securities, may underperform other market segments or the
equity markets as a whole. The Fund may invest in foreign instruments which
may be riskier than U.S. investments for many reasons, including changes in
currency exchange rates, unstable political and economic conditions, a lack
of adequate company information, differences in the way securities markets
operate, less secure foreign banks or securities depositories than those in
the United States, and foreign controls on investment.

The principal risk of growth stocks is that investors expect growth companies
to increase their earnings at a certain rate that is generally higher than
the rate expected for non-growth companies. If these expectations are not met,
the market price of the stock may decline significantly, even if earnings
show an absolute increase. Growth company stocks also typically lack the
dividend yield that can cushion stock prices in market downturns.

PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You would pay these fees directly from your
investment in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>

<S> <C>
Management Fees 0.85%
Shareholder Service Fees 0.25%
Other Expenses 0.24%
Total Annual Fund Operating Expenses 1.34%
Fee Waiver and/or Expense Reimbursement 0.19%
Net Expenses 1.15%

</TABLE>

<PAGE>

TO NOT MORE THAN 1.15% OF THE AVERAGE DAILY NET ASSETS OF THE FUND THROUGH
THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE REIMBURSEMENT TO
PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE LIMITATION AGREEMENT"
FOR MORE DETAILED INFORMATION.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$118 $365
</TABLE>

<PAGE>

SMALL CAP VALUE FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a diversified portfolio of equity securities of small
capitalization companies (with market capitalizations between $200 million
and $1.5 billion) designed to provide exposure to the value portion of the
U.S. stock market. The Manager selects specific stocks it believes are
undervalued, in companies with a range of risk, capitalization and industry
sector characteristics similar to those included in the broad-based
securities index selected as the Fund's benchmark, with the goal of
outperforming the benchmark.

INVESTMENT STRATEGY

The Small Cap Value Fund invests primarily in U.S. common stocks and other
equity securities. Under normal market conditions, the Fund invests at least
80% of its assets in equity securities. The Manager seeks stocks with
attractive valuations within their industries and market sectors. The prices
of value stocks are typically below their true worth in the Manager's
judgment compared to other stocks as measured by such traditional fundamental
investment criteria as earnings, book value and dividend paying ability.
Dividend income, if any, is a consideration incidental to the Fund's goal.

The Fund is diversified as to issuers and industries, and emphasizes
investments in companies that have market capitalization between $200 million
and $1.5 billion. Up to 10% of the Fund's total assets may be invested in
other income-producing securities, such as preferred stocks or bonds, that
are convertible into common stock. Up to 20% of the Fund's total assets may
also be invested in securities issued by non- U.S. companies. The Fund may
engage in transactions involving "derivative instruments" - - options or
futures contracts and similar instruments - - in order to hedge against
fluctuations in market price of the securities in which the Fund primarily
invests, or for tax management purposes. The Fund may also acquire shares of
exchange-traded funds or similar securities in order to achieve market or
industry exposure pending direct investments in equity securities. An
exchange-traded fund is a pooled investment vehicle, like other mutual funds,
that invests in the securities of other issuers.

The Manager adheres to an investment philosophy which focuses on specific
security selection within a disciplined risk managed portfolio structure. The
Manager conducts in-depth analysis of the financial quality, market
capitalization, cash flow, earnings and revenues of individual companies
within those characteristics.

The Fund currently intends to use the Russell 2000-Registered Trademark-
Value Index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark). The
Russell 2000-Registered Trademark- Value Index measures the performance of
those Russell 2,000 companies with lower price-to-book ratios and lower
forecasted growth values. You cannot invest directly in the Index.

<PAGE>

TAX MANAGEMENT STRATEGY

Selecting individual stocks that appreciate in value and managing those gains
(and any losses) to minimize the impact of taxes on shareholders are ways in
which the Manager may seek to achieve the Fund's goal. The Manager and the
Fund may use one or more of the following tax management strategies (to the
extent consistent with the Fund's investment goal:

- When a portfolio security is sold, selecting the highest cost tax lots to
reduce the amount of the capital gain or to increase the amount of the
capital loss realized;

- Selling securities to realize capital losses that can be offset against
realized capital gains; and

- Favoring lower dividend stocks.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. In addition, there is a higher risk
that the Fund will lose money because it invests primarily in small
capitalization stocks. Smaller companies may have limited product lines,
markets and financial resources. They may have shorter operating histories
and more volatile businesses. The prices of small capitalization stocks tend
to be more volatile than those of other stocks. In addition, it may be harder
to sell these stocks, which can reduce their selling prices. Historically,
the equity markets have moved in cycles. The value of the Fund's equity
securities may fluctuate from day to day. Individual companies may report
poor results or be negatively affected by industry and/or economic trends and
developments. The Fund's investment strategy may lead it to emphasize certain
sectors, such as technology, health care, business services and
communications. Negative market sentiment towards, or events affecting
issuers in, these sectors may adversely affect the Fund's performance due to
its emphasis on these sectors. The prices of securities issued by such
companies may suffer a decline in value in response to such developments
which could result in a decline in the value of the Fund's shares. These
factors contribute to price volatility, which is the principal risk of
investing in the Fund. In addition, during periods of particularly volatile
market conditions, the Fund may not be able to buy or sell securities at
favorable prices and the Fund may experience losses. The Fund is subject to
the risk that its market segment, small capitalization equity securities, may
underperform other market segments or the equity markets as a whole. The Fund
may invest in foreign instruments which may be riskier than U.S. investments
for many reasons, including changes in currency exchange rates, unstable
political and economic conditions, a lack of adequate company information,
differences in the way securities markets operate, less secure foreign banks
or securities depositories than those in the United States, and foreign
controls on investment.

<PAGE>

therefore the Fund's performance may be lower or higher than that of funds
that invest in other types of equity securities (such as those emphasizing
growth stocks).

PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You would pay these fees directly from your
investment in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>

<S> <C>
Management Fees 0.70%
Shareholder Service Fees 0.25%
Other Expenses 0.14%
Total Annual Fund Operating Expenses 1.09%
Fee Waiver and/or Expense Reimbursement 0.09%
Net Expenses 1.00%
</TABLE>

* SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IF NECESSARY, IN AN AMOUNT THAT LIMITS
THE TOTAL ANNUAL OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF
ANY, AND EXCLUSIVE OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND
EXTRAORDINARY EXPENSES, TO NOT MORE THAN 1.00% OF THE AVERAGE DAILY NET
ASSETS OF THE FUND THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT
TO POSSIBLE REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND
EXPENSE LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C>
$102 $318
</TABLE>

<PAGE>

SMALL CAP GROWTH FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a diversified portfolio of small U.S. companies with
total market capitalizations no greater than 75% of the maximum capitalization
of the companies included in the broad-based securities index selected as the
Fund's benchmark, with the goal of outperforming the benchmark. This would
correspond to companies with total market capitalizations of less than $9.7
billion as of January 1, 2000. The Manager seeks to identify those small cap
companies which are experiencing or will experience rapid earnings growth.

INVESTMENT STRATEGY

The Small Cap Growth Fund invests primarily in common stocks and other equity
securities of small U.S. companies. Under normal market conditions, the Fund
invests at least 80% of its assets in equity securities. The Manager seeks
stocks with above average potential for growth in revenue and earnings. Dividend
income, if any, is a consideration incidental to the Fund's investment goal.

The Fund is diversified as to issuers and industries. Up to 10% of the Fund's
total assets may be invested in other income-producing securities, such as
preferred stocks or bonds, that are convertible into common stock. Up to 20% of
the Fund's total assets may also be invested in securities issued by non- U.S.
companies. The Fund may engage in transactions involving "derivative
instruments" - - options or futures contracts and similar instruments - - in
order to hedge against fluctuations in market price of the securities in which
the Fund primarily invests, or for tax management purposes. The Fund may also
acquire shares of exchange-traded funds or similar securities in order to
achieve market or industry exposure pending direct investments in equity
securities.

The Manager focuses on high quality companies, especially those with products or
services that are leaders in their market niches. The Manager selects stocks for
the Fund's portfolio by:

- Using fundamental research to identify and follow companies with
attractive characteristics, such as strong business and competitive
positions, solid cash flows and balance sheets, high quality management
and high sustained growth.

- Investing in a company when the Manager's research indicates that the
company will experience accelerating revenues and expanding operating
margins, which may lead to rising estimate trends and favorable
earnings.

The Fund currently intends to use the Russell 2000-Registered Trademark-
Growth Index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark). The
Russell 2000-Registered Trademark- Growth Index measures the performance of
those Russell 2000 companies with higher price-to-book ratios and higher
forecasted growth values. You cannot invest directly in the Index.

<PAGE>

TAX MANAGEMENT STRATEGY

- Minimizing sales of portfolio securities that result in capital gains;

- When a portfolio security is sold, selecting the highest cost tax lots to
reduce the amount of the capital gain or to increase the amount of the
capital loss realized;

- Selling securities to realize capital losses that can be offset against
realized capital gains; and

- Favoring lower dividend stocks and limiting income-producing investments.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. In addition, there is a higher risk
that the Fund will lose money because it invests primarily in small
capitalization stocks. Smaller companies may have limited product lines, markets
and financial resources. They may have shorter operating histories and more
volatile businesses than larger capitalization companies. The prices of small
capitalization stocks, in particular aggressive growth stocks, tend to be more
volatile than those of other stocks. In addition, it may be harder to sell these
stocks, which can reduce their selling prices. Historically, the equity markets
have moved in cycles. The value of the Fund's equity securities may fluctuate
from day to day. Individual companies may report poor results or be negatively
affected by industry and/or economic trends and developments. The Fund's
investment strategy may lead it to emphasize certain sectors, such as
technology, health care, business services and communications. Negative market
sentiment towards, or events affecting issuers in, these sectors may
disproportionately hurt the Fund's performance. The prices of securities issued
by such companies may suffer a decline in value in response which could result
in a decline in the value of the Fund's shares. These factors contribute to
price volatility, which is the principal risk of investing in the Fund. In
addition, during periods of particularly volatile market conditions, the Fund
may not be able to buy or sell securities at favorable prices, and the Fund may
experience losses. The Fund is subject to the risk that its market segment,
small capitalization growth stocks, may underperform other market segments or
the equity markets as a whole.

The principal risk of growth stocks is that investors expect growth companies to
increase their earnings at a certain rate that is generally higher than the rate
expected for non-growth companies. If these expectations are not met, the market
price of the stock may decline significantly, even if earnings show an absolute
increase. Growth company stocks also typically lack the dividend yield that can
cushion stock prices in market downturns.

<PAGE>

PREDECESSOR FUND PERFORMANCE INFORMATION

THE FUND DOES NOT HAVE PERFORMANCE HISTORY BECAUSE IT DID NOT COMMENCE
OPERATIONS UNTIL AUGUST 4, 2000.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You would pay these fees directly from your investment in
the Fund.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<S> <C>
Management Fees 0.95%
Shareholder Service Fees 0.25%
Other Expenses 0.16%
Total Annual Fund Operating Expenses 1.36%
Fee Waiver and/or Expense Reimbursement 0.11%
Net Expenses 1.25%
</TABLE>

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES (EXCLUSIVE OF INTEREST, TAXES, BROKERAGE FEES AND
COMMISSIONS, AND EXTRAORDINARY EXPENSES), OFFSET BY SECURITIES LENDING
REVENUE TO NOT MORE THAN 1.25% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:

<TABLE>
<S> <C>
1 YEAR 3 YEARS
$127 $397
</TABLE>
<PAGE>

FAMILY HERITAGE-Registered Trademark- FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a portfolio of equity securities of companies designed to
provide exposure to the overall U.S. equity market. The Manager selects specific
stocks which have significant family ownership and which it believes will
appreciate in value, from among companies with a range of risk and
capitalization characteristics similar to those included in the broad-based
securities index selected as the Fund's benchmark, with the goal of
outperforming the benchmark. The Fund is non-diversified for purposes of the
Investment Company Act of 1940, as amended, and it may hold larger positions in
a smaller number of securities than a diversified fund.

INVESTMENT STRATEGY
The Family Heritage-Registered Trademark- Fund invests primarily in equity
securities of U.S. companies with significant ownership, at least 10% of the
outstanding shares, by the founding family or a related foundation. Under
normal market conditions, the Fund invests at least 80% of its assets in
equity securities. The Manager believes that family-controlled companies tend
to seek high after-tax returns on investment and manage their businesses with
a view toward long-term planning. The Fund produces less current income than
the U.S. market as a whole, in part because portfolio companies tend to
reinvest earnings in the business. Up to 10% of the Fund's total assets may
be invested in other income-producing securities, such as preferred stocks or
bonds, that are convertible into common stock. Up to 20% of the Fund's total
assets may also be invested in securities issued by non-U.S. companies. The
Fund may engage in transactions involving "derivative instruments" - -
options or futures contracts and similar instruments - - in order to hedge
against fluctuations in market price of the securities in which the Fund
primarily invests, or for tax management purposes. The Fund may also acquire
shares of exchange-traded funds or similar securities in order to achieve
market exposure pending direct investments in equity securities. An
exchange-traded fund is a pooled investment vehicle, like other mutual funds,
that invests in the securities of other issuers.

TAX MANAGEMENT STRATEGY

<PAGE>

- When a portfolio security is sold, selecting the highest cost tax lots to
reduce the amount of the capital gain or to increase the amount of the
capital loss realized;

- Selling securities to realize capital losses that can be offset against
realized capital gains; and

- Favoring lower dividend stocks.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is intended to provide long-term capital
appreciation, which carries with it the potential for price volatility
associated with owning equity securities. Since it purchases equity
securities, the Fund is subject to the risk that stock prices will fall over
short or extended periods of time. Historically, the equity markets have
moved in cycles. The value of the Fund's equity securities may fluctuate from
day to day. Individual companies may report poor results or be negatively
affected by industry and/or economic trends and developments. The prices of
securities issued by such companies may suffer a decline in value in
response, which could result in a decline in the value of the Fund's shares.
These factors contribute to price volatility, which is the principal risk of
investing in the Fund. In addition, during periods of particularly volatile
market conditions, the Fund may not be able to buy or sell securities at
favorable prices, and the Fund may experience losses. The Fund is subject to
the risk that family-controlled equity securities may underperform the equity
markets as a whole.

PREDECESSOR FUND PERFORMANCE INFORMATION

The performance information shown below reflects the performance of a common
trust fund (the "Predecessor Fund" for the purposes of this section) that was
previously managed with full investment authority by the Fund's Manager prior
to August 4, 2000 (the effective date of the Trust's registration statement),
restated to reflect the fees and expenses that are expected to be borne by
the Fund (including the expense limitation set forth in the fee table below).
The bar chart and the performance table below provide an indication of the
risks of investing in the Fund by showing (on a calendar year basis) changes
in the Predecessor Fund's average annual total returns from year to year and
by showing (on a calendar year basis) how the Predecessor Fund's average
annual returns (with fee adjustments) for one, five and ten years compare to
those of a broad-based securities market index. The Predecessor Fund's
investment adviser effected material changes in the investment strategy in
the Predecessor Fund in April, 1996. Since that time the Predecessor Fund has
used the same investment strategy described in this Prospectus for the Family
Heritage Fund. From inception in 1989 until 1994

<PAGE>

the Predecessor Fund invested primarily in large capitalization
stocks and from 1994 to April 1996 the Predecessor Fund invested primarily in
mid-capitalization stocks and selected stocks with risk and capitalization
characteristics similar to the Russell Midcap Index. The assets of the
Predecessor Fund were converted into assets of the Fund upon the establishment
of the Fund. Past performance is not necessarily an indication of how the Fund
will perform in the future.

Calendar Graph Appears Here [Plot Points]
<TABLE>
<CAPTION>
[0.83%] [33.17%] [6.33%] [6.69%] [-4.92%] [15%] [19.84%] [38.17%] [23.67%] [32.3%]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>

Highest and Lowest Quarter Returns
(for periods shown in the bar chart)
--------------------------------------
Highest (4/th/ Qtr. '99) 27.02%
--------------------------------------
Lowest (3/rd/ Qtr. '90) -14.52%

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS PAST ONE PAST 5 YEARS PAST 10 YEARS
PERIOD ENDED DECEMBER 31, 1999* YEAR
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Predecessor Fund** 32.30% 25.52% 16.26%
-------------------------------------------------------------------------------------------------------------
Wilshire 5000 Index*** 23.57% 27.06% 17.59%
-------------------------------------------------------------------------------------------------------------
</TABLE>

*The Predecessor Fund's total return for the six months ended June 30, 2000 (as
restated to reflect the fees and expenses, including expense limitations,
expected to be borne by the Fund) was ____%.

**The Family Heritage-Registered Trademark- Fund's investment goal and
policies are the same as those of the Predecessor Fund at the time of the
conversion. The Predecessor Fund was not registered under the 1940 Act and
therefore was not subject to certain investment restrictions imposed by the
1940 Act. If the Predecessor Fund had been registered under the 1940 Act, its
performance might have been adversely affected.

***The Wilshire 5000 Index is a widely-recognized unmanaged index of
large, mid and small capitalization stocks. The Fund currently uses this index
as the broad-based securities market index for comparison purposes in reporting
performance (also referred to as its benchmark). You cannot invest directly
in the Index.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You would pay these fees directly from your investment in
the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<S> <C>
Management Fees 0.90%
Shareholder Service Fees 0.25%
</TABLE>

<PAGE>

<TABLE>
<S> <C>
Other Expenses 0.18%
Total Annual Fund Operating Expenses 1.33%
Fee Waiver and/or Expense Reimbursement 0.13%
Net Expenses 1.20%
</TABLE>

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 1.25% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:

<TABLE>
<S> <C>
1 YEAR 3 YEARS
$127 $396
</TABLE>

<PAGE>

INTERNATIONAL EQUITY FUND

FUND SUMMARY

INVESTMENT GOAL
Long-term capital appreciation

PRINCIPAL INVESTMENT STRATEGY
Investing primarily in a diversified portfolio of equity securities of non-U.S.
issuers.

INVESTMENT STRATEGY

The International Equity Fund invests primarily in equity securities of non-U.S.
companies. Under normal market conditions, the Fund invests at least 65% of its
assets in equity securities of non-U.S. companies. In selecting the investments
for the Fund, the Manager diversifies the Fund's investments among at least
three foreign countries. The Fund invests primarily in developed countries, but
may invest in countries with emerging markets. The Manager's approach to stock
selection focuses on individual stocks and fundamental characteristics of
companies. The Manager's goal is to find companies with top management, quality
products and sound financial positions that are attractively priced. Due to
its investment strategy, the Fund may buy and sell securities frequently. This
may result in higher transaction costs and additional capital gains tax
liabilities.

PRINCIPAL RISKS OF INVESTING

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over extended periods of time. Historically, the equity markets
have moved in cycles. The value of the Fund's equity securities may fluctuate
drastically from day to day. Individual companies may report poor results or be
negatively affected by industry and/or economic trends and developments. The
prices of securities issued by such companies may suffer a decline in response
to such developments. These factors contribute to price volatility, which is the
principal risk of investing in the Fund. The Fund is also subject to the risk
that its market segment, foreign common stocks, may underperform other equity
market segments or the equity markets as a whole.

Investing in foreign securities poses additional risks since political and
economic events unique to a county or region will affect those markets and their
issuers. These events will not necessarily affect the U.S. economy or similar
issuers located in the United States. In addition, investments in foreign
securities are generally denominated in foreign currency. As a result, changes
in the value of those currencies compared to the U.S. dollar may affect
(positively or negatively) the value of a Fund's investments. These currency
movements may happen separately from, or in response to, events that do not
otherwise affect the value of the security in the issuer's home country.

Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial
stability of issuers (including governments) in emerging market countries

<PAGE>

may be more precarious than in other countries. As a result, there will tend
to be an increased risk of price volatility associated with the Fund's
investments in emerging market countries, which may be magnified by currency
fluctuations relative to the U.S. dollar.

PREDECESSOR FUND PERFORMANCE INFORMATION

The performance information shown below reflects the performance of a common
trust fund (the "Predecessor Fund" for the purposes of this section) that
was previously managed with full investment authority by the Fund's Manager
prior to August 4, 2000 (the effective date of the Trust's registration
statement), restated to reflect the fees and expenses that are expected to be
borne by the Fund (including the expense limitation set forth in the fee
table below). The bar chart and the performance table below provide an
indication of the risks of investing in the Fund by showing (on a calendar
year basis) changes in the Predecessor Fund's average annual total returns
from year to year and by showing (on a calendar year basis) how the
Predecessor Fund's average annual returns (with fee adjustments) for one
year, five years and since inception compare to those of a broad-based
securities market index (with fee adjustments). The Predecessor Fund's
investment adviser effected material changes in the investment strategy in
the Predecessor Funds in April, 1999 through the selection of a new
sub-adviser. Prior to that time the Predecessor Fund's portfolio was not as
heavily weighted in the technology sector as it is now and had more of a
value orientation. The assets of the Predecessor Fund were converted into
assets of the Fund upon the establishment of the Fund. Past performance is
not necessarily an indication of how the Fund will perform in the future.

Calendar Graph Appears Here [Plot Points]

[9.6%] [2.67%] [9.89%] [-3.8%] [12.71%] [38.16%]
1994 1995 1996 1997 1998 1999

Highest and Lowest Quarter Returns
(for periods shown in the bar charts)
---------------------------------------
Highest (4/th/ Qtr. '99) 23.39%
--------------------------------------
Lowest (3/rd/ Qtr. '98) -16.11%

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS PAST 1 YEAR PAST 5 YEARS SINCE INCEPTION**
FOR PERIOD ENDED DECEMBER 31, 1999*
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PREDECESSOR FUND** 38.16% 12.76% 12.71%
-------------------------------------------------------------------------------------------------------------
MSCI ALL COUNTRY WORLD EX-US INDEX*** 31.79% 13.09% 11.95%
-------------------------------------------------------------------------------------------------------------
</TABLE>

*The Predecessor Fund's total return for the six months ended June 30, 2000 (as
restated to reflect the fees and expenses, including expense limitations,
expected to be borne by the Fund) was ____%.

**The International Equity Fund's investment goal and policies are the same as
those of the Predecessor Fund at the time of the conversion. The Predecessor
Fund was not registered under the 1940 Act and therefore was not subject to
certain investment restrictions imposed by the 1940 Act. If the

<PAGE>

Predecessor Fund had been registered under the 1940 Act, its performance
might have been adversely affected.

** The Predecessor Fund, the Pitcairn International Equity Common
Trust Fund, commenced operations on July 1, 1993.

***The Fund's investment performance currently is measured against The Morgan
Stanley Capital International All Country World ex-U.S. Index which is a
composite of both developed and emerging market countries. The Fund currently
uses this index as the broad-based securities market index for comparison
purposes in reporting performance (also referred to as its benchmark).
You cannot invest directly in the Index.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You would pay these fees directly from your investment in
the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 1.25% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS.) SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:

<TABLE>
<S> <C>
1 YEAR 3 YEARS
$127 $396
</TABLE>

<PAGE>

GOVERNMENT/CORPORATE BOND FUND

FUND SUMMARY

INVESTMENT GOAL
Income and capital appreciation consistent with prudent investment risk and
liquidity.

PRINCIPAL INVESTMENT STRATEGY

Investing primarily in a portfolio of investment grade fixed income
securities without limitation as to their maturity. The Fund is
non-diversified for purposes of the Investment Company Act of 1940, as
amended, and it may hold larger positions in a smaller number of securities
than a diversified fund.

INVESTMENT STRATEGY

The Government/Corporate Bond Fund invests primarily in investment grade
fixed income securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities ("U.S. Government Securities"), and corporate
issuers. U.S. Government Securities in which the Fund may invest include, but
are not limited to, U.S. Treasury bills, notes and bonds, government National
Mortgage Association mortgage-backed certificates and other securities
representing ownership interests in mortgage pools. Normally the Fund will
invest at least 80% of its assets in fixed income securities of all types.
The Fund may invest up to 65% of its assets in a combination of U.S. dollar
denominated bonds of foreign issuers, mortgage-backed securities,
asset-backed securities, receivable-backed securities, floating or variable
rate corporate debt instruments, convertible bonds (and the corresponding
stock, if converted) and preferred stock. Under normal conditions the Fund
may hold up to 20% of its assets in cash or money market instruments in order
to maintain liquidity or pending appropriate investment opportunities. The
Fund maintains an average maturity that is generally similar to that of the
broad-based securities index selected as the Fund's benchmark; however, there
is no limit on the maximum maturity for a particular investment. Investment
grade fixed income securities are those rated at the time of investment in
one of the four highest rating categories by nationally recognized
statistical rating organization, or determined by the Manager to be of
equivalent quality. The Fund will not invest more than 20% of its assets in
fixed income securities rated in the lowest category of investment grade
securities, measured at the time of the Fund's initial investment in the
security. The Fund may hold securities purchased by a predecessor collective
trust fund with substantially similar investment goals and strategies the
assets of which have been converted to the Fund (the "Predecessor Fund")
that are rated below investment-grade, if the securities were rated
investment-grade at the time of purchase by the Predecessor Fund and the
Manager believes that holding the securities remains consistent with the
Fund's investment goal.

