<PAGE>
As filed with the Securities and Exchange Commission on
March 29, 1996
1933 Act Registration No. 2-80543
1940 Act Registration No. 811-3605
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 ( )
Post-Effective Amendment No. 31 ( X )
and/or
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940 ( )
Amendment No. 32 ( X )
(Check appropriate box or boxes)
--------------------
THE BENCHMARK FUNDS
(Exact name of registrant as specified in charter)
4900 Sears Tower
Chicago, Illinois 60606
(Address of principal executive offices)
(Registrant's Telephone Number, including Area Code)
800-621-2550
Michael J. Richman, Secretary with a copy to:
Goldman Sachs Asset Management W. Bruce McConnel, III
85 Broad Street Drinker Biddle & Reath
New York, NY 10004 Suite 1100
1345 Chestnut Street
Philadelphia, PA
19107-3496
(name and address of agent for service)
The Index to Exhibits is located on page ____.
Page 1 of ___ total pages.
<PAGE>
It is proposed that this filing will become effective
(check appropriate box)
( ) immediately upon filing pursuant to paragraph (b)
(x) on March 29, 1996 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
( ) On (date) pursuant to paragraph (a)(2) of rule 485
( ) 75 days after filing pursuant to paragraph (a)(2) on (date)
( ) On (date) pursuant to paragraph (a)(2) of rule 485
================================================================================
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of its units of beneficial interest under the
Securities Act of 1933. On January 29, 1996, Registrant filed a Rule 24f-2
Notice for its fiscal year ended November 30, 1995. Registrant continues its
election to register an indefinite number of units of beneficial interest
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
DIVERSIFIED ASSETS PORTFOLIO
CROSS REFERENCE SHEET
(as required by Rule 495)
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
GOVERNMENT PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
GOVERNMENT SELECT PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
TAX-EXEMPT PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
U.S. TREASURY INDEX PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
U.S. GOVERNMENT SECURITIES PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
SHORT-INTERMEDIATE BOND PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
BOND PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
SHORT DURATION PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
INTERNATIONAL BOND PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
BALANCED PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
EQUITY INDEX PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
DIVERSIFIED GROWTH PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
FOCUSED GROWTH PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
SMALL COMPANY INDEX PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
INTERNATIONAL GROWTH PORTFOLIO
CROSS REFERENCE SHEET
Form N-1A
Part A
Item Prospectus Caption
- ---------- ------------------
Cover Page Cover Page
Synopsis Summary of Expenses
Condensed Financial Information Financial Highlights
General Description of Registration Summary of Expenses;
Investment
Information;
Organization
Management of the Fund Trust Information
Capital Stock and Other Securities Trust Information;
Investing; Net Asset
Value; Organization
Purchase of Securities Being Offered Trust Information;
Investing; Net Asset
Value
Redemption Repurchase Investing
Pending Legal Proceedings Not Applicable
<PAGE>
The
Benchmark
Funds
Money
Market
Portfolios
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian:
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor:
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
PROSPECTUS
APRIL 1, 1996
<PAGE>
THE BENCHMARK FUNDS
THE NORTHERN TRUST COMPANY INVESTMENT ADVISER, TRANSFER
50 S. LaSalle Street AGENT AND CUSTODIAN
Chicago, Illinois 60675
312-630-6000 --------------------
This Prospectus describes four short-term money market portfolios (the
"Portfolios") offered by The Benchmark Funds (the "Trust") to institutional
investors. Each Portfolio, other than the Tax-Exempt Portfolio, seeks to
maximize current income to the extent consistent with the preservation of
capital and maintenance of liquidity. The Tax-Exempt Portfolio seeks to
provide, to the extent consistent with the preservation of capital and
prescribed portfolio standards, a high level of income exempt from regular
Federal income tax.
The GOVERNMENT SELECT PORTFOLIO invests in selected short-term obligations
of the U.S. Government, its agencies and instrumentalities the interest on
which is generally exempt from state income taxation.
The GOVERNMENT PORTFOLIO invests in short-term obligations of the U.S.
Government, its agencies and instrumentalities and related repurchase
agreements.
The DIVERSIFIED ASSETS PORTFOLIO invests in money market instruments of
both U.S. and foreign issuers, including certificates of deposit, bankers'
acceptances, commercial paper and repurchase agreements.
The TAX-EXEMPT PORTFOLIO invests primarily in short-term municipal
instruments the interest on which is exempt from regular Federal income
tax.
Each Portfolio is advised by The Northern Trust Company ("Northern"). Units are
sold and redeemed without any purchase or redemption charge imposed by the
Trust, although Northern and other institutions may charge their customers for
services provided in connection with their investments.
This Prospectus provides information about the Portfolios that you should know
before investing. It should be read and retained for future reference. If you
would like more detailed information, a Statement of Additional Information
(the "Additional Statement") dated April 1, 1996 is available upon request
without charge by writing to the Trust's distributor, Goldman, Sachs & Co.
("Goldman Sachs"), 4900 Sears Tower, Chicago, Illinois 60606 or by calling 1-
800-621-2550.
UNITS OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS PARENT
COMPANY OR ITS AFFILIATES AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. THERE CAN BE NO ASSURANCE THAT ANY
PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER UNIT.
AN INVESTMENT IN A PORTFOLIO INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is April 1, 1996.
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HIGHLIGHTS 3
- ----------
Description of Trust 3
Summary of Expenses 3
FINANCIAL HIGHLIGHTS 5
- --------------------
INVESTMENT INFORMATION 9
- ----------------------
Government Select Portfolio 9
Government Portfolio 10
Diversified Assets Portfolio 10
Tax-Exempt Portfolio 10
Description of Securities and Com-
mon Investment Techniques 11
Investment Restrictions 17
TRUST INFORMATION 18
- -----------------
Board of Trustees 18
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Adviser, Transfer Agent
and Custodian 18
Administrator and Distributor 19
INVESTING 19
- ---------
Purchase of Units 19
Redemption of Units 22
Distributions 24
Taxes 25
NET ASSET VALUE 26
- ---------------
PERFORMANCE INFORMATION 26
- -----------------------
ORGANIZATION 27
- ------------
MISCELLANEOUS 28
- -------------
</TABLE>
2
<PAGE>
HIGHLIGHTS
DESCRIPTION OF TRUST
The Trust is an open-end, management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). Each Portfolio consists of a
separate pool of assets with separate investment policies, as described below
under "Investment Information." All of the Portfolios are classified as
diversified companies. Northern serves as investment adviser, transfer agent
and custodian. Goldman Sachs serves as distributor and administrator.
Units of the Portfolios are offered exclusively to institutional investors. See
"Investing--Purchase of Units" and "Investing--Redemption of Units" for
information on how to place purchase and redemption orders.
Each Portfolio seeks to maintain a net asset value of $1.00 per unit. The
assets of each Portfolio will be invested in dollar-denominated debt securities
with remaining maturities of thirteen months or less as defined by the
Securities and Exchange Commission (the "SEC"), and each Portfolio's dollar-
weighted average portfolio maturity will not exceed 90 days. All securities
acquired by the Portfolios will be determined by Northern, under guidelines
established by the Trust's Board of Trustees, to present minimal credit risks,
and will be "Eligible Securities" as defined by the SEC. There can be no
assurance that the Portfolios will be able to achieve a stable net asset value
on a continuous basis, or that they will achieve their investment objectives.
Investors should note that one or more of the Portfolios may purchase variable
and floating rate instruments, enter into repurchase agreements, reverse
repurchase agreements and securities loans, acquire U.S. dollar-denominated
instruments of foreign issuers and make limited investments in illiquid
securities and securities issued by other investment companies. These
investment practices involve investment risks of varying degrees. None of the
Portfolios will invest in instruments denominated in a foreign currency.
SUMMARY OF EXPENSES
The following table sets forth certain information regarding the annualized
operating expenses the Government Select Portfolio, Government Portfolio and
Tax-Exempt Portfolio incurred during the Trust's last fiscal year. With respect
to the Diversified Assets Portfolio, the table sets forth certain information
regarding unitholder transaction expenses imposed by the Trust and the
estimated annualized operating expenses the Diversified Assets Portfolio
expects to incur during the current fiscal year. Hypothetical examples based on
the table are also shown.
<TABLE>
<CAPTION>
GOVERNMENT DIVERSIFIED TAX-
SELECT GOVERNMENT ASSETS EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Unitholder Transaction Expenses
Maximum Sales Charge Imposed on
Purchases....................... NONE NONE NONE NONE
Sales Charge Imposed on Rein-
vested Distributions............ NONE NONE NONE NONE
Deferred Sales Load Imposed on
Redemptions..................... NONE NONE NONE NONE
Redemption Fees.................. NONE NONE NONE NONE
Exchange Fees.................... NONE NONE NONE NONE
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
GOVERNMENT DIVERSIFIED TAX-
SELECT GOVERNMENT ASSETS EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Annual Operating Expenses After
Expense Reimbursements and Fee
Reductions (as a percentage of
average daily net assets)
Management Fees After Fee Reduc-
tions.......................... .10% .25% .25% .25%
12b-1 Fees...................... None None None None
Other Expenses After Expense Re-
imbursements and Fee Reduc-
tions.......................... .10% .10% .10% .10%
---- ---- ---- ----
Total Operating Expenses.......... .20% .35% .35% .35%
==== ==== ==== ====
</TABLE>
EXAMPLE OF EXPENSES. Based on the foregoing table, you would pay the following
expenses on a hypothetical $1,000 investment, assuming a 5% annual return and
redemption at the end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Government Select Portfolio..................... $2 $ 6 $11 $26
Government Portfolio............................ $4 $11 $20 $44
Diversified Assets Portfolio.................... $4 $11 $20 $44
Tax-Exempt Portfolio............................ $4 $11 $20 $44
</TABLE>
Operating expenses for the Diversified Assets Portfolio are based on estimates
of expenses expected to be incurred during the fiscal year ending November 30,
1996. With respect to the other Portfolios, the costs and expenses included in
the table and hypothetical example are based on actual amounts incurred for the
fiscal year ended November 30, 1995. The costs and expenses included in the
table and hypothetical example have been restated to reflect current costs and
expenses. Annual operating expenses for the Diversified Assets Portfolio during
the fiscal year ended November 30, 1995 (expressed as a percentage of average
daily net assets after fee adjustments and expense limitations) were as
follows: management fees and other expenses were .25% and .09%, respectively,
and total operating expenses were .34%.
During the Trust's last fiscal year, Northern voluntarily reduced its advisory
fee for the Government Select Portfolio (payable at the annual rate of .25% of
the Portfolio's average daily net assets) to .10% per annum. In addition,
Goldman Sachs has agreed to reduce or otherwise limit other expenses of the
Portfolios on an annualized basis to .10% of each such Portfolio's average
daily net assets. The expense information in the table has, accordingly, been
presented to reflect these fee reductions and reimbursements. Without the
undertakings of Northern and Goldman Sachs, for the fiscal year ended November
30, 1995, the total annual operating expenses of the Government Select,
Government and Tax-Exempt Portfolios would have been .41%, .40% and .41%,
respectively; and other expenses of the Government Select, Government and Tax-
Exempt Portfolios would have been .16%, .15% and .16%, respectively. For a more
complete description of the Portfolios' expenses, see "Financial Highlights"
and "Trust Information" in this Prospectus and the financial statements and
related notes incorporated by reference into the Additional Statement.
---------------------
THE PURPOSE OF THE FOREGOING TABLE IS TO ASSIST YOU IN UNDERSTANDING THE
VARIOUS UNITHOLDER TRANSACTION AND OPERATING EXPENSES OF EACH PORTFOLIO THAT
UNITHOLDERS BEAR DIRECTLY OR INDIRECTLY. IT DOES NOT, HOWEVER, REFLECT ANY
CHARGES WHICH MAY BE IMPOSED BY NORTHERN, ITS AFFILIATES AND CORRESPONDENT
BANKS AND OTHER INSTITUTIONS ON THEIR CUSTOMERS AS DESCRIBED UNDER "INVESTING--
PURCHASE OF UNITS." THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES
AND RATE OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN.
4
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following data have been audited by Ernst & Young LLP, independent
auditors, as indicated in their report incorporated by reference into the
Additional Statement from the annual report to unitholders for the fiscal year
ended November 30, 1995, and should be read in conjunction with the financial
statements and related notes incorporated by reference and attached to the
Additional Statement.
For the Years Ended November 30,
Government Select Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 (a)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.06 0.04 0.03 0.04 0.06 0.01
- ---------------------------------------------------------------------------------------
Total income from
investment operations 0.06 0.04 0.03 0.04 0.06 0.01
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.06) (0.04) (0.03) (0.04) (0.06) (0.01)
- ---------------------------------------------------------------------------------------
Total distributions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.01)
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------
Total return (b)(c) 5.82% 3.84% 3.00% 3.71% 5.82% 0.50%
Ratios to average net
assets (d):
Net expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income 5.67% 3.83% 2.99% 3.70% 5.78% 7.65%
Ratios to average net
assets assuming no
voluntary waiver of
advisory and
administration fees and
maximum non-reimbursable
expenses (d):
Net expenses 0.35% 0.35% 0.35% 0.52% 0.60% 1.33%
Net investment income 5.52% 3.68% 2.84% 3.38% 5.38% 6.52%
Net assets at end of
period (in thousands) $685,142 $493,718 $386,507 $264,756 $160,750 $44,215
- ---------------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on November 7, 1990.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(c) Total return for the year ended November 30, 1995 would have been 5.80%
absent the effect of a capital contribution equivalent to $.0002 per share
received from Northern Trust Corporation.
(d) Annualized for periods less than a full year.
5
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Government Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total income from in-
vestment operations 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.06)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (a)(b) 5.64% 3.78% 2.91% 3.91% 6.18% 7.89% 8.63% 6.83% 6.15% 5.94%
Ratios to average net
assets:
Net expenses 0.35% 0.34% 0.34% 0.34% 0.35% 0.37% 0.50% 0.54% 0.44% 0.40%
Net investment income 5.49% 3.60% 2.92% 3.71% 6.03% 7.88% 8.63% 6.83% 6.15% 5.94%
Ratios to average net
assets assuming no vol-
untary waiver of advi-
sory and administration
fees and maximum non-re-
imbursable expenses:
Net expenses 0.35% 0.35% 0.35% 0.40% 0.40% 0.46% 0.50% 0.55% 0.55% 0.62%
Net investment income 5.49% 3.59% 2.91% 3.65% 5.98% 7.79% 8.63% 6.82% 6.04% 5.72%
Net assets at end of
year (in thousands) $850,664 $787,816 $1,065,705 $1,163,905 $895,405 $971,720 $423,517 $335,301 $218,530 $160,542
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the year.
(b) Total return for the year ended November 30, 1995 would have been 5.53%
absent the effect of a capital contribution equivalent to $.0011 per share
received from Northern Trust Corporation.
6
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Diversified Assets Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM IN-
VESTMENT OPERA-
TIONS:
Net investment
income 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06
- -----------------------------------------------------------------------------------------------------------------------------
Total income
from investment
operations 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS
FROM:
Net investment
income (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
- -----------------------------------------------------------------------------------------------------------------------------
Total distribu-
tions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total return
(a)(b) 5.78% 3.92% 3.00% 3.80% 6.19% 8.01% 8.98% 7.15% 6.30%
Ratios to aver-
age net assets:
Net expenses 0.34% 0.35% 0.34% 0.34% 0.35% 0.35% 0.37% 0.39% 0.41%
Net investment
income 5.63% 3.74% 3.00% 3.79% 6.18% 8.01% 8.98% 7.15% 6.30%
Ratios to aver-
age net assets
assuming no vol-
untary waiver of
advisory and ad-
ministration
fees and maximum
non-reimbursable
expenses:
Net expenses 0.34% 0.35% 0.35% 0.35% 0.36% 0.36% 0.37% 0.39% 0.41%
Net investment
income 5.63% 3.74% 2.99% 3.78% 6.17% 8.00% 8.98% 7.15% 6.30%
Net assets at
end of year (in
thousands) $2,610,347 $2,891,880 $3,200,288 $2,801,744 $2,784,485 $2,192,756 $1,871,713 $1,528,203 $1,533,941
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1986
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF
YEAR $1.00
INCOME FROM IN-
VESTMENT OPERA-
TIONS:
Net investment
income 0.07
- -----------------------------------------------------------------------------------------------------------------------------
Total income
from investment
operations 0.07
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS
FROM:
Net investment
income (0.07)
- -----------------------------------------------------------------------------------------------------------------------------
Total distribu-
tions to
unitholders (0.07)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total return
(a)(b) 6.56%
Ratios to aver-
age net assets:
Net expenses 0.40%
Net investment
income 6.56%
Ratios to aver-
age net assets
assuming no vol-
untary waiver of
advisory and ad-
ministration
fees and maximum
non-reimbursable
expenses:
Net expenses 0.40%
Net investment
income 6.56%
Net assets at
end of year (in
thousands) $1,080,659
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the year.
(b) Total return for the year ended November 30, 1995 would have been 5.73%
absent the effect of a capital contribution equivalent to $.0005 per share
received from Northern Trust Corporation.
7
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Tax-Exempt Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.04 0.02 0.02 0.03 0.05 0.06 0.06 0.05 0.04 0.04
- ---------------------------------------------------------------------------------------------------------------------------------
Total income from in-
vestment operations 0.04 0.02 0.02 0.03 0.05 0.06 0.06 0.05 0.04 0.04
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.04) (0.02) (0.02) (0.03) (0.05) (0.06) (0.06) (0.05) (0.04) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to
unitholders (0.04) (0.02) (0.02) (0.03) (0.05) (0.06) (0.06) (0.05) (0.04) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (a) 3.71% 2.62% 2.27% 2.97% 4.57% 5.71% 6.04% 4.92% 4.00% 4.30%
Ratios to average net
assets:
Net expenses 0.35% 0.35% 0.34% 0.34% 0.35% 0.36% 0.49% 0.48% 0.45% 0.47%
Net investment income 3.63% 2.40% 2.27% 2.95% 4.57% 5.71% 6.03% 4.92% 4.00% 4.30%
Ratios to average net
assets assuming no vol-
untary waiver of advi-
sory and administration
fees and maximum non-re-
imbursable expenses:
Net expenses 0.35% 0.35% 0.35% 0.39% 0.40% 0.43% 0.49% 0.48% 0.46% 0.50%
Net investment income 3.63% 2.40% 2.26% 2.90% 4.52% 5.64% 6.03% 4.92% 3.99% 4.27%
Net assets at end of
year (in thousands) $803,730 $853,103 $1,191,932 $1,226,480 $872,405 $752,257 $545,215 $529,680 $410,772 $456,467
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the end of the year.
8
<PAGE>
INVESTMENT INFORMATION
The investment objective of each Portfolio, other than the Tax-Exempt
Portfolio, is to seek to maximize current income to the extent consistent with
the preservation of capital and maintenance of liquidity by investing
exclusively in high quality money market instruments. The Tax-Exempt Portfolio
seeks to provide its unitholders, to the extent consistent with the
preservation of capital and prescribed portfolio standards, with a high level
of income exempt from Federal income tax by investing primarily in municipal
instruments. The investment objective of a Portfolio may not be changed without
the vote of the majority of the outstanding units of the particular Portfolio
(as defined below under "Organization"). Except as expressly noted below,
however, a Portfolio's investment policies may be changed without a vote of
unitholders.
All securities acquired by the Portfolios will be determined by Northern, under
guidelines established by the Board of Trustees, to present minimal credit
risks and will be "Eligible Securities" as defined by the SEC. Eligible
Securities consist of (i) securities that either (a) have short-term debt
ratings at the time of purchase in the two highest rating categories by at
least two unaffiliated nationally recognized statistical rating organizations
("NRSROs") (or one NRSRO if the security is rated by only one NRSRO), or (b)
are comparable in priority and security with a security issued by an issuer
which has such ratings, and (ii) securities that are unrated (including
securities of issuers that have long-term but not short-term ratings) but are
of comparable quality as determined in accordance with guidelines approved by
the Board of Trustees. The purchase of single rated and unrated securities by
the Diversified Assets Portfolio will be ratified by the Board of Trustees.
Securities which are rated (or that have been issued by an issuer that is rated
with respect to a class of short-term debt obligations), or any security within
that class, comparable in priority and quality with such securities in the
highest short-term rating category by at least two NRSROs are designated "First
Tier Securities." Under normal circumstances, the Diversified Assets Portfolio,
Government Portfolio and Government Select Portfolio intend to limit purchases
of securities to First Tier Securities. The Additional Statement includes a
description of applicable NRSRO ratings.
Each Portfolio is managed so that the average maturity of all instruments in
the Portfolio (on a dollar-weighted basis) will not exceed 90 days. In no event
will the Portfolios purchase any securities which mature more than 13 months
from the date of purchase (except for certain variable and floating rate
instruments and securities collateralizing repurchase agreements). Securities
in which the Portfolios invest may not earn as high a level of income as long-
term or lower quality securities, which generally have greater market risk and
more fluctuation in market value.
GOVERNMENT SELECT PORTFOLIO
The Government Select Portfolio seeks to achieve its investment objective by
investing exclusively in securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities. In making
investments, Northern will seek to acquire, under normal market conditions,
only those U.S. Government securities the interest on which is generally exempt
from state income taxation. Securities generally eligible for this exemption
include those issued by the U.S. Treasury and certain U.S. Government agencies
and instrumentalities, including the Federal Home Loan Bank, Federal Farm
Credit Banks Funding Corp. and the Student Loan Marketing Association. The
Portfolio intends to limit investments to only the foregoing exempt U.S.
Government securities. However, under extraordinary circumstances, such as when
appropriate exempt securities are unavailable, the Portfolio may make
investments in non-exempt U.S. Government securities and cash equivalents, and
may hold uninvested cash. See "Investing--Taxes" below for certain tax
considerations.
9
<PAGE>
GOVERNMENT PORTFOLIO
The Government Portfolio seeks to achieve its investment objective by investing
exclusively in:
(A) Marketable securities issued or guaranteed as to principal and interest
by the U.S. Government or by any of its agencies or instrumentalities
(including the International Bank for Reconstruction and Development) and
custodial receipts with respect thereto; and
(B) Repurchase agreements relating to the above instruments.
DIVERSIFIED ASSETS PORTFOLIO
In pursuing its investment objective, the Diversified Assets Portfolio may
invest in a broad range of government, bank and commercial obligations that are
available in the money markets. In particular, the Portfolio may invest in:
(A) U.S. dollar-denominated obligations of U.S. banks with total assets in
excess of $1 billion (including obligations of foreign branches of such
banks);
(B) U.S. dollar-denominated obligations of foreign commercial banks where
such banks have total assets in excess of $5 billion;
(C) High quality commercial paper and other obligations issued or
guaranteed by U.S. and foreign corporations and other issuers rated (at the
time of purchase) A-2 or higher by Standard & Poor's Ratings Group ("S&P"),
Prime-2 or higher by Moody's Investors Service, Inc. ("Moody's"), Duff 2 or
higher by Duff & Phelps Credit Rating Co. ("D&P"), F-2 or higher by Fitch
Investors Service, Inc. ("Fitch") or TBW-2 or higher by Thomson BankWatch,
Inc. ("TBW"), as well as high quality corporate bonds rated (at the time of
purchase) AA or higher by S&P, D&P, Fitch or TBW or Aa or higher by
Moody's;
(D) Unrated notes, paper and other instruments that are of comparable
quality as determined by Northern under guidelines established by the
Trust's Board of Trustees and are subsequently ratified by the Board;
(E) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card receivables);
(F) Securities issued or guaranteed as to principal and interest by the
U.S. Government or by its agencies or instrumentalities and custodial
receipts with respect thereto;
(G) Dollar-denominated securities issued or guaranteed by one or more
foreign governments or political subdivisions, agencies or
instrumentalities thereof;
(H) Repurchase agreements relating to the above instruments; and
(I) Securities issued or guaranteed by state or local governmental bodies.
TAX-EXEMPT PORTFOLIO
The Tax-Exempt Portfolio invests primarily in high quality short-term
instruments, the interest on which is, in the opinion of bond counsel for the
issuers, exempt from regular Federal income tax ("Municipal
10
<PAGE>
Instruments"). Such opinions may contain various assumptions, qualifications or
exceptions that are reasonably acceptable to Northern. In particular, the
Portfolio may invest in:
(A) Fixed and variable rate notes and similar debt instruments rated MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by S&P, AA or
higher by D&P or F-2 or higher by Fitch;
(B) Tax-exempt commercial paper and similar debt instruments rated Prime-2
or higher by Moody's, A-2 or higher by S&P, Duff 2 or higher by D&P or F-2
or higher by Fitch;
(C) Municipal bonds rated Aa or higher by Moody's or AA or higher by S&P,
D&P or Fitch;
(D) Unrated notes, paper or other instruments that are of comparable
quality as determined by Northern under guidelines established by the
Trust's Board of Trustees; and
(E) Municipal bonds and notes which are guaranteed as to principal and
interest by the U.S. Government or an agency or instrumentality thereof or
which otherwise depend directly or indirectly on the credit of the United
States.