The Adviser's strategy for the Fund is intended to provide relatively stable
current income, a competitive current yield and reasonable principal
volatility. The fixed income securities held by the Fund may also have the
potential for moderate price appreciation.

The Fund's investment approach, with its emphasis on fixed income securities
of varying maturity, may experience greater price volatility than funds that
invest in similar quality securities with shorter maturities. The prices of
the Fund's fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
creditworthiness of individual issuers, including governments. Generally, the
Fund's fixed income securities will decrease in value if interest rates rise.

<PAGE>

PRINCIPAL RISKS OF INVESTING

The principal risks of investing in this Fund are related to changes in the
values of the securities as interest rates change, credit risk that the issuer
will not make the interest or principal payments when they are due, prepayment
risk that the issuers may prepay principal earlier than scheduled at a time when
interest rates are lower, and risks of political, social and economic
developments. As interest rates rise, the value of fixed income securities held
by the Fund are likely to decrease. Securities with longer durations tend to be
more sensitive to changes in interest rates, usually making them more volatile
than securities with shorter durations. In addition, the volatility of lower
rated securities is often greater than that of higher rated securities.
Longer-term securities are generally more volatile than shorter-term securities,
so the average maturity or duration of these securities affects risk. During
periods of particularly volatile market conditions, the Fund may not be able to
buy or sell securities at favorable prices and the Fund may experience losses.
The Fund is subject to the risk that it may underperform the fixed income
markets as a whole.

The Fund is a non-diversified fund, which means it may invest a greater
percentage of its assets than other funds in the securities of a limited number
of issuers. However, the Fund will be subject to certain diversification
requirements imposed by the Internal Revenue Code. The use of a focused
investment strategy may increase the volatility of the Fund's investment
performance, as the Fund may be more susceptible to risks associated with a
single economic, political or regulatory event than a diversified portfolio. If
the securities in which the Fund invests perform poorly, the Fund could incur
greater losses than it would have had it been invested in a greater number of
securities.

PREDECESSOR FUND PERFORMANCE INFORMATION

The performance information shown below reflects the performance of a
collective trust fund (the "Predecessor Fund" for the purposes of this
section) that was previously managed with full investment authority by the
Fund's Manager prior to August 4, 2000 (the effective date of the Trust's
registration statement), restated to reflect the fees and expenses that are
expected to be borne by the Fund (including the expense limitation set forth
in the fee table below). The bar chart and the performance table below
provide an indication of the risks of investing in the Fund by showing (on a
calendar year basis) changes in the Predecessor Fund's average annual total
returns from year to year and by showing (on a calendar year basis) how the
Predecessor Fund's average annual returns (with fee adjustments) for one,
five and ten years compare to those of a broad-based securities market index
(with fee adjustments). The assets of the Predecessor Fund were converted
into assets of the Fund upon the establishment of the Fund. Past performance
is not necessarily an indication of how the Fund will perform in the future.

<PAGE>

Calendar Graph Appears Here [Plot Points]

<TABLE>
<CAPTION>
[6.56%] [15.34%] [5.74%] [10.41%] [-4.53%] [19.05%] [2.05%] [9.58%] [8.84%] [-2.97%]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>
Highest and Lowest Quarter Returns
(for periods shown in the bar chart)
--------------------------------------
Highest (2nd/Qtr. '95) 6.15%
--------------------------------------
Lowest (1/st/ Qtr. '94) -3.82%

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Past 1 Year Past 5 years Past 10 Years
Period Ended December 31, 1999*

<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
Predecessor Fund** -2.97% 7.05% 6.77%
-------------------------------------------------------------------------------------------------------------
Lehman Government/Corporate Bond Index*** -2.15% 7.60% 7.65%
-------------------------------------------------------------------------------------------------------------
</TABLE>

The Predecessor Fund's total return for the six months ended June 30, 2000
(as restated to reflect the fees and expenses, including expense limitations,
expected to be borne by the Fund) was ____%.

**The Government/Corporate Bond Fund's investment goal and policies are the
same as those of the Predecessor Fund. The Predecessor Fund was not
registered under the 1940 Act and therefore was not subject to certain
investment restrictions imposed by the 1940 Act. If the Predecessor Fund had
been registered under the 1940 Act, its performance might have been adversely
affected.

*** The Lehman Government/Corporate Bond Index is a widely-recognized
unmanaged index of government and corporate fixed income securities. The Fund
currently uses this index as the broad-based securities market index for
comparison purposes in reporting performance (also referred to as its
benchmark). You cannot invest directly in the Index.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay indirectly if you
hold shares of the Fund. You would pay these fees directly from your investment
in the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<S> <C>
Management Fees 0.40%
Shareholder Service Fees 0.25%
Other Expenses 0.29%
Total Annual Fund Operating Expenses 0.94%
Fee Waiver and/or Expense Reimbursement 0.24%
Net Expenses 0.70%
</TABLE>

<PAGE>

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 0.70% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS

<PAGE>

TAX-EXEMPT BOND FUND

FUND SUMMARY

INVESTMENT GOAL
Current income exempt from federal income taxes and capital appreciation,
consistent with prudent investment risk and liquidity.

PRINCIPAL INVESTMENT STRATEGY
Investing in a diversified portfolio of investment grade obligations of
tax-exempt issuers situated in the United States, its territories and
possessions.

INVESTMENT STRATEGY

The Tax-Exempt Bond Fund invests primarily in municipal securities issued by
states, territories, and possessions of the United States and their political
subdivisions, the interest from which is exempt from federal income taxes. The
Fund will not invest more than 20% of its assets in securities which pay
interest subject to the alternative minimum tax. The Fund invests only in
municipal securities that are investment grade. Investment grade municipal bonds
are those rated at the time of investment in one of the four highest rating
categories by a nationally recognized statistical rating organization, or
determined by the Manager to be of equivalent quality. The Fund will not invest
more than 20% of its assets in municipal bonds rated in the lowest category of
investment grade ratings, measured at the time of initial investment by the Fund
in that security. The Fund will not invest more than 30% of its assets in
obligations of issuers located in any single state, territory or possession.
The Manager's approach in selecting securities for the Fund is to obtain as
high a level of income as is consistent with moderate share price volatility,
and to anticipate changing credit conditions. There is no restriction on the
Fund's average weighted maturity or on the maturity of any single security
held by the Fund.

PRINCIPAL RISKS OF INVESTING

The Fund's investment approach is expected to provide current tax-exempt income
with moderate price volatility. The Fund is not expected to perform as well as a
taxable bond portfolio, but return to shareholders may be as good or better on
an after-tax basis.

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of particular issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and such securities will increase in value as interest rates decline.
The volatility of lower rated securities is often greater than that of higher
rated securities. Longer-term securities are generally more volatile than
shorter-term securities, so the average maturity or duration of these securities
affects risk. During periods of particularly volatile market conditions, the
Fund may not be able to buy or sell securities at favorable prices and the Fund
may experience losses. There may be economic or political changes that impact
the ability of tax-exempt issuers to repay principal and to make interest
payments on their securities. Changes

<PAGE>

in the financial condition or credit rating of tax-exempt issuers also may
adversely affect the value of the Fund's securities. The Fund is subject to
the risk that its emphasis on current income and moderate price volatility
may cause it to underperform other fixed income funds that pursue other
objectives or the fixed income markets as a whole.

PREDECESSOR FUND PERFORMANCE INFORMATION

The performance information shown below reflects the performance of a common
trust fund (the "Predecessor Fund" for the purposes of this section) that was
previously managed with full investment authority by the Fund's Manager prior
to August 4, 2000 (the effective date of the Trust's registration statement),
restated to reflect the fees and expenses that are expected to be borne by
the Fund (including the expense limitation set forth in the fee table below).
The bar chart and the performance table below provide an indication of the
risks of investing in the Fund by showing (on a calendar year basis) changes
in the Predecessor Fund's average annual total returns from year to year and
by showing (on a calendar year basis) how the Predecessor Fund's average
annual returns (with fee adjustments) for one, five and ten years compare to
those of a broad-based securities market index (with fee adjustments). The
Predecessor Fund's investment adviser effected material changes in the
investment strategy in the Predecessor Fund in January, 1997. From inception
in 1989 until 1996 the Predecessor Fund had invested primarily in high coupon
bonds of Pennsylvania municipal issuers. In 1996 the Predecessor Fund changed
to a total return investment approach and in 1997 expanded to national
investments. The assets of the Predecessor Funds were converted into assets
of the Fund upon the establishment of the Fund. Past performance is not
necessarily an indication of how the Fund will perform in the future.

Calendar Graph Appears Here [Plot Points]

<TABLE>
<CAPTION>
[5.85%] [10.28%] [6.96%] [9.73%] [-2.13%] [10.92%] [4.4%] [8.25%] [6.93%] [-2.71%]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
</TABLE>
Highest and Lowest Quarter Returns
(for periods shown in the bar chart)
--------------------------------------
Highest (1st/Qtr. '95) 4.21%
--------------------------------------
Lowest (1/st/ Qtr. '94) -3.18%

-------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Past 1 Year Past 5 Years Past 10 Years
Period ended December 31, 1999*
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Predecessor Fund** -2.71% 5.20% 5.62%
-------------------------------------------------------------------------------------------------------------

<PAGE>

-------------------------------------------------------------------------------------------------------------
Lehman Municipal Bond Index*** -2.07% 6.91% 6.90%
-------------------------------------------------------------------------------------------------------------
</TABLE>

*The Predecessor Fund's total return for the six months ended June 30, 2000 (as
restated to reflect the fees and expenses, including expense limitations,
expected to be borne by the Fund) was _____%.

**The Tax-Exempt Bond Fund's investment goal and policies are the same as
those of the Predecessor Fund at the time of the conversion. The Predecessor
Fund was not registered under the 1940 Act and therefore was not subject to
certain investment restrictions imposed by the 1940 Act. If the Predecessor
Fund had been registered under the 1940 Act, its performance might have been
adversely affected.

***The Lehman Municipal Bond Index is a widely recognized unmanaged index of
municipal bonds. The Fund currently uses this index as the broad-based
securities market index for comparison purposes in reporting performance
(also referred to as its benchmark). You cannot invest directly in the Index.

FEES AND EXPENSES OF THE FUND

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund. You would pay these fees directly from your investment in
the Fund.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>

<S> <C>
Management Fees 0.30%
Shareholder Service Fees 0.25%
Other Expenses 0.19%
Total Annual Fund Operating Expenses 0.74%
Fee Waiver and/or Expense Reimbursement 0.14%
Net Expenses 0.60%
</TABLE>

*SINCE THE FUND COMMENCED OPERATIONS AUGUST 4, 2000, THE EXPENSE ITEMS SHOWN
ABOVE ARE BASED ON AMOUNTS ESTIMATED FOR THE CURRENT FISCAL YEAR. PTC HAS
ENTERED INTO A CONTRACTUAL AGREEMENT WITH THE PITCAIRN FUNDS, ON BEHALF OF
THE FUND, UNDER WHICH PTC HAS AGREED TO REDUCE ITS FEES AND TO ASSUME OTHER
EXPENSES OF THE FUND, IF NECESSARY, IN AN AMOUNT THAT LIMITS THE TOTAL ANNUAL
OPERATING EXPENSES, NET OF SECURITIES LENDING REVENUE, IF ANY, AND EXCLUSIVE
OF INTEREST, TAXES, BROKERAGE FEES AND COMMISSIONS, AND EXTRAORDINARY
EXPENSES, TO NOT MORE THAN 0.60% OF THE AVERAGE DAILY NET ASSETS OF THE FUND
THROUGH THE FISCAL YEAR ENDING OCTOBER 31, 2003 (SUBJECT TO POSSIBLE
REIMBURSEMENT TO PTC WITHIN TWO YEARS). SEE "ADVISORY FEES AND EXPENSE
LIMITATION AGREEMENT" FOR MORE DETAILED INFORMATION.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you redeem
all of your shares at the end of those periods. The Example also assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions, your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS

MORE INFORMATION ABOUT RISK

<PAGE>

EQUITY RISK- The Equity Funds

Investments in equity securities and equity derivatives in general are subject
to market risks that may cause their prices to fluctuate over time. The value of
securities of individual companies may fluctuate based upon performance of the
company and industry as well as economic trends and developments. Fluctuations
in the value of equity securities in which a mutual fund invests will cause a
Fund's net asset value to fluctuate. An investment in a portfolio of equity
securities may be more suitable for long-term investors who can bear the risk of
these share price fluctuations.

FIXED INCOME RISK - THE FIXED INCOME FUNDS

The market value of fixed income investments changes in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally rise and during periods
of rising interest rates, the values of those securities generally fall. While
securities with longer maturities tend to produce higher yields, the prices of
longer maturity securities are also subject to greater market fluctuations as a
result of changes in interest rates. In addition to these fundamental risks,
different types of fixed income securities may be subject to the following
additional risks:

CALL RISK

During periods of falling interest rates, certain debt obligations with high
coupon rates may be prepaid (or "called" ) by the issuer prior to maturity. This
may cause a Fund's average weighted maturity to fluctuate, and may require a
Fund to invest the resulting proceeds at lower interest rates. The types of
securities that are subject to call risk include mortgage-backed securities and
municipal bonds with a term of longer than ten years.

CREDIT RISK
It is possible that an issuer will be unable to make timely payments of either
principal or interest. This may cause the issuer's securities to decline in
value. The effect of this risk to an investor in this Fund should be reduced
because of the Fund's holdings of bonds of multiple issuers.

EVENT RISK
Securities may suffer declines in credit quality and market value due to issuer
restructurings or other factors. The effect of this risk to an investor in this
Fund should be reduced because of the Fund's holdings of bonds of multiple
issuers.

TAX-EXEMPT ISSUER RISK-TAX-EXEMPT BOND FUND

There may be economic or political changes that impact the ability of tax-exempt
issuers to repay principal and to make interest payments on tax-exempt
securities. Changes to the financial condition or credit rating of tax-exempt
issuers may also adversely affect the value of the Fund's tax exempt
securities. Constitutional or legislative limits on borrowing by tax-exempt
issuers may result in reduced supplies of tax-exempt securities. In addition,
concentration of investments in issuers located in a single state makes a
Fund more susceptible to adverse political or economic developments affecting
that state.

<PAGE>

MORTGAGE BACKED SECURITIES - THE FIXED INCOME FUNDS

Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, thereby exacerbating its
decrease in market price. When interest rates fall, however, mortgage-backed
securities may not gain as much in market value because of the expectation of
additional mortgage prepayments that must be reinvested at lower interest rates.
Prepayment risk may make it difficult to calculate the average maturity of a
portfolio of mortgage-backed securities and, therefore, to assess the volatility
risk of that portfolio.

U.S. GOVERNMENT SECURITIES RISK - THE FIXED INCOME FUNDS

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued or guaranteed by some U.S.
government agencies are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.

MULTI MANAGER RISK

To the extent that the Adviser engages a Manager to make investment decisions on
its behalf for a portion or all of a Fund, there is a risk that the Adviser may
be unable to identify and retain Managers who achieve superior investment
returns relative to other similar investments. Moreover, use of such Managers
may result in higher advisory fees and, therefore, higher Fund costs than when a
single investment manager is used.

TERMINATION OF FUND RISK

The Funds only recently commenced operations. As with any venture, there can be
no assurance that the Funds as an enterprise will be successful or will
continue to operate indefinitely. The Trustees may determine to close and
liquidate a Fund at any time, which may have adverse tax consequences to
shareholders. In the event of a liquidation, shareholders will receive a
liquidating distribution in cash or in-kind equal to their proportionate
interest in the Fund. A liquidating distribution may be a taxable event to
shareholders, resulting in a gain or loss for tax purposes, depending upon a
shareholders basis in his or her shares of the Fund.

FOREIGN INVESTING RISK

<PAGE>

A Fund that invests in foreign securities may experience more rapid and extreme
changes in value than a Fund that invests exclusively in securities of U.S.
companies. The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small number of
industries. Additionally, issuers of foreign securities are usually not subject
to the same degree of regulation as U.S. issuers. Reporting, accounting and
auditing standards of foreign countries differ, in some cases significantly,
from U.S. standards. Also, nationalization, expropriation or confiscatory
taxation, currency blockage, political changes or diplomatic developments could
adversely affect a Fund's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Fund could lose its
entire investment in foreign securities. Adverse conditions in a certain region
can adversely affect securities of other countries whose economies appear to be
unrelated. To the extent that a Fund invests a significant portion of its assets
in a focused geographic area like Eastern Europe or Asia, the Fund will
generally have more exposure to regional economic risks associated with foreign
investments.

CURRENCY RISK

Funds that invest directly in foreign currencies or in securities that trade in,
and receive revenues in, foreign (non-U.S.) currencies are subject to the risk
that those currencies will decline in value relative to the U.S. dollar, or, in
the case of hedging positions, that the U.S. dollar will decline in value
relative to the currency being hedged. Currency rates in foreign countries may
fluctuate significantly over short periods of time for a number of reasons,
including changes in interest rates, intervention (or the failure to intervene)
by U.S. or foreign governments, central banks or supranational entities such as
the International Monetary Fund, or by the imposition of currency controls or
other political developments in the U.S. or abroad. As a result, the Fund's
investments in foreign currency-denominated securities may reduce the returns of
the Fund.

<PAGE>

OTHER INFORMATION

WHAT IS AN INDEX?

An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. Unlike a mutual fund, an
index does not have an investment adviser and does not pay any commissions or
expenses. If an index had to pay commissions or expenses, its performance would
be lower. The Funds are not sponsored, endorsed, sold or promoted by the sponsor
of any index, and no such sponsor makes any representations regarding the
advisability of investing in any of the Funds.

EACH FUND'S OTHER INVESTMENTS - DEFENSIVE INVESTING AND USE OF DERIVATIVE
CONTRACTS

In addition to the investments and strategies described in this Prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this Prospectus, are described in detail in the Statement of
Additional Information. Of course, there can be no guarantee that any Fund will
achieve its investment goal.

The investments and strategies described in this Prospectus are those used under
normal conditions. During unusual economic or market conditions, or for
temporary defensive purposes due to adverse economic or political conditions, or
for liquidity purposes, each Fund may invest up to 100% of its total assets in
fixed income securities, money market instruments and other securities that
would not ordinarily be consistent with the Fund's objectives. Such defensive
investing may increase a Fund's taxable income.

Each Fund may, but is not required to, use derivative instruments for any of the
following purposes:

- To hedge against adverse changes - caused by changing interest rates,
stock market prices or currency exchange rates - in the market value of
securities held by or to be bought for a Fund;

- As a substitute for purchasing or selling securities;

- To shorten or lengthen the effective portfolio maturity or duration of
tax-exempt bonds;

- To enhance a Fund's potential gain in non-hedging situations; or

- To lock in a substantial portion of the unrealized appreciation in a stock
without selling it.

A derivative instrument will obligate or entitle a Fund to deliver or receive an
asset or a cash payment that is based on the change in value of a designated
security, currency or index. Even a small investment in derivative instruments
can have a big impact on a portfolio's yield, stock prices and currency
exposure. Therefore, using derivatives can disproportionately increase portfolio
losses and reduce opportunities for gains when interest rates, stock prices or
currency rates are changing. A Fund may not fully benefit from or may lose money
on derivatives if changes in their value do not correspond accurately to changes
in the value of the Fund's portfolio holdings.

<PAGE>

Counterparties to over-the-counter derivative contracts present the same types
of credit risk as issuers of fixed income securities. Derivatives can also make
a Fund's portfolio less liquid and harder to value, especially in declining
markets. In addition, much of the income and gains generated by derivatives will
be taxed as ordinary income.

INVESTMENT ADVISER

Pitcairn Investment Management, a division of PTC, with offices at One
Pitcairn Place, Suite 3000, 165 Township Line Road, Jenkintown, PA 19046,
serves as the Adviser to the Funds. The Adviser makes investment decisions
for those Funds for which its serves as Manager, and continuously reviews,
supervises and administers each Fund's investment program and the performance
of specialty Managers it engages for the day-to-day management of certain
Funds. The Board of Trustees supervises the Adviser and establishes policies
that the Adviser must follow in its management activities.

PTC was established in 1987 and is a state-chartered trust company formed for
the purpose of conducting a general trust company business with the power to
act, alone or with others, as fiduciary, investment adviser, custodian of
property and agent or attorney-in-fact. Other Pitcairn entities have provided
investment management services to the Pitcairn family and their trusts since
the 1920s and to outside clients since 1989. As of March 31, 2000, PTC had
approximately $2.5 billion in assets under management.

ADVISORY FEES AND EXPENSE LIMITATION AGREEMENT

Each Fund pays the Adviser an aggregate fee for investment management
services as a percentage of the average daily net assets of the Fund
according to the table below. In the interest of limiting expenses of the
Fund, PTC has entered into an expense limitation agreement with the Trust
(the "Expense Limitation Agreement"), pursuant to which it has agreed to
waive or limit its fees and to assume other expenses so that the total annual
operating expenses of the Funds (other than interest, taxes, brokerage
commissions, other expenditures which are capitalized in accordance with
generally accepted accounting principles, and other extraordinary expenses
not incurred in the ordinary course of the Fund's business), offset by the
amount of revenue to the Fund from securities lending activities of the Fund
(the net amount referred to as a "Fund Operating Expenses"), are limited to a
specified percentage of the average daily assets of each Fund, as set forth
below through the fiscal year ending October 31, 2003:

<TABLE>
<CAPTION>
Fund Advisory Fee Expense Cap

<S> <C> <C>
Diversified Value 0.70% 1.00%
Diversified Growth 0.70% 1.00%
Select Value 0.70% 1.00%
Select Growth 0.85% 1.15%
Small Cap Value 0.70% 1.00%
Small Cap Growth 0.95% 1.25%
Family Heritage-Registered Trademark- 0.90% 1.20%
International Equity 0.95% 1.25%
Government/Corporate Bond 0.40% 0.70%

<PAGE>
Tax-Exempt Bond 0.30% 0.60%
</TABLE>

The Fund may at a later date reimburse PTC for the fees waived or limited and
other expenses assumed and paid by PTC pursuant to the Expense Limitation
Agreement during any of the previous two (2) fiscal years, provided that the
Fund has reached a sufficient asset size to permit such reimbursement to be
made without causing the total annual expense ratio of the Fund to exceed the
percentage limits stated above, and remains the investment adviser to the
Fund. Consequently, no reimbursement by the Fund will be made unless: (i) the
Fund's assets exceed $10 million; (ii) the Fund's total annual expense ratio
is less than the percentage stated in the chart above; and (iii) the payment
of such reimbursement has been approved by the Trust's Board of Trustees on a
quarterly basis.

SUB-ADVISERS - MANAGERS

While Pitcairn Investment Management serves as the overall investment adviser to
the Funds, it may engage one or more specialty Managers to make investment
decisions for all or a portion of any of the Funds' portfolios.

The Adviser has engaged Oechsle International Advisors, LLC ("Oechsle"), a
registered investment adviser, with offices at One International Place, 23rd
Floor, Boston, MA 02110, to serve as the Manager to the International Equity
Fund. Oechsle also has served as the sub-adviser to the Pitcairn Trust Company
International Common Trust Fund since April 1, 1999. Oechsle was formed in 1986
and, as of March 31, 2000, it had more than $20 billion of assets under
management.

The Adviser has engaged Standish, Ayer & Wood, Inc. ("Standish"), a registered
investment adviser, with offices at One Financial Center, Boston, MA 02111, to
serve as the Manager to the Small Cap Growth Fund. Standish also has served as
the sub-adviser to the Pitcairn Trust Company Small Capitalization Common Trust
Fund since April 26, 2000. Standish was founded in 1933 and currently manages
more than $45 billion of assets for a broad range of clients in the U.S. and
abroad.

The Adviser has engaged Sands Capital Management, Inc. ("Sands"), a registered
investment adviser, with offices at 1100 North Glebe Road, Suite 1000,
Arlington, VA 22201, to serve as the Manager for the Select Growth Fund. Sands
also has served as the sub-adviser to the Pitcairn Trust Company Select Growth
Common Trust Fund since June 15, 2000. Sands was founded in 1992 and currently
manages in excess of $800 million in large capitalization growth equity
portfolios.

The Trust intends to apply for an exemptive order (the "Order") from the
Securities and Exchange Commission that permits the Adviser, subject to certain
conditions, to retain new Managers without shareholder approval of the contracts
with those Managers. Within 60 days of retaining a new Manager, shareholders of
any affected Fund will receive information similar to what would have been
provided in a proxy statement, except for fees to be paid to the Manager. The
Order would relieve the Funds from a requirement to disclose fees paid to
Managers (except to any Managers affiliated with the Adviser) in the prospectus
and other documents.

<PAGE>

PRIOR PERFORMANCE OF SANDS CAPITAL MANAGEMENT, INC.

The following table provides information concerning the historical
performance of other institutional private accounts managed by Sands Capital
Management, Inc. ("Sands"), the Manager for the Select Growth Fund, that have
investment objectives, policies, strategies and risks substantially similar
to those of the Fund. The data is provided to illustrate the past performance
of Sands in managing substantially similar investment vehicles (for
tax-exempt institutional clients) as measured against a specified market
index. This data does not represent the past performance of any Fund or the
future performance of any Fund or its Manager. Consequently, potential
investors should not consider this performance data as an indication of the
future performance of any Fund or of its Manager and should not confuse this
performance data with performance data for the Funds, which, where
applicable, is shown for each Fund under the caption "Performance."

Composite performance data relating to the historical performance of
private accounts managed by Sands was calculated on a total annual return
basis, was prepared in compliance with the Performance Presentation
Standards of the Association for Investment Management and Research
(AIMR-PPS-TM-), and includes all losses. AIMR did not prepare or review this
data. All performance information has been provided by Sands and has not been
verified or audited by the Adviser or the Trust. The total returns for the
Composite reflect the deduction of investment advisory fees, brokerage
commissions and execution costs paid, without provision for federal or state
income taxes. Custodial fees were not included in the calculation. The
Composite includes all actual, fee-paying, discretionary institutional
private accounts managed by Sands during the periods shown that have
investment objectives, policies, strategies and risks substantially similar
to those of the relevant portfolio. Securities transactions are accounted for
on the trade date and accrual accounting is utilized. Cash and equivalents
are included in performance returns.

The private accounts that are included in the Composite are not subject to
specific tax restrictions and investment limitations imposed on the Select
Growth Fund by the Investment Company Act of 1940 or Subchapter M of the
Internal Revenue Code of 1986, as amended. Consequently, the performance results
for the Composite could have been adversely affected if the private accounts
included in the Composite had been regulated as investment companies under the
federal securities laws.

The actual fees and expenses of the accounts included in the Composite
presented below are lower than those estimated for the Select Growth Fund.
Use of the Fund's expense structure would have lowered the performance
results. Performance results indicated below are not, and should not be
interpreted as, indicative of the Fund's future results.

The investment results presented below are unaudited.

<PAGE>

INVESTMENT PERFORMANCE

ANNUAL 1993 1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C> <C>

SANDS(1) -0.35 3.21 42.31 38.12 30.22 54.11 47.58
S&P 500 INDEX(2) 10.00 1.33 37.50 23.25 33.38 28.76 21.14
RUSSELL 1000 GROWTH INDEX

ANNUALIZED 1 YEAR 2 YEARS 3 YEARS 4 YEARS 5 YEARS 6 YEARS 7 YEARS
<S> <C> <C> <C> <C> <C> <C> <C>

SANDS(1) 47.57 50.81 43.61 42.21 42.23 34.83 29.13
S&P 500 INDEX(2) 21.15 24.89 27.66 26.54 28.66 23.64 21.59
RUSSELL 1000 GROWTH INDEX
</TABLE>

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

(1) For the periods shown, the results shown reflect the
deduction of actual fees paid by clients in the Composite.

(2) "S&P 500-Registered Trademark-" is a trademark of The McGraw-Hill
Companies, Inc. The S&P 500 is an unmanaged index and is considered
to be generally representative of the large-cap U.S. stock market.
Total returns reflect the reinvestment of all dividends and capital
gains. You cannot invest directly in an index.

(3) The Russell 2000-Registered Trademark- Index is an unmanaged index that
measures the performance of the 2,000 smallest companies in the Russell
3000-Registered Trademark- Index, which, in turn, is an unmanaged index
that includes the 3,000 largest U.S. companies based on total market
capitalization. The Russell 2000 Index represents approximately 10% of
the total market capitalization of the Russell 3000 Index.
The Russell 2000-Registered Trademark- Growth Index measures the
performance of those Russell 2000-Registered Trademark- Companies with
higher price-to-book ratios and higher forcasted growth values. Total
returns reflect reinvestment as of all dividends and capital gains. You
cannot invest directly in an index.

PRIOR PERFORMANCE OF STANDISH, AYER & WOOD, INC.

The following table provides information concerning the historical
performance of another registered investment company account managed by
Standish, Ayer & Wood, Inc. ("Standish"), the Manager for the Small Cap Growth
Fund, that has investment objectives, policies, strategies and risks
substantially similar to those of the Fund. The data is provided to illustrate
the past performance of Standish in managing a substantially similar investment
vehicle as measured against two widely recognized, unmanaged indices of common
stock prices. This data does not represent the past performance of any Fund or
the future performance of any Fund or its Manager. Consequently, potential
investors should not consider this performance data as an indication of the
future performance of any Fund of the Trust or of its Manager and should not
confuse this performance data with performance data for the Funds, which, where
applicable, is shown for each Fund under the caption "Performance."

Performance data shown below for the Standish Small Cap
Tax-Sensitive Equity Fund was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. All performance information
has been provided by Standish and has not been verified or audited by the
Adviser or the Trust. Average annual total return reflects changes in share
prices and reinvestment of dividends and distributions and is net of fund
expenses. In each such instance, the share prices and investment returns will
fluctuate, reflecting market conditions as well as changes in
company-specific fundamentals of portfolio securities.

The performance results for the registered investment company presented
below are generally subject to somewhat lower fees and expenses (1.00% of
average daily net assets) than those estimated for the Small Cap Growth Fund.
The investment results presented below are unaudited.

Average Annual total return for selected periods ended December 31, 1999

<TABLE>
<CAPTION>
1 year Life of Fund Date of Inception
<S> <C> <C> <C>
Small Cap Tax Sensitive Equity Fund 100.68 35.06 1-2-96
Russell 1000 Growth Index 43.09 16.16 N/A
S&P 500 21.04 26.39 N/A
</TABLE>

<PAGE>

ANNUAL TOTAL RETURNS 1996 1997 1998 1999

<S> <C> <C> <C> <C>
Standish Small Cap Tax-Sensitive Equity Fund(1) 21.23 23.61 10.65 100.68
S&P 500 Index(2) 22.96 33.36 28.57 21.04
Russell 2000 Growth Index(3) 11.26 12.95 1.24 43.09
</TABLE>

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

(1) For the years ended 1996, 1997, 1998, 1999, Standish reimbursed the
Standish Small Cap-Tax Sensitive Fund operating expenses. Had Standish not
done so, total return would have been somewhat lower.

(2) "S&P 500-Registered Trademark-" is a trademark of The McGraw-Hill
Companies, Inc. The S&P 500 is an unmanaged index and is considered to be
generally representative of the large-cap U.S. stock market. Total
returns reflect the reinvestment of all dividends and capital gains. You
cannot invest directly in an index.

(3) The Russell 2000-Registered Trademark- Index is an unmanaged index that
measures the performance of the 2,000 smallest companies in the Russell
3000-Registered Trademark- Index, which, in turn, is an unmanaged index
that includes the 3,000 largest U.S. companies based on total market
capitalization. The Russell 2000 Index represents approximately 10% of
the total market capitalization of the Russell 3000 Index. Total returns
reflect reinvestment as of all dividends and capital gains. You cannot
invest directly in an index.

FUND MANAGEMENT

For the Funds where Pitcairn serves as Manager, the portfolio managers
for a Fund buy and sell securities for a Fund as they see fit, guided by the
Fund's investment objective and strategy and based upon input from Pitcairn
Investment Management analysts that cover specific industries. The portfolio
managers and analysts meet regularly to review portfolio holdings and discuss
purchase and sales activity. Where there is more than one portfolio manager
for a Fund, they make decisions jointly as to each investment. The portfolio
managers on the investment teams are identified below, by Fund, followed by
the respective biographical information for the portfolio managers. Where
Pitcairn Investment Management has engaged a specialty Manager (sub-adviser)
for a particular Fund, the Manager and portfolio manager are identified below:

DIVERSIFIED GROWTH FUND

ERIC M. FEDER

Mr. Feder, Vice President of PTC joined PTC in 1994 as an investment analyst
and was promoted to Vice President in 1999. Before joining PTC, he held
financial analyst positions as an intern at SEI, Inc., Centocor, Inc. and
Johnson & Johnson *Merck. He is jointly responsible for equity
recommendations in the following industries: commercial services, technology
and the Internet . He holds a B.S. from Drexel University and is a candidate
for a master's degree in finance.

JOSEPH F. MONAHAN

Mr. Monahan, Vice President of PTC, has been a member of the team since
joining the investment department at PTC in 1986. He is jointly responsible
for equity recommendations in the following industries: commercial services,
technology and the Internet. He has a B.A. from Penn State University and an
M.B.A from Temple University. He is a Chartered Financial Analyst.

DIVERSIFIED VALUE FUND

44
<PAGE>

CATHERINE E. ROONEY

Ms. Rooney, Vice President of PTC, has been a member of the team since
joining PTC in 1994. She is primarily responsible for equity recommendations
in the following industries: food and beverage, pharmaceuticals, restaurant,
retail, and technology. Before joining PTC she was a vice president and the
director of research at Merus Capital Management and was a security analyst
at Wilmington Trust Company and Josephthal & Company. She holds B.A. and
M.B.A degrees from Temple University. She is a Chartered Financial Analyst.

DAVID T. LARRABEE

Mr. Larrabee, Vice President of PTC, who is primarily responsible for equity
recommendations in finance and health care, has been a member of the team
since joining PTC in 1997. His previous investment experience from 1993 to
1997 was at General Accident Insurance, Provident Mutual Management Company,
and Standard & Poor's Corporation. He has a B.A., Finance from Colgate
University and an M.B.A in finance from Fordham University. He is a Chartered
Financial Analyst.

SELECT VALUE FUND

CATHERINE M. ROONEY. SEE BIOGRAPHICAL INFORMATION UNDER DIVERSIFIED VALUE FUND,
ABOVE.

SELECT GROWTH FUND - SANDS CAPITAL MANAGEMENT, INC., MANAGER

FRANK M. SANDS
Mr. Sands, President and co-founder of Sands, has been the portfolio manager for
Sands' large capitalization growth stock strategy since the firm was formed in
1992. He has 31 years of investment management experience. Mr. Sands has a B.A.
in economics from Dickinson College and an MBA from the University of Virginia.
He is a Chartered Financial Analyst.

SMALL CAP VALUE FUND

JOSEPH F. MONAHAN. See biographical information under Diversified Growth Fund,
above

SMALL CAP GROWTH FUND - STANDISH, AYER & WOOD, INC., MANAGER

NICHOLAS S. BATTELLE
Mr. Battelle has been the leader of Standish's small cap team since its
inception in 1987. Mr. Battelle joined Standish in 1983 and has 32 years of
experience in managing equity portfolios. He graduated from Duke University
and has an M.B.A. from Columbia University.

FAMILY HERITAGE-Registered Trademark- FUND

JOSEPH F. MONAHAN. See biographical information under Diversified Growth Fund,
above

INTERNATIONAL EQUITY FUND - OECHSLE INTERNATIONAL ADVISORS, LLC, MANAGER

S. DEWEY KEESLER, JR.

<PAGE>

Mr. Keesler is a Principal, the Chief Investment Officer and a Portfolio
Manager/Research Analyst of Oechsle with responsibility for coordinating
Oechsle's investment activities. He has over nineteen years of international
investment experience, investing in markets all over the world. Prior to
forming Oechsle, he was a Portfolio Manager at Putnam International Advisors.
Mr. Keesler received a B.A. (magna cum laude) from Washington and Lee
University and was a Fulbright Scholar at the University of Freiburg in West
Germany. He studied investment analysis and management at London Business
School.

KATHLEEN HARRIS

Ms. Harris is a Principal and Portfolio Manager/Research Analyst of Oechsle.
Prior to joining Oechsle in January 1995, Ms. Harris was Portfolio Manager
and Investment Director for the State of Wisconsin Investment Board, where
she managed the fund's international equity assets. Previously, she was a
Fund Manager and Equity Analyst for the Northern Trust Company. Ms. Harris
received an M.B.A. in Finance from the University of Chicago Graduate School
of Business and a B.S. (Honors) in Finance from the University of Illinois.
She is a Chartered Financial Analyst.

GOVERNMENT/CORPORATE BOND FUND AND TAX-EXEMPT BOND FUND

PATRICK M. KENNEDY

Mr. Kennedy, Vice President of PTC, has been a member of the team, primarily
responsible for fixed income investments, since joining Pitcairn in 1995.
Before joining PTC, he was a fixed income analyst at PNC Investment
Management and Research and The Massachusetts Company, Inc. He received a
B.S. from Susquehanna University and a M.S., Finance from Suffolk University.

SHAREHOLDER SERVICES PLAN

The Board of Trustees of the Trust has adopted a Shareholder Services Plan
(the "Plan") for the purpose of paying for shareholder servicing activities
which may include: providing personal services or account maintenance
services; receiving, aggregating and processing purchase and redemption
orders; providing and maintaining retirement plan records; communicating
periodically with shareholders; acting as the sole shareholder of record and
nominee for shareholders; maintaining account records and providing
beneficial owners with account statements; processing dividend payments;
issuing shareholder reports and transaction confirmations; providing
subaccounting services for Fund shares held beneficially; forwarding
shareholder communications to beneficial owners; receiving, tabulating and
transmitting proxies executed by beneficial owners; performing daily
investment ("sweep") functions for shareholders; providing investment
advisory services; and general account administration activities.

Pursuant to the Plan, each Fund is authorized to pay to any person who enters
into a shareholder services agreement with the Fund (an "Authorized Service
Provider"), which may include PTC or its affiliates, as compensation for service
activities rendered by the Authorized Service Provider to shareholders of a
Fund, a shareholder service fee at the rate of 0.25% on an annual basis of the
average daily net asset value of shares of the Fund (the "Plan Fee"). Such Plan
Fee is calculated daily and paid monthly or at such other intervals as the Board
shall determine. An Authorized Service Provider is authorized to pay its
affiliates or independent third party service providers for performing service
activities consistent with this Plan. Because the Plan Fees are paid out of the
Fund's assets on an on-going basis, these fees, over time, will increase the
cost of your investment and may cost you more than paying other types of sales
loads.

SHAREHOLDER SERVICES AGREEMENT

The Board of Trustees of the Trust has adopted a Shareholder Services Agreement
(the "Agreement") whereby PTC provides certain shareholder services which may
include: subaccounting for all Fund share transactions at the shareholder
level; crediting distributions from the Funds to shareholder accounts;
determining amounts to be reinvested in the Funds; assisting customers in
changing account options, account designations and account addresses; and
disseminating tax information and mailing Fund information, such as
prospectuses and annual and semi-annual reports to beneficial owners of the
subject shares. This Agreement may be terminated by either party to the
Agreement by a vote of the Plan Trustees (as defined in the Shareholder
Services Plan) or by vote of a majority of the outstanding shareholders of a
Fund with respect to any Fund at any time without payment of penalty.

Pursuant to this Agreement, each Fund is authorized to pay PTC a quarterly
service fee at an annual rate of 0.25% of the average net asset value of the
shares of the Fund. Because the fees are paid out of the Fund's assets on an
on-going basis, these fees, over time, will increase the cost of your
investment and may cost you more than paying other types of sales loads.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to purchase, sell (sometimes called "redeem") or
exchange shares of the Funds.

HOW TO PURCHASE FUND SHARES

The Funds are available for purchase by clients of Pitcairn Trust Company.

Shares of the Funds may not be available for sale in every state.

You may purchase shares directly by:

- Mail
- Telephone, or
- Wire

To purchase shares directly from us, please call 1-800-214-6744. Unless you
arrange to pay by wire, write your check, payable in U.S. dollars, to "Pitcairn
Funds" and include the name of the appropriate Fund(s) on the check. A Fund
cannot accept third-party checks, credit cards, credit card checks or cash.

<PAGE>

GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange ("NYSE") is
open for business (a Business Day). A Fund may reject any purchase order if it
is determined that accepting the order would not be in the best interests of the
Fund or its shareholders. The price per share (the offering price) will be the
net asset value per share ("NAV") next determined after a Fund receives your
purchase order in good order. Each Fund calculates its NAV once each Business
Day at the regularly-scheduled close of normal trading on the NYSE (normally,
4:00 p.m. Eastern time). So, for you to receive the current Business Day's
NAV, generally a Fund must receive your purchase order in good order before
4:00 p.m. Eastern time.

HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund. In calculating NAV, a Fund generally values its investment
portfolio at market price. If market prices are unavailable or a Fund thinks
that they are unreliable, or the value of a security has been materially
affected by events occurring after the closing of a foreign exchange, fair value
prices will be determined in good faith using methods approved by the Board of
Trustees. Foreign markets may be open when U.S. markets are closed and the value
of foreign securities owned by a Fund may change on days when shareholders
cannot purchase or redeem shares.

HOW TO SELL YOUR FUND SHARES
Holders of shares may sell shares by following procedures established when they
opened their account or accounts. If you have questions, call 1-800-214-6744. If
you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

If you own your shares directly, you may sell your shares on any Business Day by
contacting a Fund directly by mail or telephone at 1-800-214-6744. The sale
price of each share will be the next NAV determined after the Fund receives your
request.

RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven business days after we
receive your request. Your proceeds can be wired to your bank account (which may
be subject to a fee) or sent to you by check. If you recently purchased your
shares by check, redemption proceeds may not be available until your check has
cleared (which may take up to 15 Business Days).

ABUSIVE TRADING PRACTICES

<PAGE>

To minimize harm to the Funds and their shareholders, we reserve the right to
reject any purchase order (including exchanges) from any investor we believe has
a history of abusive trading or whose trading, in our judgment, has been or may
be disruptive to a Fund. In making this judgment, we may consider trading done
in multiple accounts under common ownership or control. We also reserve the
right to delay delivery of your redemption proceeds - up to seven days - or to
honor certain redemptions with securities, rather than cash, as described in the
next section.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

We generally pay sale (redemption) proceeds in cash, but we reserve the right
to pay all or part of any redemption proceeds in kind, that is, in securities
with a market value equal to the redemption price. If we make the payment in
securities, we will value the securities in the same manner as we value the
securities in computing the Fund 's net asset value. We may provide these
securities in lieu of cash without prior notice. You would have to pay
transaction costs to sell the securities distributed to you, as well as taxes
on any capital gains you may realize from the sale.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares on any Business Day by contacting us directly by
mail or telephone. When you exchange shares, you are really selling your shares
and buying other Fund shares, which may produce a gain or loss for tax purposes.
Your sale price and purchase price will be based on the NAV next calculated
after the Fund receives your exchange request.

TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund distributes its income as follows: Generally, the Equity Funds
declare and pay dividends quarterly, although the Small Cap Growth and Select
Growth Funds may distribute income annually. The Fixed Income Funds generally
declare dividends daily and distribute them monthly.

Each Fund makes distributions of realized capital gains, if any, at least
annually. If you own Fund shares on the record date of the declared
distribution, you will be entitled to receive the distribution. You will receive
dividends and distributions in the form of additional Fund shares unless you
elect to receive payment in cash. To elect cash payment, you must notify the
Fund in writing prior to the declaration date of the distribution. Your election
will be effective for dividends and distributions declared after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.

TAXES
PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. The following is meant as a general summary for
U.S. taxpayers on some important tax issues that affect the Funds and their
shareholders. This summary is based on current tax laws, which may change. Each
Fund will distribute substantially all of its income and capital gains, if any.
The dividends and distributions you receive are generally subject to federal,
state and local taxation. Distributions you receive from a Fund may be taxable
whether or not you reinvest them. If you receive a distribution in January that
a Fund declared in October, November or December of the prior year, you will be
taxed as if you received it in the prior year. Income distributions are
generally taxable at ordinary income tax rates. Capital gains distributions are
generally taxable at the rates applicable to long-term capital gains. EACH SALE
OR EXCHANGE OF SHARES IS A TAXABLE EVENT FOR TAXABLE INVESTORS. The amount of
the gain or loss and the rate of tax will depend on how much you paid for the
shares, how much you sell them for, and how long you hold them. Taxable
investors should generally avoid investing in a Fund shortly before an expected
dividend or capital gain distribution. The Tax-Exempt Bond Fund intends to
distribute federally tax-exempt income. The Tax-Exempt Bond Fund also intends to
distribute state tax-exempt income. The Tax-Exempt Bond Fund may invest a
portion of its assets in securities that generate taxable income for federal or
state income taxes. Income exempt from federal tax may be subject to state and
local taxes. Any capital gains distributed by this Fund are taxable.

MORE INFORMATION ABOUT TAXES IS AVAILABLE IN THE STATEMENT OF ADDITIONAL
INFORMATION.

IRA DISCLOSURE

An investor may establish an individual retirement account ("IRA") to invest in
a Fund. An IRA enables individuals, even if they participate in an
employer-sponsored plan, to establish their own retirement program. IRA
contributions may be tax-deductible and earnings are tax-deferred. Deductions
for IRA contributions may be limited or eliminated for individuals who
participate in certain employer pension plans and/or whose annual income exceeds
certain limits. Existing IRAs and future contributions up to the maximum
permitted, whether deductible or not, earn income on a tax-deferred basis.

<PAGE>

Certain individuals may make contributions to Roth IRAs. These contributions are
non-deductible but distributions from a Roth IRA may be tax free. Non-deductible
contributions of up to $500 per year per beneficiary may be made to an Education
IRA. To the extent that distributions from an Education IRA do not exceed a
beneficiary's "qualified higher education expenses," they are not taxable.
Shareholders may only establish a Roth IRA or an Education IRA if they are below
certain maximum income levels.

Shareholders are advised to consult their tax advisers on IRA contribution
and withdrawal requirements and restrictions.

<PAGE>

ADDITIONAL INFORMATION

PITCAIRN FUNDS

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

Additional information about each Fund is available in the Statement of
Additional Information.

The Statement of Additional Information is available free of charge upon
request by contacting us:

BY TELEPHONE: 1-800-214-6744

BY MAIL: PITCAIRN FUNDS
c/o Pitcairn Trust Company

One Pitcairn Place, Suite 3000
165 Township Line Road
Jenkintown, PA 19046

Information about the Funds can also be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. Inquiries on the operations of the public
reference room may be made by calling the SEC at 1-202-942-8090. Reports and
other information about the Fund are available on the SEC's Internet site at
http://www.sec.gov, and copies of this information may be obtained, upon payment
of a duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the SEC's Public Reference Section,
Washington, D.C. 20549-0102.

INVESTMENT COMPANY ACT FILE NUMBER 811-09943

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

PITCAIRN FUNDS

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

PROSPECTUS

AUGUST 4, 2000

<PAGE>

The information in this Statement of Additional Information is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.

Subject to Completion
Preliminary Statement of Additional Information
July 28, 2000

PITCAIRN FUNDS
ONE PITCAIRN PLACE, SUITE 3000
165 TOWNSHIP LINE ROAD
JENKINTOWN, PA 19046
(800) 214-6744

STATEMENT OF ADDITIONAL INFORMATION

August 4, 2000

PITCAIRN EQUITY FUNDS
PITCAIRN DIVERSIFIED VALUE FUND
PITCAIRN DIVERSIFIED GROWTH FUND
PITCAIRN SELECT VALUE FUND
PITCAIRN SELECT GROWTH FUND
PITCAIRN SMALL CAP VALUE FUND
PITCAIRN SMALL CAP GROWTH FUND
PITCAIRN FAMILY HERITAGE -REGISTERED TRADEMARK- FUND
PITCAIRN INTERNATIONAL EQUITY FUND
PITCAIRN FIXED INCOME FUNDS
PITCAIRN GOVERNMENT /CORPORATE BOND FUND
PITCAIRN TAX-EXEMPT BOND FUND

THIS STATEMENT OF ADDITIONAL INFORMATION ("SAI") IS NOT A PROSPECTUS. IT
IS INTENDED TO PROVIDE ADDITIONAL INFORMATION REGARDING THE ACTIVITIES AND
OPERATIONS OF THE PITCAIRN FUNDS (THE "TRUST") AND SHOULD BE READ IN
CONJUNCTION WITH THE TRUST'S PROSPECTUS DATED AUGUST___, 2000. THE PROSPECTUS
MAY BE OBTAINED FREE OF CHARGE BY WRITING PITCAIRN FUNDS AT ONE PITCAIRN
PLACE, SUITE 3000, 165 TOWNSHIP LINE ROAD, JENKINTOWN, PA 19046 OR BY CALLING
1-800-214-6744.

TABLE OF CONTENTS

The Trust........................................................
Description of Permitted Investments and Risk Factors............
Investment Limitations...........................................
Service Providers................................................
Shareholder Servicing............................................
Trustees and Officers of the Trust...............................
Performance......................................................
Purchase and Redemption of Shares................................
Taxes............................................................
Portfolio Transactions...........................................
Redemptions in Kind..............................................
Description of Shares............................................
Limitation of Trustees' Liability................................
Voting...........................................................
Shareholder Liability............................................
Control Persons..................................................
5% Shareholders..................................................
Custodian........................................................
Experts..........................................................
Legal Counsel....................................................
Appendix A.......................................................