As a matter of fundamental policy, changeable only with the approval of the
holders of a majority of the outstanding units of the Tax-Exempt Portfolio, at
least 80% of the Portfolio's annual gross income will be derived from Municipal
Instruments except under extraordinary circumstances, such as when Northern
believes that market conditions indicate that the Portfolio should adopt a
temporary defensive posture by holding uninvested cash or investing in taxable
short-term securities ("Taxable Investments"). Taxable Investments will consist
exclusively of instruments that may be purchased by the Diversified Assets
Portfolio.
DESCRIPTION OF SECURITIES AND COMMON INVESTMENT TECHNIQUES
BANK OBLIGATIONS. Domestic and foreign bank obligations in which the
Diversified Assets Portfolio may invest include certificates of deposit, bank
and deposit notes, bankers' acceptances and fixed time deposits. Such
obligations may be general obligations of the parent bank or may be limited to
the issuing branch or subsidiary by the terms of the specific obligation or by
government regulation. Total assets of a bank are determined on the basis of
the bank's most recent annual financial statements.
FOREIGN OBLIGATIONS. In addition to the obligations of foreign commercial banks
and foreign branches of U.S. banks, the Diversified Assets Portfolio may
acquire commercial obligations issued by Canadian corporations and Canadian
counterparts of U.S. corporations, as well as Europaper, which is U.S. dollar-
denominated commercial paper of a foreign issuer. The Diversified Assets
Portfolio may also invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities. Such obligations may include debt obligations of
supranational entities, including international organizations (such as the
European Coal and Steel Community) designated or supported by governmental
entities to promote economic reconstruction or development and international
banking institutions and related government agencies.
Obligations of foreign issuers acquired by the Diversified Assets Portfolio may
involve risks that are different than those of obligations of domestic issuers.
These risks include unfavorable political and economic developments, the
possible imposition of withholding taxes on interest income, possible seizure
or nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which
might adversely affect the payment of principal and interest on such
11
<PAGE>
obligations. In addition, foreign branches of U.S. banks and foreign banks may
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting, and recordkeeping standards than those applicable to
domestic branches of U.S. banks and, generally, there may be less publicly
available information regarding such issuers. The Trust could also encounter
difficulties in obtaining or enforcing a judgment against a foreign issuer
(including a foreign branch of a U.S. bank).
VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolios may purchase rated and
unrated variable and floating rate instruments, which may have stated
maturities in excess of the Portfolios' maturity limitations but will, in any
event, permit a Portfolio to demand payment of the principal of the instrument
at least once every 13 months on not more than thirty days' notice (unless the
instrument is issued or guaranteed by the U.S. Government or an agency or
instrumentality thereof). In the case of the Diversified Assets Portfolio, such
instruments may include variable amount master demand notes that permit the
indebtedness thereunder to vary in addition to providing for periodic
adjustments in the interest rate. Unrated variable and floating rate
instruments will be determined by Northern to be of comparable quality at the
time of the purchase to rated instruments purchasable by the Portfolios. The
absence of an active secondary market with respect to particular variable and
floating rate instruments could, however, make it difficult for a Portfolio to
dispose of instruments if the issuer defaulted on its payment obligation or
during periods that the Portfolio is not entitled to exercise its demand
rights, and the Portfolio could, for these or other reasons, suffer a loss with
respect to such instruments. Variable and floating rate instruments held by a
Portfolio will be subject to the Portfolio's 10% limitation on illiquid
investments when the Portfolio may not demand payment of the principal amount
within seven days and a reliable trading market is absent.
UNITED STATES GOVERNMENT OBLIGATIONS. Each Portfolio may invest in a variety of
U.S. Treasury obligations, consisting of bills, notes and bonds, which
principally differ only in their interest rates, maturities and time of
issuance. These obligations include "stripped" securities issued by the U.S.
Treasury and recorded in the Federal Reserve book-entry record-keeping system.
The Portfolios may also invest in other securities issued or guaranteed by the
U.S. Government, its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities, such as the Government National Mortgage
Association, are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of the Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; still others are supported only by the credit of the
instrumentalities. No assurance can be given that the U.S. Government would
provide financial support to its agencies or instrumentalities if it is not
obligated to do so by law. Obligations of the International Bank for
Reconstruction and Development (also known as the World Bank) are supported by
subscribed but unpaid commitments of its member countries. There is no
assurance that these commitments will be undertaken or complied with in the
future.
Securities guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities are deemed to include (a) securities for which
the payment of principal and interest is backed by an irrevocable letter of
credit issued by the U.S. Government or an agency or instrumentality thereof,
and (b) participations in loans made to foreign governments or their agencies
that are so guaranteed. The secondary market for certain of these
participations is limited. Such participations may therefore be regarded as
illiquid.
12
<PAGE>
CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. The Portfolios (other than the
Government Select Portfolio) may also purchase participations in trusts that
hold U.S. Treasury securities (such as TIGRs and CATS) where the trust
participations evidence ownership in either the future interest payments or the
future principal payments on the U.S. Treasury obligations. These
participations are normally issued at a discount to their "face value," and may
exhibit greater price volatility than ordinary debt securities because of the
manner in which their principal and interest are returned to investors.
Investments by the Government Portfolio in such custodial receipts will not
exceed 35% of the value of that Portfolio's total assets.
REPURCHASE AGREEMENTS. Each Portfolio may, in accordance with its investment
objective, policies and guidelines established by the Trust's Board of
Trustees, agree to purchase portfolio securities from financial institutions
subject to the seller's agreement to repurchase them at a mutually agreed upon
date and price ("repurchase agreements"). Although the securities subject to a
repurchase agreement may bear maturities exceeding 13 months, settlement for
the repurchase agreement will never be more than one year after a Portfolio's
acquisition of the securities and normally will be within a shorter period of
time. Securities subject to repurchase agreements are held either by the
Trust's custodian or subcustodian (if any), or in the Federal Reserve/Treasury
Book-Entry System. The seller under a repurchase agreement will be required to
maintain the value of the securities subject to the agreement in an amount
exceeding the repurchase price (including accrued interest). Default by the
seller would, however, expose a Portfolio to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.
REVERSE REPURCHASE AGREEMENTS. The Government Select Portfolio, Government
Portfolio and Diversified Assets Portfolio may enter into reverse repurchase
agreements which involve the sale of money market securities held by a
Portfolio, with an agreement to repurchase the securities at an agreed upon
price (including interest) and date. A Portfolio will use the proceeds of
reverse repurchase agreements to purchase other money market securities either
maturing, or under an agreement to resell, at a date simultaneous with or prior
to the expiration of the reverse repurchase agreement. A Portfolio will utilize
reverse repurchase agreements, which may be viewed as borrowings (or leverage)
by the Portfolio, when it is anticipated that the interest income to be earned
from the investment of the proceeds of the transaction is greater than the
interest expense of the reverse repurchase transaction. During the time a
reverse repurchase agreement is outstanding, the Portfolio will maintain a
segregated account with the Trust's custodian containing U.S. Government or
other appropriate high-grade debt securities having a value at least equal to
the repurchase price. A Portfolio may enter into reverse repurchase agreements
with banks, brokers and dealers, and has the authority to enter into reverse
repurchase agreements in amounts not exceeding in the aggregate one-third of
the Portfolio's total assets. See "Additional Investment Information--
Investment Restrictions" in the Additional Statement.
SECURITIES LENDING. The Portfolios may seek additional income from time to time
by lending their portfolio securities on a short-term basis to banks, brokers
and dealers under agreements requiring that the loans be secured by collateral
in the form of cash, cash equivalents or U.S. Government securities or
irrevocable bank letters of credit maintained on a current basis equal in value
to at least the market value of the securities loaned. A Portfolio may not make
such loans in excess of 33 1/3% of the value of the Portfolio's total assets.
Loans of securities involve risks of delay in receiving additional collateral
or in recovering the securities loaned, or possibly loss of rights in the
collateral should the borrower of the securities become insolvent.
13
<PAGE>
FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. Each Portfolio may purchase
when-issued securities and make contracts to purchase or sell securities for a
fixed price at a future date beyond customary settlement time. Securities
purchased or sold on a when-issued or forward commitment basis involve a risk
of loss if the value of the security to be purchased declines prior to the
settlement date, or if the value of the security to be sold increases prior to
the settlement date. A Portfolio is required to hold and maintain in a
segregated account with the Portfolio's custodian until the settlement date,
cash, U.S. Government Securities or other liquid high grade debt obligations
having a value (determined daily) at least equal to the amount of the
Portfolio's purchase commitments. Although a Portfolio would generally purchase
securities on a when-issued or forward commitment basis with the intention of
acquiring securities, the Portfolio may dispose of a when-issued security or
forward commitment prior to settlement if Northern deems it appropriate to do
so.
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, the Portfolios may invest in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or penny-
rounding method of valuation. As a shareholder of another investment company, a
Portfolio would bear, along with other shareholders, its pro rata portion of
the other investment company's expenses, including advisory fees. These
expenses would be in addition to the advisory fees and other expenses the
Portfolio bears directly in connection with its own operations. Securities of
the investment companies will be acquired by a Portfolio within the limits
prescribed by the 1940 Act, and will be determined by Northern, under
guidelines established by the Board of Trustees, to present minimal credit
risks. The Trust has been advised by its counsel that exempt-interest dividends
received by the Tax-Exempt Portfolio as a shareholder of a regulated investment
company paying such dividends will receive the same Federal tax treatment as
interest received by the Portfolio on Municipal Instruments held by it.
MUNICIPAL AND RELATED INSTRUMENTS. Municipal Instruments in which the Tax-
Exempt Portfolio may invest include debt obligations issued by or on behalf of
states, territories and possessions of the United States and their political
subdivisions, agencies, authorities and instrumentalities.
Municipal Instruments may be issued to obtain funds for various public
purposes, including capital improvements, the refunding of outstanding
obligations, general operating expenses, and lending to other public agencies.
Among other instruments, the Portfolio may purchase short-term Tax Anticipation
Notes, Bond Anticipation Notes, Revenue Anticipation Notes, and other forms of
short-term loans. Such notes are issued with a short-term maturity in
anticipation of the receipt of tax funds, the proceeds of bond placements or
other revenues.
Municipal Instruments include both "general" and "revenue" obligations. General
obligations are secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue obligations are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source such as the user of the facility being financed.
Industrial development bonds are in most cases revenue securities and are not
payable from the unrestricted revenues of the issuer. Consequently, the credit
quality of an industrial revenue bond is usually directly related to the credit
standing of the private user of the facility involved.
14
<PAGE>
The Tax-Exempt Portfolio may also invest in "moral obligation" bonds, which are
normally issued by special purpose public authorities. If the issuer of a moral
obligation bond is unable to meet its debt service obligations from current
revenues, it may draw on a reserve fund, the restoration of which is a moral
commitment but not a legal obligation of the state or municipality which
created the issuer.
Municipal bonds with a series of maturity dates are called Serial Bonds. The
Portfolio may purchase Serial Bonds and other long-term securities provided
that they have a remaining maturity meeting the Tax-Exempt Portfolio's maturity
requirements. The Portfolio may also purchase long-term variable and floating
rate bonds (sometimes referred to as "Put Bonds") where the Portfolio obtains
at the time of purchase the right to put the bond back to the issuer or a third
party at par at least every thirteen months. Put Bonds with conditional puts
(that is, puts which cannot be exercised if the issuer defaults on its payment
obligations) will present risks that are different than those of other
Municipal Instruments because of the possibility that the Portfolio might hold
a long-term Put Bond on which a default occurs following its acquisition by the
Portfolio.
The Tax-Exempt Portfolio may acquire securities in the form of custodial
receipts evidencing rights to receive a specific future interest payment,
principal payment or both on certain municipal obligations. Such obligations
are held in custody by a bank on behalf of the holders of the receipts. These
custodial receipts are known by various names, including "Municipal Receipts,"
"Municipal Certificates of Accrual on Tax-Exempt Securities" ("M-CATS") and
"Municipal Zero-Coupon Receipts." The Portfolio may also purchase certificates
of participation that, in the opinion of counsel to the issuer, are exempt from
regular Federal income tax. Certificates of participation are a type of
floating or variable rate obligation that represents interests in a pool of
municipal obligations held by a bank.
The Tax-Exempt Portfolio may acquire "standby commitments" with respect to the
Municipal Instruments it holds. Under a standby commitment, a dealer agrees to
purchase at the Portfolio's option specified Municipal Instruments at a
specified price. The acquisition of a standby commitment may increase the cost,
and thereby reduce the yield, of the Municipal Instruments to which the
commitment relates. The Portfolio will acquire standby commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes.
Municipal Instruments purchased by the Tax-Exempt Portfolio may be backed by
letters of credit issued by foreign (as well as domestic) banks. Letters of
credit, like other obligations of foreign banks, may involve certain risks in
addition to those of domestic obligations. (See "Foreign Obligations" above.)
As stated, the Tax-Exempt Portfolio expects to invest primarily in Municipal
Instruments. However, the Portfolio may from time to time hold uninvested cash
or invest a portion of its assets in Taxable Investments. The Portfolio does
not intend to invest more than 25% of the value of its total assets in
industrial development bonds or similar obligations where the non-governmental
entities supplying the revenues from which such bonds or obligations are to be
paid are in the same industry. The Portfolio may, however, invest 25% or more
of its total assets in (a) Municipal Instruments the interest upon which is
paid solely from revenues of similar projects, and (b) industrial development
obligations. In addition, although the Tax-Exempt Portfolio does not expect to
do so during normal market conditions, it may invest more than 25% of the value
of its total assets in Municipal Instruments whose issuers are in the same
state. When a substantial percentage of the Portfolio's assets is invested in
instruments which are used to finance facilities involving a particular
industry, whose issuers are in the same state or which are otherwise related,
there is a possibility that an
15
<PAGE>
economic, business or political development affecting one such instrument would
likewise affect the other related instruments. The Tax-Exempt Portfolio did not
invest 25% or more of its assets in any of these categories during the year
ended November 30, 1995, except for industrial development obligations.
So long as other suitable Municipal Instruments are available for investment,
the Tax-Exempt Portfolio does not intend to invest in "private activity bonds"
the interest from which may be treated as an item of tax preference to
unitholders under the Federal alternative minimum tax.
The Diversified Assets Portfolio may also invest up to 5% of its net assets
from time to time in municipal instruments or other securities issued by state
and local governmental bodies when, as a result of prevailing economic,
regulatory or other circumstances, the yield of such securities, on a pre-tax
basis, is comparable to that of other permitted short-term taxable investments.
Dividends paid on such investments will be taxable to unitholders.
ISSUER DIVERSIFICATION. In accordance with current SEC regulations, each of the
Government Select, Government and Diversified Assets Portfolios intends to
limit investments in the securities of any single issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements collateralized by such securities) to not more than
5% of the value of its total assets at the time of purchase, provided that the
Diversified Assets Portfolio may invest up to 25% of the value of its total
assets in certificates of deposit and bankers' acceptances of any one issuer
for a period of up to three business days. In addition, each of these three
Portfolios will limit investments in Eligible Securities that are not in the
highest rating category as determined by two NRSROs (or one NRSRO if the
security is rated by only one NRSRO) or, if unrated, are not of comparable
quality, to 5% of its total assets, with investments in any one such issuer
being limited to no more than 1% of its total assets or $1 million, whichever
is greater.
The Tax-Exempt Portfolio will not purchase the securities of any one issuer,
other than securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities (or repurchase agreements collateralized by such
securities), if immediately after the purchase more than 5% of the value of its
total assets would be invested in such issuer, except that up to 25% of the
value of the total assets of the Tax-Exempt Portfolio may be invested without
regard to this restriction.
DERIVATIVE INSTRUMENTS. Each Portfolio may also purchase certain "derivative"
instruments. "Derivative" instruments are instruments that derive value from
the performance of underlying assets, interest rates or indices, and include
(but are not limited to) various structured debt obligations (including certain
variable and floating rate instruments). Derivative instruments present, to
varying degrees, market risk that the performance of the underlying assets,
interest rates or indices will decline; credit risk that the dealer or other
counterparty to the transaction will fail to pay its obligations; volatility
risk that, if interest rates change adversely, the value of the derivative
instrument will decline more than the assets, rates or indices on which it is
based; liquidity risk that a Portfolio will be unable to sell a derivative
instrument when it wants because of lack of market depth or market disruption;
pricing risk that the value of a derivative instrument will not correlate
exactly to the value of the underlying assets, rates or indices on which it is
based; and operations risk that loss will occur as a result of inadequate
systems and controls, human error or otherwise. Some derivative instruments are
more complex than others, and for those instruments that have been developed
recently, data is lacking regarding their actual performance over complete
market cycles. Northern will evaluate the risks presented by the derivative
instruments purchased by the Portfolios, and will determine,
16
<PAGE>
in connection with its day-to-day management of the Portfolios, how they will
be used in furtherance of the Portfolios' investment objectives. It is
possible, however, that Northern's evaluations will prove to be inaccurate or
incomplete and, even when accurate and complete, it is possible that the
Portfolios will, because of the risks discussed above, incur loss as a result
of their investments in derivative instruments.
ILLIQUID OR RESTRICTED SECURITIES. A Portfolio will not invest more than 10% of
its net assets in securities which are illiquid, including repurchase
agreements and time deposits that do not provide for payment to the Trust
within seven days after notice and certificates of participation for which
there is no readily available secondary market and certain securities which are
subject to trading restrictions because they are not registered under the
Securities Act of 1933 (the "1933 Act"). In accordance with the current
position of the staff of the SEC, municipal custodial receipts representing
rights only to either future interest or to future principal payments will be
considered illiquid.
If otherwise consistent with its investment objective and policies, the
Portfolios may purchase commercial paper issued pursuant to Section 4(2) of the
1933 Act and securities that are not registered under the 1933 Act but can be
sold to "qualified institutional buyers" in accordance with Rule 144A under the
1933 Act. These securities will not be considered illiquid so long as Northern
determines, under guidelines approved by the Trust's Board of Trustees, that an
adequate trading market exists. This practice could increase the level of
illiquidity during any period that qualified institutional buyers become
uninterested in purchasing these securities.
MISCELLANEOUS. Although the Portfolios will generally not seek profits through
short-term trading, each Portfolio may dispose of any portfolio security prior
to its maturity if, on the basis of a revised credit evaluation of the issuer
or other considerations, Northern believes such disposition is advisable.
Subsequent to its purchase, a portfolio security may be assigned a lower rating
or cease to be rated. Such an event would not necessarily require the
disposition of the security, if the continued holding of the security is
determined to be in the best interest of the Portfolio and its unitholders.
In determining the creditworthiness of the issuers of portfolio securities that
may be purchased and held by the Portfolios, Northern gathers and reviews
historical financial data and, through the use of a proprietary software
computer program, analyzes and attempts to assess the fundamental strengths and
weaknesses of individual issuers, industries and market sectors. Exposure
limits are established by Northern for each security in conformance with the
objectives and policies stated in this Prospectus, and are thereafter adjusted
periodically in response to changes in relevant credit factors.
The Portfolios do not intend to purchase certificates of deposit of Northern or
its affiliate banks, commercial paper issued by Northern's parent holding
company or other securities issued or guaranteed by Northern, its parent
holding company or their subsidiaries or affiliates.
INVESTMENT RESTRICTIONS
The Portfolios are subject to certain investment restrictions which, as
described in more detail in the Additional Statement, are fundamental policies
that cannot be changed without the approval of a majority of
17
<PAGE>
the outstanding units of a Portfolio. Each Portfolio will limit its investments
so that less than 25% of the Portfolio's total assets will be invested in the
securities (other than U.S. Government securities and repurchase agreements
collateralized by such securities) of issuers in any one industry. Each
Portfolio may borrow money from banks for temporary or emergency purposes or to
meet redemption requests, provided that the Portfolio maintains asset coverage
of at least 300% for all such borrowings.
In order to permit the sale of its units in certain states, the Trust may make
commitments more restrictive than the investment policies and limitations
described in this Prospectus. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust, it will revoke the
commitment by terminating sales of its units in the state involved.
TRUST INFORMATION
BOARD OF TRUSTEES
The business and affairs of the Trust and each Portfolio are managed under the
direction of the Trust's Board of Trustees. The Additional Statement contains
the name of each Trustee and background information regarding the Trustees.
INVESTMENT ADVISER, TRANSFER AGENT AND CUSTODIAN
Northern, which has offices at 50 S. LaSalle Street, Chicago, Illinois 60675,
serves as investment adviser, transfer agent and custodian for each Portfolio.
As transfer agent, Northern performs various unitholder servicing functions,
and any unitholder inquiries should be directed to it.
Northern, a member of the Federal Reserve System, is an Illinois state-
chartered commercial bank and the principal subsidiary of Northern Trust
Corporation, a bank holding company. Northern was formed in 1889 with
capitalization of $1 million. As of December 31, 1995, Northern Trust
Corporation and its subsidiaries had approximately $19.9 billion in assets,
$12.5 billion in deposits and employed over 6,500 persons.
Northern administered in various capacities (including as master trustee,
investment manager or custodian) approximately $613.9 billion of assets as of
December 31, 1995, including approximately $105.5 billion of assets for which
Northern had investment management responsibility. Included in administered
assets were approximately $60 billion of money market instruments.
Under its Advisory Agreement with the Trust, Northern, subject to the general
supervision of the Trust's Board of Trustees, is responsible for making
investment decisions for the Portfolios and placing purchase and sale orders
for portfolio securities. Northern is also responsible for monitoring and
preserving the records required to be maintained under the regulations of the
SEC (with certain exceptions unrelated to its activities for the Trust). As
compensation for its advisory services and its assumption of related expenses,
Northern is entitled to a fee, computed daily and payable monthly, at an annual
rate of .25% of the average daily net assets of each Portfolio.
For serving as investment adviser during the fiscal year ended November 30,
1995, Northern earned fees paid by the Government Portfolio, the Diversified
Assets Portfolio and the Tax-Exempt Portfolio at the rate of
18
<PAGE>
.25% (per annum) of each Portfolio's average daily net assets. For serving as
investment adviser during the fiscal year ended November 30, 1995, Northern
earned fees (after waivers) paid by the Government Select Portfolio at the rate
of .10% (per annum) of its average daily net assets.
ADMINISTRATOR AND DISTRIBUTOR
Goldman Sachs, 85 Broad Street, New York, New York 10004, acts as administrator
and distributor for the Portfolios. Subject to the limitations described below
as compensation for its administrative services (which include supervision with
respect to the Trust's non-investment advisory operations) and the assumption
of related expenses, Goldman Sachs is entitled to a fee from each Portfolio,
computed daily and payable monthly, at an annual rate of .25% of the first $100
million, .15% of the next $200 million, .075% of the next $450 million and .05%
of any excess over $750 million of the average daily net assets of each
Portfolio. No compensation is payable by the Trust to Goldman Sachs for its
distribution services.
Goldman Sachs has agreed in its Administration Agreement with the Trust that if
in any fiscal year the sum of a Portfolio's expenses (including the fees
payable to Goldman Sachs as Administrator, but excluding the fees payable to
Northern for its duties as investment adviser and taxes, interest, brokerage
expenses relating to the purchase and sale of securities and extraordinary
expenses such as for litigation) exceeds on an annualized basis .10% of such
Portfolio's average daily net assets for such fiscal year it will reimburse
such Portfolio for the amount of the excess. In addition, as stated under
"Highlights--Summary of Expenses," Northern intends to voluntarily reduce its
advisory fee for the Government Select Portfolio during the Trust's current
fiscal year, and Goldman Sachs has also voluntarily undertaken additional fee
reductions on behalf of the Portfolios. The result of these reimbursement and
fee reductions will be to increase the yields of the Portfolios during the
periods for which the reimbursements and reductions are made.
INVESTING
PURCHASE OF UNITS
Units are offered to Northern, its affiliates and other institutions and
organizations (the "Institutions") acting on behalf of their customers,
clients, employees and others (the "Customers") and for their own account.
Units of the Portfolios are sold on a continuous basis by the Trust's
distributor, Goldman Sachs, to Institutions that either maintain certain
qualified accounts with Northern or its affiliates or invest an aggregate of at
least $5 million in one or more Portfolios of the Trust. Goldman Sachs has
established procedures for purchasing units in order to accommodate different
types of Institutions.