<PAGE>

THE TRUST

Pitcairn Funds (the "Trust") is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Trust was established as a Delaware business trust on March 24,
2000. The Amended and Restated Declaration of Trust (the "Declaration of
Trust") of the Trust permits the Trust to offer shares of beneficial interest
("shares") in separate portfolios.

As of the date of this SAI, the Trust consists of the following
portfolios: Diversified Value, Diversified Growth, Select Value, Select
Growth, Small Cap Value, Small Cap Growth, Family Heritage -Registered
Trademark-, International Equity, Government/Corporate Bond and Tax-Exempt
Bond Funds (each a "Fund" and, together, the "Funds"). Pitcairn Investment
Management ("Pitcairn"), a division of Pitcairn Trust Company, serves as the
investment adviser for all of the Funds. It has engaged, Oechsle
International Advisors LLC as sub-adviser for the International Equity Fund,
Standish, Ayer & Wood, Inc. as sub-adviser for the Small Cap Growth Fund, and
Sands Capital Management, Inc. as sub-adviser for the Select Growth Fund. Use
of the term "Manager" in this Statement of Additional Information refers to
the investment adviser or sub-adviser, as the case may be, who is responsible
for the day-to-day management of the relevant Fund. "Investment Adviser" or
"Adviser" refers to Pitcairn Investment Management. Where the Adviser has
retained a sub-adviser for a Fund, that sub-adviser will be the Manager of
that Fund. If no sub-adviser has been retained for a Fund, the Adviser will
be the Manager for that Fund.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

ALL FUNDS MAY INVEST IN THE FOLLOWING INVESTMENTS UNLESS SPECIFICALLY
NOTED OTHERWISE.

ASSET-BACKED SECURITIES. Asset-backed securities are securities secured
by non-mortgage assets such as company receivables, truck and auto loans,
leases and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity, such as a trust,
organized solely for the purpose of owning such assets and issuing such debt.
Credit support for asset-backed securities may be based on the underlying
assets and/or provided by a third party through credit enhancements. Credit
enhancement techniques include letters of credit, insurance bonds, limited
guarantees (which are generally provided by the issuer), senior-subordinated
structures and overcollateralization.

Asset-backed securities are not issued or guaranteed by the United States
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the
issuers of such securities. The purchase of asset-backed securities raises
risk considerations peculiar to the financing of the instruments underlying
such securities. For example, there is a risk that another party could
acquire an interest in the obligations superior to that of the holders of the
asset-backed securities. There also is

<PAGE>

the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are
unsecured obligations of the card holders.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANKERS' ACCEPTANCES. A bankers' acceptance is a bill of exchange or time
draft drawn on and accepted by a commercial bank. It is used by corporations
to finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less.

BANK OBLIGATIONS. Bank obligations of United States and foreign
commercial banks or savings and loan institutions which the Funds may buy
include certificates of deposit, time deposits and bankers' acceptances. A
certificate of deposit is an interest-bearing instrument with a specific
maturity issued by a bank or savings and loan institution in exchange for the
deposit of funds that normally can be traded in the secondary market prior to
maturity. A time deposit is an account containing a currency balance pledged
to remain at a particular bank for a specified period in return for payment
of interest.

BRADY BONDS. Certain debt obligations, customarily referred to as "Brady
Bonds," are created through the exchange of existing commercial bank loans to
foreign entities for new obligations in connection with a debt restructuring.
Brady Bonds have only been issued since 1989, and, accordingly, do not have a
long payment history. In addition, they are issued by governments that may
have previously defaulted on the loans being restructured by the Brady Bonds,
so they are subject to the risk of default by the issuer. They may be fully
or partially collateralized or uncollateralized and issued in various
currencies (although most are U.S. dollar denominated) and generally, they
are actively traded in the over-the-counter secondary market. U.S.
dollar-denominated, collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are generally collateralized in full
as to principal due at maturity by U.S. Treasury zero coupon obligations
which have the same maturity as the Brady Bonds. Certain interest payments on
these Brady Bonds may be collateralized by cash or securities in an amount
that, in the case of fixed rate bonds, is typically equal to between 12 and
18 months of rolling interest payments or, in the case of floating rate
bonds, initially is typically equal to between 12 and 18 months rolling
interest payments based on the applicable interest rate at that time and is
adjusted at regular intervals thereafter with the balance of interest
accruals in each case being uncollateralized. Payment of interest and (except
in the case of principal collateralized Brady Bonds) principal on Brady Bonds
with no or limited collateral depends on the willingness and ability of the
foreign government to make payment. In the event of a default on
collateralized Brady Bonds for which obligations are accelerated, the
collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The
collateral will be held by the collateral agent to the scheduled maturity of
the defaulted Brady Bonds, which will continue to be outstanding, at which
time the face amount of the collateral will equal the principal payments
which would have then been due on the Brady Bonds in the normal course.

Based upon current market conditions, a Fund would not intend to purchase
Brady Bonds which, at the time of investment, are in default as to payment.
However, in light of the residual risk of Brady Bonds and, among other
factors, the history of default with respect to commercial bank loans by

<PAGE>

public and private entities of countries issuing Brady Bonds, investments in
Brady Bonds are to be viewed as speculative. A substantial portion of the
Brady Bonds and other sovereign debt securities in which a Fund invests are
likely to be acquired at a discount, which involves certain additional
considerations.

Sovereign obligors in developing and emerging market countries are among
the world's largest debtors to commercial banks, other governments,
international financial organizations and other financial institutions. These
obligors have in the past experienced substantial difficulties in servicing
their external debt obligations, which led to defaults on certain obligations
and the restructuring of certain indebtedness. Restructuring arrangements
have included, among other things, reducing and rescheduling interest and
principal payments by negotiating new or amended credit agreements or
converting outstanding principal and unpaid interest to Brady Bonds, and
obtaining new credit to finance interest payments. Holders of certain foreign
sovereign debt securities may be requested to participate in the
restructuring of such obligations and to extend further loans to their
issuers. There can be no assurance that the Brady Bonds and other foreign
sovereign debt securities in which the Fund may invest will not be subject to
similar restructuring arrangements or to requests for new credit which may
adversely affect a Fund's holdings. Furthermore, certain participants in the
secondary market for such debt may be directly involved in negotiating the
terms of these arrangements and may therefore have access to information not
available to other market participants.

CERTIFICATES OF DEPOSIT. A certificate of deposit is a negotiable,
interest-bearing instrument with a specific maturity. Certificates of deposit
are issued by banks and savings and loan institutions in exchange for the
deposit of funds, and normally can be traded in the secondary market prior to
maturity. Certificates of deposit have penalties for early withdrawal.

COMMERCIAL PAPER. Commercial paper is the term used to designate
unsecured, short-term promissory notes issued by corporations and other
entities. Maturities on these issues vary from a day to nine months.

CONSTRUCTION LOANS. In general, construction loans are mortgages on
multifamily homes that are insured by the Federal Housing Administration
("FHA") under various federal programs of the National Housing Act of 1934
and its amendments. Several FHA programs have evolved to ensure the
construction financing and permanent mortgage financing on multifamily
residences, nursing homes, elderly residential facilities, and health care
units. Project loans typically trade in two forms: either as FHA-insured
pass-through securities or Government National Mortgage Association ("GNMA")
insured pass-through securities. In this case, a qualified issuer issues the
pass-through securities while holding the underlying mortgage loans as
collateral. Regardless of form, all projects are government-guaranteed by the
U.S. Department of Housing and Urban Development ("HUD") through the FHA
insurance fund. The credit backing of all FHA and GNMA projects derives from
the FHA insurance fund, and so projects issued in either form enjoy the full
faith and credit backing of the U.S. Government.

Most project pools consist of one large mortgage loan rather than
numerous smaller mortgages, as is typically the case with agency
single-family mortgage securities. As such, prepayments on projects are
driven by the incentives most mortgagors have to refinance, and are very
project-specific in nature. However, to qualify for certain government
programs, many project securities contain specific prepayment restrictions
and penalties.
Under multifamily insurance programs, the government insures the
construction financing of projects as well as the permanent mortgage
financing on the completed structures. This is unlike the single-family
mortgage market, in which the government only insures mortgages on completed

<PAGE>

homes. Investors purchase new projects by committing to fund construction
costs on a monthly basis until the project is built. Upon project completion,
an investor's construction loan commitments are converted into a
proportionate share of the final permanent project mortgage loan. The
construction financing portion of a project trades in the secondary market as
an insured Construction Loan Certificate ("CLC"). When the project is
completed, the investor exchanges all the monthly CLCs for an insured
Permanent Loan Certificate ("PLC"). The PLC is an insured pass-through
security backed by the final mortgage on the completed property. As such,
PLCs typically have a thirty-five to forty year maturity, depending on the
type of final project. There are vastly more PLCs than CLCs in the market,
owing to the long economic lives of the project structures. While neither
CLCs or PLCs are as liquid as agency single-family mortgage securities, both
are traded on the secondary market and would generally not be considered
illiquid. The benefit of owning these securities is a relatively high yield
combined with significant prepayment protection, which generally makes these
types of securities more attractive when prepayments are expected to be high
in the mortgage market. CLCs typically offer a higher yield due to the fact
that they are somewhat more administratively burdensome to account for.

CONVERTIBLE SECURITIES. Convertible securities are corporate securities
that are exchangeable for a set number of another security at a prestated
price. Convertible securities have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of convertible securities tends to move together with the market value
of the underlying stock. As a result, a Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality
of the issuer and any call provisions.

DEPOSITORY RECEIPTS. Depository Receipts are receipts issued by an
American bank or trust company evidencing ownership of underlying securities
issued by foreign issuers. American Depository Receipts ("ADRs") in
registered form, are designed for use in U.S. securities markets. Such
depository receipts may be sponsored by the foreign issuer or may be
unsponsored. The Funds may also invest in European and Global Depository
Receipts ("EDRs" and "GDRs"), which in bearer form, are designed for use in
European securities markets, and in other instruments representing securities
of foreign companies. Such depository receipts may be sponsored by the
foreign issuer or may be unsponsored. Unsponsored depository receipts are
organized independently and without the cooperation of the foreign issuer of
the underlying securities; as a result, available information regarding the
issuer may not be as current as for sponsored depository receipts, and the
prices of unsponsored depository receipts may be more volatile than if they
were sponsored by the issuer of the underlying securities. ADRs may be listed
on a national securities exchange or may trade in the over-the-counter
market. ADR prices are denominated in U.S. dollars; the underling security
may be denominated in a foreign currency, although the underlying security
may be subject to foreign governmental taxes which would reduce the yield on
such securities.

DOLLAR ROLLS. "Dollar rolls" are transactions in which a Fund sells
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar securities on a specified future date. The
difference between the sale price and the purchase price (plus any interest
earned on the cash proceeds of the sale) is netted against the interest
income foregone on the securities sold to arrive at an implied borrowing
rate. Alternatively, the sale and purchase transactions can be executed at
the same price, with the Fund being paid a fee as consideration for entering
into the commitment to purchase.

EQUITY SECURITIES. Equity securities include common stock, preferred
stock, warrants or rights to subscribe to common stock and, in general, any
security that is convertible into or exchangeable for common stock.
Investments in equity securities in general are subject to market risks that
may cause their prices to fluctuate over time. The value of convertible
equity securities is also affected by prevailing interest rates, the credit
quality of the issuer and any call provisions. Fluctuations in the value of
equity securities in which a Fund invests will cause the net asset value of
the Fund to fluctuate.

Investments in small or middle capitalization companies involve greater
risk than is customarily associated with larger, more established companies
due to the greater business risks of small size, limited markets and
financial resources, narrow product lines and the frequent lack of depth of
management. The securities of small or medium-sized companies are often
traded over-the-counter, and may not be traded in volumes typical of
securities traded on a national securities exchange. Consequently, the
securities of small or medium sized companies may have limited market
stability and may be subject to more abrupt or erratic market movements than
securities of larger, more established companies or the market averages in
general.

<PAGE>

THE EURO. On January 1, 1999, the European Monetary Union ("EMU")
implemented a new currency unit, the Euro, which is expected to reshape
financial markets, banking systems and monetary policies in Europe and other
parts of the world. The countries that converted or tied their currencies to
the Euro include Austria, Belgium, France, Germany, Luxembourg, the
Netherlands, Ireland, Finland, Italy, Portugal and Spain. Implementation of
this plan means that financial transactions and market information, including
share quotations and company accounts, in participating countries will be
denominated in Euros. A significant percentage of the stock exchange
capitalization of the total European market may be reflected in Euros, and
participating governments will issue their bonds in Euros. Monetary policy
for participating countries will be uniformly managed by a new central bank,
the European Central Bank ("ECB").

Although it is not possible to predict the eventual impact of the Euro
implementation plan on the Funds, the transition to the Euro may change the
economic environment and behavior of investors, particularly in European
markets. For example, investors may begin to view those countries
participating in the EMU as a single entity, and the Adviser or Manager may
need to adapt its investment strategy accordingly. The process of
implementing the Euro also may adversely affect financial markets world-wide
and may result in changes in the relative strength and value of the U.S.
dollar or other major currencies, as well as possible adverse tax
consequences. The ongoing transition to the Euro is likely to have a
significant impact on fiscal and monetary policy in the participating
countries and may produce unpredictable effects on trade and commerce
generally. These resulting uncertainties could create increased volatility in
financial markets world-wide.

EUROBONDS. A Eurobond is a bond denominated in U.S. dollars or another
currency and sold to investors outside of the country whose currency is used.
Eurobonds may be issued by government or corporate issuers, and are typically
underwritten by banks and brokerage firms from numerous countries. While
Eurobonds typically pay principal and interest in Eurodollars, U.S. dollars
held in banks outside of the United States, they may pay principal and
interest in other currencies.

FIXED INCOME SECURITIES. Fixed income securities are debt obligations
issued by corporations, municipalities and other borrowers. The market value
of a Fund's fixed income investments will change in response to interest rate
changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally rise. Conversely,
during periods of rising interest rates, the values of such securities
generally decline. Securities with longer maturities are subject to greater
fluctuations in value than securities with shorter maturities. Fixed income
securities rated in the fourth highest rating category lack outstanding
investment characteristics, and have speculative characteristics as well.
Changes by an a nationally recognized statistical rating organization
("NRSRO") in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal also affect the value of
these investments. Changes in the value of a Fund's securities will not
affect cash income derived from these securities but will affect the Fund's
net asset value.

Securities held by a Fund that are guaranteed by the U.S. Government, its
agencies or instrumentalities guarantee only the payment of principal and
interest, and do not guarantee the securities' yield or value or the yield or
value of a Fund's shares.

There is a risk that the current interest rate on floating and variable
rate instruments may not accurately reflect existing market interest rates.

FOREIGN SECURITIES. Foreign securities include U.S. dollar denominated
obligations of securities of foreign issuers. Permissible investments may
consist of Yankee Obligations, obligations of foreign branches of U.S. banks
and foreign banks, including European Certificates of Deposit,

<PAGE>

European Time Deposits, Canadian Time Deposits, Yankee Certificates of
Deposit and investments in Canadian Commercial Paper, foreign securities and
Europaper. These instruments may subject the Fund to investment risks that
differ in some respects from those related to investments in obligations of
U.S. issuers. Investing in the securities of foreign companies and the
utilization of forward foreign currency contracts involve special risks and
considerations not typically associated with investing in U.S. companies.
These risks and considerations include differences in accounting, auditing
and financial reporting standards, generally higher commission rates on
foreign portfolio transactions, the possibility of expropriation or
confiscatory taxation, adverse changes in investment or exchange control
regulations, political instability that could affect U.S. investment in
foreign countries and potential restrictions of the flow of international
capital and currencies. Such investments may also entail higher custodial
fees and sales commissions than domestic investments. Foreign issuers of
securities or obligations are often subject to accounting treatment and
engage in business practices different from those respecting domestic issuers
of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than
those applicable to domestic branches of U.S. banks.

FORWARD FOREIGN CURRENCY CONTRACTS. A forward contract involves an
obligation to purchase or sell a specific currency amount at a future date,
agreed upon by the parties, at a price set at the time of the contract. A
Fund may enter into a contract to sell, for a fixed amount of U.S. dollars or
other appropriate currency, the amount of foreign currency approximating the
value of some or all of a Fund's securities denominated in such foreign
currency.

By entering into forward foreign currency contracts, a Fund will seek to
protect the value of its investment securities against a decline in the value
of a currency. However, these forward foreign currency contracts will not
eliminate fluctuations in the underlying prices of the securities. Rather,
they simply establish a rate of exchange which one can obtain at some future
point in time. Although such contracts tend to minimize the risk of loss due
to a decline in the value of the hedged currency, they also tend to limit any
potential gain which might result should the value of such currency increase.
At the maturity of a forward contract, a Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency
trader, obligating it to purchase, on the same maturity date, the same amount
of the foreign currency. A Fund may realize a gain or loss from currency
transactions. A Fund will place assets in a segregated account to assure that
its obligations under forward foreign currency contracts are covered.

FUTURES AND OPTIONS ON FUTURES. Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
specific security at a specified future time and at a specified price. An
option on a futures contract gives the purchaser the right, in exchange for a
premium, to assume a position in a futures contract at a specified exercise
price during the term of the option. A Fund may use futures contracts and
related options for "bona fide hedging purposes," to offset changes in the
value of securities held or expected to be acquired or be disposed of, to
minimize fluctuations in foreign currencies, or to gain exposure to a
particular market or instrument. A Fund will minimize the risk that it will
be unable to close out a futures contract by only entering into futures
contracts that are traded on national futures exchanges.

An index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the bond index value at
the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the bonds comprising
the index is made; generally contracts are closed out prior to the expiration
date of the contract.

<PAGE>

In order to avoid leveraging and related risks, when a Fund invests in
futures contracts, it will cover its position by depositing an amount of cash
or liquid securities equal to the market value of the futures positions held,
less margin deposits, in a segregated account and that amount will be marked
to market on a daily basis.

A Fund may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions are not for "bona
fide hedging purposes," the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do
not exceed 5% of the Fund's net assets.

There are risks associated with these activities, including the
following: (1) the success of a hedging strategy may depend on an ability to
predict movements in the prices of individual securities, fluctuations in
markets and movements in interest rates, (2) there may be an imperfect or no
correlation between the changes in market value of the securities held by a
Fund and the prices of futures and options on futures, (3) there may not be a
liquid secondary market for a futures contract or option, (4) trading
restrictions or limitations may be imposed by an exchange, and (5) government
regulations may restrict trading in futures contracts and options on futures.
In addition, some strategies reduce a Fund's exposure to price fluctuations,
while others tend to increase its market exposure. Futures and options on
futures can be volatile instruments and involve certain risks that could
negatively impact a Fund's return.

HIGH YIELD FOREIGN SOVEREIGN DEBT SECURITIES. Investing in fixed and
floating rate high yield foreign sovereign debt securities will expose a Fund
to the direct or indirect consequences of political, social or economic
changes in the countries that issue the securities. The ability of a foreign
sovereign obligor to make timely payments on its external debt obligations
will also be strongly influenced by the obligor's balance of payments,
including export performance, its access to international credits and
investments, fluctuations in interest rates and the extent of its foreign
reserves. Countries such as those in which a Fund may invest have
historically experienced, and may continue to experience, high rates of
inflation, high interest rates, exchange rate or trade difficulties and
extreme poverty and unemployment. Many of these countries are also
characterized by political uncertainty or instability. Additional factors
which may influence the ability or willingness to service debt include, but
are not limited to, a country's cash flow situation, the availability of
sufficient foreign exchange on the date a payment is due, the relative size
of its debt service burden to the economy as a whole, and its government's
policy towards the International Monetary Fund, the World Bank and other
international agencies. A country whose exports are concentrated in a few
commodities or whose economy depends on certain strategic imports could be
vulnerable to fluctuations in international prices of these commodities or
imports. To the extent that a country receives payment for its exports in
currencies other than dollars, its ability to make debt payments denominated
in dollars could be adversely affected. If a foreign sovereign obligor cannot
generate sufficient earnings from foreign trade to service its external debt,
it may need to depend on continuing loans and aid from foreign governments,
commercial banks and multilateral organizations, and inflows of foreign
investment. The commitment on the part of these foreign governments,
multilateral organizations and others to make such disbursements may be
conditioned on the government's implementation of economic reforms and/or
economic performance and the timely service of its obligations. Failure to
implement such reforms, achieve such levels of economic performance or repay
principal or interest when due may result in the cancellation of such third
parties' commitments to lend funds, which may further impair the obligor's
ability or willingness to timely service its debts.

8
<PAGE>

ILLIQUID SECURITIES. Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which
they are being carried on the Fund's books. Illiquid securities may include
demand instruments with demand notice periods exceeding seven days,
securities for which there is no active secondary market, and repurchase
agreements with maturities over seven days in length.

LOAN PARTICIPATIONS AND ASSIGNMENTS. Loan participations are interests in
loans to corporations or governments which are administered by the lending
bank or agent for a syndicate of lending banks, and sold by the lending bank,
financial institution or syndicate member ("intermediary bank"). In a loan
participation, the borrower will be deemed to be the issuer of the
participation interest, except to the extent the Fund derives its rights from
the intermediary bank. Because the intermediary bank does not guarantee a
loan participation in any way, a loan participation is subject to the credit
risks generally associated with the underlying borrower. In the event of the
bankruptcy or insolvency of the borrower, a loan participation may be subject
to certain defenses that can be asserted by such borrower as a result of
improper conduct by the intermediary bank. In addition, in the event the
underlying borrower fails to pay principal and interest when due, the Fund
may be subject to delays, expenses and risks that are greater than those that
would have been involved if the Fund had purchased a direct obligation of
such borrower. Under the terms of a loan participation, the Fund may be
regarded as a creditor of the intermediary bank (rather than of the
underlying borrower), so that the Fund may also be subject to the risk that
the intermediary bank may become insolvent.

Loan assignments are investments in assignments of all or a portion of
certain loans from third parties. When a Fund purchases assignments from
lenders it will acquire direct rights against the borrower on the loan. Since
assignments are arranged through private negotiations between potential
assignees and assignors, however, the rights and obligations acquired by the
Fund may differ from, and be more limited than, those held by the assigning
lender. Loan participations and assignments may be considered liquid, as
determined by the Adviser or Manager based on criteria approved by the Board
of Trustees.

MONEY MARKET SECURITIES. Each Fund may hold cash reserves and invest in
money market instruments (including securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, repurchase agreements,
certificates of deposit and bankers' acceptances issued by banks or savings
and loan associations having net assets of at least $500 million as of the
end of their most recent fiscal year, high-grade commercial paper and other
short-term debt securities) rated at the time of purchase in the top two
categories by an NRSRO, or, if not rated, determined by the Adviser or
Manager to be of comparable quality at the time of purchase.

MORTGAGE-BACKED SECURITIES. The Funds may, consistent with their
respective investment objectives and policies, invest in mortgage-backed
securities. Mortgage-backed securities in which these Funds may invest
represent pools of mortgage loans assembled for sale to investors by various
governmental agencies such as the GNMA and government-related organizations
such as Fannie Mae and the Federal Home Loan Mortgage Corporation ("FHLMC"),
as well as by non-governmental issuers such as commercial banks, savings and
loan institutions, mortgage bankers, and private mortgage insurance
companies. Mortgage-backed securities are instruments that entitle the holder
to a share of all interest and principal payments from mortgages underlying
the security. The mortgages backing these securities include conventional
fifteen- and thirty-year fixed-rate mortgages, graduated payment mortgages,
adjustable rate mortgages and balloon mortgages. During periods of declining
interest rates, prepayment of mortgages underlying mortgage-backed securities
can be expected to accelerate. Prepayment of mortgages which underlie
securities purchased at a premium often results in capital losses, while
prepayment of mortgages purchased at a discount often results in capital
gains. Because of these

<PAGE>

unpredictable prepayment characteristics, it is often not possible to predict
accurately the average life or realized yield of a particular issue. Although
certain mortgage-backed securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-backed security
at a premium, that portion may be lost if there is a decline in the market
value of the security whether resulting from changes in interest rates or
prepayments in the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-backed security may decline when interest rates rise, the converse
is not necessarily true since in periods of declining interest rates the
mortgages underlying the securities are prone to prepayment. When the
mortgage-backed securities held by a Fund are prepaid, the Fund must reinvest
the proceeds in securities the yield of which reflects prevailing interest
rates, which may be lower than the prepaid security. For this and other
reasons, a mortgage-backed security's stated maturity may be shortened by
unscheduled prepayments on the underlying mortgages and, therefore, it is not
possible to predict accurately the security's return to a Fund. In addition,
regular payments received in respect of mortgage-backed securities include
both interest and principal. No assurance can be given as to the return a
Fund will receive when these amounts are reinvested.