PURCHASE OF UNITS THROUGH QUALIFIED ACCOUNTS. Any Institution maintaining a
qualified account at Northern or an affiliate may make purchases through such
qualified account either by directing automatic investment of cash balances in
excess of certain agreed upon amounts or by directing investments from time to
time on a non-automatic basis. The nature of an Institution's relationship with
Northern or an affiliate will determine whether the Institution maintains a
qualified account as well as the procedures available for purchases.
Institutions should contact Northern or an affiliate for further information in
this regard. There is no minimum initial investment for Institutions that
maintain qualified accounts with Northern or its affiliates.
19
<PAGE>
PURCHASE OF UNITS DIRECTLY FROM THE TRUST. Institutions that purchase units
directly may do so by means of one of the following procedures, provided they
make an aggregate minimum initial investment of $5 million in one or more
Portfolios of the Trust:
PURCHASE BY MAIL. An Institution desiring to purchase units of a Portfolio
by mail should mail a check or Federal Reserve draft payable to the
specific Portfolio together with a completed and signed new account
application to The Benchmark Funds, c/o The Northern Trust Company, P.O.
Box 75943, Chicago, Illinois 60675-5943. An application will be incomplete
if it does not include a corporate resolution with the corporate seal and
secretary's certification within the preceding 30 days, or other acceptable
evidence of authority. If an Institution desires to purchase the units of
more than one Portfolio, the Institution should send a separate check for
each Portfolio. All checks must be payable in U.S. dollars and drawn on a
bank located in the United States. A $20 charge will be imposed if a check
does not clear. The proceeds of redemptions of units purchased by check may
be delayed up to 15 days to allow the Trust to determine that the check has
cleared and been paid. Cash and third party checks are not acceptable for
the purchase of Trust units.
PURCHASE BY TELEPHONE. An Institution desiring to purchase units of a
Portfolio by telephone should call Northern acting as the Trust's transfer
agent ("Transfer Agent") at 1-800-637-1380. Please be prepared to identify
the name of the Portfolio with respect to which units are to be purchased
and the manner of payment. Please indicate whether a new account is being
established or an additional payment is being made to an existing account.
If an additional payment is being made to an existing account, please
provide the Institution's name and Portfolio Account Number. Purchase
orders are effected upon receipt by the Transfer Agent of Federal funds or
other immediately available funds in accordance with the terms set forth
below.
PURCHASE BY WIRE OR ACH TRANSFER. An Institution desiring to purchase units
of a Portfolio by wire or ACH Transfer should call the Transfer Agent at 1-
800-637-1380 for instructions if it is not making an additional payment to
an existing account. An Institution that wishes to add to an existing
account should wire Federal funds or effect an ACH Transfer to:
The Northern Trust Company
Chicago, Illinois
ABA Routing No. 0710-00152
(Reference 10 Digit Portfolio Account Number)
(Reference Unitholder's Name)
For other information concerning requirements for the purchase of units,
call the Transfer Agent at 1-800-637-1380.
EFFECTIVE TIME OF PURCHASES. A purchase order for Portfolio units placed with
the Transfer Agent by 1:00 p.m., Chicago time, on a Business Day (as defined
under "Miscellaneous") will be effected on that Business Day at the net asset
value next determined on that day with respect to a Portfolio, provided that
the Transfer Agent receives the purchase price in Federal funds or other
immediately available funds prior to 1:00 p.m., Chicago time, on the same
Business Day such order is received. Orders received after 1:00 p.m. on a
Business Day will be effected at the net asset value next determined on the
following Business Day, provided that
20
<PAGE>
payment is received as provided herein. Purchase orders received on a non-
Business Day will not be executed until the following Business Day in
accordance with the foregoing procedures. An order generated pursuant to an
automatic investment direction of an Institution that has a qualified account
with Northern or its affiliates will normally be placed either on the Business
Day that funds are available in such account or on the first Business Day
thereafter, depending upon the terms of the Institution's automatic investment
arrangements. Units of a Portfolio are entitled to the dividends declared by
the Portfolio beginning on the Business Day the purchase order is executed.
MISCELLANEOUS PURCHASE INFORMATION. Units are purchased without a sales charge
imposed by the Trust. The minimum initial investment is $5 million for
Institutions that invest directly in one or more Portfolios. The Trust reserves
the right to waive this minimum and to determine the manner in which the
minimum investment is satisfied. There is no minimum for subsequent
investments.
Institutions intending to place a purchase order of $5 million or more directly
with the Trust through the Transfer Agent are requested to give advance notice
to the Transfer Agent no later than 11:00 a.m. Chicago Time on a Business Day
in order to assist in the processing of the order.
Institutions may impose minimum investment and other requirements on Customers
purchasing units through them. Depending on the terms governing the particular
account, Institutions may impose account charges such as asset allocation fees,
account maintenance fees, compensating balance requirements or other charges
based upon account transactions, assets or income, which will have the effect
of reducing the net return on an investment in a Portfolio. The exercise of
voting rights and the delivery to Customers of unitholder communications from
the Trust will be governed by the Customers' account agreements with the
Institutions. Customers should read this Prospectus in connection with any
relevant agreement describing the services provided by an Institution and any
related requirements and charges, or contact the Institution at which the
Customer maintains its account for further information.
Institutions that purchase units on behalf of Customers are responsible for
transmitting purchase orders to the Transfer Agent and delivering required
Federal funds on a timely basis. An Institution will be responsible for all
losses and expenses of a Portfolio as a result of a check that does not clear,
an ACH transfer that is rejected, or any other failure to make payment in the
time and manner described above, and Northern may redeem units from an account
it maintains to protect the Portfolio and Northern against loss. The Trust
reserves the right to reject any purchase order. In those cases in which an
Institution pays for units by check, Federal funds will generally become
available two Business Days after a purchase order is received. Federal
regulations require that the Transfer Agent be furnished with a taxpayer
identification number upon opening or reopening an account. Purchase orders
without such a number or an indication that a number has been applied for will
not be accepted. If a number has been applied for, the number must be provided
and certified within sixty days of the date of the order.
In the interests of economy and convenience, certificates representing units of
the Portfolios are not issued.
Institutions investing in the Portfolios on behalf of their Customers should
note that state securities laws regarding the registration of dealers may
differ from the interpretations of Federal law and such institutions may be
required to register as dealers pursuant to state law.
21
<PAGE>
Northern may, at its own expense, provide compensation to certain dealers whose
customers purchase significant amounts of units of a Portfolio. The amount of
such compensation may be made on a one-time and/or periodic basis, and may be
up to 25% of the annual fees that are earned by Northern as investment adviser
to such Portfolio (after adjustments) and are attributable to units held by
such customers. Such compensation will not represent an additional expense to
the Trust or its unitholders, since it will be paid from assets of Northern or
its affiliates.
REDEMPTION OF UNITS
Institutions may redeem units of a Portfolio through procedures established by
Northern and its affiliates in connection with the requirements of their
qualified accounts or through procedures set forth herein with respect to
Institutions that invest directly.
REDEMPTION OF UNITS THROUGH QUALIFIED ACCOUNTS. Institutions may redeem units
in their qualified accounts at Northern or its affiliates. For Institutions
that participate in an automatic investment service described above under
"Purchase of Units," Northern or its affiliates will calculate on each Business
Day the number of units that need to be redeemed in order to bring the
Institution's account up to any agreed upon minimum amount. Redemption requests
on behalf of an Institution will normally be placed either on the Business Day
the redemption amount is calculated or on the first Business Day thereafter,
depending upon the terms of the Institution's automatic investment
arrangements. In the latter case, however, Northern or its affiliates normally
will provide funds by provisionally crediting the qualified account of the
Institution on the Business Day on which the calculation is made. The nature of
an Institution's relationship with Northern or an affiliate will determine
whether the Institution maintains a "qualified account" as well as the
procedures available for redemptions. Institutions should contact Northern or
an affiliate for further information in this regard.
REDEMPTION OF UNITS DIRECTLY. Institutions that purchase units directly from
the Trust through the Transfer Agent may redeem all or part of their Portfolio
units in accordance with the procedures set forth below.
REDEMPTION BY MAIL. An Institution may redeem units by sending a written
request to The Benchmark Funds, c/o The Northern Trust Company, P.O. Box
75943, Chicago, Illinois 60675-5943. Redemption requests must be signed by
a duly authorized person, and must state the number of units or the dollar
amount to be redeemed and identify the Portfolio Account Number. See "Other
Requirements."
REDEMPTION BY TELEPHONE. An Institution may redeem units by placing a
redemption order by telephone by calling the Transfer Agent at 1-800-637-
1380. During periods of unusual economic or market changes, telephone
redemptions may be difficult to implement. In such event, unitholders
should follow procedures outlined above under "Redemption by Mail."
REDEMPTION BY WIRE. If an Institution has given authorization for expedited
wire redemption, units can be redeemed and the proceeds sent by Federal
wire transfer to a single previously designated bank account. The minimum
amount which may be redeemed by this method is $10,000. The Trust reserves
the right to change or waive this minimum or to terminate the wire
redemption privilege. See "Other Requirements."
22
<PAGE>
TELEPHONE PRIVILEGE. An Institution that has notified the Transfer Agent in
writing of the Institution's election to redeem or exchange units by
placing an order by telephone may do so by calling the Transfer Agent at
1-800-637-1380. Neither the Trust nor its Transfer Agent will be
responsible for the authenticity of instructions received by telephone that
are reasonably believed to be genuine. To the extent that the Trust fails
to use reasonable procedures to verify the genuineness of telephone
instructions, it or its service providers may be liable for such
instructions that prove to be fraudulent or unauthorized. In all other
cases, the unitholder will bear the risk of loss for fraudulent telephone
transactions. However, the Transfer Agent has adopted procedures in an
effort to establish reasonable safeguards against fraudulent telephone
transactions. The proceeds of redemption orders received by telephone will
be sent by check, by wire or by transfer pursuant to proper instruments.
All checks will be made payable to the unitholder of record and mailed only
to the unitholder's address of record. See "Other Requirements."
Additionally, the Transfer Agent utilizes recorded lines for telephone
transactions and retains such tape recordings for six months, and will
request a form of identification if such identification has been furnished
to the Transfer Agent or the Trust.
OTHER REQUIREMENTS. A change of wiring instructions and a change of the
address of record may be effected only by a written request to the Transfer
Agent accompanied by (i) a corporate resolution which evidences authority
to sign on behalf of the Institution (including the corporate seal and
secretary's certification within the preceding 30 days), (ii) a signature
guarantee by a financial institution that is a participant in the Stock
Transfer Agency Medallion Program ("STAMP") in accordance with rules
promulgated by the SEC (a signature notarized by a notary public is not
acceptable) or (iii) such other means or evidence of authority as may be
acceptable to the Transfer Agent. A redemption request by mail will not be
effective unless signed by a person authorized by the corporate resolution
or other acceptable evidence of authority on file with the Transfer Agent.
EXCHANGE PRIVILEGE. Institutions and, to the extent permitted by their account
agreements, Customers, may, after appropriate prior authorization, exchange
units of a Portfolio having a value of at least $1,000 for units of certain
other portfolios of the Trust as to which the Institution or Customer maintains
an existing account with an identical title.
Exchanges will be effected by a redemption of units of the portfolio held and
the purchase of units of the portfolio acquired. Customers of Institutions
should contact their Institutions for further information regarding the Trust's
exchange privilege and Institutions should contact the Transfer Agent as
appropriate. Customers and Institutions exercising the exchange privilege
should read the relevant Prospectus prior to making an exchange. The Trust
reserves the right to modify or terminate the exchange privilege at any time
upon 60 days' written notice to unitholders of record and to reject any
exchange request. Exchanges are only available in states where an exchange can
legally be made.
EFFECTIVE TIME OF REDEMPTIONS AND EXCHANGES. Redemption orders of Portfolio
units are effected at the net asset value per unit next determined after
receipt in good order by the Transfer Agent. Good order means that the request
includes the following: the account number and Portfolio name; the amount of
the transaction (as specified in dollars or units); and the signature of a duly
authorized person (except for telephone and wire redemptions). See "Investing--
Redemption of Units--Other Requirements." Exchange orders are effected at the
net asset value per unit next determined after receipt in good order by the
Transfer Agent. Payment for redeemed units for which a redemption order is
received by Northern with respect to a qualified account it
23
<PAGE>
maintains or the Transfer Agent as of 1:00 p.m., Chicago time, on a Business
Day normally will be made in Federal funds or other immediately available funds
wired or sent by check to the redeeming unitholder or, if selected, the
unitholder's qualified account with Northern. Redemption orders received after
1:00 p.m. will be effected the next Business Day. Proceeds for redemption
orders received on a non-Business Day will normally be sent on the next
Business Day after receipt in good order.
MISCELLANEOUS REDEMPTION INFORMATION. All redemption proceeds will be sent by
check unless Northern or the Transfer Agent is directed otherwise. The ACH
system may be utilized for payment of redemption proceeds. Redemption of units
may not be effected if a unitholder has failed to submit a completed and
properly executed (with corporate resolution or other acceptable evidence of
authority) new account application. Institutions intending to place exchange
and redemption orders for same day proceeds of $5 million or more directly with
the Trust through the Transfer Agent are requested to give advance notice to
the Transfer Agent no later than 11:00 a.m. Chicago Time on a Business Day. The
proceeds of redemptions of units purchased by check may be delayed up to 15
days to allow the Trust to determine that the check has cleared and been paid.
The Trust reserves the right to defer crediting, sending or wiring redemption
proceeds for up to seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect a Portfolio.
The Trust may require any information reasonably necessary to ensure that a
redemption has been duly authorized. Dividends on units are earned through and
including the day prior to the day on which they are redeemed.
It is the responsibility of Institutions acting on behalf of Customers to
transmit redemption orders to the Transfer Agent and to credit Customers'
accounts with the redemption proceeds on a timely basis. If a Customer has
agreed with a particular Institution to maintain a minimum balance in his
account at such Institution and the balance in such account falls below that
minimum, such Customer may be obliged to redeem all or part of his units to the
extent necessary to maintain the required minimum balance.
DISTRIBUTIONS
Unitholders of each Portfolio are entitled to dividends and distributions
arising from the net income and capital gains, if any, earned on investments
held by the particular Portfolio. Dividends from each Portfolio's net income
are declared daily as a dividend to unitholders of record at the close of
business on the days the dividends are declared (or 3:00 p.m., Chicago time, on
non-Business Days).
Net income of each Portfolio includes interest accrued on the assets of such
Portfolio less the estimated expenses charged to such Portfolio. Net realized
short-term capital gains of each Portfolio will be distributed at least
annually. The Portfolios do not expect to realize net long-term capital gains.
Dividends declared during a calendar month (including dividends with respect to
units redeemed at any time during the month) will be paid as soon as
practicable following the end of the month. All distributions are paid by each
Portfolio in cash or are automatically reinvested (without any sales charge or
additional purchase price amount) in additional units of the same Portfolio.
Arrangements may be made for the crediting of such distributions to a
unitholder's account with Northern, its affiliates or its correspondent banks.
24
<PAGE>
TAXES
Management of the Trust intends that each Portfolio will qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code") as long as such qualification is in the best interest of
the Portfolio's unitholders. Such qualification generally relieves each
Portfolio of liability for Federal income taxes to the extent its earnings are
distributed in accordance with the Code, but unitholders, unless otherwise
exempt, will pay income taxes on amounts so distributed (except distributions
that constitute "exempt-interest dividends" or that are treated as a return of
capital). Dividends paid from net short-term capital gains are treated as
ordinary income dividends. None of the Portfolios' distributions will be
eligible for the corporate dividends received deduction.
The Tax-Exempt Portfolio intends to pay substantially all of its dividends as
"exempt-interest dividends." Investors in the Portfolio should note, however,
that taxpayers are required to report the receipt of tax-exempt interest and
"exempt-interest dividends" on their Federal income tax returns and that in two
circumstances such amounts, while exempt from regular Federal income tax, are
taxable to persons subject to alternative minimum and environmental taxes.
First, tax-exempt interest and "exempt-interest dividends" derived from certain
private activity bonds issued after August 7, 1986 generally will constitute an
item of tax preference for corporate and noncorporate taxpayers in determining
alternative minimum and environmental tax liability. Second, all tax-exempt
interest and "exempt-interest dividends" must be taken into account by
corporate taxpayers in determining certain adjustments for alternative minimum
and environmental tax purposes. Unitholders who are recipients of Social
Security Act or Railroad Retirement Act benefits should note that tax-exempt
interest and "exempt-interest dividends" will be taken into account in
determining the taxability of their benefit payments. To the extent, if any,
that dividends paid by the Tax-Exempt Portfolio to its unitholders are derived
from taxable interest or from capital gains, such dividends will be subject to
Federal income tax, whether received in cash or reinvested in additional units.
The Tax-Exempt Portfolio will determine annually the percentages of its net
investment income which is exempt from the regular Federal income tax, which
constitutes an item of tax preference for purposes of the Federal alternative
minimum tax, and which is fully taxable and will apply such percentages
uniformly to all distributions declared from net investment income during that
year. These percentages may differ significantly from the actual percentages
for any particular day.
The Trust will send written notices to unitholders annually regarding the tax
status of distributions made by each Portfolio. Dividends declared in October,
November or December of any year payable to unitholders of record on a
specified date in those months will be deemed for Federal tax purposes to have
been paid by a Portfolio and to have been received by the unitholders on
December 31 of that year, if the dividends are actually paid during the
following January.
The foregoing discussion is only a brief summary of some of the important tax
considerations generally affecting the Portfolios and their unitholders and is
not intended as a substitute for careful tax planning. Accordingly, investors
should consult their tax advisers with specific reference to their own Federal,
state and local tax situation. In particular, although the Government Select
Portfolio intends to invest primarily in U.S. Government securities the
interest on which is generally exempt from state income taxation, an investor
should consult his or her own tax adviser to determine whether distributions
from the Portfolio are exempt
25
<PAGE>
from state income taxation in the investor's own state. Similarly, dividends
paid by the Portfolios may be taxable to investors under state or local law as
dividend income even though all or a portion of such dividends may be derived
from interest on obligations which, if realized directly, would be exempt from
such income taxes. Future legislative or administrative changes or court
decisions may materially affect the tax consequences of investing in one or
more of the Portfolios.
NET ASSET VALUE
The net asset value per unit of each Portfolio for purposes of purchases and
redemptions is calculated by Northern as of 3:00 p.m., Chicago time,
immediately after the declaration of net income earned by unitholders of
record, on each Business Day (as defined below under "Miscellaneous"), except
for days during which no units are tendered to the Portfolio for redemption
and no orders to purchase or sell units are received by the Portfolio and
except for days on which there is an insufficient degree of trading in the
Portfolio's securities for changes in the value of such securities to
materially affect the net asset value per unit. Net asset value per unit of
each Portfolio is calculated by adding the value of all securities and other
assets of the Portfolio, subtracting the liabilities of the Portfolio and
dividing by the number of units of the Portfolio outstanding.
In seeking to maintain a net asset value of $1.00 per unit with respect to
each Portfolio for purposes of purchases and redemptions, the Trust values the
portfolio securities held by a Portfolio pursuant to the amortized cost
method. Under this method, investments purchased at a discount or premium are
valued by amortizing the difference between the original purchase price and
maturity value of the issue over the period of maturity. See "Amortized Cost
Valuation" in the Additional Statement.
PERFORMANCE INFORMATION
From time to time the Portfolios may advertise their "yields" and "effective
yields" and the Government Select Portfolio and Tax-Exempt Portfolio may
advertise their "tax-equivalent yields." These yield figures will fluctuate,
are based on historical earnings and are not intended to indicate future
performance. "Yield" refers to the net investment income generated by an
investment in the Portfolio over a seven-day period identified in the
advertisement. This net investment income is then "annualized." That is, the
amount of net investment income generated by the investment during that week
is assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. "Effective yield" is calculated similarly but,
when annualized, the net investment income earned by an investment in the
Portfolio is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment. The "tax-equivalent yield" demonstrates the level of taxable
yield necessary to produce an after-tax yield equivalent to a Portfolio's tax-
free yield. It is calculated by taking that portion of the seven-day "yield"
which is tax-exempt and adjusting it to reflect the tax savings associated
with a stated tax rate. The "tax-equivalent yield" will always be higher than
the Portfolio's yield.
The Portfolios' yields may not provide a basis for comparison with bank
deposits and other investments which provide a fixed yield for a stated period
of time. Yield will be affected by portfolio quality, composition, maturity,
market conditions and the level of the Portfolio's operating expenses.
26
<PAGE>
ORGANIZATION
The Trust was formed as a Massachusetts business trust on July 15, 1982 under
an Agreement and Declaration of Trust (the "Trust Agreement"). The Trust offers
sixteen separate series of units of beneficial interest, each series evidencing
interests in a separate investment portfolio. This Prospectus describes four of
the Trust's portfolios; the other portfolios are described in separate
prospectuses. The Trust's Tax-Exempt Portfolio is the successor to a separate
series of The Benchmark Tax-Exempt Fund, which was organized on July 15, 1982
and which transferred its assets and liabilities to the Tax-Exempt Portfolio
pursuant to a reorganization on October 5, 1990.
The Trust Agreement permits the Board of Trustees to issue an unlimited number
of units of beneficial interest of each of the Trust's series. The Trust
Agreement further authorizes the Board of Trustees to classify or reclassify
any unissued units into any number of additional series of units. Each unit of
a Portfolio is without par value, represents an equal proportionate interest in
that Portfolio and is entitled to such dividends and distributions earned on
such Portfolio's assets as are declared in the discretion of the Board of
Trustees.
The Trust's unitholders are entitled to one vote for each full unit held and
proportionate fractional votes for fractional units held. Each series entitled
to vote on a matter will vote thereon in the aggregate and not by series,
except as otherwise required by law or when the matter to be voted on affects
only the interests of unitholders of a particular series. The Additional
Statement gives examples of situations in which the law requires voting by
series. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate units of the Trust may elect all of the Trustees
irrespective of the vote of the other unitholders.
The Trust does not presently intend to hold annual meetings of unitholders
except as required by the 1940 Act or other applicable law. Pursuant to the
Trust Agreement, the Trustees will promptly call a meeting of unitholders to
vote upon the removal of any Trustee when so requested in writing by the record
holders of 10% or more of the outstanding units. To the extent required by law,
the Trust will assist in unitholder communications in connection with such a
meeting.
The term "majority of the outstanding units" of either the Trust or a
particular Portfolio means the vote of the lesser of (i) 67% or more of the
units of the Trust or such Portfolio present at a meeting, if the holders of
more than 50% of the outstanding units of the Trust or such Portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding units
of the Trust or such Portfolio.
The Trust Agreement provides that each unitholder, by virtue of becoming such,
will be held to have expressly assented and agreed to the terms of the Trust
Agreement and to have become a party thereto.
27
<PAGE>
MISCELLANEOUS
The address of the Trust is 4900 Sears Tower, Chicago, Illinois 60606 and the
telephone number is 1-800-621-2550.
As used in this Prospectus, the term "Business Day" refers to each day when
Northern and the New York Stock Exchange are open, which is Monday through
Friday, except for holidays observed by Northern and/or the Exchange other than
Good Friday. For 1996 the holidays of Northern and/or the Exchange are: New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving and
Christmas Day. Notice of purchase or redemption orders to be executed on Good
Friday, or any other day Northern is open for business and the Exchange is
closed, must be received by the Transfer Agent no later than 11:00 a.m. Chicago
time on the prior Business Day if the amount of the order is in excess of
$1,000,000. On those days when Northern or the Exchange closes early as a
result of unusual weather or other circumstances, the right is reserved to
advance the time on that day by which purchase and redemption requests must be
received. In addition, on any Business Day when the Public Securities
Association (PSA) recommends that the securities markets close early, the
Portfolios reserve the right to cease or to advance the deadline for accepting
purchase and redemption orders for same Business Day credit up to one hour
before the PSA recommended closing time. Purchase and redemption requests
received after the advanced closing time will be effected on the next Business
Day.
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE TRUST'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
28
<PAGE>
The
Benchmark
Funds
Equity
Portfolios
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian:
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor:
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
PROSPECTUS
APRIL 1, 1996
<PAGE>
THE BENCHMARK FUNDS
THE NORTHERN TRUST COMPANY INVESTMENT ADVISER, TRANSFER AGENT AND
50 S. LaSalle Street CUSTODIAN
Chicago, Illinois 60675
312-630-6000
---------------------
This Prospectus describes one balanced and five equity portfolios (the
"Portfolios") offered by The Benchmark Funds (the "Trust") to institutional
investors.
The BALANCED PORTFOLIO seeks to provide long-term capital appreciation and
current income by investing in stocks, bonds and cash equivalents.