A Fund may also invest in mortgage-backed securities that are
collateralized mortgage obligations structured on pools of mortgage
pass-through certificates or mortgage loans. For purposes of determining the
average maturity of a mortgage-backed security in its investment portfolio,
the Fund will utilize the expected average life of the security, as estimated
in good faith by the Fund's Adviser. Unlike most single family residential
mortgages, commercial real estate property loans often contain provisions
which substantially reduce the likelihood that such securities will be
prepaid. The provisions generally impose significant prepayment penalties on
loans and, in some cases there may be prohibitions on principal prepayments
for several years following origination.

GOVERNMENT PASS-THROUGH SECURITIES: Government Pass-Through Securities are
securities that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The primary issuers or
guarantors of these mortgage-backed securities are GNMA, Fannie Mae and
FHLMC. GNMA, Fannie Mae and FHLMC guarantee timely distributions of interest
to certificate holders. GNMA and Fannie Mae also guarantee timely
distributions of scheduled principal. FHLMC generally guarantees only the
ultimate collection of principal of the underlying mortgage loan. Fannie Mae
and FHLMC obligations are not backed by the full faith and credit of the U.S.
Government as GNMA certificates are, but Fannie Mae and FHLMC securities are
supported by the instrumentalities' right to borrow from the U.S. Treasury.
Government and private guarantees do not extend to the securities' value,
which is likely to vary inversely with fluctuations in interest rates.

There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-backed
securities and among the securities that they issue. Mortgage-backed
securities issued by GNMA include GNMA Mortgage Pass-Through Certificates
(also known as "Ginnie Maes") that are guaranteed as to the timely payment of
principal and interest by GNMA and are backed by the full faith and credit of
the United States. GNMA is a wholly-owned U.S. Government corporation within
HUD. GNMA certificates also are supported by the authority of GNMA to borrow
funds from the U.S. Treasury to make payments under its guarantee.
Mortgage-backed securities issued by Fannie Mae include Fannie Mae Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") that are
solely the obligations of Fannie Mae and are not backed by or entitled to the
full faith and credit of the United States. Fannie Mae is a
government-sponsored organization owned entirely by private stockholders.
Fannie Maes are guaranteed as to timely payment of the principal and interest
by Fannie Mae. Mortgage-backed securities issued by the FHLMC include FHLMC
Mortgage Participation Certificates (also known as "Freddie Macs" or "PC's").
The FHLMC is a corporate instrumentality of the United States, created
pursuant to an Act of

<PAGE>

Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs
are not guaranteed by the United States or by any Federal Home Loan Banks and
do not constitute a debt or obligation of the United States or of any Federal
Home Loan Bank. Freddie Macs entitle the holder to timely payment of
interest, which is guaranteed by the FHLMC. The FHLMC guarantees either
ultimate collection or timely payment of all principal payments on the
underlying mortgage loans. When the FHLMC does not guarantee timely payment
of principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable. For
FHLMC REMIC Certificates, FHLMC guarantees the timely payment of interest,
and also guarantees the payment of principal as payments are required to be
made on the underlying mortgage participation certificates. Fannie Mae REMIC
Certificates are issued and guaranteed as to timely distribution of principal
and interest by Fannie Mae.

PRIVATE PASS-THROUGH SECURITIES: Private Pass-Through Securities are
mortgage-backed securities issued by a non-governmental entity, such as a
trust. While they are generally structured with one or more types of credit
enhancement, private pass-through securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.

COLLATERALIZED BOND OBLIGATION ("CBOs"). A CBO is a type of asset-backed
security. Specifically, a CBO is an investment grade bond which is backed by a
diversified pool of high risk, high yield fixed income securities. The pool of
high yield securities is separated into "tiers" representing different degrees
of credit quality. The top tier of CBOs is backed by the pooled securities with
the highest degree of credit quality and pays the lowest interest rate.
Lower-tier CBOs represent lower degrees of credit quality and pay higher
interest rates to compensate for the attendant risk. The bottom tier typically
receives the residual interest payments (i.e. money that is left over after the
higher tiers have been paid) rather than a fixed interest rate. The return on
the bottom tier of CBOs is especially sensitive to the rate of defaults in the
collateral pool.

COMMERCIAL MORTGAGE-BACKED SECURITIES ("CMBS"): CMBS are generally
multi-class or pass-through securities backed by a mortgage loan or a pool of
mortgage loans secured by commercial property, such as industrial and
warehouse properties, office buildings, retail space and shopping malls,
multifamily properties and cooperative apartments. The commercial mortgage
loans that underlie CMBS are generally not amortizing or not fully
amortizing. That is, at their maturity date, repayment of the remaining
principal balance or "balloon" is due and is repaid through the attainment of
an additional loan of sale of the property.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"): CMOs are debt obligations of
multiclass pass-through certificates issued by agencies or instrumentalities
of the U.S. Government or by private originators or investors in mortgage
loans. Principal payments on the underlying mortgage assets may cause CMOs to
be retired substantially earlier then their stated maturities or final
distribution dates, resulting in a loss of all or part of any premium paid.
Each class of a CMO is issued with a specific fixed or floating coupon rate
and has a stated maturity or final distribution date.

REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code of 1986, as amended (the "Code") and invests in certain
mortgages principally secured by interests in real property. Investors may
purchase beneficial interests in REMICs, which are known as "regular"
interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by Fannie Mae, GNMA or FHLMC
represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed
mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also guarantees the payment of
principal as payments are required to be made on the underlying mortgage
participation certificates. Fannie Mae REMIC Certificates are issued and
guaranteed as to timely distribution of principal and interest by Fannie Mae.
GNMA REMIC Certificates are backed by the full faith and credit of the U.S.
Government.

PARALLEL PAY SECURITIES; PAC BONDS: Parallel pay CMOs and REMICS are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating
the stated maturity date or final distribution date of each class, which

<PAGE>

must be retired by its stated maturity date or final distribution date, but
may be retired earlier. Planned Amortization Class CMOs ("PAC Bonds")
generally require payments of a specified amount of principal on each payment
date. PAC Bonds are always parallel pay CMOs with the required principal
payment on such securities having the highest priority after interest has
been paid to all classes.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured
with two classes that receive specified proportions of the monthly interest
and principal payments from a pool of mortgage securities. One class may
receive all of the interest payments, while the other class may receive all
of the principal payments. The market for SMBs is not as fully developed as
other markets; SMBs, therefore, may be illiquid.

MORTGAGE DOLLAR ROLLS: Mortgage "dollar rolls" are transactions in which
mortgage-backed securities are sold for delivery in the current month and the
seller simultaneously contracts to repurchase substantially similar
securities on a specified future date. The difference between the sale price
and the purchase price (plus any interest earned on the cash proceeds of the
sale) is netted against the interest income foregone on the securities sold
to arrive at an implied borrowing rate. Alternatively, the sale and purchase
transactions can be executed at the same price, with a Fund being paid a fee
as consideration for entering into the commitment to purchase. Mortgage
dollar rolls may be renewed prior to cash settlement and initially may
involve only a firm commitment agreement by a Fund to buy a security. If the
broker-dealer to whom a Fund sells the security becomes insolvent, the Fund's
right to repurchase the security may be restricted. Other risks involved in
entering into mortgage dollar rolls include the risk that the value of the
security may change adversely over the term of the mortgage dollar roll and
that the security a Fund is required to repurchase may be worth less than the
security that the Fund originally held.

To avoid any leveraging concerns, a Fund will place U.S. Government or
other liquid securities in a segregated account in an amount sufficient to
cover its repurchase obligation.

MUNICIPAL SECURITIES. The Government/Corporate Bond Fund and the
Tax-Exempt Bond Fund may invest in municipal securities. Municipal securities
consist of (i) debt obligations issued by or on behalf of public authorities
to obtain funds to be used for various public facilities, for refunding
outstanding obligations, for general operating expenses, and for lending such
funds to other public institutions and facilities, and (ii) certain private
activity and industrial development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated facilities. The two principal
classifications of municipal securities are "general obligation" and
"revenue" issues. General obligation issues are issues involving the credit
of an issuer possessing taxing power and are payable from the issuer's
general unrestricted revenues, although the characteristics and method of
enforcement of general obligation issues may vary according to the law
applicable to the particular issuer. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or other
specific revenue source. A Fund may also invest in "moral obligation" issues,
which are normally issued by special purpose authorities. Moral obligation
issues are not backed by the full faith and credit of the state and are
generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public
facilities, the refunding of outstanding obligations, the payment of general
operating expenses, and the extension of loans to other public institutions
and facilities. Certain private activity bonds that are issued by or on
behalf of public authorities to finance various privately-owned or operated
facilities are included within the term "municipal securities." Private
activity bonds and industrial development

12
<PAGE>

bonds are generally revenue bonds, the credit and quality of which are
directly related to the credit of the private user of the facilities.

Municipal securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
project notes, certificates of indebtedness, demand notes, tax-exempt
commercial paper, construction loan notes and other forms of short-term,
tax-exempt loans. Such instruments are issued with a short-term maturity in
anticipation of the receipt of tax funds, the proceeds of bond placements or
other revenues. Project notes are issued by a state or local housing agency
and are sold by HUD. While the issuing agency has the primary obligation with
respect to its project notes, they are also secured by the full faith and
credit of the United States through agreements with the issuing authority
which provide that, if required, the federal government will lend the issuer
an amount equal to the principal of and interest on the project notes.

The quality of municipal securities, both within a particular
classification and between classifications, will vary, and the yields on
municipal securities depend upon a variety of factors, including general
money market conditions, the financial condition of the issuer (or other
entity whose financial resources are supporting the securities), general
conditions of the municipal bond market, the size of a particular offering,
the maturity of the obligation and the rating(s) of the issue. In this
regard, it should be emphasized that the ratings of any NRSRO are general and
are not absolute standards of quality municipal securities with the same
maturity, interest rate and rating(s) may have different yields, while
municipal securities of the same maturity and interest rate with different
rating(s) may have the same yield.

An issuer's obligations under its municipal securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its municipal securities may be
materially adversely affected by litigation or other conditions.

MUNICIPAL LEASES. The Funds may invest in instruments, or participations
in instruments, issued in connection with lease obligations or installment
purchase contract obligations of municipalities ("municipal lease
obligations"). Although municipal lease obligations do not constitute general
obligations of the issuing municipality, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate funds for,
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 in the relevant years. Municipal lease obligations are a
relatively new form of financing, and the market for such obligations is
still developing. Municipal leases will be treated as liquid only if they
satisfy criteria set forth in guidelines established by the Board of
Trustees, and there can be no assurance that a market will exist or continue
to exist for any municipal lease obligation.

OPTIONS. The Funds may purchase and write put and call options on indices
and enter into related closing transactions. A put option on a security gives
the purchaser of the option the right to sell, and the writer of the option
the obligation to buy, the underlying security at any time during the option
period. A call option on a security gives the purchaser of the option the
right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period.

<PAGE>

The premium paid to the writer is the consideration for undertaking the
obligations under the option contract.

A Fund may purchase and write put and call options on foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage
its exposure to exchange rates. Call options on foreign currency written by a
Fund will be "covered," which means that the Fund will own an equal amount of
the underlying foreign currency.

Put and call options on indices are similar to options on securities
except that options on an index give the holder the right to receive, upon
exercise of the option, an amount of cash if the closing level of the
underlying index is greater than (or less than, in the case of puts) 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 multiplied by a specified number. Thus, unlike options
on individual securities, all settlements are in cash, and gain or loss
depends on price movements in the particular market represented by the index
generally, rather than the price movements in individual securities.

All options written on indices or securities must be covered. When a Fund
writes an option or security on an index or a foreign currency, it will
establish a segregated account containing cash or liquid securities in an
amount at least equal to the market value of the option and will maintain the
account while the option is open or will otherwise cover the transaction.

Each Fund may trade put and call options on securities and securities
indices, as the Manager determines is appropriate in seeking the Fund's
investment objective, and except as restricted by each Fund's investment
limitations as set forth below. See "Investment Limitations."

The initial purchase (sale) of an option contract is an "opening
transaction." In order to close out an option position, a Fund may enter into
a "closing transaction," which is simply the sale (purchase) of an option
contract on the same security with the same exercise price and expiration
date as the option contract originally opened. If a Fund is unable to effect
a closing purchase transaction with respect to an option it has written, it
will not be able to sell the underlying security until the option expires or
the Fund delivers the security upon exercise.

A Fund may purchase put and call options on securities to protect against
a decline in the market value of the securities in its portfolio or to
anticipate an increase in the market value of securities that the Fund may
seek to purchase in the future. A Fund purchasing put and call options pays a
premium therefor. If price movements in the underlying securities are such
that exercise of the options would not be profitable for the Fund loss of the
premium paid may be offset by an increase in the value of the Fund's
securities or by a decrease in the cost of acquisition of securities by the
Fund.

A Fund may write covered call options on securities as a means of
increasing the yield on its fund and as a means of providing limited
protection against decreases in its market value. When a Fund writes an
option, if the underlying securities do not increase or decrease to a price
level that would make the exercise of the option profitable to the holder
thereof, the option generally will expire without being exercised and the
Fund will realize as profit the premium received for such option. When a call
option of which a Fund is the writer is exercised, the Fund will be required
to sell the underlying securities to the option holder at the strike price,
and will not participate in any increase in the price of such securities
above the strike price. When a put option of which a Fund is the writer is
exercised, the Fund will be required to purchase the underlying securities at
a price in excess of the market value of such securities.

<PAGE>

A Fund may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options
in several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for
a wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker.

The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.

OPTIONS - RISK FACTORS. Risks associated with options transactions
include: (1) the success of a hedging strategy may depend on an ability to
predict movements in the prices of individual securities, fluctuations in
markets and movements in interest rates; (2) there may be an imperfect
correlation between the movement in prices of options and the securities
underlying them; (3) there may not be a liquid secondary market for options;
and (4) while a Fund will receive a premium when it writes covered call
options, it may not participate fully in a rise in the market value of the
underlying security.

PAY-IN-KIND BONDS. Investments of a Fund in fixed-income securities may
include pay-in-kind bonds. These are securities which, at the issuer's
option, pay interest in either cash or additional securities for a specified
period. Pay-in-kind bonds, like zero coupon bonds, are designed to give an
issuer flexibility in managing cash flow. Pay-in-kind bonds are expected to
reflect the market value of the underlying debt plus an amount representing
accrued interest since the last payment. Pay-in-kind bonds are usually less
volatile than zero coupon bonds, but more volatile than cash pay securities.

RECEIPTS. Receipts are interests in separately traded interest and
principal component parts of U.S. Government obligations that are issued by
banks or brokerage firms and are created by depositing U.S. Government
obligations into a special account at a custodian bank. The custodian holds
the interest and principal payments for the benefit of the registered owners
of the certificates or receipts. The custodian arranges for the issuance of
the certificates or receipts evidencing ownership and maintains the register.
Receipts include "Treasury Receipts" ("TRs"), "Treasury Investment Growth
Receipts" ("TIGRs"), "Liquid Yield Option Notes" ("LYONs") and "Certificates
of Accrual on Treasury Securities" ("CATS"). LYONs, TIGRs and CATS are
interests in private proprietary accounts while TRs and Separately Traded
Registered Interest and Principal Securities ("STRIPS") (See "U.S. Treasury
Obligations") are interests in accounts sponsored by the U.S. Treasury.
Receipts are sold as zero coupon securities, which means that they are sold
at a substantial discount and redeemed at face value at their maturity date
without interim cash payments of interest or principal. This discount is
accreted over the life of the security, and such accretion will constitute
the income earned on the security for both accounting and tax purposes.
Because of these features, such securities may be subject to greater interest
rate volatility than interest paying securities.

REITs. REITs are trusts that invest primarily in commercial real
estate or real estate-related loans. A REIT is not taxed on income
distributed to its shareholders or unitholders if it complies with regulatory
requirements relating to its organization, ownership, assets and income, and
with a regulatory requirement that it distribute to its shareholders or
unitholders at least 95% of its taxable income for each taxable year.
Generally, REITs can be classified as Equity REITs, Mortgage REITs and Hybrid
REITs. Equity REITs invest the majority of their assets directly in real
property and derive their income primarily from rents and capital gains from
appreciation realized through property

15
<PAGE>

sales. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive their income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity and Mortgage REITs. By investing in
REITs indirectly through a Fund, shareholders will bear not only the
proportionate share of the expenses of the Fund, but also, indirectly, similar
expenses of underlying REITs.

A Fund may be subject to certain risks associated with the direct
investments of the REITs. REITs may be affected by changes in the of their
underlying properties and by defaults by borrowers or tenants. Mortgage REITs
may be affected by the quality of the credit extended. Furthermore, REITs are
dependent on specialized management skills. Some REITs may have limited
diversification and may be subject to risks inherent in financing a limited
number of properties. REITs depend generally on their ability to generate cash
flow to make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, a REIT may be
affected by its failure to qualify for tax-free pass-through of income under the
Code or its failure to maintain exemption from registration under the Investment
Company Act of 1940, as amended ("1940 Act").

REPURCHASE AGREEMENTS. Repurchase agreements are agreements under which
securities are acquired from a securities dealer or bank subject to resale on an
agreed upon date and at an agreed upon price which includes principal and
interest. A Fund involved bears a risk of loss in the event that the other party
to a repurchase agreement defaults on its obligations and a Fund is delayed or
prevented from exercising its rights to dispose of the collateral securities. A
Fund enters into repurchase agreements only with financial institutions that are
deemed to present minimal risk of bankruptcy during the term of the agreement,
based on guidelines that are periodically reviewed by the Board of Trustees.
These guidelines currently permit each Fund to enter into repurchase agreements
only with approved banks and primary securities dealers, as recognized by the
Federal Reserve Bank of New York, which have minimum net capital of $100
million, or with a member bank of the Federal Reserve System. Repurchase
agreements are considered to be loans collateralized by the underlying security.
Repurchase agreements entered into by a Fund will provide that the underlying
security at all times shall have a value at least equal to 102% of the price
stated in the agreement. This underlying security will be marked to market
daily. The Managers will monitor compliance with this requirement. Under all
repurchase agreements entered into by a Fund, the Custodian or its agent must
take possession of the underlying collateral. However, if the seller defaults, a
Fund could realize a loss on the sale of the underlying security to the extent
the proceeds of the sale are less than the resale price. In addition, even
though the Bankruptcy Code provides protection for most repurchase agreements,
if the seller should be involved in bankruptcy or insolvency proceedings, a Fund
may incur delay and costs in selling the security and may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor.

RESTRICTED SECURITIES. Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933,
as amended (the "1933 Act"), or an exemption from registration. Section 4(2)
commercial paper is issued in reliance on an exemption from registration under
Section 4(2) of the 1933 Act, and is generally sold to institutional investors
who purchase for investment. Any resale of such commercial paper must be in an
exempt transaction, usually to an institutional investor through the issuer or
investment dealers who make a market on such commercial paper. Rule 144A
securities are securities re-sold in reliance on an exemption from registration
provided by Rule 144A under the 1933 Act.

SECURITIES LENDING. Loans are made only to borrowers deemed by the Adviser
to be in good standing and when, in the judgment of the Adviser, the
consideration that can be earned currently from such loaned securities justifies
the attendant risk. Any loan may be terminated by

16
<PAGE>

either party upon reasonable notice to the other party. Each of the Funds may
use the Distributor or the Fund's Custodian as a broker in these transactions.

TIME DEPOSITS. Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid securities.

U.S. GOVERNMENT AGENCY OBLIGATIONS. Obligations issued or guaranteed by
agencies of the U.S. Government, including, among others, the Federal Farm
Credit Bank, the FHA and the Small Business Administration, and obligations
issued or guaranteed by instrumentalities of the U.S. Government, including,
among others, the FHLMC, the Federal Land Banks and the U.S. Postal Service.
Some of these securities are supported by the full faith and credit of the U.S.
Treasury, and others are supported by the right of the issuer to borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality. Guarantees of principal by agencies or instrumentalities of the
U.S. Government may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might not be a market
and thus no means of realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not extend to the value or
yield of these securities nor to the value of the Funds' shares.

U.S. TREASURY OBLIGATIONS. U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, as well as separately traded interest and
principal component parts of such obligations, known as STRIPS that are
transferable through the Federal book-entry system.

U.S. TREASURY RECEIPTS. U.S. Treasury receipts are interests in separately
traded interest and principal component parts of U.S. Treasury obligations that
are issued by banks or brokerage firms and are created by depositing U.S.
Treasury notes and obligations into a special account at a custodian bank. The
custodian holds the interest and principal payments for the benefit of the
registered owners of the certificates of receipts. The custodian arranges for
the issuance of the certificates or receipts evidencing ownership and maintains
the register.

VARIABLE OR FLOATING RATE INSTRUMENTS. Certain obligations may carry
variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or some
other reset period, and may have a floor or ceiling on interest rate changes.
These instruments may involve a demand feature and may include variable amount
master demand notes available through the Custodian. Variable or floating rate
instruments bear interest at a rate which varies with changes in market rates.
The holder of an instrument with a demand feature may tender the instrument back
to the issuer at par prior to maturity. A variable amount master demand note is
issued pursuant to a written agreement between the issuer and the holder, its
amount may be increased by the holder or decreased by the holder or issuer, it
is payable on demand, and the rate of interest varies based upon an agreed
formula. The quality of the underlying credit must, in the opinion of a Fund's
Manager, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for each Fund. Each Fund's Manager will
monitor on an ongoing basis the earning power, cash flow, and liquidity ratios
of the issuers of such instruments and will similarly monitor the ability of an
issuer of a demand instrument to pay principal and interest on demand. There is
a risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

<PAGE>

In case of obligations which include a put feature at the option of the debt
holder, the date of the put may be used as an effective maturity date for the
purpose of determining weighted average portfolio maturity.

WARRANTS. Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.

WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. When-Issued securities are
securities that involve the purchase of debt obligations on a when-issued basis,
in which case delivery and payment normally take place within 45 days after the
date of commitment to purchase. The payment obligation and the interest rate
that will be received on the securities are each fixed at the time the purchaser
enters into the commitment. Purchasing when-issued obligations results in
leveraging, and can involve a risk that the yields available in the market when
the delivery takes place may actually be higher than those obtained in the
transaction itself. In that case there could be an unrealized loss at the time
of delivery. A Fund will establish a segregated account with the Custodian and
maintain liquid assets in an amount at least equal in value to that Fund's
commitments to purchase when-issued securities. If the value of these assets
declines, the Fund involved will place additional liquid assets in the account
on a daily basis so that the value of the assets in the account is equal to the
amount of such commitments.

One form of when-issued or delayed-delivery security that a Fund may
purchase is a TBA mortgage-backed security. A TBA mortgage-backed security
transaction arises when a mortgage-backed security, such as a GNMA pass-through
security, is purchased or sold with specific pools that will constitute that
GNMA pass-through security to be announced on a future settlement date.

YANKEE OBLIGATIONS. Yankee obligations ("Yankees") are U.S.
dollar-denominated instruments of foreign issuers who either register with the
Securities and Exchange Commission ("SEC") or issue securities under Rule 144A
of the 1933 Act, as amended. These consist of debt securities (including
preferred or preference stock of non-governmental issuers), certificates of
deposit, fixed time deposits and bankers' acceptances issued by foreign banks,
and debt obligations of foreign governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational entities. Some
securities issued by foreign governments or their subdivisions, agencies and
instrumentalities may not be backed by the full faith and credit of the foreign
government. Yankee obligations as obligations of foreign issuers, are subject to
the same types of risks discussed in "Foreign Securities," above.

The Yankee obligations selected for the Funds will adhere to the same
quality standards as those utilized for the selection of domestic debt
obligations.

ZERO COUPON AND DEFERRED PAYMENT SECURITIES. Zero coupon
securities are securities that are sold at a discount to par value and
securities on which interest payments are not made during the life of the
security. Upon maturity, the holder is entitled to receive the par value of the
security. While interest payments are not made on such securities, holders of
such securities are deemed to have received "phantom income" annually. Because a
Fund will distribute its "phantom income" to shareholders, to the extent that
shareholders elect to receive dividends in cash rather than reinvesting such
dividends in additional shares, a Fund will have fewer assets with which to
purchase income producing securities. In the event of adverse market conditions,
zero coupon, pay-in-kind and deferred payment securities may be subject to
greater fluctuations in value and may be less liquid than comparably rated
securities paying cash interest at regular interest payment periods. STRIPS and
Receipts (TRs, TIGRs, LYONs and CATS) are sold as zero coupon securities, that
is,

<PAGE>

fixed income securities that have been stripped of their unmatured interest
coupons. Zero coupon securities are sold at a (usually substantial) discount
and redeemed at face value at their maturity date without interim cash
payments of interest or principal. The amount of this discount is accreted
over the life of the security, and the accretion constitutes the income
earned on the security for both accounting and tax purposes. Because of these
features, the market prices of zero coupon securities are generally more
volatile than the market prices of securities that have similar maturity but
that pay interest periodically. Zero coupon securities are likely to respond
to a greater degree to interest rate changes than are non-zero coupon
securities with similar maturity and credit qualities. The Fund may have to
dispose of its portfolio securities under disadvantageous circumstances to
generate cash, or may have to leverage itself by borrowing cash to satisfy
income distribution requirements. A Fund accrues income with respect to the
securities prior to the receipt of cash payments. Deferred payment securities
are securities that remain zero coupon securities until a predetermined date,
at which time the stated coupon rate becomes effective and interest becomes
payable at regular intervals.

CORPORATE AND MUNICIPAL ZERO COUPON SECURITIES. Corporate or Municipal zero
coupon securities are: (i) notes or debentures which do not pay current interest
and are issued at substantial discounts from par value, or (ii) notes or
debentures that pay no current interest until a stated date one or more years
into the future, after which date the issuer is obligated to pay interest until
maturity, usually at a higher rate than if interest were payable from the date
of issuance, and may also make interest payments in kind (e.g., with identical
zero coupon securities). Such corporate zero coupon securities, in addition to
the risks identified above, are subject to the risk of the issuer's failure to
pay interest and repay principal in accordance with the terms of the obligation.

INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment restrictions are fundamental policies and cannot be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities defined in the 1940 Act as the lesser of (a) more
than 50% of the outstanding shares or (b) 67% or more of the shares represented
at a meeting at which more than 50% of the outstanding shares are represented.
If a percentage restriction on investment or use of assets set forth below is
adhered to at the time a transaction is effected, later changes in percentage
resulting from changing market values will not be considered a deviation from
this policy. A Fund may, notwithstanding any fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objective, policies, and limitations as that Fund.

A Fund may not:

1. Purchase any securities which would cause more than 25% of the net
assets of the Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same
industry, provided that this limitation does not apply to investments
in obligations issued or guaranteed by the United States Government,
its agencies or instrumentalities.

19
<PAGE>

2. Borrow money from banks and make other investments or engage in other
transactions permissible under the 1940 Act which may involve a
borrowing, the combination of which exceeds 33 1/3% of the value of its
total assets (including the amount borrowed) less the Fund's
liabilities (other than borrowings), except that the Fund may borrow up
to an additional 5% of its total assets (not including the amount
borrowed) from a bank for temporary or emergency purposes. The Fund may
also borrow money from other persons to the extent permitted by
applicable law .

3. Purchase or sell real estate, although it may purchase or sell
securities secured by real estate or interests therein, or securities
issued by companies which invest in real estate, or interests therein
(including REITs);

4. Purchase or sell physical commodities (which shall not, for purposes of
this restriction, include currencies), or commodities contracts, except
that each Fund may (i) purchase or sell marketable securities issued by
companies which own or invest in commodities, or commodities contracts;
and (ii) enter into commodities and futures contracts relating to
securities, currencies, indexes or any other financial instruments,
such as financial futures contracts and options on such contracts.

5. Make loans to other persons except through the lending of its portfolio
securities, provided that this limitation does not apply to the
purchase of debt securities and loan participations and/or engaging in
direct corporate loans or repurchase agreements in accordance with its
investment objectives and policies. The Fund may also make loans to
other investment companies to the extent permitted by the 1940 Act or
any exemptions therefrom which may be granted by the SEC.

6. Issue senior securities (as defined in the 1940 Act) except as
permitted by rule, regulation or order of the SEC, or SEC staff
interpretation.

7. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security or when
selling its own shares.

These investment limitations and the investment limitations in the
Prospectus are fundamental policies of the Trust and may not be changed without
shareholder approval

In addition, the Diversified Growth, Diversified Value, Small Cap Growth,
Small Cap Value, International Equity, and Tax-Exempt Bond Funds are diversified
(as defined in the 1940 Act) and, therefore, may not:

1. With respect to 75% of its total assets, (i) purchase the securities of any
issuer (except securities issued or guaranteed by the United States
Government, its agencies or instrumentalities) if, as a result, more than
5% of its total assets would be invested in the securities of such issuer;
or (ii) acquire more than 10% of the outstanding voting securities of any
one issuer.

NON-FUNDAMENTAL POLICIES.

The following policies are non-fundamental and may be changed without
shareholder approval.

A Fund may not:

1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.

2. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.

3. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.

Under rules and regulations established by the SEC, a Fund is typically
prohibited from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total voting stock
of the company; securities issued by any one investment company represent more
than 5% of the total Fund's assets; or securities (other than treasury stock)
issued by all investment companies represent more than 10% of the total assets
of the Fund. However, certain Funds may rely upon SEC exemptive orders issued to
the Trust which permit the Funds to invest in other investment companies beyond
these percentage limitations. A Fund's purchase of such investment company
securities results in the bearing of expenses such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.

Each of the foregoing percentage limitations (except with respect to the
limitation on investing in illiquid securities) apply at the time of purchase.
These limitations are non-fundamental and may be changed by the Trust's Board of
Trustees without a vote of shareholders.

20
<PAGE>

SERVICE PROVIDERS

THE ADMINISTRATOR

The Trust and SEI Investments Mutual Funds Services ("SEI" or the
"Administrator") have entered into an Administration Agreement ("the
Administration Agreement"). Pursuant to the Administration Agreement, SEI
provides the Trust with overall administrative services, regulatory reporting,
all necessary office space, equipment, personnel and facilities, and acts as
dividend disbursing agent.

The Administration Agreement provides that SEI shall, with certain
exceptions, not be liable for any error or judgment or mistake of law or for
any loss suffered by the Trust in connection with the matters to which the
Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of SEI in the
performance of its duties or from reckless disregard of its duties and
obligations thereunder.

This Administration Agreement will become effective on August 4,
2000, and shall remain in effect for an initial term of five (5) years from
that date and, thereafter, for sucessive renewal terms of two (2) years each,
unless and until the Agreement is terminated. The Administration Agreement
may be terminated only: (a) by the mutual written agreement of the
Administrator and the Trust; (b) by the Administrator or the Trust at the end
of the initial term or the end of the any renewal term on ninety (90) days'
written notice; (c) by the Administrator of the Trust such date as is
specified in written notice given by the terminating party, in the event of a
material breach of the Administration Agreement by the other party (including
failure to meet the Service Standards during a rolling six (6) month period),
provided the terminating party has notified the other party of such breach at
least 45 days prior to the specified date of termination and the breaching
party has not remedied such breach by the specified date; (d) effective upon
the liquidation of the Administrator; or (e) as to any Fund or the Trust,
effective upon the liquidation of such Fund or the Trust, as the case may be.

21
<PAGE>

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SEI Management"), a wholly-owned subsidiary of SEI Investments Company
("SEI Investments"), is the owner of all beneficial interest in the
Administrator. SEI Management and its subsidiaries and affiliates, including
the Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers.

For its administration services, SEI is entitled to a fee, which is
calculated daily and paid monthly, at the following annual rates (shown as a
percentage of the average daily net assets of each Fund):

<TABLE>
<CAPTION>
NAME OF FUND
ADMINISTRATION FEES
<S> <C>
Diversified Value Fund 0.08%
Diversified Growth Fund 0.08%
Select Value Fund 0.08%
Select Growth Fund 0.08%
Small Cap Value Fund 0.08%
Small Cap Growth Fund 0.08%
Family Heritage-Registered Trademark- Fund 0.08%
International Equity Fund 0.08%
Government/Corporate Bond Fund 0.08%
Tax-Exempt Bond Fund 0.08%
</TABLE>

THE TRANSFER AGENT

The Trust and State Street Bank and Trust Company (the "Transfer Agent"
or "State Street") have entered into a Transfer Agency and Service Agreement
(the "Transfer Agency Agreement"). Pursuant to the Transfer Agency Agreement,
State Street serves as the transfer agent for the Trust and Boston Financial
Data Services, Inc. (the "Servicing Agent") serves as the Transfer Agent's
servicing agent. Under the Transfer Agency Agreement, State Street or the
Servicing Agent will perform the following services: receive for acceptance,
orders for the purchase of shares, and promptly deliver payment and appropriate
document thereof to the Custodian; pursuant to purchase orders, issue the
appropriate number of shares and hold such shares in the appropriate shareholder
account; receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation thereof to the Custodian; in respect
to the aforementioned transactions, the Transfer Agent shall execute
transactions directly with broker-dealers authorized by the Fund; at the
appropriate time as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay over or cause to be paid over in the appropriate
manner such monies as instructed by the redeeming shareholders; effect transfers
of shares by the registered owners thereof upon receipt of appropriate
instructions; prepare and transmit payments for dividends and distributions
declared by the Trust; issue replacement certificates (if issued) for those
certificates alleged to have been lost, stolen or destroyed upon receipt by the
Transfer Agent of indemnification satisfactory to the Transfer Agent and
protecting the Transfer Agent and the Trust, and the Transfer Agent at its
option, may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such indemnity; maintain
records of account for and advice the Trust and its shareholders as to the
foregoing; and record the issuance of shares of the Funds and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares of each Fund which
are authorized, based upon data provided to it by the Trust, and issued and
outstanding. The Transfer Agent shall also provide the Trust on a regular basis
with the total number of shares which are authorized and issued and outstanding
and shall have no obligation, when recording the issuance of shares, to monitor
the issuance of such shares or to take cognizance of any laws relating to the
issue or sale of such shares, which functions shall be the sole responsibility
of the Trust.

The Transfer Agency Agreement provides that State Street shall not be
responsible for, and the Trust shall indemnify and hold the Transfer Agent
harmless from and against, any and all losses, damages, costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to: (a)
all actions of the Transfer Agent or its agents or subcontractors required to be
taken pursuant to the Transfer Agency Agreement (including the defense of any
law suit in which the Transfer Agent or affiliate is a named party), provided
that such actions are taken in good faith and without negligence or willful
misconduct; (b) the Trust's lack of good faith, negligence or willful
misconduct; (c) the reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors on: (i) any
information, records, documents, data, stock certificates or services, which are
received by the Transfer Agent or its agents or subcontractors by machine
readable input, facsimile, CRT data entry, electronic instructions or other
similar means authorized by the Trust, and which have been prepared, maintained
or performed by the Trust or any other person or form on behalf of the Trust
including but not limited to any broker-dealer, third party administrators or
previous transfer agent; (ii) any instructions or requests of the Trust or any
of its officers; (iii) any instructions or opinions of legal counsel with
respect to any matter arising in connection with the services to be performed by
the Transfer Agent under the Transfer Agency Agreement which are provided to the
Transfer Agent after consultation with such legal counsel; or (iv) any paper or
document, reasonably believed to be genuine, authentic, or signed by the proper
person or persons; (d) the offer or sale of shares in violation of federal or
state securities laws or regulations requiring that such shares be registered or
in violation of any stop order or other determination or ruling by any federal
or any state agency with respect to the offer or sale of such Shares; (e) the
negotiation and processing of any checks including without limitation for
deposit into the Trust's demand deposit account maintained by the Transfer
Agent; or (f) upon the Trust's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") for the transmission
of Trust or shareholder data through the NSCC clearing systems. Upon the
assertion of a claim for which the Trust may be required to indemnify the
Transfer Agent, the Transfer Agent will promptly notify the trust of such
assertion, and will keep the Trust advised with respect to all developments
concerning such claim. The Trust will have the option to participate with the
Transfer Agent in the defense of such claim or to defend against such claim in
its own name or in the name of the Transfer Agent. The Transfer Agent will in no
case confess any claim or make any compromise in any case in which the Trust may
be required to indemnify the Transfer Agent except with the Trust's prior
written consent.

The initial term of the Transfer Agency Agreement is two years unless
it is terminated sooner according to the terms of that Agreement. Thereafter,
unless a terminating party gives written notice to the other party 120 days
before the expiration of the initial term, the Transfer Agency Agreement will
renew automatically from year to year. The Transfer Agent and the Trust may
renegotiate the fees payable under the Transfer Agency Agreement 120 before the
expiration of the initial term or any subsequently renewed term. The Transfer
Agency Agreement may be terminated prior to the end of a term and without the
required notice. However, in the event of such an early termination, the
Transfer Agency Agreement provides that the fees payable to the Transfer Agent
shall be calculated as if the services had been performed by the Transfer Agent
until the expiration of the then current term and calculated at the asset and/or
shareholder account levels, as the case may be, on the date notice of
termination was given to the Transfer Agent, and the payment of all fees to the
Transfer Agent will be accelerated to the business day immediately prior to the
conversion to a new service provider or termination of services.

For its services, the Transfer Agent is entitled to fees of $15,0000
for the first year of services and $17,000 every year thereafter. In addition,
the Transfer Agent is compensated $20 per account per year and $1.80 to close
any account.

THE ADVISER AND MANAGERS

Pitcairn Investment Management ("Pitcairn" or the "Adviser") is a
division of Pitcairn Trust Company, a state-chartered trust company. The
principal business address of Pitcairn is One Pitcairn Place, Suite 3000,
Jenkintown Pennsylvania, 19046. Pitcairn Trust Company was founded in 1987, and
is a state-chartered trust company formed for the purposes of conducting a
general trust company business with the power to act, alone or with others, as
fiduciary, investment adviser, custodian of property and agent or
attorney-in-fact. Affiliates of Pitcairn have provided family office services,

22
<PAGE>

including investment advice, to high net worth individuals and their related
trusts for more than 75 years. The Adviser was formed as a division of Pitcairn
Trust Company in 2000 in order to provide investment advisory and Manager
selection services to the Trust.

Pitcairn is the investment adviser for each of the Funds. As Adviser,
Pitcairn is responsible for the day-to-day investment management for those
Funds for which it also serves as Manager, and oversees the performance of
specialty Managers engaged for specific Funds. Pitcairn has engaged Oechsle
International Advisors LLC ("Oechsle"), as the Manager for the International
Equity Fund, and Standish, Ayer & Wood, Inc. ("Standish") as the Manager for
the Small Cap Growth Fund, and Sands Capital Management, Inc. ("Sands") as
the Manager for the Select Growth Fund.

Subject to Board review, Pitcairn engages Managers, monitors and
evaluates Manager performance, and oversees Manager compliance with the
Funds' investment objectives, policies and restrictions. Pitcairn selects
Managers for the Funds based primarily upon the research and recommendations
of Pitcairn and consultants engaged by it, quantitative and qualitative
analysis of a Manager's skills and investment results in managing assets for
specific asset classes, investment styles and strategies. Pitcairn pays all
of its expenses arising from the performance of its obligations under the
Advisory Agreement, including all fees payable to any Manager and executive
salaries and expenses of the Trustees and Officers of the Trust who are
employees of the Adviser or its affiliates. Payments are made to the Manager
on the first day of each month for the preceding month or portion thereof. In
the event the calculation of any Fund's net asset value is suspended, the net
asset value used for any day will be that for the last business day prior to
such suspension until net asset value calculations are resumed.

For its advisory services, Pitcairn is entitled to a fee, which is
calculated and accrued daily and paid monthly, at the following annual rates
(shown as a percentage of the average daily net assets of each Fund):

<TABLE>
<CAPTION>
<S> <C>
Diversified Value Fund 0.70%
Diversified Growth Fund 0.70%
Select Value Fund 0.70%
Select Growth Fund 0.85%
Small Cap Value Fund 0.70%
Small Cap Growth Fund 0.95%
Family Heritage -Registered Trademark- Fund 0.90%
International Equity Fund 0.95%
Government/Corporate Bond Fund 0.40%
Tax Exempt Bond Fund 0.30%
</TABLE>

Pitcairn pays each Manager's fee out of its advisory fee, which fee shall
be calculated and accrued daily and paid monthly based on a percentage of the
average daily net asset value of the Fund's assets as follows:

<TABLE>
<CAPTION>
<S> <C>
Small Cap Growth Fund 0.70%
Select Growth Fund 0.40%
International Equity Fund 0.40%
</TABLE>

The Advisory Agreement and certain of the Sub-Advisory Agreements (between
Pitcairn and a Manager for a Fund) provide that Pitcairn (or the Manager) shall
not be protected against any liability to the Trust or its shareholders by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties, or from reckless disregard of its obligations or
duties thereunder. In addition, certain of the Sub-Advisory Agreements provide
that the Manager shall not be protected against any liability to the Trust or
its shareholders by reason of willful misfeasance, bad faith or negligence on
its part in the performance of its duties, or from reckless disregard of its
obligations or duties thereunder.

The continuance of each Advisory and Sub-Advisory Agreement must be
specifically approved at least annually (i) by the vote of a majority of the
outstanding shares of that Fund or by the Trustees, and (ii) by the vote of a
majority of the Trustees who are not parties to such Agreement or "interested

23
<PAGE>

persons" of any party thereto ("Non-Interested Trustees"), cast in person at
a meeting called for the purpose of voting on such approval.

The Advisory Agreement may be terminated at any time, without the payment of
any penalty, by the Trustees, including a majority of the Non-Interested
Trustees of the Trust, by the vote of a majority of the outstanding voting
securities of the Trust, or with respect to any affected Fund, by the vote of
a majority of the outstanding voting securities of such Fund, on sixty (60)
days' written notice to the Adviser, or by Adviser on sixty (60) days'
written notice to the Trust. Each of the Sub-Advisory Agreements may be
terminated at any time, without the payment of any penalty, (A) by the
Adviser at the direction of the Board of Trustees, including a majority of
the Independent Trustees, (B) by the vote of a majority of the outstanding
voting securities of the Fund, on thirty (30) days' written notice to the
Adviser and the Manager, or (C) by the Adviser or the Manager on thirty (30)
days' written notice to the Trust and the other party. Each of the Advisory
Agreement or the Sub-Advisory Agreements will automatically terminate,
without the payment of any penalty, in the event of its assignment (as
defined in the Investment Company Act) or, in the case of the Sub-Advisory
Agreements, in the event that the Advisory Agreement between the Adviser and
the Trust is assigned or terminates for any other reason.

Pitcairn and the Trust will seek an exemptive order from the SEC that
permits Pitcairn, with the approval of the Trust's Board of Trustees, to retain
Managers unaffiliated with Pitcairn for the Funds without submitting the
Sub-Adviser agreements to a vote of the Fund's shareholders. The exemptive
relief will permit Pitcairn to disclose only the aggregate amount payable by
Pitcairn to the Managers under all such Sub-Adviser agreements for each Fund.
Pitcairn will notify shareholders of a Fund in the event of any addition or
change in the identity of a Manager.

OECHSLE INTERNATIONAL ADVISORS, LLC

Pursuant to the Sub-Advisory Agreement between the Adviser and Oechsle
International Advisors, LLC, Oechsle acts as Manager to the International Equity
Fund. In this capacity, Oechsle, subject to the supervision and control of the
Adviser and the Trustees of the Trust, manages that Fund's portfolio
investments, consistently with its investment objective, and executes any of
that Fund's investment policies that it deems appropriate to utilize from time
to time. Singleton Dewey Keesler, Jr., Stephen Patrick Langer, Lawrence Sean
Roche, and Warren Robbins Walker each serve on the Executive Committee of
Oechsle and each owns in excess of 5% of Oechsle. Oechsle's principal place of
business is One International Place, Boston, Massachusetts 02110. For its
services as Manager to the International Equity Fund, Pitcairn will pay Oechsle
compensation at the annual rate of 0.40% of the average daily value of that
Fund's assets, as calculated in accordance with the computation of net asset
value, and accrued on a daily basis.

STANDISH, AYER & WOOD, INC.

Pursuant to the Sub-Advisory Agreement between the Adviser and
Standish, Ayer & Wood, Inc., Standish acts as Manager to the Small Cap Growth
Fund. In this capacity, Standish, subject to the supervision and control of the
Adviser and the Trustees of the Trust, manages that Fund's portfolio
investments, consistently with its investment objective, and executes any of
that Fund's investment policies that it deems appropriate to utilize from time
to time. The following, constituting all of the Directors and all of the
shareholders of Standish, are Standish controlling persons: Caleb F. Aldrich,
Nicholas S. Battelle, David H. Cameron, Karen K. Chandor, D. Barr Clayson,
Lavina B. Chase, W. Charles Cook, Joseph M. Corrado, Richard C. Doll, Dolores S.
Driscoll, Maria D. Furman, James E. Hollis III, Raymond J. Kubiak, Edward H.
Ladd, Laurence A. Manchester, George W. Noyes, Arthur H. Parker, Catherine A.
Powers, Howard B. Rubin, Austin C. Smith, Thomas P. Sorbo, David C. Stuehr,
Ralph S. Tate, Michael W. Thompson and Richard S. Wood. Standish's principal
place of business is One Financial Center, Boston, Massachusetts 02111. For its
services as Manager to the Small Cap Growth Fund, Pitcairn will pay Standish
compensation at the annual rate of 0.70% of the average daily value of that
Fund's assets, as calculated in accordance with the computation of net asset
value, and accrued on a daily basis.

SANDS CAPITAL MANAGEMENT, INC.

Pursuant to the Sub-Advisory Agreement between the Adviser and Sands
Capital Management, Inc., Sands acts as Manager to the Select Growth Fund. In
this capacity, Sands, subject to the supervision and control of the Adviser
and the Trustees of the Trust, manages that Fund's portfolio investments,
consistently with its investment objective, and executes any of that Fund's
investment policies that it deems appropriate to utilize from time to time.
Frank M. Sands, Marjorie R. Sands and William L. Johnson control Sands.
Sands's principal place of business is 1100 North Glebe Road, Suite 1000,
Arlington, Virginia 22201. For its services as Manager to the Select Growth
Fund, Pitcairn will pay Sands compensation at the annual rate of 0.40% of the
average daily value of that Fund's assets, as calculated in accordance with
the computation of net asset value, and accrued on a daily basis.

EXPENSE LIMITATION ARRANGEMENT

PTC has entered into an Expense Limitation Agreement with the Trust
in order to maintain the expenses of the Funds at certain levels. Pursuant to
that Expense Limitation Agreement, PTC has agreed to reduce its fees and to
assume other expenses of each Fund, if necessary, in an amount that limits
the Total Annual Operating Expenses, net of securities lending revenue, if
any, and exclusive of interest, taxes, brokerage fees and commissions, and
extraordinary expenses, to not more than the amounts listed below measured as
a percentage of the particular Fund's average daily net assets.

Diversified Value Fund 1.00%
Diversified Growth Fund 1.00%
Select Value Fund 1.00%
Select Growth Fund 1.15%
Small Cap Value Fund 1.00%
Small Cap Growth Fund 1.25%
Family Heritage-Registered Trademark- Fund 1.20%
International Equity Fund 1.25%
Government/Corporate Bond Fund 0.70%
Tax-Exempt Bond Fund 0.60%

Under the Expense Limitation Agreement, the Trust, on behalf of a
particular Fund, may, at a later date, reimburse PTC, in whole or in part, for
investment advisory fees waived or reduced and other payments made by PTC with
respect to that particular Fund provided: (i) that Fund's total assets are
greater than $10 million; (ii) the Advisory Agreement is still in effect for
that Fund' (iii) the estimated aggregate Fund Operating Expenses of that Fund
are less than the Operating Expense Limit for that year; and (iv) the Board of
Trustees has approved such reimbursement. The total amount of reimbursement to
which PTC shall be entitled shall equal, at any time, the sum of all investment
advisory fees previously waived or reduced by PTC and all other payments made by
PTC during any of the previous two (2) fiscal years, less any reimbursement
previously paid by such Fund to PTC.

The Expense Limitation Agreement, with respect to the each of the
Funds, shall have an initial term until October 31, 2003, and from year to
year thereafter provided each such continuance is specifically approved by a
majority of the Trustees of the Trust who (i) are not "interested persons" of
the Trust or any other party to the Agreement, as defined in the 1940 Act,
and (ii) have no direct or indirect financial interest in the operation of
the Agreement ("Non-Interested Trustees"). Nevertheless, the Agreement may be
terminated by the Trust or PTC, without payment of any penalty, upon the
provision of a written notice of not less than ninety (90) days prior to
October 31, 2003 to the other party at its principal place of business;
provided that, in the case of termination by the Trust, such action shall be
authorized by resolution of a majority of the Non-Interested Trustees of the
Trust or by a vote of a majority of the outstanding voting securities of the
Trust.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor"), located at One
Freedom Valley Drive, Oaks, Pennsylvania, 19456, a wholly owned subsidiary of
SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to shares of the Funds. The
Distribution Agreement shall remain in effect for a period of two years after
the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority
vote of the Trustees who are not interested persons of the Trust and have no
financial interest in the Distribution Agreement or by a majority vote of the
outstanding securities of the Trust upon not less than 60 days' written
notice by either party or upon assignment by the Distributor. The Distributor
distributes the Funds' securities on a best efforts basis in a continuous
offering of the Fund's securities.