The EQUITY INDEX PORTFOLIO seeks to provide investment results
approximating the aggregate price and dividend performance of the
securities included in the Standard & Poor's 500 Composite Stock Price
Index (the "S&P Index") by investing substantially all of its assets in
securities comprising the S&P Index.
The DIVERSIFIED GROWTH PORTFOLIO seeks to provide long-term capital
appreciation with income a secondary consideration by investing principally
in common and preferred stocks and securities convertible into common stock
of growth companies.
The FOCUSED GROWTH PORTFOLIO seeks to provide long-term capital
appreciation by investing primarily in common stocks of growth companies.
Any income received is incidental to the objective of capital appreciation.
The SMALL COMPANY INDEX PORTFOLIO seeks to provide investment results
approximating the aggregate price and dividend performance of the
securities included in the Russell 2000 Small Stock Index (the "Russell
Index") by investing substantially all of its assets in securities
represented in the Russell Index.
The INTERNATIONAL GROWTH PORTFOLIO seeks to provide long-term capital
appreciation by investing principally in common and preferred stocks and
securities convertible into common stock of foreign issuers. Any income
received is incidental to the objective of capital appreciation.
Each Portfolio is advised by The Northern Trust Company ("Northern"). Units of
all Portfolios other than the Small Company Index Portfolio are sold and
redeemed without any purchase or redemption charge imposed by the Trust,
although Northern and other institutions may charge their customers for
services provided in connection with their investments. The Small Company Index
Portfolio requires the payment of an additional purchase price amount equal to
0.75% of the amount invested.
This Prospectus provides information about the Portfolios that you should know
before investing. It should be read and retained for future reference. If you
would like more detailed information, a Statement of Additional Information
(the "Additional Statement") dated April 1, 1996, is available upon request
without charge by writing to the Trust's distributor, Goldman, Sachs & Co.
("Goldman Sachs"), 4900 Sears Tower, Chicago, Illinois 60606 or by calling 1-
800-621-2550.
UNITS OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS PARENT
COMPANY OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THE PORTFOLIOS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is April 1, 1996.
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF EXPENSES 3
- -------------------
FINANCIAL HIGHLIGHTS 6
- --------------------
INVESTMENT INFORMATION 12
- ----------------------
Introduction 12
Balanced Portfolio 12
Equity Index Portfolio 13
Diversified Growth Portfolio 14
Focused Growth Portfolio 14
Small Company Index Portfolio 15
International Growth Portfolio 16
Special Risk Considerations 17
Description of Securities and Com-
mon Investment Techniques 19
Description of Other Securities and
Investment Techniques Used by the
Balanced Portfolio 26
Investment Restrictions 29
TRUST INFORMATION 30
- -----------------
Board of Trustees 30
Investment Adviser, Transfer Agent
and Custodian 30
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Administrator and Distributor 31
Unitholder Servicing Plan 32
Service Information 32
INVESTING 33
- ---------
Purchase of Units 33
Redemption of Units 35
Distributions 38
Taxes 38
NET ASSET VALUE 40
- ---------------
PERFORMANCE INFORMATION 40
- -----------------------
ORGANIZATION 42
- ------------
MISCELLANEOUS 43
- -------------
</TABLE>
2
<PAGE>
SUMMARY OF EXPENSES
The following table sets forth certain information regarding the unitholder
transaction expenses imposed by the Trust and the annualized operating expenses
the Balanced Portfolio, Equity Index Portfolio, Diversified Growth Portfolio,
Focused Growth Portfolio, Small Company Index Portfolio and International
Growth Portfolio incurred during the Trust's last fiscal year. Hypothetical
examples based on the table are also shown. Investors should note that units of
each Portfolio have been classified into four separate classes, Class A, B, C
and D units. Each class is distinguished by the level of administrative support
and transfer agency services provided. Class A, B, C and D units represent pro
rata interests in a Portfolio except that different unitholder servicing fees
and transfer agency fees are payable by Class A, B, C and D units in a
Portfolio. See "Trust Information--Unitholder Servicing Plan."
<TABLE>
<CAPTION>
Balanced Equity Index Diversified Growth
------------------------------- ------------------------------- -------------------------------
Class A Class B Class C Class D Class A Class B Class C Class D Class A Class B Class C Class D
Units Units Units Units Units Units Units Units Units Units Units Units
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unitholder
Transaction Expenses
Maximum Sales
Charge Imposed on
Purchases.......... None None None None None None None None None None None None
Additional Pur-
chase Price Amount
(as a percentage
of amount
invested).......... None None None None None None None None None None None None
Deferred Sales
Charge Imposed on
Reinvested Distri-
butions............ None None None None None None None None None None None None
Deferred Sales
Charge Imposed on
Redemptions........ None None None None None None None None None None None None
Redemption Fees.... None None None None None None None None None None None None
Exchange Fees...... None None None None None None None None None None None None
Annual Operating
Expenses After
Expense
Reimbursements and
Fee Reductions (as a
percentage of
average daily net
assets).
Management Fees
After Fee
Reductions(2)...... .50% .50% .50% .50% .10% .10% .10% .10% .55% .55% .55% .55%
12b-1 Fees......... None None None None None None None None None None None None
Servicing Fees(3).. None .10% .15% .25% None .10% .15% .25% None .10% .15% .25%
Transfer Agency
Fees(3)............ .01% .05% .10% .15% .01% .05% .10% .15% .01% .05% .10% .15%
Other Expenses Af-
ter Expense
Reimbursements and
Fee Reductions(2).. .10% .10% .10% .10% .11% .11% .11% .11% .13% .13% .13% .13%
---- ---- ---- ----- ---- ---- ---- ---- ---- ---- ---- -----
Total Operating
Expenses(2,3,4).. .61% .75% .85% 1.00% .22% .36% .46% .61% .69% .83% .93% 1.08%
==== ==== ==== ===== ==== ==== ==== ==== ==== ==== ==== =====
Example of Expenses.
Based on the
foregoing table, you
would pay the
following expenses
on a hypothetical
$1,000 investment,
assuming a 5% annual
return and
redemption at the
end of each time
period:
One Year........... $6 $8 $9 $10 $2 $4 $5 $6 $7 $8 $9 $11
Three Years........ $20 $24 $27 $32 $7 $12 $15 $20 $22 $26 $30 $34
Five Years......... $34 $42 $47 $55 $12 $20 $26 $34 $38 $46 $51 $60
Ten Years.......... $76 $93 $105 $122 $28 $46 $58 $76 $86 $103 $114 $132
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Focused Growth Small Company Index International Growth
------------------------------- ----------------------------------- -------------------------------
Class A Class B Class C Class D Class A Class B Class C Class D Class A Class B Class C Class D
Units Units Units Units Units(1) Units(1) Units(1) Units(1) Units Units Units Units
------- ------- ------- ------- -------- -------- -------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unitholder
Transaction
Expenses
Maximum Sales
Charge Imposed
on Purchases..... None None None None None None None None None None None None
Additional Pur-
chase Price
Amount (as a
percentage of
amount
invested)(1)..... None None None None .75% .75% .75% .75% None None None None
Deferred Sales
Charge Imposed
on Reinvested
Distributions.... None None None None None None None None None None None None
Deferred Sales
Charge Imposed
on Redemptions... None None None None None None None None None None None None
Redemption Fees... None None None None None None None None None None None None
Exchange Fees..... None None None None None None None None None None None None
Annual Operating
Expenses After
Expense
Reimbursements and
Fee Reductions (as
a percentage of
average daily net
assets).
Management Fees
After Fee
Reductions(2).... .80% .80% .80% .80% .20% .20% .20% .20% .80% .80% .80% .80%
12b-1 Fees........ None None None None None None None None None None None None
Servicing
Fees(3).......... None .10% .15% .25% None .10% .15% .25% None .10% .15% .25%
Transfer Agency
Fees(3).......... .01% .05% .10% .15% .01% .05% .10% .15% .01% .05% .10% .15%
Other Expenses
After Expense
Reimbursements
and
Fee
Reductions(2).... .10% .10% .10% .10% .11% .11% .11% .11% .25% .25% .25% .25%
---- ----- ----- ----- ---- ---- ---- ---- ----- ----- ----- -----
Total Operating
Expenses(2,3,4). .91% 1.05% 1.15% 1.30% .32% .46% .56% .71% 1.06% 1.20% 1.30% 1.45%
==== ===== ===== ===== ==== ==== ==== ==== ===== ===== ===== =====
Example of
Expenses. Based on
the foregoing
table, you would
pay the following
expenses on a
hypothetical
$1,000 investment,
assuming a 5%
annual return and
redemption at the
end of each time
period:
One Year.......... $9 $11 $12 $13 $11 $12 $13 $15 $11 $12 $13 $15
Three Years....... $29 $33 $37 $41 $18 $22 $25 $30 $34 $38 $41 $46
Five Years........ $50 $58 $63 $71 $26 $33 $39 $47 $58 $66 $71 $79
Ten Years......... $112 $128 $140 $157 $48 $65 $77 $95 $129 $145 $157 $174
</TABLE>
4
<PAGE>
- ----------
(1) To prevent the Small Company Index Portfolio from being adversely affected
by the transaction costs associated with unit purchases, the Portfolio
will sell units at a price equal to the net asset value of the units plus
an additional purchase price amount equal to .75% of such value. Such
amounts are not sales charges, but are retained by the Portfolio for the
benefit of all unitholders. (See "Investment Information--Small Company
Index Portfolio," "Investing--Purchase of Units" and "Investing--
Redemption of Units".)
(2) For the fiscal year ending November 30, 1996, Northern has advised the
Trust that it intends to voluntarily reduce its advisory fee for the
Balanced, Equity Index, Diversified Growth, Focused Growth, Small Company
Index and International Growth Portfolios to .50%, .10%, .55%, .80%, .20%
and .80%, respectively, of the Portfolios' respective average daily net
assets (advisory fees are otherwise payable at the annual rate of .80%,
.30%, .80%, 1.10%, .40% and 1.00%, respectively, of the Portfolios'
respective average daily net assets). For the fiscal year ending November
30, 1996, Goldman Sachs has advised the Trust that it intends to
voluntarily reduce its administration fee (otherwise payable with respect
to each Portfolio at the annual rate of .25% of the first $100 million,
.15% of the next $200 million, .075% of the next $450 million and .05% of
any excess over $750 million of the Portfolio's net assets) to .10% of
each Portfolio's average daily net assets and to reimburse expenses for
the Balanced, Equity Index, Diversified Growth, Focused Growth, Small
Company Index and International Growth Portfolios to the extent that, in
such fiscal year, the sum of a Portfolio's expenses (including the fees
payable to Goldman Sachs as administrator, but excluding the fees payable
to Northern for its duties as adviser and certain other expenses) exceeds
on an annualized basis .25% of the International Growth Portfolio's
average daily net assets and .10% of each other Portfolio's average daily
net assets for such fiscal year. The expense information in the table has,
accordingly, been presented to reflect these fee reductions and
reimbursements. Without the undertakings of Northern and Goldman Sachs,
and had all classes of units been outstanding during the year ending
November 30, 1995, "Other Expenses" in the foregoing table would have been
as follows: Balanced Portfolio .47%; Equity Index Portfolio .23%;
Diversified Growth Portfolio .31%; Focused Growth Portfolio .36%; Small
Company Index Portfolio .40%; and International Growth Portfolio .37%, and
the total annual operating expenses of the Portfolios' units would have
been as follows: Balanced Class A, Class B, Class C and Class D units--
1.28%, 1.42%, 1.52% and 1.67%, respectively; Equity Index Class A, Class
B, Class C and Class D units--.54%, .68%, .78% and .93%, respectively;
Diversified Growth Class A, Class B, Class C and Class D units--1.12%,
1.26%, 1.36% and 1.51%, respectively; Focused Growth Class A, Class B,
Class C and Class D units--1.47%, 1.61%, 1.71% and 1.86%, respectively;
Small Company Index Class A, Class B, Class C and Class D units--.81%,
.95%, 1.05% and 1.20%, respectively; and International Growth Portfolio
Class A, Class B, Class C and Class D units--1.38%, 1.52%, 1.62% and
1.77%, respectively, based on actual expenses incurred during the fiscal
year ended November 30, 1995. For a more complete description of the
Portfolios' expenses, see "Trust Information" in this Prospectus.
(3) The Trust has adopted a Unitholder Servicing Plan pursuant to which the
Trust may enter into agreements with Institutions or other financial
intermediaries under which they render (or arrange to have rendered)
certain unitholder administrative support services for their Customers or
other Investors who beneficially own Class B, Class C and Class D units in
return for a fee ("Servicing Fee") of up to .10%, .15%, and .25%,
respectively, per annum of the value of each Portfolio's outstanding Class
B, Class C and Class D units, respectively. The Trust also allocates
transfer agency fees, which are attributable to the Class A, Class B,
Class C and Class D units in a Portfolio separately to such units, as
reflected in the table. For further information, see "Investment Adviser,
Transfer Agent and Custodian" and "Unitholder Servicing Plan" under the
heading "Trust Information" in this Prospectus.
(4) The actual expense ratios reflected in the above table for each class of
the Equity Index, Diversified Growth and Small Company Index Portfolios
include interest expense of .01%, .03% and .01%, respectively, associated
with temporary borrowings. Interest expense is not subject to voluntary
expense limitations. Had the Portfolios not experienced such temporary
borrowings, the total annual operating expense ratios would have been as
follows: Equity Index Class A, Class B, Class C and Class D units--.21%,
.35%, .45% and .60% respectively; Diversified Growth Class A, Class B,
Class C, and Class D units--.66%, .80%, .90% and 1.05%, respectively; and
Small Company Index Class A, Class B, Class C and Class D units--.31%,
.45%, .55% and .70%, respectively. Whether such borrowings will occur in
any given year and the actual amount of such borrowings is difficult to
predict. The expenses noted in the table under "Other Expenses After
Expense Reimbursements and Fee Reductions" have been restated with respect
to Class D units of the Focused Growth and Small Company Index Portfolios
and Class C units of the Equity Index Portfolio to reflect what such
expenses would have been had such classes of units of those Portfolios
been outstanding for the entire fiscal year ended November 30, 1995.
---------------------
THE PURPOSE OF THE FOREGOING TABLE IS TO ASSIST YOU IN UNDERSTANDING THE
VARIOUS UNITHOLDER TRANSACTION AND OPERATING EXPENSES OF EACH PORTFOLIO THAT
UNITHOLDERS BEAR DIRECTLY OR INDIRECTLY. IT DOES NOT, HOWEVER, REFLECT ANY
CHARGES WHICH MAY BE IMPOSED BY NORTHERN, ITS AFFILIATES AND CORRESPONDENT
BANKS AND OTHER INSTITUTIONS ON THEIR CUSTOMERS AS DESCRIBED UNDER
"INVESTING--PURCHASE OF UNITS." THE EXAMPLE SHOWN ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATE OF RETURN.
ACTUAL EXPENSES AND RATE OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN.
5
<PAGE>
FINANCIAL HIGHLIGHTS
The following data have been audited by Ernst & Young LLP, independent
auditors, as indicated in their report incorporated by reference into the
Additional Statement from the annual report to unitholders for the fiscal year
ended November 30, 1995 (the "Annual Report"), and should be read in
conjunction with the financial statements and related notes incorporated by
reference and attached to the Additional Statement. Information regarding units
other than Class A and Class D units with respect to the Diversified Growth
Portfolio, Focused Growth Portfolio, Small Company Index Portfolio and
International Growth Portfolio has not been given since no such units were
outstanding. Information regarding units other than Class A units with respect
to the Balanced Portfolio and information regarding units other than Class A,
Class C and Class D units with respect to the Equity Index Portfolio has not
been given since no such units were outstanding. The Annual Report also
contains performance information and is available upon request and without
charge by calling the telephone number or writing to the address on the first
page of this Prospectus.
Balanced Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A
---------------------------
1995 1994 1993 (a)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.50 $ 10.22 $ 10.00
Income from investment operations:
Net investment income 0.34 0.24 0.09
Net realized and unrealized gain (loss) on
investments 1.55 (0.72) 0.22
- ---------------------------------------------------------------------------
Total income (loss) from investment operations 1.89 (0.48) 0.31
- ---------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.34) (0.22) (0.09)
Net realized gain on investments -- (0.02) --
- ---------------------------------------------------------------------------
Total distributions to unitholders (0.34) (0.24) (0.09)
- ---------------------------------------------------------------------------
Net increase (decrease) 1.55 (0.72) 0.22
- ---------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.05 $ 9.50 $ 10.22
- ---------------------------------------------------------------------------
Total return (b) 20.22% (4.76)% 3.12%
Ratio to average net assets of: (c)
Expenses, net of waivers and reimbursements 0.61% 0.61% 0.61%
Expenses, before waivers and reimbursements 1.28% 1.50% 1.62%
Net investment income, net of waivers and
reimbursements 3.36% 2.56% 2.20%
Net investment income, before waivers and
reimbursements 2.69% 1.68% 1.19%
Portfolio turnover rate 93.39% 75.69% 35.03%
Net assets at end of period (in thousands) $38,897 $31,462 $15,928
- ---------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on July 1, 1993.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(c) Annualized for periods less than a full year.
6
<PAGE>
FINANCIAL HIGHLIGHTS
Equity Index Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A Class C Class D
---------------------------- -------- ----------------
1995 1994 1993 (a) 1995 (b) 1995 1994 (c)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.60 $ 10.78 $ 10.00 $ 13.43 $10.60 $10.96
Income from investment
operations:
Net investment income 0.30 0.27 0.22 0.05 0.25 0.02
Net realized and
unrealized gain (loss)
on investments and
futures 3.47 (0.18) 0.78 0.45 3.47 (0.31)
- -----------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.77 0.09 1.00 0.50 3.72 (0.29)
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.30) (0.27) (0.22) (0.07) (0.28) (0.07)
Net realized gain on
investments (0.21) -- -- -- (0.21) --
- -----------------------------------------------------------------------------------
Total distributions to
unitholders (0.51) (0.27) (0.22) (0.07) (0.49) (0.07)
- -----------------------------------------------------------------------------------
Net increase (decrease) 3.26 (0.18) 0.78 0.43 3.23 (0.36)
- -----------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 13.86 $ 10.60 $ 10.78 $ 13.86 $13.83 $10.60
- -----------------------------------------------------------------------------------
Total return (d) 36.60% 0.87% 10.09% 3.73% 36.20% (2.65)%
Ratio to average net as-
sets of: (e)
Expenses, net of
waivers and
reimbursements 0.22% 0.23% 0.21% 0.46% 0.61% 0.60%
Expenses, before
waivers and
reimbursements 0.54% 0.59% 0.66% 0.78% 0.93% 0.96%
Net investment income,
net of waivers and re-
imbursements 2.54% 2.62% 2.62% 2.29% 2.07% 2.67%
Net investment income,
before waivers and
reimbursements 2.22% 2.25% 2.17% 1.97% 1.75% 2.31%
Portfolio turnover rate 15.27% 71.98% 2.06% 15.27% 15.27% 71.98%
Net assets at end of
period (in thousands) $479,763 $281,817 $219,282 $18,390 $ 810 $ 3
- -----------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class C units were issued on September 29, 1995.
(c) Class D units were issued on September 14, 1994.
(d) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(e) Annualized for periods less than a full year.
7
<PAGE>
FINANCIAL HIGHLIGHTS
Diversified Growth Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A Class D
----------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.88 $ 10.65 $ 10.00 $ 9.88 $10.41
Income from investment opera-
tions:
Net investment income 0.15 0.09 0.09 0.11 0.01
Net realized and unrealized
gain (loss) on investments 2.26 (0.83) 0.65 2.25 (0.54)
- --------------------------------------------------------------------------------
Total income (loss) from in-
vestment
operations 2.41 (0.74) 0.74 2.36 (0.53)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (0.09) (0.01) (0.09) (0.08) --
Net realized gain on invest-
ments -- (0.02) -- -- --
- --------------------------------------------------------------------------------
Total distributions to
unitholders (0.09) (0.03) (0.09) (0.08) --
- --------------------------------------------------------------------------------
Net increase (decrease) 2.32 (0.77) 0.65 2.28 (0.53)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.20 $ 9.88 $ 10.65 $12.16 $ 9.88
- --------------------------------------------------------------------------------
Total return (c) 24.55% (6.98)% 7.39% 24.19% (5.18)%
Ratio to average net assets
of: (d)
Expenses, net of waivers and
reimbursements 0.69% 0.67% 0.71% 1.08% 1.05%
Expenses, before waivers and
reimbursements 1.12% 1.08% 1.13% 1.51% 1.46%
Net investment income, net of
waivers and
reimbursements 1.16% 0.77% 1.04% 0.73% 0.94%
Net investment income, before
waivers and reimbursments 0.73% 0.35% 0.62% 0.30% 0.53%
Portfolio turnover rate 81.65% 78.94% 140.88% 81.65% 78.94%
Net assets at end of period
(in thousands) $146,731 $164,963 $199,053 $ 221 $ 40
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on September 14, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
8
<PAGE>
FINANCIAL HIGHLIGHTS
Focused Growth Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A Class D
---------------------------- --------
1995 1994 1993 (a) 1995 (b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.79 $ 10.43 $ 10.00 $ 9.55
Income from investment operations:
Net investment income 0.05 0.02 0.01 0.02
Net realized and unrealized gain
(loss) on investments 2.71 (0.66) 0.43 2.93
- -------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.76 (0.64) 0.44 2.95
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.02) -- (0.01) (0.02)
Net realized gain on investments -- -- -- --
- -------------------------------------------------------------------------------
Total distributions to unitholders (0.02) -- (0.01) (0.02)
- -------------------------------------------------------------------------------
Net increase (decrease) 2.74 (0.64) 0.43 2.93
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.53 $ 9.79 $ 10.43 $12.48
- -------------------------------------------------------------------------------
Total return (c) 28.38% (6.15)% 4.33% 31.00%
Ratio to average net assets of: (d)
Expenses, net of waivers and reim-
bursements 0.91% 0.91% 0.91% 1.30%
Expenses, before waivers and reim-
bursements 1.47% 1.55% 1.88% 1.86%
Net investment income (loss), net of
waivers and reimbursements 0.46% 0.24% 0.14% (0.11)%
Net investment loss, before waivers
and reimbursements (0.10)% (0.39)% (0.83)% (0.67)%
Portfolio turnover rate 85.93% 74.28% 27.48% 85.93%
Net assets at end of period (in thou-
sands) $86,099 $57,801 $32,099 $ 489
- -------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on July 1, 1993.
(b) Class D units were issued on December 8, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
9
<PAGE>
FINANCIAL HIGHLIGHTS
Small Company Index Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A Class D
-------------------------- --------
1993
1995 1994 (a) 1995 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.86 $ 11.29 $ 10.00 $10.60
Income from investment operations:
Net investment income 0.16 0.14 0.11 0.18
Net realized and unrealized gain (loss)
on investments and futures 2.67 (0.30) 1.29 2.87
- --------------------------------------------------------------------------------
Total income (loss) from investment opera-
tions 2.83 (0.16) 1.40 3.05
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.15) (0.02) (0.11) (0.14)
Net realized gain on investments and
futures (0.56) (0.25) -- (0.56)
- --------------------------------------------------------------------------------
Total distributions to unitholders (0.71) (0.27) (0.11) (0.70)
- --------------------------------------------------------------------------------
Net increase (decrease) 2.12 (0.43) 1.29 2.35
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.98 $ 10.86 $ 11.29 $12.95
- --------------------------------------------------------------------------------
Total return (c) 27.76% (1.54)% 14.09% 30.50%
Ratio to average net assets of: (d)
Expenses, net of waivers and reimburse-
ments 0.32% 0.33% 0.31% 0.71%
Expenses, before waivers and reimburse-
ments 0.81% 0.86% 1.02% 1.20%
Net investment income, net of waivers and
reimbursements 1.31% 1.27% 1.25% 0.90%
Net investment income, before waivers and
reimbursements 0.82% 0.74% 0.54% 0.41%
Portfolio turnover rate 38.46% 98.43% 26.31% 38.46%
Net assets at end of period (in thousands) $94,899 $77,120 $54,763 $ 44
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on December 11, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return does not include the additional purchase price amount payable by
investors in connection with purchases of Portfolio units. Total return is
not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
10
<PAGE>
FINANCIAL HIGHLIGHTS
International Growth Portfolio
For the Years Ended November 30,
<TABLE>
<CAPTION>
Class A Class D
------------------- -----------------
1995 1994(a) 1995 1994(b)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.21 $ 10.00 $ 10.21 $10.47
Income from investment operations:
Net investment income 0.12 0.05 0.19 --
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (0.36) 0.16 (0.48) (0.26)
- ------------------------------------------------------------------------------
Total income (loss) from investment
operations (0.24) 0.21 (0.29) (0.26)
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.05) -- (0.05) --
Net realized gain on investments and
foreign currency transactions (0.04) -- (0.04) --
- ------------------------------------------------------------------------------
Total distributions to unitholders (0.09) -- (0.09) --
- ------------------------------------------------------------------------------
Net increase (decrease) (0.33) 0.21 (0.38) (0.26)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.88 $ 10.21 $ 9.83 $10.21
- ------------------------------------------------------------------------------
Total return (c) (2.32)% 2.11% (2.78)% (2.51)%
Ratio to average net assets of: (d)
Expenses, net of waivers and reim-
bursements 1.06% 1.04% 1.45% 1.35%
Expenses, before waivers and reim-
bursements 1.38% 1.47% 1.77% 1.78%
Net investment income, net of waivers
and reimbursements 1.22% 0.76% 2.01% --
Net investment income (loss), before
waivers and reimbursements 0.90% 0.33% 1.69% (0.43)%
Portfolio turnover rate 215.31% 77.79% 215.31% 77.79%
Net assets at end of period (in thou-
sands) $148,704 $133,212 $ 20 --
- ------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
(b) Class D units were issued on November 16, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
11
<PAGE>
INVESTMENT INFORMATION
INTRODUCTION
The Trust is an open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). Each Portfolio consists of a
separate pool of assets with separate investment objectives and policies, as
described below. Each Portfolio is classified as a diversified investment
company. Units of each Portfolio have been classified into four classes--Class
A units, Class B units, Class C units and Class D units. Northern serves as
investment adviser, transfer agent and custodian. Goldman Sachs serves as
distributor and administrator. The investment objective of a Portfolio may not
be changed without the vote of the majority of the outstanding units of the
particular Portfolio. Except as expressly noted below, however, a Portfolio's
investment policies may be changed without a vote of unitholders.