SHAREHOLDER SERVICING

The Trust has adopted a Shareholder Servicing Plan effective August 4,
2000 (the "Plan") under which the Funds may pay a fee to broker/dealers,
banks and other financial institutions (including the Adviser and its
affiliates) that are dealers of record or holders of record or which have a
servicing relationship ("Servicing Agent") with the beneficial owners of
shares in any of the Funds. The Plan is not a plan adopted pursuant to Rule
12b-1. Under the Plan, Servicing Agents enter into Shareholder Servicing
Agreements (the "Agreements") with the Funds. Pursuant to such Agreements,
Servicing Agents provide shareholder support services to their clients
("Clients") who beneficially own shares of the Fund(s). The principal types
of activities for which payments will be made under the shareholder servicing
agreement include subaccounting for all Fund share transactions at the
shareholder level, crediting distributions from the Funds to shareholder
accounts, determination of amounts to reinvest in the Funds, dissemination of
tax information, and mailing Fund information such as prospectuses and annual
and semi-annual reports to beneficial owners of accounts holding Fund shares.
In exchange for providing such services and pursuant to the Agreements, the
Funds pay a fee to the Servicing Agent. The fee, which is at an annual rate
of 0.25%, is computed monthly and is based on the average daily net assets of
the shares beneficially owned by Clients of such Servicing Agents. All
expenses incurred by the Funds in connection with the Agreements and the
implementation of the Plan shall be borne entirely by the holders of the
shares of the particular Fund involved and will result in an equivalent
increase to each Fund's Total Annual Fund Operating Expenses.

24
<PAGE>

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under
the laws of the State of Delaware. The Trustees have approved contracts under
which, as described above, certain companies provide essential management
services to the Trust.

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of the individuals listed
below is Pitcairn Trust Company, One Pitcairn Place, Suite 3000, Jenkintown
Pennsylvania 19046. All executive officers of the Trust are affiliates of
Pitcairn Trust Company or Pitcairn Investment Management.

<TABLE>
<CAPTION>
Name & Date of Birth Position Held with Trust Principal Occupation(s)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alvin A. Clay III* Trustee, President and President and Chief Executive Officer and
October 2, 1957 Chief Executive Officer Director, Pitcairn Trust Company, President
and Director, Pitcairn Trust Company
-------------------------------------------------------------------------------------------------------------------------
Dirk Junge* Trustee, Chairman and Vice Chairman and CEO Pitcairn Company,
January 31, 1949 President Chairman, Pitcairn Trust Company
-------------------------------------------------------------------------------------------------------------------------
Carleton A. Holstrom Trustee Private investor since April, 1995; Chief
August 18, 1935 Financial Officer, Scientific Learning
Corporation, Berkeley, CA from January 1994
to March 1995; Director, Custodial Trust
Company, Princeton, NJ; Managing Director
Emeritus, Bear Stearns & Co., Inc.; Director,
Scientific Leraning Corporation
-------------------------------------------------------------------------------------------------------------------------
George M. Chamberlain, Jr., Esq. Trustee Attorney in private practice since July 1999;
February 13, 1947 prior to that time Senior Vice President and
General Counsel, Delaware Management
Holdings, Inc. and the Delaware Investments
Companies and Funds
-------------------------------------------------------------------------------------------------------------------------
James R. Wood Trustee Consultant since March 2000; President STI
April 15, 1939 Capital Management, a registered investment
adviser, from September 1995 to February
15, 2000; Executive Vice President,
Franklin/Templeton Funds, October 1988 to
September 1995
-------------------------------------------------------------------------------------------------------------------------
William C. McCormick Vice President, Chief Financial EVP,CFO and Treasurer, Pitcairn Company and
June 22, 1959 Officer and Treasurer Pitcairn Trust Company
-------------------------------------------------------------------------------------------------------------------------
Dain Kistner** Vice President and Assistant AVP, Pitcairn Trust Company
August 25, 1970 Treasurer
-------------------------------------------------------------------------------------------------------------------------
Lawrence R. Bardfeld Vice President and Secretary EVP, Corporate Counsel and Secretary,
May 17, 1947 Pitcairn Company and Pitcairn Trust Company
-------------------------------------------------------------------------------------------------------------------------
Averill R. Jarvis Vice President and Assistant SVP and Associate General Counsel, Pitcairn
June 29, 1950 Secretary Trust Company
-------------------------------------------------------------------------------------------------------------------------
James R. Foggo Vice President and Assistant Vice President and Assistant Secretary of SEI
June 3, 1964 Secretary Investments since 1998. Vice President and
Assistant Secretary of the Administrator and
the Distributor since May 1999. Associate,
Paul Weiss, Rifkind, Wharton & Garrison (law
firm), 1998. Associate, Baker & McKenzie (law
firm), 1995-1998.
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Messrs. Junge and Clay are Trustees who may be deemed to be "interested
persons" of the Trust as that term is defined in the 1940 Act
("Interested Trustees").

** Dain Kistner is a nephew of Dirk Junge.

Messrs. Holstrom, Chamberlain and Wood serve as members
of the Audit Committee of the Trust.

Messrs. Clay and Chamberlain serve as members of the Executive Committee
of the Trust. The Executive Committee functions to act for the entire Board
of Trustees between regularly scheduled meetings with such actions to be
ratified at the next meeting of the full Board.

Officers and Interested Trustees of the Trust do not receive any
compensation from the Trust. The Trust pays the fees for Non-Interested
Trustees. For the Trust's first fiscal year ending October 31, 2000, the
Trust intends to pay to each of the Non-Interested Trustees a pro rata
portion of the annual retainer of $10,000 and a per meeting fee of $2,000,
for services with respect to the ten funds comprising the Trust commencing in
July, 2000. In addition, the Trust will pay the Non-Interested Trustee $250
for each telephonic meeting attended. The members of the Audit Committee will
receive $250 for each meeting of that committee attended. Mr. Chamberlain shall
receive a pro rata portion of an annual fee of $1,000 for serving as Chairman
of the Audit Committee. The table below shows estimated amounts of compensation
that will be paid to the Trustees by the Trust until October 31, 2000 (the end
of the Trust's fiscal year).

25
<PAGE>

COMPENSATION TABLE
(estimates for period ending 10/31/00)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
NAME OF PERSON, POSITION AGGREGATE COMPENSATION FROM TRUST
----------------------------------------------------------------------------------
<S> <C>
Alvin A. Clay, III, Trustee and 0
President
----------------------------------------------------------------------------------
Dirk Junge, Trustee and Vice President 0
----------------------------------------------------------------------------------
James R. Wood, $5500
Non-Interested Trustee
----------------------------------------------------------------------------------
Carleton A. Holstrom, $5500
Non-Interested Trustee
----------------------------------------------------------------------------------
George M. Chamberlain, Jr., $6000
Non-Interested Trustee
----------------------------------------------------------------------------------
</TABLE>

CODE OF ETHICS The Trust, the Adviser, each Manager and the Distributor have
each adopted a Code of Ethics governing personal trading activities of all
Trustees and officers of the Trust, and Directors, officers and employees of
the Adviser, the Managers and the Distributor who, in connection with their
regular functions, play a role in the recommendation of any purchase or sale
of a security by the Trust or obtain information pertaining to such purchase
or sale or who have the power to influence the management or policies of the
Trust, the Adviser, the Managers or the Distributor. The Codes permit
personnel subject to the Codes to invest in securities, including securities
that may be purchased or held by the Funds, subject to certain restrictions
and are required to report certain transactions on a regular basis. The
Trust, the Adviser, the Managers and the Distributor have developed
procedures for administration of their respective Codes.

PERFORMANCE

From time to time, each Fund may advertise yield and/or total return.
These figures will be based on historical earnings and are not intended to
indicate future performance. The yield of a Fund refers to the annualized
income generated by an investment in such Fund over a specified 30-day
period. The yield is calculated by assuming that the income generated by the
investment during that period is generated each period over one year and is
shown as a percentage of the investment. In particular, yield will be
calculated according to the following formula:

6
Yield = 2[((a-b)/cd) + 1) - 1], where a = dividends and interest
earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the current daily number of shares outstanding
during the period that were entitled to receive dividends; and d = the
maximum offering price per share on the last day of the period.

[Based on the foregoing, the 30-day yield for those Funds whose prior
performance as a common or collective trust fund is being carried forward
(with adjustments) to the new Funds. for the 30-day period June 30, 2000,
were as follows:

<TABLE>
<CAPTION>
FUND 30-DAY-YIELD
<S> <C>
Government/Corporate Bond Fund
Tax-Exempt Bond Fund
</TABLE>

The total return of a Fund refers to the average compounded rate of return
to a hypothetical investment for designated time periods (including, but not
limited to, the period from which the Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula:

26
<PAGE>

N
P(1 + T) = ERV, where P = a hypothetical initial payment of $1,000; T
= average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning
of the designated time period as of the end of such period.

Based on the foregoing, the average annual total returns for those Funds
from inception through and for the one, five and ten year periods ended
June 30, 2000, for those funds whose prior performance (with
adjustments) as a CTF is being carried forward, were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
TEN YEAR
FUND ONE YEAR FIVE YEAR (Or Since Inception)
-------- --------- -------------------
<S> <C> <C> <C>
Family Heritage -Registered Trademark- Fund(1) 32.30% 25.52% 16.25%
International Equity Fund(2) 38.16% 12.76% 12.71%
Government/Corporate Bond Fund(3) -2.97% 7.05% 6.77%
Tax-Exempt Bond Fund(4) -2.71% 5.20% 5.62%
</TABLE>

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

(1) Commenced operations 1/1/1990; Portfolio restructured as of 4/1/1996.
(2) Commenced operations 7/1/1993; Portfolio restructured as of 4/1/1999.
(3) Commenced operations 1/1/1989.
(4) Commenced operations 10/1/1988; Portfolio restructured as of 1/1/1997.

The Funds may, from time to time, compare their performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for administrative and management costs.

The performance shown in this section for the periods prior to August 4,
2000 is based on the performance of predecessor common and collective trust
funds which were converted into the Funds on August 4, 2000. The performance
has been adjusted to reflect estimated expenses of the Funds at the time of the
conversion. The common and collective trust funds were not registered under the
1940 Act and were not subject to certain investment restrictions to which the
Funds are subject. If the common and collective trust funds had been registered,
their performance may have been adversely affected.

DETERMINATION OF SHARE PRICE

The purchase and redemption price of shares is the net asset value of
each share. A Fund's securities are valued by the Funds' Administrator
pursuant to valuations provided by an independent pricing service (generally
the last reported sale price). Fund securities listed on a securities
exchange and securities listed on the NASDAQ national market for which market
quotations are available are valued at the last reported sale price on each
Business Day (defined as days on which the New York Stock Exchange is open
for business ("Business Day") or, if there is no such reported sale, at the
last reported bid price. Securities listed on a foreign exchange are valued
at the last quoted sale price and translated into U.S. dollars at the
currency exchange rate quoted at the London close. Unlisted securities for
which market quotations are readily available are valued at the most recently
quoted bid price. The pricing service may also use a matrix system to
determine valuations. This system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to
specific securities in

<PAGE>

arriving at valuations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

Information about the market value of each portfolio security may be
obtained by the Administrator from an independent pricing service. The pricing
service relies primarily on prices of actual market transactions as well as
trader quotations. However, the pricing service may use a matrix system to
determine valuations of fixed income securities. This system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures used by the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.

Securities with remaining maturities of 60 days or less will be valued by
the amortized cost method, which involves valuing a security at its cost on the
date of purchase and thereafter (absent unusual circumstances) assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuations in general market rates of interest on the value of the
instrument. While this method provides certainty in valuation, it may result in
periods during which value, as determined by this method, is higher or lower
than the price the Trust would receive if it sold the instrument. During periods
of declining interest rates, the daily yield of a Fund may tend to be higher
than a like computation made by a company with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices for
all of its portfolio securities. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a prospective
investor in a Fund would be able to obtain a somewhat higher yield than would
result from investment in a company utilizing solely market values, and existing
shareholders in the Fund would experience a lower yield. The converse would
apply during a period of rising interest rates.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions of shares of the Funds may be made on any day the
New York Stock Exchange is open for business. Currently, the following holidays
are observed by the Trust: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Trust reserves the right to suspend the
right of redemption and/or to postpone the date of payment upon redemption for
any period during which trading on the New York Stock Exchange is restricted, or
during the existence of an emergency (as determined by the SEC by rule or
regulation) as a result of which disposal or evaluation of the portfolio
securities is not reasonably practicable, or for such other periods as the SEC
may by order permit. The Trust also reserves the right to suspend sales of
shares of the Funds for any period during which the New York Stock Exchange, the
Adviser, the Manager, the Distributor, and/or the Custodian are not open for
business.

TAXES

Set forth below is a discussion of certain U.S. federal income tax issues
concerning each Fund and the purchase, ownership, and disposition of Fund
shares. This discussion does not purport to be complete or to deal with all
aspects of federal income taxation that may be relevant to shareholders in light
of their particular circumstances. This discussion is based upon present
provisions of the Code,

<PAGE>

the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. Prospective investors should consult their own tax advisers with
regard to the federal tax consequences of the purchase, ownership, or
disposition of Fund shares, as well as the tax consequences arising under the
laws of any state, foreign country, or other taxing jurisdiction.

TAX STATUS OF THE FUNDS

Each Fund intends to be taxed as a regulated investment company under Subchapter
M of the Code. Accordingly, each Fund must, among other things, (a) derive in
each taxable year at least 90% of its gross income from dividends, interest,
payments with respect to certain securities loans, and gains from the sale or
other disposition of stock, securities or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the value of the Fund's total assets is represented
by cash and cash items, U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
limited, in respect of any one issuer, to an amount not greater than 5% of the
value of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and the securities of other regulated investment companies).

As a regulated investment company, each Fund generally is not subject to U.S.
federal income tax on income and gains that it distributes to shareholders, if
at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed. Each Fund intends to distribute substantially all of such income.

Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, a Fund must distribute during each calendar year
an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, each Fund intends to make distributions in accordance with the
calendar year distribution requirement.

A distribution will be treated as paid on December 31 of a calendar year if it
is declared by a Fund in October, November or December of that year with a
record date in such a month and paid by the Fund during January of the following
year. Such a distribution will be taxable to shareholders in the calendar year
in which the distribution is declared, rather than the calendar year in which it
is received.

DISTRIBUTIONS

Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by a Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received by the Fund from U.S. corporations, may,
subject to limitation, be eligible for the dividends received deduction.
However, the alternative minimum tax applicable to corporations may reduce the
value of the dividends received deduction.

The excess of net long-term capital gains over net short-term capital losses
realized, distributed and properly designated by a Fund, whether paid in cash or
reinvested in Fund shares, will generally be taxable to shareholders as
long-term gain, regardless of how long a shareholder has held Fund shares.

29
<PAGE>

The current maximum tax rate on long-term capital gain applicable to individuals
is 20%. Net capital gains from assets held for one year or less will be taxed as
ordinary income.

Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received.

If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by a Fund, such distribution generally will be taxable
even though it represents a return of invested capital. Investors should be
careful to consider the tax implications of buying shares of a Fund just prior
to a distribution. The price of shares purchased at this time will include the
amount of the forthcoming distribution, but the distribution will generally be
taxable to the shareholder.

FOREIGN TAXES

A Fund may be subject to certain taxes imposed by the countries in which it
invests or operates. If a Fund qualifies as a regulated investment company and
if more than 50% of the value of the Fund's total assets at the close of any
taxable year consists of stocks or securities of foreign corporations, the Fund
may elect, for U.S. federal income tax purposes, to treat any foreign taxes paid
by the Fund that qualify as income or similar taxes under U.S. income tax
principles as having been paid by the Fund's shareholders. The International
Equity Fund intends to take this approach. For any year for which the
International Equity Fund makes such an election, each shareholder will be
required to include in its gross income an amount equal to its allocable share
of such taxes paid by the International Equity Fund and the shareholders will be
entitled, subject to certain limitations, to credit their portions of these
amounts against their U.S. federal income tax liability, if any, or to deduct
their portions from their U.S. taxable income, if any. No deduction for foreign
taxes may be claimed by individuals who do not itemize deductions. In any year
in which it elects to "pass through" foreign taxes to shareholders, the
International Equity Fund will notify shareholders within 60 days after the
close of the International Equity Fund's taxable year of the amount of such
taxes and the sources of its income.

Generally, a credit for foreign taxes paid or accrued is subject to the
limitation that it may not exceed the shareholder's U.S. tax attributable to his
or her total foreign source taxable income. For this purpose, the source of the
International Equity Fund's income flows through to its shareholders. With
respect to the International Equity Fund, gains from the sale of securities may
have to be treated as derived from U.S. sources and certain currency fluctuation
gains, including Section 988 gains (defined below), may have to be treated as
derived from U.S. sources. The limitation of the foreign tax credit is applied
separately to foreign source passive income, including foreign source passive
income received from the International Equity Fund. Shareholders may be unable
to claim a credit for the full amount of their proportionate share of the
foreign taxes paid by the International Fund. The foreign tax credit can be
applied to offset no more than 90% of the alternative minimum tax imposed on
corporations and individuals.

The foregoing is only a general description of the foreign tax credit. Because
application of the credit depends on the particular circumstances of each
shareholder, shareholders are advised to consult their own tax advisers.

TAX-EXEMPT INCOME

The Tax-Exempt Bond Fund intends to invest a sufficient amount of its assets in
municipal securities to qualify to distribute "exempt-interest dividends" (as
defined in the Code) to shareholders. The Tax-Exempt Bond Fund's dividends
payable from net tax-exempt interest earned from municipal securities will
qualify as exempt-interest dividends if, at the close of each quarter of the
Tax-Exempt Bond Fund's taxable year, at least 50% of the value of its total
assets consists of securities the interest on which is exempt from the regular
federal income tax under Code section 103. Exempt-interest

<PAGE>

dividends distributed to shareholders are not included in shareholders' gross
income for regular federal income tax purposes. The Tax-Exempt Bond Fund will
determine periodically which distributions will be designated as
exempt-interest dividends. If the Tax-Exempt Bond Fund earns income which is
not eligible to be so designated, the Tax-Exempt Bond Fund intends to
distribute such income. Such distributions will be subject to federal, state
and local taxes, as applicable, in the hands of shareholders.

Interest on certain types of private activity bonds is not exempt from federal
income tax when received by "substantial users" (as defined in the Code). A
"substantial user" includes any "nonexempt person" who regularly uses in trade
or business part of a facility financed from the proceeds of private activity
bonds. The Tax-Exempt Bond Fund may invest periodically in private activity
bonds and, therefore, may not be an appropriate investment for entities that are
substantial users of facilities financed by private activity bonds or "related
persons' of substantial users. Generally, an individual will not be a related
person of a substantial user under the Code unless he/she or his/her immediate
family owns indirectly in aggregate more than 50% of the equity value of the
substantial user.

Opinions relating to the tax status of interest derived from individual
municipal securities are rendered by bond counsel to the issuer. Although the
Tax-Exempt Bond Fund's adviser attempts to determine that any security it
contemplates purchasing on behalf of the Tax-Exempt Bond Fund is issued with an
opinion indicating that interest payments will be exempt from federal and (as
applicable) state tax, neither the Adviser nor the Tax-Exempt Bond Fund's
counsel makes any review of proceedings relating to the issuance of municipal
securities or the bases of such opinions.

DISPOSITIONS

Upon a redemption, sale or exchange of shares of a Fund, a shareholder will
realize a taxable gain or loss depending upon his or her basis in the shares. A
gain or loss will be treated as capital gain or loss if the shares are capital
assets in the shareholder's hands, and the rate of tax will depend upon the
shareholder's holding period for the shares. Any loss realized on a redemption,
sale or exchange will be disallowed to the extent the shares disposed of are
replaced (including through reinvestment of dividends) within a period of 61
days, beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case the basis of the shares acquired will be adjusted to reflect
the disallowed loss. If a shareholder holds Fund shares for six months or less
and during that period receives a distribution taxable to the shareholder as
long-term capital gain, any loss realized on the sale of such shares during such
six-month period would be a long-term loss to the extent of such distribution.

If, within 90 days after purchasing Fund shares with a sales charge, a
shareholder exchanges the shares and acquires new shares at a reduced (or
without any) sales charge pursuant to a right acquired with the original
shares, then the shareholder may not take the original sales charge into
account in determining the shareholder's gain or loss on the disposition of
the shares. Gain or loss will generally be determined by excluding all or a
portion of the sales charge from the shareholder's tax basis in the exchanged
shares, and the amount excluded will be treated as an amount paid for the new
shares.

BACKUP WITHHOLDING

Each Fund generally will be required to withhold federal income tax at a rate of
31% ("backup withholding") from dividends paid (other than exempt-interest
dividends), capital gain distributions, and redemption proceeds to shareholders
if (1) the shareholder fails to furnish the Fund with the shareholder's correct
taxpayer identification number or social security number, (2) the IRS notifies
the shareholder or the Fund that the shareholder has failed to report properly
certain interest and dividend income to the IRS and to respond to notices to
that effect, or (3) when required to do so, the

<PAGE>

shareholder fails to certify that he or she is not subject to backup
withholding. Any amounts withheld may be credited against the shareholder's
federal income tax liability.

OTHER TAXATION

Distributions may be subject to additional state, local and foreign taxes,
depending on each shareholder's particular situation. Non-U.S. shareholders may
be subject to U.S. tax rules that differ significantly from those summarized
above, including the likelihood that ordinary income dividends to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower treaty rate, if
applicable).

FUND INVESTMENTS

MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than the
stated redemption price of such debt security, the excess of the stated
redemption price over the purchase price is "market discount". If the amount of
market discount is more than a DE MINIMIS amount, a portion of such market
discount must be included as ordinary income (not capital gain) by the Fund in
each taxable year in which the Fund owns an interest in such debt security and
receives a principal payment on it. In particular, a Fund will be required to
allocate that principal payment first to the portion of the market discount on
the debt security that has accrued but has not previously been includable in
income. In general, the amount of market discount that must be included for each
period is equal to the lesser of (i) the amount of market discount accruing
during such period (plus any accrued market discount for prior periods not
previously taken into account) or (ii) the amount of the principal payment with
respect to such period. Generally, market discount accrues on a daily basis for
each day the debt security is held by a Fund at a constant rate over the time
remaining to the debt security's maturity or, at the election of a Fund, at a
constant yield to maturity which takes into account the semi-annual compounding
of interest. Gain realized on the disposition of a market discount obligation
must be recognized as ordinary interest income (not capital gain) to the extent
of the "accrued market discount."

ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by a Fund may be
treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by the Fund, original issue discount that accrues on a debt security in
a given year generally is treated for federal income tax purposes as interest
and, therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies. Some debt securities may be
purchased by a Fund at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).

OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures contracts and
certain options (namely, nonequity options and dealer equity options) in which a
Fund may invest may be "section 1256 contracts." Gains (or losses) on these
contracts generally are considered to be 60% long-term and 40% short-term
capital gains or losses. Also, section 1256 contracts held by a Fund at the end
of each taxable year (and on certain other dates prescribed in the Code) are
"marked to market" with the result that unrealized gains or losses are treated
as though they were realized.

Transactions in options, futures and forward contracts undertaken by a Fund may
result in "straddles" for federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by such a Fund, and losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized. In
addition, certain carrying charges (including interest expense) associated with
positions in a straddle may be required to be capitalized rather than deducted
currently. Certain elections that a Fund may make with respect to its straddle

<PAGE>

positions may also affect the amount, character and timing of the recognition of
gains or losses from the affected positions.

Because only a few regulations implementing the straddle rules have been
promulgated, the consequences of such transactions to a Fund are not entirely
clear. The straddle rules may increase the amount of short-term capital gain
realized by the Fund, which is taxed as ordinary income when distributed to
shareholders. Because application of the straddle rules may affect the character
of gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders as ordinary income or long-term capital gain may be
increased or decreased substantially as compared to a fund that did not engage
in such transactions.

CONSTRUCTIVE SALES. Under certain circumstances, a Fund may recognize gain from
a constructive sale of an "appreciated financial position" it holds if it enters
into a short sale, forward contract or other transaction that substantially
reduces the risk of loss with respect to the appreciated position. In that
event, the Fund would be treated as if it had sold and immediately repurchased
the property and would be taxed on any gain (but not loss) from the constructive
sale. The character of gain from a constructive sale would depend upon the
Fund's holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Fund's holding period and the application of various loss
deferral provisions of the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.

SECTION 988 GAINS OR LOSSES. Gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues income or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of some investments, including debt securities and
certain forward contracts denominated in a foreign currency, gains or losses
attributable to fluctuations in the value of the foreign currency between the
acquisition and disposition of the position also are treated as ordinary gain or
loss. These gains and losses, referred to under the Code as "section 988" gains
or losses, increase or decrease the amount of such a Fund's investment company
taxable income available to be distributed to its shareholders as ordinary
income. If section 988 losses exceed other investment company taxable income
during a taxable year, the Fund would not be able to make any ordinary dividend
distributions, or distributions made before the losses were realized would be
recharacterized as a return of capital to shareholders, rather than as an
ordinary dividend, reducing each shareholder's basis in his or her Fund shares.

PASSIVE FOREIGN INVESTMENT COMPANIES. A Fund may invest in shares of foreign
corporations that may be classified under the Code as passive foreign investment
companies ("PFICs"). In general, a foreign corporation is classified as a PFIC
if at least one-half of its assets constitute investment-type assets, or 75% or
more of its gross income is investment-type income. If a Fund receives a
so-called "excess distribution" with respect to PFIC stock, the Fund itself may
be subject to a tax on a portion of the excess distribution, whether or not the
corresponding income is distributed by the Fund to shareholders. In general,
under the PFIC rules, an excess distribution is treated as having been realized
ratably over the period during which the Fund held the PFIC shares. A Fund will
itself be subject to tax on the portion, if any, of an excess distribution that
is so allocated to prior Fund taxable years and an interest factor will be added
to the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
excess distributions might have been classified as capital gain.

<PAGE>

A Fund may be eligible to elect alternative tax treatment with respect to PFIC
shares. Under an election that currently is available in some circumstances, the
Fund would be required to include in its gross income its share of the earnings
of a PFIC on a current basis, regardless of whether distributions were received
from the PFIC in a given year. If this election were made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. In addition, another election would involve marking to market the Fund's
PFIC shares at the end of each taxable year, with the result that unrealized
gains would be treated as though they were realized and reported as ordinary
income. Any mark-to-market losses and any loss from an actual disposition of
PFIC shares would be deductible as ordinary losses to the extent of any net
mark-to-market gains included in income in prior years.

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any broker-dealer or group of
brokers or dealers in the execution of transactions in portfolio securities.
Subject to policies established by the Trustees, the Managers are responsible
for placing orders to execute Fund transactions. In placing orders, it is the
Trust's policy to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Managers generally seek reasonably competitive spreads or
brokerage commissions, the Trust will not necessarily be paying the lowest
spread or commission available. The Trust will not purchase portfolio securities
from any affiliated person acting as principal except in conformity with the
regulations of the SEC.

It is possible that the Funds may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules and regulations of the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Fund on an exchange if a written contract is in
effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the Funds
may direct commission business to one or more designated broker-dealers,
including the Distributor, in connection with such broker-dealer's payment of
certain of the Funds' expenses. The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.

The portfolio turnover rates for each Fund for the first fiscal year are
expected to be as follows, but may deviate from these expected ranges:

Diversified Value Fund 25-35%
Diversified Growth Fund 50-60%
Select Growth Fund 30%
Small Cap Value Fund 40-50%
Small Cap Growth Fund ____%
Select Value Fund 40-50%
Family Heritage-Registered Trademark- Fund 25-35%
International Equity Fund ____%
Government/Corporate Bond Fund ____%
Tax-Exempt Bond Fund 33%

<PAGE>

Consistent with their duty to obtain best execution, the Managers may
allocate brokerage or principal business to certain broker-dealers in
recognition of the sale of Fund shares. In addition, a Fund's Manager may place
portfolio orders with qualified broker-dealers who recommend the Trust to
clients, and may, when a number of brokers and dealers can provide best price
and execution on a particular transaction, consider such recommendations by a
broker or dealer in selecting among broker-dealers.

The Trust does not expect to use one particular broker or dealer, but a
Fund's Manager may, consistent with the interests of the Fund, select brokers
on the basis of the research services they provide to that Manager. Such
services may include analysis of the business or prospects of a company,
industry or economic sector or statistical and pricing services. Information
so received by the Managers will be in addition to and not in lieu of the
services required to be performed by a Fund's Manager under the Advisory and
Sub-Advisory Agreements. If in the judgment of a Fund's Manager, the Fund, or
other accounts managed by the Fund's Manager, will be benefited by
supplemental research services, the Fund's Manager is authorized to pay
brokerage commissions to a broker furnishing such services that are in excess
of commissions which another broker may have charged for effecting the same
transaction. The expenses of a Fund's Manager will not necessarily be reduced
as a result of the receipt of such supplemental information.

The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act) which the Trust has acquired
during its most recent fiscal year. As of _____________, 2000 the Trust held the
following securities:

Diversified Value Fund None
Diversified Growth Fund None
Select Value Fund None
Select Growth None
Small Cap Value Fund None
Small Cap Growth Fund ____
Family Heritage -Registered Trademark- Fund None
International Equity Fund ____
Government/Corporate Bond Fund $1.8 million Lehman Bothers 7.25%
due 4/15/03
Tax-Exempt Bond Fund None

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of beneficial interest of each Fund, each of which represents an equal
proportionate interest in that Fund. Each share upon liquidation entitles a
shareholder to a pro rata share in the net assets of that Fund. Shareholders
have no preemptive rights. The Declaration of Trust provides that the Trustees
of the Trust may create additional series of shares or separate classes of
portfolios without shareholder approval. Share certificates representing the
shares will not be issued.

35
<PAGE>

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or administrators, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.

VOTING

Each share held entitles the shareholder of record to one vote. The
shareholders of each Fund or class will vote separately on matters pertaining
solely to that Fund or class, such as any distribution plan. As a Delaware
business trust, the Trust is not required to hold annual meetings of
shareholders, but approval will be sought for certain changes in the operation
of the Trust and for the election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees or by shareholders
at a special meeting called upon written request of shareholders owning at least
10% of the outstanding shares of the Trust. In the event that such a meeting is
requested, the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.

Where the Trust's Prospectus or Statement of Additional Information state
that an investment limitation or a fundamental policy may not be changed without
shareholder approval, such approval means the vote of: (i) 67% or more of the
affected Fund's shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy; or (ii)
more than 50% of the affected Fund's outstanding shares, whichever is less.

CONTROL PERSONS

As of ___________, 2000, Pitcairn Trust Company was the sole shareholder
of each Fund. Pitcairn Trust Company is a Pennsylvania chartered trust
company with principal offices at One Pitcairn Place, Suite 3000, Jenkintown,
PA 19046. Pitcairn Trust Company is a wholly-owned subsidiary of Pitcairn
Company, a Delaware corporation, which in turn is a wholly-owned subsidiary
of Pitcairn Group L. P., a Delaware limited partnership.

The following individuals may be deemed to be beneficial owners of greater
than 25% of the outstanding voting securities (limited partnership interests) in
Pitcairn Group L. P.(the "Units").

36
<PAGE>

Dirk Junge, a Vice President and Trustee of the Trust, may be deemed to have
or share the power to vote approximately 31.4% of the Units by virtue of Units
owned directly by Mr. Junge, his wife, his adult children, trusts for which he
serves as Trustee or Co-Trustee and partnerships for which he serves as general
partner. Mr. Junge is Chairman and CEO of Pitcairn Company which is the general
partner of Pitcairn Group L. P. Mr. Junge disclaims any beneficial interest
other than in the Units owned directly by him and his spouse.

Clark D. Pitcairn may be deemed to have or share the power to vote
approximately 29% of the Units by virtue of Units owned directly by Mr.
Pitcairn, his minor children, and trusts for which he serves as Trustee or
Co-Trustee. Mr. Pitcairn is a Director of Pitcairn Company which is the general
partner of Pitcairn Group L. P. Mr. Junge disclaims any beneficial interest
other than in the Units owned directly by him and his minor children.

Stephen Pitcairn may be deemed to have or share the power to vote
approximately 30% of the Units by virtue of Units owned directly by Mr.
Pitcairn, his wife, and trusts for which he serves as Trustee or Co-Trustee.
Mr. Pitcairn is a Director of Pitcairn Company which is the general partner
of Pitcairn Group L. P. Mr. Pitcairn disclaims any beneficial interest other
than in the Units owned directly by him and his wife.

Pitcairn Trust Company ("PTC") serves as co-trustee for trusts that
initially will own over half of the outstanding shares of the Funds. As
co-trustee, PTC will have or share voting power as to these shares.

5% SHAREHOLDERS

As of _______________, 2000 , the following person was the only person who
was a record owner (or to the knowledge of the Trust, beneficial owner) of 5% or
more of the shares of the Funds:

Pitcairn Trust Company
One Pitcairn Place, Suite 3000
Jenkintown, PA 19046.

Members of the Pitcairn family serve (in various combinations) as
co-trustee with Pitcairn Trust Company on trusts that are expected to be the
beneficial owners of shares of the Funds as of August 11, 2000. As
co-trustees these individuals share voting power and the power to dispose of
Fund shares with Pitcairn Trust Company and, as such, each individual
co-trustee may be deemed to be the beneficial owner of more than 5% of the
shares of each Fund. A list of the co-trustees and the percentage of shares
of each Fund held as trustee is as follows (there is duplicative reporting of
shares due to the overlapping nature of the co-trustees):

<TABLE>
<CAPTION>
DIVERSIFIED VALUE DIVERSIFIED GROWTH SELECT VALUE SELECT GROWTH SMALL CAP VALUE
----------------- ------------------ ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen Pitcairn 20.92% 20.90% 21.01% 20.60% 21.31%

Clark D. Pitcairn 21.33% 21.22% 21.42% 20.99% 19.90%

Dirk Junge 19.05% 19.04% 19.13% 18.75% 17.61%

Lachlan Pitcairn 21.45% 21.43% 21.54% 21.10% 19.63%

Feodor U. Pitcairn 10.88% 10.87% 10.92% 10.70% 10.00%

SMALL CAP GROWTH FAMILY HERITAGE INTERNATIONAL EQUITY GOV/CORP BOND TAX-EXEMPT BOND
---------------- --------------- -------------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Stephen Pitcairn 20.99% 20.61% 17.70% 0.00% 23.00%

Clark D. Pitcairn 19.61% 20.80% 0.00% 0.00% 18.02%

Dirk Junge 18.40% 18.40% 17.13% 0.00% 10.70%

Lachlan Pitcairn 19.34% 21.34% 18.32% 0.00% 15.16%

Feodor U. Pitcairn 9.86% 10.58% 9.87% 0.00% 5.97%
</TABLE>

37
<PAGE>

CUSTODIAN

The Northern Trust Company, (the "Custodian"), located at 50 South
LaSalle Street, Chicago, Illinois 60675, acts as Custodian and wire agent of
the assets. The Custodian hold cash, securities and other assets of the
Trust as required by the 1940 Act.

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, located at Two Commerce Square, Suite 1700,
2001 Market Street, Philadelphia, Pennsylvania 19103, serves as independent
accountants for the Trust and will audit the Trust's financial statements
annually.

The financial statements incorporated by reference into this Statement of
Additional Information have been incorporated by reference in reliance on the
report of PricewaterhouseCoopers, LLP located at 2 Commerce Square, Suite 1700,
2001 Market Street, Philadelphia, Pennsylvania 19103, independent accountants,
given on the authority of said firm as experts in auditing and accounting.

LEGAL COUNSEL

Dechert, 1775 Eye Street N.W., Washington, DC, 20006-2401, serves
as counsel to the Trust and to the Adviser.

Stradley, Ronan, Stevens & Young, LLP, 2600 One Commerce Square,
Philadelphia, Pennsylvania 19103-7098, serves as counsel to the
Non-Interested Trustees of the Trust.

<PAGE>

APPENDIX A

DESCRIPTION OF RATINGS

DESCRIPTION OF CORPORATE BOND RATINGS

The following descriptions of corporate bond ratings have been published by
Moody's, S&P, Duff and Phelps, Inc. ("Duff"), Fitch Investor's Services, Inc.
("Fitch"), IBCA Limited ("IBCA") and Thomson BankWatch ("Thomson"),
respectively.

DESCRIPTION OF MOODY'S LONG-TERM RATINGS

Aaa Bonds 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 edged". 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 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 risk appear
somewhat larger than the Aaa securities.

A Bonds rated A possess many favorable investment attributes and are to be
considered as 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 some time in the
future.

Baa Bonds rated Baa are considered as 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.

DESCRIPTION OF S&P'S LONG-TERM RATINGS

INVESTMENT GRADE

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 the highest rated debt only in small
degree.

A Debt rated "A" has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to 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 in higher
rated categories.

<PAGE>

DESCRIPTION OF DUFF'S LONG-TERM RATINGS

AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong.

AA- Risk is modest but may vary slightly from time to time because of
economic conditions.

A+ Protection factors are average but adequate. However, A- risk factors
are more variable and greater in periods of economic stress.

BBB+ Below average protection factors but still considered

BBB- sufficient for prudent investment. Considerable variability in risk
during economic cycles.

DESCRIPTION OF FITCH'S LONG-TERM RATINGS

INVESTMENT GRADE BOND

AAA Bonds rated AAA are judged to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary
institutions liable to slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a
showing of earnings several times or many times greater than interest
requirements, with such stability of applicable earnings that safety
is beyond reasonable question whatever changes occur in conditions.

AA Bonds rated AA are judged to be of safety virtually beyond question
and are readily salable, whose merits are not unlike those of the AAA
class, but whose margin of safety is less strikingly broad. The issue
may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the
enterprise and more local type market.

A Bonds rated A are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds
with higher ratings.

BBB Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest
and repay principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to
have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.

DESCRIPTION OF IBCA'S LONG-TERM RATINGS

AAA Obligations rated AAA 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.

<PAGE>

AA Obligations for which there is a very low expectation of investment
risk are rated AA. Capacity for timely repayment of principal and
interest is substantial. Adverse changes in business, economic or
financial conditions may increase investment risk albeit not very
significantly.

A Bonds rated A are obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk.

BBB Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of
principal and interest is adequate, although adverse changes in
business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in other categories.

DESCRIPTION OF THOMSON'S LONG-TERM DEBT RATINGS

INVESTMENT GRADE

AAA Bonds rated AAA indicate that the ability to repay principal and
interest on a timely basis is very high.

AA Bonds rated AA indicate a superior ability to repay principal and
interest on a timely basis, with limited incremental risk compared to
issues rated in the highest category.

A Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse
developments (both internal and external) than obligations with
higher ratings.

BBB Bonds rated BBB indicate an acceptable capacity to repay principal
and interest. Issues rated BBB are, however, more vulnerable to
adverse developments (both internal and external) than obligations
with higher ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

The following descriptions of commercial paper ratings have been published
by Moody's, Standard and Poor's, Duff and Phelps, Fitch, IBCA and Thomson
BankWatch, respectively.

DESCRIPTION OF MOODY'S SHORT-TERM RATINGS

PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the
following characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial
charges and high internal cash generation.

- Well-established access to a range of financial markets and
assured

<PAGE>

sources of alternate liquidity.

PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited
above but to a lesser degree. Earnings trends and coverage ratios,
while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.

S&P'S SHORT-TERM RATINGS

A-1 This highest category indicates that the degree of safety regarding
timely payment is strong. Debt determined to possess extremely strong
safety characteristics is denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1".

DESCRIPTION OF DUFF'S SHORT-TERM RATINGS

Duff 1+ Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative
sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.

Duff 1 Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.

Duff 1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are
very small.

GOOD GRADE

Duff 2 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.

DESCRIPTION OF FITCH'S SHORT-TERM RATINGS

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely
payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated "F-1+"

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" and "F-1" ratings.

LOC The symbol LOC indicates that the rating is based on a letter of
credit issued by a commercial bank.

42
<PAGE>

DESCRIPTION OF IBCA'S SHORT-TERM RATINGS (UP TO 12 MONTHS)

A1+ Obligations supported by the highest capacity for timely repayment.

A1 Obligations supported by a strong capacity for timely repayment.

A2 Obligations supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse
changes in business, economic, or financial conditions.

DESCRIPTION OF THOMSON'S SHORT-TERM RATINGS

TBW-1 The highest category; indicates a very high 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".

43
<PAGE>

PART C
OTHER INFORMATION

ITEM 23. EXHIBITS

(a)(1) Amended and Restated Declaration of Trust (1)

(2) Certificate of Trust (1)

(b) By-laws (1)

(c) Certificates for shares are not issued. Articles III, V and VI of the
Registrant's Amended and Restated Declaration of Trust and Article II
of the Registrant's By-laws define the rights of holders of shares of
beneficial interest

(d)(1) Investment Advisory Agreement between Pitcairn Funds and Pitcairn
Investment Management, a division of Pitcairn Trust Company (1)

(2) Form of Investment Management Agreement between Pitcairn Trust Company
and Oechsle International Advisors, LLC as Sub-Adviser to the
International Equity Fund (1)

(3) Form of Investment Management Agreement between Pitcairn Trust Company
and Standish Ayer & Wood, Inc. as Sub-Adviser to the Small Cap Growth
Fund (1)

(4) Form of Investment Management Agreement between Pitcairn Trust Company
and Sands Capital Management, Inc. as Sub-Adviser to the Select Growth
Fund (1)

(e) Distribution Agreement between Pitcairn Funds and SEI Investments
Distribution Co. (1)

(f) N/A

(g) Custody Agreement (1)

(h)(1) Administration Agreement between Pitcairn Funds and SEI Investments
Mutual Funds Services (2)

(2) Transfer Agency and Service Agreement between Pitcairn Funds and
State Street Bank and Trust Company (1)

(3) Expense Limitation Agreement between Pitcairn Funds and Pitcairn
Trust Company (1)

(4) Form of Shareholder Services Agreement (1)

(5) Shareholder Service Plan (1)

(i) Legal Opinion of Dechert regarding the legality of the securities being
registered (2)

(j) Auditor's Consent of PricewaterhouseCoopers LLP (2)

(k) N/A

(l) Subscription for the Purchase of Shares of Beneficial Interest of
Pitcairn Funds (2)

(m) N/A

(n) N/A

(p)(1) Code of Ethics of Pitcairn Trust Company (1)

(2) Code of Ethics of Oechsle International Advisors, LLC (1)

(3) Code of Ethics of Standish, Ayer & Wood, Inc. (1)

(4) Code of Ethics of Sands Capital Management, Inc. (1)

(5) Code of Ethics of SEI Investments Distribution Co. (1)

(6) Code of Ethics of the Pitcairn Funds (1)

(q)(1) Power of Attorney of Alvin A. Clay III (1)

(2) Power of Attorney of Dirk Junge (1)

(3) Power of Attorney of George M. Chamberlain (1)

(4) Power of Attorney of Carleton A. Holstrom (1)

(5) Power of Attorney of James R Wood (1)

(6) Power of Attorney of William C. McCormick (1)

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

(1) Filed herewith

(2) To be filed by amendment.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND

Pitcairn Trust Company ("PTC"), a Pennsylvania state-chartered trust
company, established the Trust. PTC is controlled by Pitcairn Company, a
Pennsylvania Corporation, which, in turn, is controlled by Pitcairn Group,
L.P., a Delaware limited partnership. Pitcairn Company serves as the General
Partner to the following partnerships: Pitcairn International Stock Fund,
L.P., (to be terminated) Pitcairn Taxable Fixed Income Investment
Partnership, L.P., (to be terminated) Pitcairn Alternative Investment Fund,
L.P. and Pitcairn Group, L.P.

ITEM 25. INDEMNIFICATION

Reference is made to Article VII of the Registrant's Amended and Restated
Declaration of Trust.

Reference is made to Article VII of the Distribution Agreement incorporated
herein by reference and filed herewith as Exhibit (e).

<PAGE>

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the
Amended and Restated Declaration of Trust or otherwise, the Registrant is
aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and,
therefore, is unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by trustees, officers or controlling persons of the
Registrant in connection with the successful defense of any act, suit or
proceeding) is asserted by such trustees, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issues.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER

Pitcairn Investment Management ("Pitcairn" or the "Adviser") is a division of
Pitcairn Trust Company ("PTC"), a state chartered trust company. The
principal business address of Pitcairn is One Pitcairn Place, Suite 3000,
Jenkintown Pennsylvania, 19046. Pitcairn Trust Company was founded in 1987,
and is a state-chartered trust company formed for the purposes of conducting
a general trust company business with the power to act, alone or with others,
as fiduciary, investment adviser, custodian of property and agent or
attorney-in-fact. Affiliates of Pitcairn have provided family office
services, including investment advice, to high net worth individuals and
their related trusts for more than 75 years. The Adviser was formed as a
division of Pitcairn Trust Company in ___________, 2000 in order to provide
investment advisory and Manager selection services to the Trust.

Information as to the directors and officers of the sub-advisers, together with
information as to any other business, profession, vocation or employment of a
substantial nature engaged in by the directors and officers of the sub-advisers
in the last two years, are included in their applications for registration as
investment advisers on Form ADV of Oechsle International Advisors, LLC, File
No. 801-56031; Standish, Ayer & Wood, Inc., File No. 801-00584; Sands Capital
Management, Inc., File No. 801-36414.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
The PBHG Funds, Inc. July 16, 1993
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
STI Classic Variable Trust August 18, 1995

<PAGE>

ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
CNI Charter Funds April 1, 1999
The Armada Advantage Fund May 1, 1999
Amerindo Funds Inc. July 13, 1999
Huntington VA Funds October 15, 1999
Friends Ivory Funds December 16, 1999
SEI Insurance Products Trust March 29, 2000

The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").

(b) Information as to the directors and officers of SEI Investments
Distribution Co. (the "Distributor"), together with information as to
any other business, profession, vocation or employment of a
substantial nature engaged in by the directors and officers of the
Distributor in the last two years, is included in its application for
registration as a broker-dealer on Form BD (CRD#10690) filed under
the Securities and Exchange Act of 1934 and is incorporated herein by
reference.

<PAGE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules promulgated
thereunder are maintained at the office of Registrant, One Pitcairn Place,
165 Township Line Road, Suite 3000, Jenkintown, PA 19046-3593, at the offices
of SEI Investments Mutual Funds Services, Oaks, Pennsylvania 19456, and at
the offices of Vontobel USA Inc., 450 Park Avenue, New York, New York 10022.
Records relating to the duties of the Custodian for the Funds are maintained
by Summit Bank, 210 Main Street, Hackensack, New Jersey 07601 and by Union
Bank of California Hobal Custody, 475 Sansome Street, 11th Floor, San
Francisco, California 94111.

ITEM 29. MANAGEMENT SERVICES

Not applicable.

ITEM 30. UNDERTAKINGS

The Registrant hereby undertakes to file an amendment to the registration
statement with certified financial statements showing the initial capital
received.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Jenkintown in the State of Pennsylvania on the 23rd day of June, 2000.

PITCAIRN TRUST COMPANY
(Registrant)

By: /s/ Alvin A. Clay III
-------------------------
Name: Alvin A. Clay III
Title: President and Chief Executive Officer

By: /s/ Averill R. Jarvis
-------------------------
Averill R. Jarvis
As ATTORNEY-IN-FACT

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

SIGNATURE TITLE DATE

/s/ Alvin A. Clay III
---------------------
Alvin A. Clay III Trustee July 28, 2000
(President and Chief
Executive Officer)

/s/ Dirk Junge
--------------
Dirk Junge* Trustee July 28, 2000

/s/ George M. Chamberlain
-------------------------
George M. Chamberlain* Trustee July 28, 2000

/s/ Carleton A. Holstrom
------------------------
Carleton A. Holstrom* Trustee July 28, 2000

/s/ James R. Wood
-----------------
James R. Wood* Trustee July 28, 2000

/s/ William C. McCormick
------------------------
William C. McCormick Treasurer (Chief Financial July 28, 2000
Officer and Accounting Officer)

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

* Pursuant to powers of attorney filed herewith.

<PAGE>

Exhibit Index

Exhibit Description
------- -----------

(a)(1) Amended and Restated Declaration of Trust

(2) Certificate of Trust

(b) By-laws

(d)(1) Investment Advisory Agreement between Pitcairn Funds and Pitcairn
Investment Management, a division of Pitcairn Trust Company

(2) Form of Investment Management Agreement between Pitcairn Trust Company
and Oechsle International Advisors, LLC as Sub-Adviser to the
International Equity Fund

(3) Form of Investment Management Agreement between Pitcairn Trust Company
and Standish Ayer & Wood, Inc. as Sub-Adviser to the Small Cap Growth
Fund

(4) Form of Investment Management Agreement between Pitcairn Trust Company
and Sands Capital Management, Inc. as Sub-Adviser to the Select Growth
Fund

(e) Distribution Agreement between Pitcairn Funds and SEI Investments
Distribution Co.

(f) N/A

(g) Custody Agreement

(h)(2) Transfer Agency and Service Agreement between Pitcairn Funds and
State Street Bank and Trust Company

(3) Expense Limitation Agreement between Pitcairn Funds and Pitcairn
Trust Company

(4) Shareholder Services Agreement

(5) Shareholder Services Plan

(p)(1) Code of Ethics of Pitcairn Trust Company

(2) Code of Ethics of Oechsle International Advisors, LLC

(3) Code of Ethics of Standish, Ayer & Wood, Inc.

(4) Code of Ethics of Sands Capital Management, Inc.

(5) Code of Ethics of SEI Investments Distribution Co.

(6) Code of Ethics of the Pitcairn Funds

(q)(1) Power of Attorney of Alvin A. Clay III

(2) Power of Attorney of Dirk Junge

(3) Power of Attorney of George M. Chamberlain

(4) Power of Attorney of Carleton A. Holstrom

(5) Power of Attorney of James R Wood

(6) Power of Attorney of William McCormick

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