BALANCED PORTFOLIO
The Balanced Portfolio seeks to provide long-term capital appreciation and
current income. The Portfolio will invest at least 25% of the value of its
total assets in fixed income senior securities and no more than 75% in equity
securities under normal market conditions. The actual percentage of assets
invested in equity and fixed income securities will vary from time to time,
depending upon Northern's judgment as to general market and economic
conditions, trends and yields, interest rates and changes in fiscal and
monetary policies. The Portfolio reserves the right to hold as a temporary
defensive measure up to 100% of its total assets in cash and short-term
obligations (having remaining maturities of 18 months or less) at such times
and in such proportions as, in the opinion of Northern, is warranted. For
purposes of determining the percentages of the Portfolio's assets that are
invested in equity and fixed income securities, respectively, only that portion
of the value of convertible securities attributable to their fixed income
characteristics will be deemed to be a fixed income investment.
The Portfolio may invest in common and preferred stocks and securities
convertible into common stock ("equity securities"). The Portfolio selects
equity securities based on such factors as growth of sales, return on equity,
growth and consistency of earnings, financial condition, market share, product
leadership and other investment criteria. The Portfolio will normally limit its
equity investments to the securities of companies which together with their
predecessors have been in continuous operation for at least five years and have
stock market capitalization in excess of $200 million. The Portfolio may also
purchase warrants and rights which entitle the holder to buy equity securities
at a specified price for a specified period of time.
The Portfolio will invest in fixed income securities of all types as set forth
below and in any proportions that generally are rated investment-grade at the
time of purchase. These securities may include bonds, debentures, mortgage and
other asset-related securities, zero coupon bonds, convertible debentures, and
other obligations issued by the U.S. Government, its agencies or
instrumentalities, foreign governments, U.S. and foreign corporations and U.S.
and foreign banks. The Portfolio may also purchase bonds that are issued in
tandem with warrants which entitle the holder to purchase certain common stock
at a specified price valid during a specified period of time. The Portfolio may
also invest in short-term notes, bills, commercial paper and certificates of
deposit. The dollar-weighted average maturity of the fixed income portion of
the Portfolio will, under normal market conditions, range between two and ten
years. The Balanced Portfolio may also invest up to 5% of its total assets in
pair-off transactions involving securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
12
<PAGE>
The Portfolio may also enter into forward currency contracts and utilize
options and futures contracts and related options. Pending investment, as a
temporary defensive measure and to meet anticipated redemption requests, the
Portfolio may also invest in various short-term obligations. See "Description
of Securities and Common Investment Techniques" and "Description of Other
Securities and Investment Techniques Used by the Balanced Portfolio" below for
more information.
EQUITY INDEX PORTFOLIO
The Equity Index Portfolio seeks to provide investment results approximating
the aggregate price and dividend performance of the securities included in the
S&P Index. Under normal market conditions the Portfolio will invest at least
80% of the Portfolio's total assets in the common stocks of the companies that
constitute the S&P Index, in approximately the same proportions as they are
represented in the S&P Index. The S&P Index is a market value-weighted index
consisting of 500 common stocks which are traded on the New York Stock
Exchange, American Stock Exchange and the NASDAQ National Market System and
selected by Standard & Poor's Corporation (the "S&P") through a detailed
screening process starting on a macro-economic level and working toward a
micro-economic level dealing with company specific information such as market
value, industry group classification, capitalization and trading activity.
S&P's primary objective for the S&P Index is to be the performance benchmark
for the U.S. equity markets. The companies chosen for inclusion in the S&P
Index tend to be leaders in important industries within the U.S. economy.
However, companies are not selected by S&P for inclusion because they are
expected to have superior stock price performance relative to the market in
general or other stocks in particular. S&P makes no representation or
warranty, implied or express, to purchasers of Portfolio units or any member
of the public regarding the advisability of investing in the Portfolio or the
ability of the S&P Index to track general stock market performance.
The Equity Index Portfolio is managed through the use of a "passive" or
"indexing" investment approach, which attempts to duplicate the investment
composition and performance of the S&P Index through statistical procedures.
As a result, Northern does not employ traditional methods of fund investment
management, such as selecting securities on the basis of economic, financial
and market analysis.
Northern believes that under normal market conditions, the quarterly
performance of the Portfolio will be within a .95 correlation with the S&P
Index. However, there is no assurance that the Portfolio will be able to do so
on a consistent basis. Deviations from the performance of the S&P Index
("tracking error") may result from unitholder purchases and redemptions of
units of the Portfolio that occur daily, as well as from the expenses borne by
the Portfolio. Such purchases and redemptions may necessitate the purchase and
sale of securities by the Portfolio and the resulting transaction costs which
may be substantial because of the number and the characteristics of the
securities held. In addition, transaction costs are incurred because sales of
securities received in connection with spin-offs and other corporate
reorganizations are made to conform the Portfolio's holdings with its
investment objective. Tracking error may also occur due to factors such as the
size of the Portfolio, the maintenance of a cash reserve pending investment or
to meet expected redemptions, changes made in the S&P Index or the manner in
which the S&P Index is calculated or because the indexing and investment
approach of Northern does not produce the intended goal of the
13
<PAGE>
Portfolio. In the event the performance of the Portfolio is not comparable to
the performance of the S&P Index, the Board of Trustees will evaluate the
reasons for the deviation and the availability of corrective measures. If
substantial deviation in the Portfolio's performance were to continue for
extended periods, it is expected that the Board of Trustees would consider
recommending to unitholders possible changes to the Portfolio's investment
objective.
The Portfolio may invest in options and futures contracts and related options.
The Portfolio may also invest in certain short-term fixed income securities as
cash reserves. However, the Portfolio will not invest in cash reserves,
options or futures contracts and related options as part of a temporary
defensive strategy such as lowering its investment in common stocks to protect
against potential stock market declines. See "Description of Securities and
Common Investment Techniques" below for more information.
DIVERSIFIED GROWTH PORTFOLIO
The Diversified Growth Portfolio seeks to provide long-term capital
appreciation, with income a secondary consideration. The Portfolio invests
principally in common and preferred stocks and securities convertible into
common stock. The Portfolio will, under normal market conditions, invest at
least 65% of its assets in equity securities. The Portfolio selects
investments based on such factors as growth of sales, return on equity, growth
and consistency of earnings, financial condition, market share, product
leadership and other investment criteria. The Portfolio may also purchase
warrants and rights which entitle the holder to buy equity securities at a
specific price for a specific period of time.
The Portfolio may also enter into forward currency contracts and utilize
options and futures contracts and related options. Pending investment, as a
temporary defensive measure and to meet anticipated redemption requests, the
Portfolio may also invest in various short-term obligations. See "Description
of Securities and Common Investment Techniques" below for more information.
FOCUSED GROWTH PORTFOLIO
The Focused Growth Portfolio seeks to provide long-term capital appreciation.
Any income received is incidental to the objective of capital appreciation.
The Portfolio invests in equity securities of companies believed by Northern
to have superior quality and growth characteristics. Under normal market
conditions at least 65% of the Portfolio's total assets will be invested in
equity securities. The Portfolio selects equity securities based on such
factors as growth of sales, return on equity, growth and consistency of
earnings, financial condition, market share, product leadership and other
investment criteria. Companies in which the Portfolio invests often retain
their earnings to finance current and future growth and generally pay little
or no dividends. The Portfolio may also purchase warrants and rights which
entitle the holder to buy equity securities at a specific price for a specific
period of time. The Portfolio intends to invest in the securities of companies
which together with their predecessors have been in continuous operation for
at least five years and have stock market capitalization in excess of $200
million.
The Portfolio may also enter into forward currency contracts and utilize
options and futures contracts and related options. Pending investment, as a
temporary defensive measure and to meet anticipated redemption requests, the
Portfolio may also invest in various short-term obligations. See "Description
of Securities and Common Investment Techniques" below for more information.
14
<PAGE>
SMALL COMPANY INDEX PORTFOLIO
The Small Company Index Portfolio seeks to provide investment results
approximating the aggregate price and dividend performance of the securities
included in the Russell Index. Under normal market conditions, the Portfolio
will invest at least 80% of its total assets in a statistically selected sample
of the 2000 stocks included in the Russell Index. The Russell Index is a market
value-weighted index comprised of the stocks of the smallest 2,000 companies in
the Russell 3000 Index which is comprised of the stocks of 3,000 large U.S.
domiciled companies (based on market capitalization) that represent
approximately 98% of the investable U.S. equity markets. Because of its
emphasis on the smallest 2,000 companies, the Russell Index represents
approximately 10% of the total market capitalization of the Russell 3000 Index.
As of January 31, 1996, the average market capitalization of the companies
included in the Russell Index was approximately $274 million. The Russell Index
is reconstituted annually to reflect changes in market capitalization. The
primary criteria used by Frank Russell & Company ("Russell") to determine the
initial list of securities eligible for inclusion in the Russell 3000 Index
(and, accordingly, the Russell Index) is total market capitalization adjusted
for large private holdings and cross-ownership. However, companies are not
selected by Russell for inclusion in the Russell Index because they are
expected to have superior stock price performance relative to the stock market
in general or other stocks in particular. Russell makes no representation or
warranty, implied or express, to purchasers of Portfolio units or any member of
the public regarding the advisability of investing in the Portfolio or the
ability of the Russell Index to track general market performance of small
capitalization stocks.
The Portfolio will be constructed to have aggregate investment characteristics
similar to those of the Russell Index as a whole. The Portfolio will invest in
securities which will be selected on the basis of such factors as market
capitalization, beta, industry sectors and economic factors. The number of
issues included will be a function of the Portfolio's liquidity and size. The
Portfolio will be restructured annually when the Russell Index is
reconstituted. The Portfolio will use a proprietary rebalancing algorithm that
attempts to screen out extremely illiquid issues while minimizing portfolio
turnover and related expenses.
It should be noted that small companies in which the Portfolio may invest may
have limited product lines, markets, or financial resources, or may be
dependent upon a small management group, and their securities may be subject to
more abrupt or erratic market movements than larger, more established
companies, both because their securities typically are traded in lower volume
and because the issuers typically are subject to a greater degree of changes in
their earnings and prospects.
Northern believes that under normal market conditions, the quarterly
performance of the Portfolio will be within a .95 correlation with the Russell
Index. However, there is no assurance that the Portfolio will be able to do so
on a consistent basis. Deviations from the performance of the Russell Index
("tracking error") may result from unitholder purchases and redemptions of
units of the Portfolio that occur daily, as well as from the expenses borne by
the Portfolio. Such purchases and redemptions may necessitate the purchase and
sale of securities by the Portfolio and the resulting transaction costs which
may be substantial because of the number and the characteristics of the
securities held. In addition, transaction costs are incurred because sales of
securities received in connection with spin-offs and other corporate
reorganizations are made to conform the Portfolio's holdings with its
investment objective. Tracking error may also occur due to factors such as the
size of the Portfolio, the maintenance of a cash reserve pending investments or
to meet expected redemptions, changes made in the Russell Index, or the manner
in which the Russell Index is calculated. In
15
<PAGE>
the event the performance of the Portfolio is not comparable to the
performance of the Russell Index, the Board of Trustees will evaluate the
reasons for the deviation and the availability of corrective measures. These
measures may include adjustments to Northern's portfolio management practices.
If substantial deviation in the Portfolio's performance were to continue for
extended periods, it is expected that the Board of Trustees would consider
recommending to unitholders possible changes to the Portfolio's investment
objective.
The Portfolio requires the payment of an additional purchase price amount on
purchases of units of the Portfolio equal to 0.75% of the dollar amount
invested. The additional purchase price amount is paid to the Portfolio, not
to Goldman Sachs or Northern. It is not a sales charge. The amount applies to
initial investments in the Portfolio and all subsequent purchases (including
purchases made by exchange from the other Portfolios of the Trust), but not to
reinvested dividends or capital gain distributions. The purpose of the
additional purchase price amount is to indirectly allocate transaction costs
associated with new purchases to investors making those purchases, thus
protecting existing unitholders. These costs include: (1) brokerage costs; (2)
market impact costs--i.e., the increase in market prices which may result when
the Portfolio purchases thinly traded stocks; and, most importantly, (3) the
effect of the "bid-ask" spread in the over-the-counter market. (Securities in
the over-the-counter market are bought at the "ask" or purchase price, but are
valued in the Portfolio at the last quoted bid price). The 0.75% amount
represents Northern's estimate of the brokerage and other transaction costs
which may be incurred by the Portfolio in acquiring stocks of small
capitalization companies. Without the additional purchase price amount, the
Portfolio would generally be selling its units at a price less than the cost
to the Portfolio of acquiring the portfolio securities necessary to maintain
its investment characteristics, resulting in reduced investment performance
for all unitholders in the Portfolio. With the additional purchase price
amount, the transaction costs of acquiring additional stocks are not borne by
all existing unitholders, but the source of funds for these costs is the
purchase price paid by those investors making additional purchases. Because
these costs are covered by the additional purchase price for units, and
therefore do not need to be paid out of the Portfolio's other assets, the
Portfolio is expected to track the Russell Index more closely.
The Portfolio may invest in options and futures contracts and related options.
The Portfolio may also invest in certain short-term fixed income securities as
cash reserves. However, the Portfolio will not invest in cash reserves,
options or futures contracts and related options as part of a temporary
defensive strategy such as lowering its investment in common stocks to protect
against potential stock market declines. See "Description of Securities and
Common Investment Techniques" below for more information.
INTERNATIONAL GROWTH PORTFOLIO
The International Growth Portfolio seeks to provide long-term capital
appreciation. Any income received is incidental to the objective of capital
appreciation. The Portfolio invests principally in common and preferred stocks
and securities convertible into common stock of foreign issuers. The Portfolio
will, under normal market conditions, invest at least 65% of its total assets
in equity securities of foreign issuers. The Portfolio selects investments
based on such factors as growth of sales, return on equity, growth and
consistency of earnings, financial condition, market share, product leadership
and other investment criteria. The Portfolio will normally limit its equity
investments to the securities of companies which together with their
predecessors have been in continuous operation for at least five years and
have stock market capitalizations in excess of $200 million. The Portfolio
invests in securities listed on foreign and domestic securities exchanges and
securities traded in foreign and domestic over-the-counter markets, and may
invest in unlisted securities. Securities issued in certain countries are
currently accessible to the Portfolio only through investment in other
investment companies that are specifically authorized to invest in such
securities.
16
<PAGE>
The Portfolio will be invested at all times in the securities of issuers
located in at least three different foreign countries. These countries include,
but are not limited to: Argentina, Australia, Belgium, Brazil, Canada, Chile,
Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
Indonesia, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, Peru, the Philippines, Poland, Portugal,
Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom and Venezuela. Criteria for determining
the appropriate distribution of investments among various countries and regions
include prospects for relative economic growth, expected levels of inflation,
government policies influencing business conditions, the outlook for currency
relationships, and the range of investment opportunities available to
international investors.
Because the securities markets in the following countries are highly developed,
liquid and subject to extensive regulation, the International Growth Portfolio
may invest more than 25% of its total assets in the securities of issuers
located in Japan, the United Kingdom, France, Germany or Switzerland.
Investment in a particular country of 25% or more of the Portfolio's total
assets will make the Portfolio's performance more dependent upon the political
and economic circumstances of a particular country than a mutual fund that is
more widely diversified among issuers in different countries. Although the five
foreign countries listed above have developed economies, they are not immune
from these risks. For example, efforts by the member countries of the European
Union to move toward monetary union and a single currency have encountered
opposition arising from the conflicting economic, political and cultural
interests and traditions of the member countries and their citizens. The end of
the Cold War, the reunification of Germany, the accession of three new Western
European members to the European Union and the aspirations of Eastern European
states to join and other political and social events in Europe have caused
considerable economic, social and political dislocation. In addition, events in
the Japanese economy, as well as political and social developments and natural
disasters there have affected Japanese securities and currency markets, and
have disrupted the relationship of the Japanese yen with other currencies and
with the U.S. dollar. Future political, economic and social developments can be
expected to produce continuing effects on securities and currency markets.
The Portfolio may also enter into forward currency contracts, purchase
convertible bonds, and utilize options, futures contracts and currency swaps.
Pending investment, as a temporary defensive measure and to meet anticipated
redemption requests, the Portfolio may invest, in accordance with its
investment policy, in various short-term obligations, such as U.S. Government
obligations, high quality money market instruments and repurchase agreements.
See "Description of Securities and Common Investment Techniques" below for more
information.
SPECIAL RISK CONSIDERATIONS
FOREIGN SECURITIES. The Balanced, Diversified Growth and Focused Growth
Portfolios may, and the International Growth Portfolio will, invest directly in
the securities of foreign issuers. In addition, each Portfolio may acquire the
obligations of foreign banks and foreign branches of U.S. banks as stated below
under "Short-Term Obligations." There are other risks and costs involved in
investing in foreign securities which are in addition to the usual risks
inherent in domestic investments. The performance of investments in securities
denominated in a foreign currency will depend, in part, on the strength of the
foreign currency against the U.S. dollar and the interest rate environment in
the country issuing the currency. Absent other events which could otherwise
affect the value of a foreign security (such as a change in the political
climate
17
<PAGE>
or an issuer's credit quality), appreciation in the value of the foreign
currency generally can be expected to increase the value of a foreign currency-
denominated security in terms of U.S. dollars. A rise in foreign interest rates
or decline in the value of the foreign currency relative to the U.S. dollar
generally can be expected to depress the value of a foreign currency-
denominated security.
Investment in foreign securities involves higher costs than investment in U.S.
securities, including higher transaction and custody costs as well as the
imposition of additional taxes by foreign governments. Foreign investments may
also involve risks associated with the level of currency exchange rates, less
complete financial information about the issuers, less market liquidity, more
market volatility and political instability. Future political and economic
developments, the possible imposition of withholding taxes on dividend income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls or freezes on the convertibility of
currency, or the adoption of other governmental restrictions might adversely
affect an investment in foreign securities. Additionally, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and recordkeeping
requirements.
In addition, there are other risks of investing in countries with emerging
economies or securities markets. These countries are located in the Asia-
Pacific region, Eastern Europe, Latin and South America and Africa. Political
and economic structures in many such countries may be undergoing significant
evolution and rapid development, and such countries may lack the social,
political and economic stability characteristic of more developed countries.
Some of these countries may have in the past failed to recognize private
property rights and have at times nationalized or expropriated the assets of
private companies. As a result, the risks described above, including the risks
of nationalization or expropriation of assets, may be heightened.
While the Portfolios invest in securities denominated in foreign currencies,
their portfolio securities and other assets held by them are valued in U.S.
dollars. Currency exchange rates may fluctuate significantly over short periods
of time causing, together with other factors, a Portfolio's net asset value to
fluctuate as well. Currency exchange rates can be affected unpredictably by the
intervention or the failure to intervene by U.S. or foreign governments or
central banks, or by currency controls or political developments in the U.S. or
abroad. The Portfolios' net long and short foreign currency exposure will not
exceed their respective total asset values. To the extent that a Portfolio is
fully invested in foreign securities while also maintaining currency positions,
it may be exposed to greater combined risk. The Portfolios' respective net
currency positions may expose them to risks independent of their securities
positions.
DERIVATIVE INSTRUMENTS. Each Portfolio may also purchase certain "derivative"
instruments. "Derivative" instruments are instruments that derive value from
the performance of underlying assets, interest or currency exchange rates, or
indices, and include (but are not limited to) interest rate and currency swaps,
futures contracts, options, forward currency contracts and structured debt
obligations (including collateralized mortgage obligations and other types of
asset-backed securities, "stripped" securities and various floating rate
instruments, including "inverse floaters"). Derivative instruments present, to
varying degrees, market risk that the performance of the underlying assets,
exchange rates or indices will decline; credit risk that the dealer or other
counterparty to the transaction will fail to pay its obligations; volatility
and leveraging risk that, if
18
<PAGE>
interest or exchange rates change adversely, the value of the derivative
instrument will decline more than the assets, rates or indices on which it is
based; liquidity risk that a Portfolio will be unable to sell a derivative
instrument when it wants because of lack of market depth or market disruption;
pricing risk that the value of a derivative instrument (such as an option) will
not correlate exactly to the value of the underlying assets, rates or indices
on which it is based; and operations risk that loss will occur as a result of
inadequate systems and controls, human error or otherwise. Some derivative
instruments are more complex than others, and for those instruments that have
been developed recently, data is lacking regarding their actual performance
over complete market cycles. Northern will evaluate the risks presented by the
derivative instruments purchased by the Portfolios, and will determine, in
connection with its day-to-day management of the Portfolios, how they will be
used in furtherance of the Portfolios' investment objectives. It is possible,
however, that Northern's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Portfolios will,
because of the risks discussed above, incur loss as a result of their
investments in derivative instruments.
DESCRIPTION OF SECURITIES AND COMMON INVESTMENT TECHNIQUES
UNITED STATES GOVERNMENT OBLIGATIONS. In addition to other permissible
investments, the Portfolios may invest in a variety of obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities consisting
of bills, notes and bonds, which principally differ only in their interest
rates, maturities and time of issuance. Some of these U.S. Government issuers
are described below under "Short-Term Obligations."
CONVERTIBLE SECURITIES. The Balanced, Diversified Growth, Focused Growth and
International Growth Portfolios may each acquire convertible securities. A
convertible security is a security that may be converted either at a stated
price or rate within a specified period of time into a specified number of
shares of common stock. By investing in convertible securities, a Portfolio
seeks the opportunity, through the conversion feature, to participate in the
capital appreciation of the common stock into which the securities are
convertible, while earning higher current income than is available from the
common stock. Convertible securities acquired by the Portfolios will be rated
investment grade by Standard and Poor's Ratings Group ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Duff & Phelps Credit Rating Co. ("Duff")
or Fitch Investors Service, Inc. ("Fitch"), or if unrated, will be of
comparable quality as determined by Northern in accordance with guidelines
approved by the Board of Trustees, except that a Portfolio may acquire
convertible securities rated below investment grade so long as a Portfolio's
investments in all non-investment grade securities does not exceed the
limitations set forth below under "Non-Investment Grade Securities."
INVESTMENT-GRADE SECURITIES. The Balanced Portfolio may invest in fixed income
securities of all types, including convertible securities, and the Diversified
Growth Portfolio, Focused Growth Portfolio and International Growth Portfolio
may invest a portion of their assets in convertible securities. Such securities
will generally be investment grade. Investment-grade securities include those
securities which are rated BBB or higher by S&P, Baa or higher by Moody's, BBB
or higher by Duff or BBB or higher by Fitch at the time of purchase, or if
unrated, are of comparable quality as determined by Northern. Securities rated
BBB by S&P, Duff or Fitch, or Baa by Moody's have certain speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than in the case of higher rated securities. Commercial paper and
other short-term obligations acquired by the Portfolio will be rated A-2 or
higher by S&P, P-2 or higher by Moody's, D-2 or
19
<PAGE>
higher by Duff, or F-2 or higher by Fitch at the time of purchase or, if
unrated, determined to be of comparable quality by Northern. Subsequent to its
purchase by a Portfolio, a rated security may cease to be rated or its rating
may be reduced below the minimum rating required for purchase by the Portfolio.
Northern will consider such an event in determining whether the Portfolio
should continue to hold such security. In addition, a Portfolio may acquire
securities rated below investment grade when Northern believes that the
investment characteristics of such securities make them desirable acquisitions
for the Portfolio in light of its investment objectives. In either case, a
Portfolio's total investment in non-investment grade securities will not exceed
the limitations set forth below under "Non-Investment Grade Securities."
NON-INVESTMENT GRADE SECURITIES. Although the fixed income and convertible
securities in which the Balanced Portfolio may invest and the convertible
securities in which the Diversified Growth Portfolio, Focused Growth Portfolio
and International Growth Portfolio may invest will normally be rated investment
grade at the time of purchase, the Portfolios may invest in non-investment
grade securities when Northern believes that the investment characteristics of
such securities make them desirable in light of the Portfolios' investment
objectives and current portfolio mix, so long as under normal market and
economic conditions, (i) no more than 5% of the total assets of the
International Growth Portfolio and no more than 10% of the respective total
assets of the Balanced Portfolio, Diversified Growth Portfolio and Focused
Growth Portfolio are invested in non-investment grade securities and (ii) such
securities are rated "B" or higher at the time of purchase by at least one
major rating agency. Non-investment grade securities (those that are rated "Ba"
or lower by Moody's or "BB" or lower by S&P, Duff or Fitch) are commonly
referred to as "junk bonds." Particular risks associated with lower-rated
securities are (a) the relative youth and growth of the market for such
securities, (b) the sensitivity of such securities to interest rate and
economic changes, (c) the lower degree of protection of principal and interest
payments, (d) the relatively low trading market liquidity for the securities,
(e) the impact that legislation may have on the high yield bond market (and, in
turn, on a Portfolio's net asset value and investment practices), and (f) the
creditworthiness of the issuers of such securities. During an economic downturn
or substantial period of rising interest rates, leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals, and to obtain additional financing. An economic downturn could
also disrupt the market for lower-rated securities and adversely affect the
value of outstanding securities and the ability of the issuers to repay
principal and interest. If the issuer of a security held by a Portfolio
defaulted, the Portfolio could incur additional expenses to seek recovery.
WARRANTS. The Balanced, Diversified Growth, Focused Growth and International
Growth Portfolios may invest up to 5% of their respective assets at the time of
purchase in warrants and similar rights (other than those that have been
acquired in units or attached to other securities). Warrants represent rights
to purchase securities at a specific price valid for a specific period of time.
The Balanced, Diversified Growth, Focused Growth and International Growth
Portfolios may also purchase bonds that are issued in tandem with warrants. The
prices of warrants do not necessarily correlate with the prices of the
underlying securities.
AMERICAN DEPOSITORY RECEIPTS. The Balanced, Diversified Growth, Focused Growth
and International Growth Portfolios may invest in securities of foreign issuers
in the form of American Depository Receipts ("ADRs") or similar securities
representing securities of foreign issuers. These securities may not be
denominated in the same currency as the securities they represent. ADRs are
receipts typically issued by a United States bank or trust company evidencing
ownership of the underlying foreign securities and are denominated in U.S.
dollars.
20
<PAGE>
Certain such institutions issuing ADRs may not be sponsored by the issuer. A
non-sponsored depository may not provide the same unitholder information that a
sponsored depository is required to provide under its contractual arrangement
with the issuer. The Balanced, Diversified Growth and Focused Growth Portfolios
will limit investments in ADRs to 20% of their respective assets.
EUROPEAN DEPOSITORY RECEIPTS. The Balanced, Diversified Growth, Focused Growth
and International Growth Portfolios may invest in securities of foreign issuers
in the form of European Depository Receipts ("EDRs") or similar securities
representing securities of foreign issuers. These securities may not be
denominated in the same currency as the securities they represent. EDRs are
receipts issued by a European financial institution evidencing ownership of the
underlying foreign securities and are generally denominated in foreign
currencies. Generally, EDRs, in bearer form, are designed for use in the
European securities markets. The Balanced, Diversified Growth and Focused
Growth Portfolios will limit investments in EDRs to 5% of their respective
assets.
FORWARD CURRENCY EXCHANGE CONTRACTS. The Balanced, Diversified Growth, Focused
Growth and International Growth Portfolios may enter into forward currency
exchange contracts for hedging purposes and in an effort to reduce the level of
volatility caused by changes in foreign currency exchange rates or where such
transactions are economically appropriate for the reduction of risks inherent
in the ongoing management of the Portfolios. The International Growth Portfolio
may also enter into forward currency exchange contracts for speculative
purposes (to seek to increase total return) when Northern anticipates that the
foreign currency will appreciate or depreciate in value, but securities
denominated in that currency do not in Northern's view present attractive
investment opportunities and are not held by the Portfolio. In addition, the
International Growth Portfolio may also engage in cross-hedging by using
forward contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if Northern believes that there
is a pattern of correlation between the two currencies.
A forward currency exchange contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of contract. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to
limit any potential gain that might be realized should the value of such
currency increase. Consequently, a Portfolio may choose to refrain from
entering into such contracts. In connection with forward currency exchange
contracts, the Portfolios will create a segregated account of cash, U.S.
Government securities or other liquid high grade debt obligations, or will
otherwise cover their position in accordance with applicable requirements of
the Securities and Exchange Commission (the "SEC").
OPTIONS. Each Portfolio may write covered call options, buy put options, buy
call options and write secured put options for hedging (or cross-hedging)
purposes or for the purpose of earning additional income. Such options may
relate to particular securities, foreign or domestic stock indices, financial
instruments or foreign currencies and may or may not be listed on a foreign or
domestic securities exchange and issued by the Options Clearing Corporation.
The Portfolios will not purchase put and call options in an amount that exceeds
5% of their respective net assets at the time of purchase. The aggregate value
of a Portfolio's assets that will be subject to options written by the
Portfolio will not exceed 25% of its net assets at the time the option is
written.
21
<PAGE>
In the case of a call option on a security or currency, the option is "covered"
if a Portfolio owns the security or currency underlying the call or has an
absolute and immediate right to acquire that security or currency without
additional cash consideration (or, if additional cash consideration is
required, liquid assets, such as cash, U.S. Government securities or other
liquid high grade debt obligations in such amount are held in a segregated
account by its custodian) upon conversion or exchange of other securities or
instruments held by it. For a call option on an index, the option is covered if
a Portfolio maintains with its custodian a portfolio of securities
substantially replicating the movement of the index, or liquid assets equal to
the contract value. A call option is also covered if a Portfolio holds a call
on the same security, currency or index as the call written where the exercise
price of the call held is (i) equal to or less than the exercise price of the
call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the Portfolio in liquid assets in a
segregated account with its custodian.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security or currency
gives the purchaser of the option the right to buy, and a writer the obligation
to sell, the underlying security at the stated exercise price at any time prior
to the expiration of the option, regardless of the market price of the security
or currency. The premium paid to the writer is in consideration for undertaking
the obligation under the option contract. A put option for a particular
security or currency gives the purchaser the right to sell the security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. In contrast to an option on a
particular security, an option on an index provides the holder with the right
to make or receive a cash settlement upon exercise of the option. The amount of
this settlement will be equal to the difference between the closing price of
the index at the time of exercise and the exercise price of the option
expressed in dollars, times a specified multiple.
Each Portfolio will invest and trade in unlisted over-the-counter options only
with firms deemed creditworthy by Northern. However, unlisted options are not
subject to the protections afforded purchasers of listed options by the Options
Clearing Corporation, which performs the obligations of its members which fail
to perform them in connection with the purchase or sale of options.
FUTURES CONTRACTS AND RELATED OPTIONS. Each Portfolio may invest in futures
contracts and options on futures contracts for hedging purposes or to maintain
liquidity to meet potential unitholder redemptions, invest cash balances or
dividends or minimize trading costs. However, a Portfolio may not purchase or
sell a futures contract unless immediately after any such transaction the sum
of the aggregate amount of margin deposits on its existing futures positions
and the amount of premiums paid for related options is 5% or less of its total
assets.
Futures contracts obligate a Portfolio, at maturity, to take or make delivery
of certain domestic or foreign securities, the cash value of a securities index
or a stated quantity of a foreign currency. A Portfolio may sell a futures
contract in order to offset a decrease in the market value of its portfolio
securities that might otherwise result from a market decline or currency
exchange fluctuations. A Portfolio may do so either to hedge the value of its
portfolio of securities as a whole, or to protect against declines, occurring
prior to sales of securities, in the value of the securities to be sold.
Conversely, a Portfolio may purchase a futures contract in anticipation of
purchases of securities. In addition, a Portfolio may utilize futures contracts
in anticipation of changes in the composition of its portfolio holdings.
22
<PAGE>
The Portfolios may purchase and sell call and put options on futures contracts
traded on a domestic or foreign exchange or board of trade. When a Portfolio
purchases an option on a futures contract, it has the right to assume a
position as a purchaser or seller of a futures contract at a specified exercise
price at any time during the option period. When a Portfolio sells an option on
a futures contract, it becomes obligated to purchase or sell a futures contract
if the option is exercised. In anticipation of a market advance, a Portfolio
may purchase call options on futures contracts as a substitute for the purchase
of futures contracts to hedge against a possible increase in the price of
securities which the Portfolio intends to purchase. Similarly, if the value of
a Portfolio's portfolio securities is expected to decline, the Portfolio might
purchase put options or sell call options on futures contracts rather than sell
futures contracts. In connection with a Portfolio's position in a futures
contract or option thereon, the Portfolio will create a segregated account of
cash, U.S. Government securities or other liquid high grade debt obligations,
or will otherwise cover its position in accordance with applicable requirements
of the SEC.
The primary risks associated with the use of futures contracts and options are:
(i) imperfect correlation between the change in market value of the securities
held by a Portfolio and the price of futures contracts and options; (ii)
possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; (iii) losses due
to unanticipated market movements which are potentially unlimited; and (iv)
Northern's ability to predict correctly the direction of securities prices,
interest rates, currency exchange rates and other economic factors. For a
further discussion see "Additional Investment Information--Futures Contracts
and Related Options" and Appendix B in the Additional Statement.
The Portfolios intend to comply with the regulations of the Commodity Futures
Trading Commission exempting the Portfolios from registration as a "commodity
pool operator."
CURRENCY SWAPS. In order to protect against currency fluctuations, the
International Growth Portfolio may enter into currency swaps. Currency swaps
involve the exchange of the rights of the Portfolio and another party to make
or receive payments in specified currencies. The net amount of the excess, if
any, of the Portfolio's obligations over its entitlements with respect to each
currency swap will be accrued on a daily basis and an amount of cash, U.S.
Government securities or other liquid high grade debt obligations having an
aggregate net asset value at least equal to such accrued excess will be
maintained in a segregated account by the Portfolio's custodian. Currency swaps
usually involve the delivery of the entire principal value of one designated
currency in exchange for the other designated currency. Therefore, the entire
principal value of a currency swap is subject to the risk that the other party
to the swap will default on its contractual delivery obligations. The Portfolio
will not enter into any currency swap unless the unsecured commercial paper,
senior debt, or claims paying ability of the other party is rated either A or
A-1 or better by S&P, Duff or Fitch, or A or P-1 or better by Moody's.
SECURITIES LENDING. The Portfolios may seek additional income from time to time
by lending their respective portfolio securities on a short-term basis to
banks, brokers and dealers under agreements requiring that the loans be secured
by collateral in the form of cash, cash equivalents, U.S. Government securities
or irrevocable bank letters of credit maintained on a current basis equal in
value to at least the market value of the securities loaned. A Portfolio may
not make such loans in excess of 33 1/3% of the value of the Portfolio's total
assets. Loans of securities involve risks of delay in receiving additional
collateral or in recovering the securities loaned, or possible loss of rights
in the collateral should the borrower of the securities become insolvent. The
23
<PAGE>
proceeds received by a Portfolio in connection with loans of portfolio
securities may be invested in U.S. Government securities and other liquid high
grade debt obligations.
FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS.
The Portfolios may purchase or sell securities on a when-issued or delayed-
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Securities purchased
or sold on a when-issued, delayed-delivery or forward commitment basis involve
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. A Portfolio is required to hold and maintain in a
segregated account with the Portfolio's custodian until the settlement date,
cash, U.S. Government Securities or other liquid high grade debt obligations
having a value (determined daily) at least equal to the amount of the
Portfolio's purchase commitments. Although the Portfolios would generally
purchase securities on a when-issued, delayed-delivery or a forward commitment
basis with the intention of acquiring the securities, the Portfolios may
dispose of such securities prior to settlement if Northern deems it appropriate
to do so.
BORROWINGS. The Portfolios are authorized to make limited borrowings for
temporary purposes to the extent described below under "Investment
Restrictions." If the securities held by the Portfolios should decline in value
while borrowings are outstanding, the net asset value of the Portfolios'
outstanding units will decline in value by proportionately more than the
decline in value suffered by the Portfolios' securities. Borrowings may be
effected through reverse repurchase agreements under which the Portfolios would
sell portfolio securities to financial institutions such as banks and broker-
dealers and agree to repurchase them at a particular date and price. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Portfolio may decline below the price of the securities it is
obligated to repurchase.
SHORT-TERM OBLIGATIONS. Subject to the requirement that each Portfolio will
maintain a specified percentage of its total assets in either common stocks or
other equity securities as stated above, the Equity Index, Diversified Growth,
Focused Growth, Small Company Index and International Growth Portfolios may
also invest in short-term U.S. government obligations, high quality money
market instruments and repurchase agreements, pending investment, to meet
anticipated redemption requests, or as a temporary defensive measure. The
Balanced Portfolio may make such investments subject to its policy regarding
average weighted portfolio maturity stated above. Such obligations may include
those issued by foreign banks and foreign branches of U.S. banks. See "Special
Risk Considerations--Foreign Securities" above.
The Portfolios may purchase obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities. Obligations of certain
agencies and instrumentalities of the U.S. Government, such as those of the
Government National Mortgage Association, are supported by the full faith and
credit of the U.S. Treasury. Others, such as those of the Export-Import Bank of
the United States, are supported by the right of the issuer to borrow from the
U.S. Treasury; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the agency or instrumentality
issuing the obligation. No assurance can be given that the U.S. Government
would provide financial support to U.S. Government-sponsored instrumentalities
if it is not obligated to do so by law.
Securities guaranteed as to principal and interest by the U.S. Government or
its agencies and instrumentalities are deemed to include (a) securities for
which the payment of principal and interest is backed by an irrevocable letter
of credit issued by the U.S. Government or an agency or instrumentality
thereof, and (b)
24
<PAGE>
participations in loans made to foreign governments or their agencies that are
so guaranteed. The secondary market for certain of these participations is
limited. Such participations will therefore be regarded as illiquid.
REPURCHASE AGREEMENTS. The Portfolios may enter into repurchase agreements only
with financial institutions such as banks and broker/dealers which are deemed
to be creditworthy by Northern under guidelines approved by the Trust's Board
of Trustees. Under a repurchase agreement, a Portfolio may purchase portfolio
securities subject to the seller's agreement to repurchase them at a mutually
specified date and price. The seller under a repurchase agreement will be
required to maintain the value of the securities which are subject to the
agreement and held by a Portfolio in an amount that exceeds the agreed upon
repurchase price. Default by or bankruptcy of the seller would, however, expose
a Portfolio to possible loss because of adverse market action or delays in
connection with the disposition of the underlying obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolios may purchase rated and
unrated variable and floating rate instruments. These instruments may include
variable amount master demand notes that permit the indebtedness thereunder to
vary in addition to providing for periodic adjustments in the interest rate.
The absence of an active secondary market could make it difficult to dispose of
the instruments, and a Portfolio could suffer a loss if the issuer defaulted or
during periods that the Portfolio is not entitled to exercise its demand
rights. Variable and floating rate instruments held by a Portfolio may be
subject to the Portfolio's 15% limitation on illiquid investments when the
Portfolio may not demand payment of the principal amount within seven days
absent a reliable trading market. The Portfolios may also invest in leveraged
inverse floating rate debt instruments ("inverse floaters"). The interest rate
on an inverse floater resets in the opposite direction from the market rate of
interest to which the inverse floater is indexed. An inverse floater may be
considered to be leveraged to the extent that its interest rate varies by a
magnitude that exceeds the magnitude of the change in the index rate of
interest. The higher degree of leverage inherent in inverse floaters is
associated with greater volatility in their market values. Unrated variable and
floating rate instruments will be determined by Northern to be of comparable
quality at the time of the purchase to rated instruments purchasable by the
Portfolios.
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, the Portfolios may invest in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or penny-
rounding method of valuation. The Equity Index and Small Company Index
Portfolios may also invest in shares of other investment companies that are
structured to seek a similar correlation to the performance of the S&P Index or
Russell Index, respectively. The International Growth Portfolio may also
purchase shares of investment companies investing primarily in foreign
securities, including so-called "country funds." Country funds have portfolios
consisting primarily of securities of issuers located in one foreign country or
region. In addition, the Portfolios may invest in securities issued by other
investment companies if otherwise consistent with their respective investment
objectives and policies. As a shareholder of another investment company, a
Portfolio would bear, along with other shareholders, its pro rata portion of
the other investment company's expenses including advisory fees. These expenses
would be in addition to the advisory fees and other expenses the Portfolio
bears directly in connection with its own operations. Securities of the
investment companies will be acquired by the Portfolios within the limits
prescribed by the 1940 Act.
25
<PAGE>
ILLIQUID OR RESTRICTED SECURITIES. Each Portfolio may invest up to 15% of its
net assets in securities which are illiquid. Illiquid securities would
generally include repurchase agreements and time deposits with
notice/termination dates in excess of seven days, unlisted over-the-counter
options and certain securities that are traded in the United States but are
subject to trading restrictions because they are not registered under the
Securities Act of 1933 (the "1933 Act"). With respect to the Balanced
Portfolio, illiquid securities will also include interest rate swaps, stripped
mortgage-backed securities ("SMBS") issued by private issuers and guaranteed
investment contracts ("GICs"). With respect to the International Growth
Portfolio, illiquid securities include currency swaps.
If otherwise consistent with their respective investment objectives and
policies, the Balanced, Diversified Growth, Focused Growth and International
Growth Portfolios may purchase domestically-traded securities which are not
registered under the 1933 Act but which can be sold to "qualified institutional
buyers" in accordance with Rule 144A under the 1933 Act. Any such security will
not be considered illiquid so long as it is determined by Northern, under
guidelines approved by the Trust's Board of Trustees, that an adequate trading
market exists for that security. This investment practice could have the effect
of increasing the level of illiquidity in a Portfolio during any period that
qualified institutional buyers become uninterested in purchasing these
restricted securities.
PORTFOLIO TURNOVER. The portfolio turnover rate of the International Growth
Portfolio will be affected by changes in country and currency weightings, as
well as changes in the holdings of specific issuers and investments in issuers
in smaller or emerging markets. High portfolio turnover (in excess of 100%) may
result in the realization of short-term capital gains which are taxable to
unitholders as ordinary income (see "Taxes"). In addition, high portfolio
turnover rates may result in corresponding increases in brokerage commissions
and other transaction costs. The Portfolios will not consider portfolio
turnover rate a limiting factor in making investment decisions consistent with
their respective objectives and policies.
MISCELLANEOUS. The Portfolios do not intend to purchase certificates of deposit
of Northern or its affiliate banks, commercial paper issued by Northern's
parent holding company or other securities issued or guaranteed by Northern,
its parent holding company or their subsidiaries or affiliates.
The value of the debt securities held by the Balanced Portfolio (and the other
Portfolios to the extent permitted by their investment policies stated above)
will vary inversely with changes in prevailing interest rates.
The Equity Index and Small Company Index Portfolios may experience higher
custody costs than other stock funds because they maintain large portfolios of
securities consistent with their respective investment objectives.
For a description of applicable securities ratings, see Appendix A to the
Additional Statement.
DESCRIPTION OF OTHER SECURITIES AND INVESTMENT TECHNIQUES USED BY THE BALANCED
PORTFOLIO
STRIPPED SECURITIES. To the extent consistent with its investment objective,
the Balanced Portfolio may purchase Treasury receipts and other "stripped"
securities that evidence ownership in either the future interest payments or
the future principal payments on U.S. Government and other obligations. These
26
<PAGE>
participations, which may be issued by the U.S. Government (or a U.S.
Government agency or instrumentality) or by private issuers such as banks and
other financial institutions, are issued at a discount to their "face value,"
and may include SMBS, which are derivative multi-class mortgage securities.
Stripped securities, particularly SMBS, may exhibit greater price volatility
than ordinary debt securities because of the manner in which their principal
and interest are returned to investors.
CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. The Balanced Portfolio may also
purchase participations in trusts that hold U.S. Treasury securities (such as
TIGRs and CATS) where the trust participations evidence ownership in either the
future interest payments or the future principal payments on the U.S. Treasury
obligations. Like other stripped securities, these participations are also
normally issued at a discount to their "face value," and may exhibit greater
price volatility than ordinary debt securities because of the manner in which
their principal and interest are returned to investors. Investments by the
Portfolio in such receipts will not exceed 5% of the value of the Portfolio's
total assets.
CORPORATE OBLIGATIONS. The Balanced Portfolio may invest in debt obligations of
domestic or foreign corporations that are rated "B" or better by at least one
major rating agency, or if unrated will be of comparable quality as determined
by Northern so long as, under normal market and economic conditions, no more
than 10% of the Portfolio's total assets are invested in non-investment grade
fixed income securities.
REVERSE REPURCHASE AGREEMENTS. The Balanced Portfolio may enter into reverse
repurchase agreements which involve the sale of securities held by it, with an
agreement to repurchase the securities at an agreed upon price (including
interest) and date. The Portfolio will use the proceeds of reverse repurchase
agreements to purchase other securities either maturing, or under an agreement
to resell, at a date simultaneous with or prior to the expiration of the
reverse repurchase agreement. The Portfolio may utilize reverse repurchase
agreements, which may be viewed as borrowings (or leverage), when it is
anticipated that the interest income to be earned from the investment of the
proceeds of the transaction is greater than the interest expense of the reverse
repurchase transaction. Reverse repurchase agreements involve the risks that
the interest income earned in the investment of the proceeds of the transaction
will be less than the interest expense of the reverse repurchase agreement,
that the market value of the securities sold by the Portfolio may decline below
the price of the securities the Portfolio is obligated to repurchase and that
the securities may not be returned to the Portfolio. During the time a reverse
repurchase agreement is outstanding, the Portfolio will maintain a segregated
account with the Trust's custodian containing U.S. Government or other
appropriate liquid high-grade debt securities having a value at least equal to
the repurchase price. The Portfolio may enter into reverse repurchase
agreements with banks, brokers and dealers, and does not have the authority to
enter into reverse repurchase agreements exceeding in the aggregate one-third
of the Portfolio's total assets. See "Additional Investment Information--
Investment Restrictions" in the Additional Statement.
BANK OBLIGATIONS. Domestic and foreign bank obligations in which the Balanced
Portfolio may invest include certificates of deposit, bank and deposit notes,
bankers' acceptances and fixed time deposits. Such obligations may be general
obligations of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of the specific obligation or by government regulation.
Total assets of a bank are determined on the basis of the bank's most recent
annual financial statements.
ASSET-BACKED SECURITIES. The Balanced Portfolio may purchase asset-backed
securities that are secured or backed by mortgages or other assets (e.g.,
automobile loans and credit card receivables) and are issued by
27
<PAGE>
entities such as GNMA, FNMA, FHLMC, commercial banks, financial companies,
finance subsidiaries of industrial companies, savings and loan associations,
mortgage banks and investment banks. Asset-backed securities acquired by the
Portfolio will be rated BBB or better by S&P, Duff or Fitch, or Baa or better
by Moody's at the time of purchase or, if not rated, will be determined by
Northern to be of comparable quality. The Portfolio will not purchase non-
mortgage asset-backed securities that are not rated by S&P, Duff, Fitch or
Moody's.
Presently there are several types of mortgage-backed securities that may be
acquired by the Portfolio, including guaranteed mortgage pass-through
certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
ordinarily elect to be taxed as pass-through entities known as real estate
mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in a variety of ways. The Portfolio will not purchase "residual" CMO interests,
which normally exhibit greater price volatility.
The yield characteristics of asset-backed securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
decrease, yield to maturity. In calculating the average weighted maturity of
the fixed income portion of the Portfolio, the maturity of asset-backed
securities will be based on estimates of average life.
Prepayments on asset-backed securities generally increase with falling interest
rates and decrease with rising interest rates; furthermore, prepayment rates
are influenced by a variety of economic and social factors. In general, the
collateral supporting non-mortgage asset-backed securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments. Like other fixed income securities, when interest rates rise the
value of an asset-backed security generally will decline; however, when
interest rates decline, the value of an asset-backed security with prepayment
features may not increase as much as that of other fixed income securities.
EXCHANGE RATE-RELATED SECURITIES. The Balanced Portfolio may invest in
securities for which the principal repayment at maturity, while paid in U.S.
dollars, is determined by reference to the exchange rate between the U.S.
dollar and the currency of one or more foreign countries ("Exchange Rate-
Related Securities"). The interest payable on these securities is denominated
in U.S. dollars and is not subject to foreign currency risk and, in most cases,
is paid at rates higher than most other similarly rated securities in
recognition of the foreign currency risk component of Exchange Rate-Related
Securities. Investments in Exchange Rate-Related Securities entail certain
risks. There is the possibility of significant changes in rates of exchange
between the U.S. dollar and any foreign currency to which an Exchange Rate-
Related Security is linked. In addition, potential illiquidity in the forward
foreign exchange market and the high volatility of the foreign
28
<PAGE>
exchange market may from time to time combine to make it difficult to sell an
Exchange Rate-Related Security prior to maturity without incurring a
significant price loss.
INTEREST RATE SWAPS. In order to protect its value from interest rate
fluctuations, the Balanced Portfolio may enter into interest rate swaps. The
Portfolio expects to enter into these hedging transactions primarily to
preserve a return or spread of a particular investment or portion of its
holdings and to protect against an increase in the price of securities the
Portfolio anticipates purchasing at a later date. Interest rate swaps involve
the exchange by the Portfolio with another party of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments). The net amount of the excess, if any, of the
Portfolio's obligations over its entitlements with respect to each interest
rate swap will be accrued on a daily basis and an amount of cash, U.S.
Government securities or other liquid high grade debt securities, having an
aggregate net asset value at least equal to such accrued excess will be
maintained in a segregated account by the Portfolio's custodian. The Portfolio
will not enter into any interest rate swap unless the unsecured commercial
paper, senior debt, or claims paying ability of the other party is rated either
A or A-1 or better by S&P, Duff or Fitch, or A or P-1 or better by Moody's.
GUARANTEED INVESTMENT CONTRACTS. The Balanced Portfolio may make limited
investments in guaranteed investment contracts ("GICs") issued by U.S.
insurance companies. Pursuant to such contracts, the Portfolio makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Portfolio on a monthly basis interest
which is based on an index (in most cases this index is expected to be the
Salomon Brothers CD Index), but is guaranteed not to be less than a certain
minimum rate. A GIC is normally a general obligation of the issuing insurance
company and not a separate account. The purchase price paid for a GIC becomes
part of the general assets of the insurance company, and the contract is paid
from the company's general assets. The Portfolio will only purchase GICs from
insurance companies which, at the time of purchase, have assets of $1 billion
or more and meet quality and credit standards established by Northern pursuant
to guidelines approved by the Board of Trustees. Generally, GICs are not
assignable or transferable without the permission of the issuing insurance
companies, and an active secondary market in GICs does not currently exist.
INVESTMENT RESTRICTIONS
The Portfolios are subject to certain investment restrictions which, as
described in more detail in the Additional Statement, are fundamental policies
that cannot be changed without the approval of a majority of the outstanding
units of a Portfolio. Each Portfolio will limit its investments so that, with
respect to 75% of a Portfolio's total assets, not more than 5% will be invested
in the securities of any one issuer (other than U.S. Government securities or
repurchase agreements collateralized by U.S. Government securities) and not
more than 25% of the Portfolio's total assets will be invested in the
securities (other than U.S. Government securities and repurchase agreements
collateralized by such securities) of issuers in any one industry. Each
Portfolio may borrow money from banks for temporary or emergency purposes or to
meet redemption requests, provided that the Portfolio maintains asset coverage
of at least 300% for all such borrowings.
In order to permit the sale of its units in certain states, the Trust may make
commitments more restrictive than the investment policies and restrictions
described in this Prospectus. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust, it will revoke the
commitment by terminating sales of its units in the state involved.
29
<PAGE>
TRUST INFORMATION
BOARD OF TRUSTEES
The business and affairs of the Trust and each Portfolio are managed under the
direction of the Trust's Board of Trustees. The Additional Statement contains
the name of each Trustee and background information regarding the Trustees.
INVESTMENT ADVISER, TRANSFER AGENT AND CUSTODIAN
Northern, which has offices at 50 S. LaSalle Street, Chicago, Illinois 60675,
serves as investment adviser, transfer agent and custodian for each Portfolio.
As transfer agent, Northern performs various administrative servicing
functions, and any unitholder inquiries should be directed to it.
Northern, a member of the Federal Reserve System, is an Illinois state-
chartered commercial bank and the principal subsidiary of Northern Trust
Corporation, a bank holding company. Northern was formed in 1889 with
capitalization of $1 million. As of December 31, 1995, Northern Trust
Corporation and its subsidiaries had approximately $19.9 billion in assets,
$12.5 billion in deposits and employed over 6,500 persons.
Northern administered in various capacities (including as master trustee,
investment manager or custodian) approximately $613.9 billion of assets as of
December 31, 1995, including approximately $105.5 billion of assets for which
Northern had investment management responsibility.
Under its Advisory Agreement with the Trust, Northern, subject to the general
supervision of the Trust's Board of Trustees, is responsible for making
investment decisions for the Portfolios and placing purchase and sale orders
for portfolio securities. Northern is also responsible for monitoring and
preserving the records required to be maintained under the regulations of the
SEC (with certain exceptions unrelated to its activities for the Trust). As
compensation for its advisory services and its assumption of related expenses,
Northern is entitled to a fee, computed daily and payable monthly, at an annual
rate of .80%, .30%, .80%, 1.10%, .40% and 1.00% of the average daily net assets
of the Balanced, Equity Index, Diversified Growth, Focused Growth, Small
Company Index and International Growth Portfolios, respectively. Although the
advisory fee rates payable by the Balanced, Diversified Growth, Focused Growth
and International Growth Portfolios are higher than the rates payable by most
mutual funds, the Board of Trustees believes they are comparable to the rates
paid by many other growth, balanced and international funds.
For serving as investment adviser during the fiscal year ended November 30,
1995, Northern earned fees (after waivers) paid by the Balanced, Equity Index,
Diversified Growth, Focused Growth, Small Company Index and International
Growth Portfolios at an annual rate of .50%, .10%, .55%, .80%, .20% and .80%,
respectively, of the Portfolios' average daily net assets.
Primary responsibility for the management of the Balanced Portfolio lies with
John J. Zielinski, Vice President in the Institutional Asset Management
Division, and Monty M. Memler, Second Vice President in the Fixed Income
Management Division of Northern's Investment Services Group. Mr. Zielinski
joined Northern in 1980. During the past five years, Mr. Zielinski has managed
various equity and fixed income portfolios, including the Balanced Portfolio
since it commenced operations on July 1, 1993. Mr. Memler
30
<PAGE>
joined Northern in 1986. During the past five years, Mr. Memler has managed
various fixed income portfolios, including the Balanced Portfolio since it
commenced operations on July 1, 1993.
Primary responsibility for the management of the Diversified Growth Portfolio
has resided with William A. Proskow, Vice President in the Institutional Asset
Management Division since September 1, 1993. Mr. Proskow joined Northern in
1993. Prior to joining Northern, Mr. Proskow was President and Chief Investment
Officer of Bank East Trust Company, and Senior Vice President and Senior
Investment Officer of First N H Investment Services.
Since commencement of operations on July 1, 1993, primary responsibility for
the management of the Focused Growth Portfolio has resided with Thomas E.
Kirkenmeier, Vice President in the Institutional Asset Management Division. Mr.
Kirkenmeier joined Northern in 1992. Prior to joining Northern, he was a Deputy
Manager at Brown Brothers Harriman & Co. where he managed various equity and
fixed income portfolios. Since joining Northern, Mr. Kirkenmeier has managed
various equity portfolios.
Robert A. LaFleur, Vice President of Northern since 1982 and Senior Vice
President since 1990, is the Chief Investment Strategist and head of the Funds
Management Division of Northern's Investment Services Group. Mr. LaFleur is
responsible for developing and implementing global and domestic investment
strategies for Northern and its affiliate banks. During the past five years,
Mr. LaFleur has managed international equity portfolios, including common and
collective trust funds invested principally in foreign securities. Since
commencement of operations on March 28, 1994, primary responsibility for the
management of the International Growth Portfolio has resided with Mr. LaFleur.
Northern also receives compensation as the Trust's custodian and transfer agent
under separate agreements. The fees payable by the Portfolios for these
services are described in this Prospectus under "Summary of Expenses" and in
the Additional Statement. Different transfer agency fees are payable with
respect to the Class A, B, C and D units in the Portfolios.
ADMINISTRATOR AND DISTRIBUTOR
Goldman Sachs, 85 Broad Street, New York, New York 10004, acts as administrator
and distributor for the Portfolios. Subject to the limitations described below
under "Expenses," as compensation for its administrative services (which
include supervision with respect to the Trust's non-investment advisory
operations) and the assumption of related expenses, Goldman Sachs is entitled
to a fee from each Portfolio, computed daily and payable monthly, at an annual
rate of .25% of the first $100 million, .15% of the next $200 million, .075% of
the next $450 million and .05% of any excess over $750 million of the average
daily net assets of each Portfolio. No compensation is payable by the Trust to
Goldman Sachs for its distribution services.
Goldman Sachs has voluntarily agreed to reduce its administration fee to .10%
of each Portfolio's average daily net assets. In addition, Goldman Sachs has
voluntarily agreed that if for the current fiscal year the sum of a Portfolio's
expenses (including the fees payable to Goldman Sachs as administrator, but
excluding the fees payable to Northern for its duties as investment adviser and
transfer agent, servicing fees and extraordinary expenses, such as litigation,
interest, taxes and indemnification expenses) exceeds on an annualized basis
.25% of the International Growth Portfolio and .10% of each other Portfolio's
average daily
31
<PAGE>
net assets for such fiscal year, it will waive a portion of its fees and/or
reimburse such Portfolio for the amount of the excess. In addition, as stated
under "Summary of Expenses," Northern intends to voluntarily reduce its
advisory fee for the Balanced, Equity Index, Diversified Growth, Focused
Growth, Small Company Index and International Growth Portfolios during the
Trust's current fiscal year. The result of these reimbursements and fee
reductions will be to increase the performance of the Portfolios during the
periods for which the reimbursements and reductions are made.
UNITHOLDER SERVICING PLAN
Pursuant to a Unitholder Servicing Plan ("Servicing Plan") adopted by the Board
of Trustees of the Trust, the Trust may enter into agreements ("Servicing
Agreements") with banks, corporations, brokers, dealers and other financial
institutions which may include Northern and its affiliates ("Servicing
Agents"), under which they will render (or arrange for the rendering of)
administrative support services for investors who beneficially own Class B, C
and D units. Beneficial owners of Class C and D units require extensive
administrative support services while beneficial owners of Class B units need
only some of these services. Administrative support services, which are
described more fully in the Additional Statement, may include processing
purchase and redemption requests from investors, placing net purchase and
redemption orders with Northern acting as the Trust's transfer agent, providing
necessary personnel and facilities to establish and maintain investor accounts
and records, and providing information periodically to investors showing their
positions in Portfolio units.
For these services, fees are payable by the Trust to Servicing Agents at an
annual rate of up to .10%, .15% and .25% of the average daily net asset value
of Class B units, Class C units and Class D units, respectively, held or
serviced by such Servicing Agents for beneficial unitholders ("Servicing
Fees"). Servicing Agents are required to provide investors with a schedule of
any credits, fees or other conditions that may be applicable to the investment
of their assets in Portfolio units.
Conflict of interest restrictions may apply to the receipt of compensation paid
by the Trust to a Servicing Agent in connection with the investment of
fiduciary funds in Portfolio units. Banks and other institutions regulated by
the Office of Comptroller of the Currency, Board of Governors of the Federal
Reserve System and state banking commissions, and investment advisers and other
money managers subject to the jurisdiction of the SEC, the Department of Labor
or state securities commissions, are urged to consult legal counsel before
entering into Servicing Agreements.
SERVICE INFORMATION
Class A units of each Portfolio are designed to be purchased by institutional
investors or others who can obtain information about their unitholder accounts
and who do not require the Transfer Agent or Servicing Agent services that are
provided for Class B, C and D unitholders.
Class B units of each Portfolio are designed to be purchased by organizations
maintaining record ownership on behalf of beneficial owners where certain
services of the Transfer Agent and a Servicing Agent are required that are
incident to the separation of record and beneficial ownership.
32
<PAGE>
Class C units of each Portfolio are designed to be purchased by institutional
investors who require certain account related services of the Transfer Agent
and a Servicing Agent that are incident to the investor being the beneficial
owner of units.
Class D units of each Portfolio are designed to be purchased by investors
having a relationship with an organization which requires that account related
services and information be provided to the investor and organization by the
Transfer Agent and a Servicing Agent.
Any person entitled to receive compensation for selling or servicing units of a
Portfolio may receive different compensation with respect to one particular
class of units over another in the same Portfolio.
INVESTING
PURCHASE OF UNITS
Units of the Portfolios are sold on a continuous basis by the Trust's
distributor, Goldman Sachs, to institutional investors that either maintain
certain qualified accounts at Northern or its affiliates or invest an aggregate
of at least $5 million in one or more Portfolios of the Trust. Goldman Sachs
has established several procedures for purchasing Portfolio units in order to
accommodate different types of institutional investors.
PURCHASE OF UNITS THROUGH QUALIFIED ACCOUNTS. Class A, B, C and D units of each
Portfolio are offered to Northern, its affiliates and other institutions and
organizations (the "Institutions") acting on behalf of their customers,
clients, employees and others (the "Customers") and for their own account.
Institutions may purchase units of a class through procedures established by
Institutions in connection with the requirements of their qualified accounts or
through procedures set forth herein with respect to Institutions that invest
directly. Institutions should contact Northern or an affiliate for further
information regarding purchases through qualified accounts. There is no minimum
initial investment for Institutions that maintain qualified accounts with
Northern or its affiliates.
PURCHASE OF UNITS DIRECTLY FROM THE TRUST. Institutions that purchase units
directly may do so by means of one of the following procedures provided that
they make an aggregate minimum initial investment of $5 million in one or more
Portfolios of the Trust:
PURCHASE BY MAIL. An Institution desiring to purchase units of a Portfolio
by mail should mail a check or Federal Reserve draft payable to the
specific Portfolio together with a completed and signed new account
application to The Benchmark Funds, c/o The Northern Trust Company, P.O.
Box 75943, Chicago, Illinois 60675-5943. An application will be incomplete
if it does not include a corporate resolution with the corporate seal and
secretary's certification within the preceding 30 days, or other acceptable
evidence of authority. If an Institution desires to purchase the units of
more than one Portfolio, the Institution should send a separate check for
each Portfolio. All checks must be payable in U.S. dollars and drawn on a
bank located in the United States. A $20 charge will be imposed if a check
33
<PAGE>
does not clear. The Trust may delay transmittal of redemption proceeds for
units recently purchased by check until such time as it has assured itself
that good funds have been collected for the purchase of such units. This
may take up to fifteen (15) days. Cash and third party checks are not
acceptable for the purchase of Trust units.
PURCHASE BY TELEPHONE. An Institution desiring to purchase units of a
Portfolio by telephone should call Northern acting as the Trust's transfer
agent ("Transfer Agent") at 1-800-637-1380. Please be prepared to identify
the name of the Portfolio with respect to which units are to be purchased
and the manner of payment. Please indicate whether a new account is being
established or an additional payment is being made to an existing account.
If an additional payment is being made to an existing account, please
provide the Institution's name and Portfolio Account Number. Purchase
orders are effected upon receipt by the Transfer Agent of Federal funds or
other immediately available funds in accordance with the terms set forth
below.
PURCHASE BY WIRE OR ACH TRANSFER. An Institution desiring to purchase units
of a Portfolio by wire or ACH Transfer should call the Transfer Agent at 1-
800-637-1380 for instructions if it is not making an additional payment to
an existing account. An Institution that wishes to add to an existing
account should wire Federal funds or effect an ACH Transfer to:
The Northern Trust Company
Chicago, Illinois
ABA Routing No. 0710-00152
(Reference 10 Digit Portfolio Account Number)
(Reference Unitholder's Name)
For more information concerning requirements for the purchase of units,
call the Transfer Agent at 1-800-637-1380.
EFFECTIVE TIME OF PURCHASES. A purchase order for Portfolio units received by
the Transfer Agent by 3:00 p.m., Chicago time, on a Business Day (as defined
under "Miscellaneous") will be effected on that Business Day at the net asset
value determined on that day with respect to the Balanced, Equity Index,
Diversified Growth, Focused Growth and International Growth Portfolios, and at
the net asset value plus an additional purchase price amount of .75 of 1% of
net asset value determined on that day with respect to the Small Company Index
Portfolio, provided that either: (a) the Transfer Agent receives the purchase
price in Federal funds or other immediately available funds prior to 3:00 p.m.,
Chicago time, on the same Business Day such order is received; or (b) payment
is received on the next Business Day in the form of Federal funds or other
immediately available funds in a qualified account maintained by an Institution
with Northern or an affiliate. Orders received after 3:00 p.m. will be effected
at the next determined net asset value, provided that payment is made as
provided herein. If an Institution accepts a purchase order from a Customer on
a non-Business Day, the order will not be executed until it is received and
accepted by the Transfer Agent on a Business Day in accordance with the
foregoing procedures.
MISCELLANEOUS PURCHASE INFORMATION. Units are purchased without a sales charge
imposed by the Trust. The minimum initial investment is $5 million for
Institutions that invest directly in one or more Portfolios. The Trust reserves
the right to waive this minimum and to determine the manner in which the
minimum investment is satisfied. There is no minimum for subsequent
investments.
34
<PAGE>
Institutions may impose different minimum investment and other requirements on
Customers purchasing units through them. Depending on the terms governing the
particular account, Institutions may impose account charges such as asset
allocation fees, account maintenance fees, compensating balance requirements or
other charges based upon account transactions, assets or income which will have
the effect of reducing the net return on an investment in a Portfolio. In
addition, certain Institutions may enter into Servicing Agreements with the
Trust whereby they will perform (or arrange to have performed) various
administrative support services for Customers who are the beneficial owners of
Class B, C and D units and receive fees from the Portfolios for such services;
such fees would be borne exclusively by the beneficial owners of Class B, C and
D units, respectively. See "Trust Information--Unitholder Servicing Plan." The
level of administrative support services, as well as transfer agency services,
required by an Institution and its Customers generally will determine whether
they purchase units of Class A, B, C or D. The exercise of voting rights and
the delivery to Customers of unitholder communications from the Trust will be
governed by the Customers' account agreements with the Institutions. Customers
should read this Prospectus in connection with any relevant agreement
describing the services provided by an Institution and any related requirements
and charges, or contact the Institution at which the Customer maintains its
account for further information.
Institutions that purchase units on behalf of Customers are responsible for
transmitting purchase orders to the Transfer Agent and delivering required
funds on a timely basis. An Institution shall be responsible for all losses and
expenses of a Portfolio as a result of a check that does not clear, an ACH
transfer that is rejected, or any other failure to make payment in the time and
manner described above, and Northern may redeem units from an account it
maintains to protect the Portfolio and Northern against loss. The Trust
reserves the right to reject any purchase order. Federal regulations require
that the Transfer Agent be furnished with a taxpayer identification number upon
opening or reopening an account. Purchase orders without such a number or an
indication that a number has been applied for will not be accepted. If a number
has been applied for, the number must be provided and certified within sixty
days of the date of the order.
Payment for units of a Portfolio may, in the discretion of Northern, be made in
the form of securities that are permissible investments for the Portfolio. For
further information, see the Additional Statement.
In the interests of economy and convenience, certificates representing units of
the Portfolios are not issued.
Institutions investing in the Portfolios on behalf of their Customers should
note that state securities laws regarding the registration of dealers may
differ from the interpretations of Federal law and such Institutions may be
required to register as dealers pursuant to state law.
Northern may, at its own expense, provide compensation to certain dealers whose
customers purchase significant amounts of units of a Portfolio. The amount of
such compensation may be made on a one-time and/or periodic basis, and may be
up to 25% of the annual fees that are earned by Northern as investment adviser
to such Portfolio (after adjustments) and are attributable to units held by
such customers. Such compensation will not represent an additional expense to
the Trust or its unitholders, since it will be paid from assets of Northern or
its affiliates.
REDEMPTION OF UNITS
REDEMPTION OF UNITS THROUGH QUALIFIED ACCOUNTS. Institutions may redeem units
of a class through procedures established by Northern and its affiliates in
connection with the requirements of their qualified
35
<PAGE>
accounts. Institutions should contact Northern or an affiliate for further
information regarding redemptions through qualified accounts.
REDEMPTION OF UNITS DIRECTLY. Institutions that purchase units directly may
redeem all or part of their Portfolio units in accordance with procedures set
forth below.
REDEMPTION BY MAIL. An Institution may redeem units by sending a written
request to The Benchmark Funds, c/o The Northern Trust Company, P.O. Box
75943, Chicago, Illinois 60675-5943. Redemption requests must be signed by
a duly authorized person, and must state the number of units or the dollar
amount to be redeemed and identify the Portfolio Account Number. See "Other
Requirements."
REDEMPTION BY TELEPHONE. An Institution may redeem units by placing a
redemption order by telephone by calling the Transfer Agent at 1-800-637-
1380. During periods of unusual economic or market changes, telephone
redemptions may be difficult to implement. In such event, unitholders
should follow procedures outlined above under "Redemption by Mail."
REDEMPTION BY WIRE. If an Institution has given authorization for expedited
wire redemption, units can be redeemed and the proceeds sent by Federal
wire transfer to a single previously designated bank account. The minimum
amount which may be redeemed by this method is $10,000. The Trust reserves
the right to change or waive this minimum or to terminate the wire
redemption privilege. See "Other Requirements."
TELEPHONE PRIVILEGE. An Institution that has notified the Transfer Agent in
writing of the Institution's election to redeem or exchange units by
placing an order by telephone may do so by calling the Transfer Agent at
1-800-637-1380. Neither the Trust nor its Transfer Agent will be
responsible for the authenticity of instructions received by telephone that
are reasonably believed to be genuine. To the extent that the Trust fails
to use reasonable procedures to verify the genuineness of telephone
instructions, it or its service providers may be liable for such
instructions that prove to be fraudulent or unauthorized. In all other
cases, the unitholder will bear the risk of loss for fraudulent telephone
transactions. However, the Transfer Agent has adopted procedures in an
effort to establish reasonable safeguards against fraudulent telephone
transactions. The proceeds of redemption orders received by telephone will
be sent by check, by wire or by transfer pursuant to proper instructions.
All checks will be made payable to the unitholder of record and mailed only
to the unitholder's address of record. See "Other Requirements."
Additionally, the Transfer Agent utilizes recorded lines for telephone
transactions and retains such tape recordings for six months, and will
request a form of identification if such identification has been furnished
to the Transfer Agent or the Trust.
OTHER REQUIREMENTS. A change of wiring instructions and a change of the
address of record may be effected only by a written request to the Transfer
Agent accompanied by (i) a corporate resolution which evidences authority
to sign on behalf of the Institution (including the corporate seal and
secretary's certification within the preceding 30 days), (ii) a signature
guarantee by a financial institution that is a participant in the Stock
Transfer Agency Medallion Program ("STAMP") in accordance with rules
promulgated by the SEC (a signature notarized by a notary public is not
acceptable) or (iii) such other evidence of authority as may be acceptable
to the Transfer Agent. A redemption request by mail will not be effective
unless signed by a person authorized by the corporate resolution or other
acceptable evidence of authority on file with the Transfer Agent.
36
<PAGE>
EXCHANGE PRIVILEGE. Institutions and, to the extent permitted by their account
agreements, Customers, may, after appropriate prior authorization, exchange
Class A, B, C or D units of a Portfolio having a value of at least $1,000 for
Class A, B, C or D units, respectively, of other equity or bond portfolios
(other than the Short Duration Portfolio) of the Trust as to which the
Institution or Customer maintains an existing account with an identical title.
Exchanges will be effected by a redemption of Class A, B, C or D units of the
portfolio held and the purchase of units of the portfolio acquired. Customers
of Institutions should contact their Institutions for further information
regarding the Trust's exchange privilege and Institutions should contact the
Transfer Agent as appropriate. Customers and Institutions exercising the
exchange privilege should read the relevant Prospectus prior to making an
exchange. The Trust reserves the right to modify or terminate the exchange
privilege at any time upon 60 days' written notice to unitholders and to reject
any exchange request. Exchanges are only available in states where an exchange
can legally be made.
EFFECTIVE TIME OF REDEMPTIONS AND EXCHANGES. Redemption orders of Portfolio
units are effected at the net asset value per unit next determined after
receipt in good order by the Transfer Agent. Good order means that the request
includes the following: the account number and Portfolio name; the amount of
the transaction (as specified in dollars or units); and the signature of a duly
authorized person (except for telephone and wire redemptions). See "Investing--
Redemption of Units--Other Requirements." Exchange orders involving the
purchase of units of the Small Company Index Portfolio are effected at the net
asset value per unit next determined after receipt in good order by the
Transfer Agent plus an additional purchase price amount equal to .75 of 1% of
such value. Exchange orders of the other Portfolios are effected at the net
asset value per unit next determined after receipt in good order by the
Transfer Agent. If received by Northern with respect to a qualified account it
maintains or the Transfer Agent by 3:00 p.m., Chicago time, on a Business Day,
a redemption request normally will result in proceeds being credited to such
account or sent on the next Business Day. Proceeds for redemption orders
received on a non-Business Day will normally be sent on the second Business Day
after receipt in good order.
MISCELLANEOUS REDEMPTION INFORMATION. All redemption proceeds will be sent by
check unless Northern or the Transfer Agent is directed otherwise. The ACH
system may be utilized for payment of redemption proceeds. Redemption of units
may not be effected if a unitholder has failed to submit a completed and
properly executed (with corporate resolution or other acceptable evidence of
authority) new account application. If units to be redeemed were recently
purchased by check, the Trust may delay transmittal of redemption proceeds
until such time as it has assured itself that good funds have been collected
for the purchase of such units. This may take up to fifteen (15) days. The
Trust reserves the right to defer crediting, sending or wiring redemption
proceeds for up to seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect a Portfolio.
The Trust may require any information reasonably necessary to ensure that a
redemption has been duly authorized.
It is the responsibility of Institutions acting on behalf of Customers to
transmit redemption orders to the Transfer Agent and to credit Customers'
accounts with the redemption proceeds on a timely basis. If a Customer has
agreed with a particular Institution to maintain a minimum balance in his
account at such
37
<PAGE>
Institution and the balance in such account falls below that minimum, such
Customer may be obliged to redeem all or part of his units to the extent
necessary to maintain the required minimum balance.
DISTRIBUTIONS
Dividends from net investment income of the Balanced and Equity Index
Portfolios are declared and paid at least quarterly. Dividends from net
investment income of the Diversified Growth, Focused Growth, Small Company
Index and International Growth Portfolios are declared and paid at least
annually. Each Portfolio's net realized capital gains are distributed at least
annually.
Dividends and distributions will reduce a Portfolio's net asset value by the
amount of the dividend or distribution. All dividends and distributions are
automatically reinvested (without any sales charge or additional purchase price
amount) in additional units of the same Portfolio at their net asset value per
unit determined on the payment date. However, a holder may elect, upon written
notification to the Transfer Agent, to have dividends or capital gain
distributions (or both) paid in cash or reinvested in the same class of units
of another Portfolio at their net asset value per unit (plus an additional
purchase price amount equal to .75 of 1% of the amount invested in the case of
the Small Company Index Portfolio) determined on the payment date (provided the
holder maintains an account in such Portfolio). Unitholders of record must make
such election, or any revocation thereof, in writing to the Transfer Agent. The
election will become effective with respect to dividends paid two days after
its receipt by the Transfer Agent.
Net loss, if any, from certain foreign currency transactions or instruments
that is otherwise taken into account with respect to the International Growth
Portfolio in calculating net investment income or net realized capital gains
for accounting purposes may not be taken into account in determining the amount
of dividends to be declared and paid, with the result that a portion of the
Portfolio's dividends may be treated as a return of capital, nontaxable to the
extent of a unitholder's tax basis in his units.
Because of the different servicing fees and transfer agency fees payable with
respect to the Class A, B, C and D units in a Portfolio, the amount of such
Portfolio's net investment income available for distribution to the holders of
such units will be effectively reduced by the amount of such fees. See
"Unitholder Service Plan" and "Investment Adviser, Transfer Agent and
Custodian" under the heading "Trust Information" in this Prospectus.
TAXES
Each Portfolio intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Such qualification
generally will relieve the Portfolios of liability for Federal income taxes to
the extent their earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that each Portfolio distribute to its
unitholders an amount equal to at least 90% of its investment company taxable
income for such year. In general, a Portfolio's investment company taxable
income will be its taxable income, subject to certain adjustments and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. Each Portfolio intends to
distribute as dividends substantially all of its investment company taxable
income each year. Such dividends
38
<PAGE>
will be taxable as ordinary income to the Portfolio's unitholders who are not
currently exempt from Federal income taxes whether they are received in cash or
reinvested in additional units. (Federal income taxes for distributions to an
IRA or other qualified retirement plan are deferred under the Code.) Such
ordinary income distributions will qualify for the dividends received deduction
for corporations to the extent of the total qualifying dividends received by
the distributing Portfolio from domestic corporations for the taxable year.
Substantially all of each Portfolio's net realized long-term capital gains will
be distributed at least annually to its unitholders. The Portfolios generally
will have no tax liability with respect to such gains and the distributions
will be taxable to Portfolio unitholders who are not currently exempt from
Federal income taxes as long-term capital gains, regardless of how long the
unitholders have held the units and whether such gains are received in cash or
reinvested in additional units. Unitholders should note that, upon sale or
exchange of Portfolio units, if the unitholder has not held such units for more
than six months, any loss on the sale or exchange of those units will be
treated as long term capital loss to the extent of the capital gain dividends
received with respect to the units.
Dividends declared in October, November or December of any year payable to
unitholders of record on a specified date in such months will be deemed for
Federal tax purposes to have been paid by the Portfolio and received by the
unitholders on December 31 of such year if such dividends are paid during
January of the following year.
An investor considering buying units of a Portfolio on or just before the
record date of a dividend should be aware that the amount of the forthcoming
dividend payment, although in effect a return of capital, will be taxable.
A taxable gain or loss may be realized by a unitholder upon the redemption,
transfer or exchange of units of a Portfolio depending upon the tax basis and
their price at the time of redemption, transfer or exchange.
It is expected that dividends and certain interest income earned by the
International Growth Portfolio from foreign securities will be subject to
foreign withholding taxes or other taxes. So long as more than 50% of the value
of the Portfolio's total assets at the close of any taxable year consists of
stock or securities of foreign corporations, the Portfolio may elect, for
Federal income tax purposes, to treat certain foreign taxes paid by it,
including generally any withholding taxes and other foreign income taxes, as
paid by its unitholders. Should the Portfolio make this election, the amount of
such foreign taxes paid by the Portfolio will be included in its unitholders'
income pro rata (in addition to taxable distributions actually received by
them), and such unitholders will be entitled either (a) to credit their
proportionate amounts of such taxes against their Federal income tax
liabilities, or (b) to deduct such proportionate amounts from their Federal
taxable income under certain circumstances.
If the International Growth Portfolio invests in certain "passive foreign
investment companies" ("PFICs"), it will be subject to Federal income tax (and
possibly additional interest charges) on a portion of any "excess distribution"
or gain from the disposition of such investments, even if it distributes such
income to its unitholders. If the Portfolio elects to treat the PFIC as a
"qualified electing fund" ("QEF") and the PFIC furnishes certain financial
information in the required form, the Portfolio would instead be required to
include in income each year its allocable share of the ordinary earnings and
net capital gains of the QEF, regardless of whether such income is received,
and such amounts would be subject to the various distribution
39
<PAGE>
requirements described above. In addition, the Portfolio may be permitted in
the future to elect instead to recognize any appreciation in the PFIC shares
that it owns by marking them to market as of the last Business Day of each
taxable year (and on certain other dates prescribed in the Code). Again, gain
recognized under this "mark-to-market" approach would be subject to the various
distribution requirements described above, even if no cash is received
currently from the PFIC investment.
Unitholders of record will be advised by the Trust at least annually as to the
Federal income tax consequences of distributions made to them each year.
The foregoing discussion summarizes some of the important Federal tax
considerations generally affecting the Portfolios and their unitholders and is
not intended as a substitute for careful tax planning. Accordingly, potential
investors in the Portfolios should consult their tax advisers with specific
reference to their own Federal, state and local tax situation.
NET ASSET VALUE
The net asset value per unit of each Portfolio for purposes of pricing purchase
and redemption orders is calculated by Northern as of 3:00 p.m., Chicago Time,
on each Business Day. Net asset value per unit of a particular class in a
Portfolio is calculated by dividing the value of all securities and other
assets belonging to a Portfolio that are allocated to such class, less the
liabilities charged to that class, by the number of the outstanding units of
that class.
U.S. and foreign investments held by a Portfolio are valued at the last quoted
sales price on the exchange on which such securities are primarily traded,
except that securities listed on an exchange in the United Kingdom are valued
at the average of the closing bid and ask prices. If any securities listed on a
U.S. securities exchange are not traded on a valuation date, they will be
valued at the last quoted bid price. If securities listed on a foreign
securities exchange are not traded on a valuation date, they will be valued at
the most recent quoted sales price. Securities which are traded in the U.S.
over-the-counter markets are valued at the last quoted bid price. Securities
which are traded in the foreign over-the-counter markets are valued at the last
sales price, except that such securities traded in the United Kingdom are
valued at the average of the closing bid and ask prices. Any securities,
including restricted securities, for which current quotations are not readily
available are valued at fair value as determined in good faith by Northern
under the supervision of the Board of Trustees. Short-term investments are
valued at amortized cost which Northern has determined, pursuant to Board
authorization, approximates market value. Securities may be valued on the basis
of prices provided by independent pricing services when such prices are
believed to reflect the fair market value of such securities.
PERFORMANCE INFORMATION
The performance of a class of units of a Portfolio may be compared to those of
other mutual funds with similar investment objectives and to stock and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the performance of a class of units may be compared to data
prepared by Lipper Analytical Services,
40
<PAGE>
Inc. or other independent mutual fund reporting services. In addition, the
performance of a class may be compared to the S&P Index, S&P/Barra Growth
Index, the Russell Index, the Consumer Price Index, the Dow Jones Industrial
Average, the Lehman Brothers Government/Corporate Bond Index or other unmanaged
stock and bond indices, including, but not limited to, the market
capitalization weighted Morgan Stanley Capital International Europe, Australia
and Far East Index. Performance data as reported in national financial
publications such as Money Magazine, Morningstar, Forbes, Barron's, The Wall
Street Journal and The New York Times, or in publications of a local or
regional nature, may also be used in comparing the performance of a class of
units of a Portfolio.
The Portfolios calculate their total returns for each class of units on an
"average annual total return" basis for various periods from the dates the
respective Portfolios commenced investment operations and for other periods as
permitted under the rules of the SEC. Average annual total return reflects the
average annual percentage change in value of an investment in the class over
the measuring period. Total returns for each class of units may also be
calculated on an "aggregate total return" basis for various periods. Aggregate
total return reflects the total percentage change in value over the measuring
period. Both methods of calculating total return reflect changes in the price
of the units and assume that any dividends and capital gain distributions made
by the Portfolio with respect to a class during the period are reinvested in
the units of that class. When considering average total return figures for
periods longer than one year, it is important to note that the annual total
return of a class for any one year in the period might have been greater or
less than the average for the entire period. The Portfolios may also advertise
from time to time the total return of one or more classes of units on a year-
by-year or other basis for various specified periods by means of quotations,
charts, graphs or schedules.
The yield of a class of units in the Balanced Portfolio is computed based on
the net income of such class during a 30-day (or one month) period (which
period will be identified in connection with the particular yield quotation).
More specifically, a Portfolio's yield for a class of units is computed by
dividing the per unit net income for the class during a 30-day (or one month)
period by the net asset value per unit on the last day of the period and
annualizing the result on a semi-annual basis.
The Small Company Index Portfolio may advertise total return data without
reflecting the .75 of 1% portfolio transaction fee if, in accordance with the
rules of the SEC, they are accompanied by average annual total return data
reflecting this fee. Quotations which do not reflect the fee will, of course,
be higher than quotations which do.
Because of the different servicing fees and transfer agency fees payable with
respect to the Class A, B, C and D units in a Portfolio, the performance of
such units will be effectively reduced by the amount of such fees. For example,
because Class A units bear the lowest servicing and transfer agency fees, the
return of Class A units will be more than the return of other classes of units
of the same Portfolio. See "Unitholder Servicing Plan" and "Investment Adviser,
Transfer Agent and Custodian" under the heading "Trust Information" in this
Prospectus.
The performance of each class of units of the Portfolios is based on historical
earnings and will fluctuate and is not intended to indicate future performance.
The investment return and principal value of an investment in a class will
fluctuate so that a unitholder's units, when redeemed, may be worth more or
less than their original cost. Performance data may not provide a basis for
comparison with bank deposits and other investments
41
<PAGE>
which provide a fixed yield for a stated period of time. Changes in the net
asset value of a class should be considered in ascertaining the total return to
unitholders for a given period. Total return data should also be considered in
light of the risks associated with a Portfolio's composition, quality,
maturity, operating expenses and market conditions. Any fees charged by
Institutions directly to their Customer accounts in connection with investments
in a Portfolio will not be included in calculations of performance data.
ORGANIZATION
The Trust was formed as a Massachusetts business trust on July 15, 1982 under
an Agreement and Declaration of Trust (the "Trust Agreement"). The Trust
Agreement permits the Board of Trustees to issue an unlimited number of units
of beneficial interest of one or more separate series representing interests in
one or more investment portfolios. As of the date of this Prospectus, the Trust
offers sixteen separate series of units of beneficial interest representing
interests in sixteen investment portfolios, six of which are described in this
Prospectus; the other series of units are described in separate prospectuses.
The Trust Agreement further permits the Board of Trustees to classify or
reclassify any unissued units into additional series or subseries within a
series. Pursuant to such authority, the Board of Trustees has classified four
subseries (sometimes referred to as "Classes") of units in each Portfolio: the
Class A units, Class B units, Class C units and Class D units. Each unit of a
Portfolio is without par value, represents an equal proportionate interest in
that Portfolio with each other unit of its class in that Portfolio and is
entitled to such dividends and distributions earned on such Portfolio's assets
as are declared in the discretion of the Board of Trustees.
The Trust's unitholders are entitled to one vote for each full unit held and
proportionate fractional votes for fractional units held. Each series entitled
to vote on a matter will vote thereon in the aggregate and not by series,
except as otherwise required by law or when the matter to be voted on affects
only the interests of unitholders of a particular series. The Additional
Statement gives examples of situations in which the law requires voting by
series. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate units of the Trust may elect all of the Trustees
irrespective of the vote of the other unitholders. In addition, holders of each
of the Class A, B, C and D units representing interests in the same Portfolio
have equal voting rights except that only units of a particular class within
the Portfolio will be entitled to vote on matters submitted to a vote of
unitholders (if any) relating to unitholder servicing expenses and transfer
agency fees that are payable by that class.
As of March 1, 1996, The Northern Trust Company Thrift Incentive Plan owned
beneficially and of record 41.1% and 43.2% of the units of the Balanced
Portfolio and Focused Growth Portfolio, respectively. As of the same date, The
Northern Trust Company Pension Plan owned beneficially and of record 36.3% and
30.3% of the units of the Diversified Growth Portfolio and Small Company Index
Portfolio, respectively.
The Trust does not presently intend to hold annual meetings of unitholders
except as required by the 1940 Act or other applicable law. Pursuant to the
Trust Agreement, the Trustees will promptly call a meeting of unitholders to
vote upon the removal of any Trustee when so requested in writing by the record
holders of 10% or more of the outstanding units. To the extent required by law,
the Trust will assist in unitholder communications in connection with such a
meeting.
42
<PAGE>
The term "majority of the outstanding units" of either the Trust or a
particular Portfolio means the vote of the lesser of (i) 67% or more of the
units of the Trust or such Portfolio present at a meeting, if the holders of
more than 50% of the outstanding units of the Trust or such Portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding units
of the Trust or such Portfolio.
The Trust Agreement provides that each unitholder, by virtue of becoming such,
will be held to have expressly assented and agreed to the terms of the Trust
Agreement and to have become a party thereto.
MISCELLANEOUS
The address of the Trust is 4900 Sears Tower, Chicago, Illinois 60606 and the
telephone number is (800) 621-2550.
As used in this Prospectus, the term "Business Day" refers to each day when
Northern and the New York Stock Exchange are open, which is Monday through
Friday, except for holidays observed by Northern and/or the Exchange. For 1996
the holidays of Northern and/or the Exchange are: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veteran's Day, Thanksgiving and Christmas Day. On
those days when Northern or the Exchange closes early as a result of unusual
weather or other circumstances, the right is reserved to advance the time on
that day by which purchase and redemption requests must be received. In
addition, on any Business Day when the Public Securities Association (PSA)
recommends that the securities markets close early, the Portfolios
reserve the right to cease or to advance the deadline for accepting purchase
and redemption orders for same Business Day credit up to one hour before the
PSA recommended closing time. Purchase and redemption requests received after
the advanced closing time will be effected on the next Business Day.
---------------------
The Equity Index Portfolio is not sponsored, endorsed, sold or promoted by S&P,
nor does S&P guarantee the accuracy and/or completeness of the S&P Index or any
data included therein. S&P makes no warranty, express or implied, as to the
results to be obtained by the Portfolio, owners of the Portfolio, any person or
any entity from the use of the S&P Index or any data included therein. S&P
makes no express or implied warranties and expressly disclaims all such
warranties of merchantability or fitness for a particular purpose for use with
respect to the S&P Index or any data included therein.
---------------------
The Small Company Index Portfolio is not sponsored, endorsed, sold or promoted
by Russell, nor does Russell guarantee the accuracy and/or completeness of the
Russell Index or any data included therein. Russell makes no warranty, express
or implied, as to the results to be obtained by the Portfolio, owners of the
Portfolio, any person or any entity from the use of the Russell Index or any
data included therein. Russell makes no express or implied warranties and
expressly disclaims all such warranties of merchantability or fitness for a
particular purpose for use with respect to the Russell Index or any data
included therein.
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE TRUST'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
43
<PAGE>
The
Benchmark
Funds
Fixed
Income
Portfolios
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian:
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor:
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
PROSPECTUS
APRIL 1, 1996
<PAGE>
THE BENCHMARK FUNDS
THE NORTHERN TRUST COMPANY INVESTMENT ADVISER, TRANSFER AGENT AND
50 S. LaSalle Street CUSTODIAN
Chicago, Illinois 60675
312-630-6000
---------------------
This Prospectus describes six fixed income portfolios (the "Portfolios")
offered by The Benchmark Funds (the "Trust") to institutional investors.
The SHORT DURATION PORTFOLIO seeks a high level of total return through
active management techniques while preserving capital and maintaining
liquidity by investing in a broad range of investment grade, fixed income
instruments and maintaining a maximum dollar-weighted average maturity of
12 months.
The U.S. GOVERNMENT SECURITIES PORTFOLIO seeks to maximize total return
with reasonable risk by investing in a broad range of U.S. Government
securities and maintaining a dollar-weighted average maturity of between 1
and 5 years.
The SHORT-INTERMEDIATE BOND PORTFOLIO seeks to maximize total return
consistent with reasonable risk by investing in a broad range of bonds and
other fixed income securities and maintaining a dollar-weighted average
maturity of between 2 and 5 years.
The U.S. TREASURY INDEX PORTFOLIO seeks to provide investment results
approximating the performance of the Lehman Brothers Treasury Bond Index
(the "Lehman Index") by investing primarily in securities represented in
the Lehman Index.
The BOND PORTFOLIO seeks to maximize total return consistent with
reasonable risk by investing in a broad range of bonds and other fixed
income securities and maintaining a dollar-weighted average maturity of
between 5 and 15 years.
The INTERNATIONAL BOND PORTFOLIO seeks to maximize total return consistent
with reasonable risk by investing primarily in a broad range of bonds and
other fixed income securities of foreign issuers while maintaining a
dollar-weighted average maturity of between 3 and 11 years.
Each Portfolio is advised by The Northern Trust Company ("Northern"). Units are
sold and redeemed without any purchase or redemption charge imposed by the
Trust, although Northern and other institutions may charge their customers for
services provided in connection with their investments.
This Prospectus provides information about the Portfolios that you should know
before investing. It should be read and retained for future reference. If you
would like more detailed information, a Statement of Additional Information
(the "Additional Statement") dated April 1, 1996, is available upon request
without charge by writing to the Trust's distributor, Goldman, Sachs & Co.
("Goldman Sachs"), 4900 Sears Tower, Chicago, Illinois 60606 or by calling 1-
800-621-2550.
UNITS OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS PARENT
COMPANY OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THE PORTFOLIOS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is April 1, 1996.
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF EXPENSES 3
- -------------------
FINANCIAL HIGHLIGHTS 6
- --------------------
INVESTMENT INFORMATION 11
- ----------------------
Introduction 11
Short Duration Portfolio 11
U.S. Government Securities Portfolio 12
Short-Intermediate Bond Portfolio 13
U.S. Treasury Index Portfolio 13
Bond Portfolio 14
International Bond Portfolio 14
Special Risk Considerations 15
Description of Securities and Common
Investment Techniques 17
Investment Restrictions 27
TRUST INFORMATION 28
- -----------------
Board of Trustees 28
Investment Adviser, Transfer Agent and Custodian 28
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Administrator and Distributor 30
Unitholder Servicing Plan 31
Service Information 31
INVESTING 32
- ---------
Purchase of Units 32
Redemption of Units 34
Distributions 37
Taxes 37
NET ASSET VALUE 39
- ---------------
PERFORMANCE INFORMATION 39
- -----------------------
ORGANIZATION 41
- ------------
MISCELLANEOUS 42
- -------------
</TABLE>
2
<PAGE>
SUMMARY OF EXPENSES
The following table sets forth certain information regarding the annualized
operating expenses the Short Duration Portfolio, U.S. Government Securities
Portfolio, Short-Intermediate Bond Portfolio, U.S. Treasury Index Portfolio,
Bond Portfolio and International Bond Portfolio incurred during the Trust's
last fiscal year. Hypothetical examples based on the table are also shown.
Investors should note that units of each Portfolio other than the Short
Duration Portfolio have been classified into four separate classes, Class A,
B, C and D units. Each class is distinguished by the level of administrative
support and transfer agency services provided. Class A, B, C, and D units
represent pro rata interests in a Portfolio except that different unitholder
servicing fees and transfer agency fees are payable by Class A, B, C, and D
units in a Portfolio. See "Trust Information--Unitholder Servicing Plan".
<TABLE>
<CAPTION>
SHORT
DURATION U.S. GOVERNMENT SECURITIES SHORT-INTERMEDIATE BOND
-------- ------------------------------- --------------------------------
Class A Class B Class C Class D Class A Class B Class C Class D
Units Units Units Units Units Units Units Units
------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unitholder Transaction
Expenses
Maximum Sales Charge
Imposed on Purchases... None None None None None None None None None
Sales Charge Imposed
on Reinvested
Distributions.......... None None None None None None None None None
Deferred Sales Charge
Imposed on
Redemptions............ None None None None None None None None None
Redemption Fees........ None None None None None None None None None
Exchange Fees.......... None None None None None None None None None
Annual Operating
Expenses After Expense
Reimbursements and Fee
Reductions (as a
percentage of average
net assets)
Management Fees After
Fee Reductions(1)...... .15% .25% .25% .25% .25% .25% .25% .25% .25%
12b-1 Fees............. None None None None None None None None None
Servicing Fees(2)...... None None .10% .15% .25% None .10% .15% .25%
Transfer Agency
Fees(2)................ N/A .01% .05% .10% .15% .01% .05% .10% .15%
Other Expenses After
Expense Reimbursements
and Fee Reductions(1).. .10% .10% .10% .10% .10% .10% .10% .10% .10%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Operating
Expenses(1,2)........ .25% .36% .50% .60% .75% .36% .50% .60% .75%
==== ==== ==== ==== ==== ==== ==== ==== ====
Example of Expenses.
Based on the foregoing
table, you would pay the
following expenses on a
hypothetical $1,000
investment, assuming a
5% annual return and
redemption at the end of
each time period:
One Year............... $3 $4 $5 $6 $8 $4 $5 $6 $8
Three Years............ $8 $12 $16 $19 $24 $12 $16 $19 $24
Five Years............. $14 $20 $28 $33 $42 $20 $28 $33 $42
Ten Years.............. $32 $46 $63 $75 $93 $46 $63 $75 $93
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
U.S. TREASURY INDEX BOND INTERNATIONAL BOND
------------------------------- ------------------------------- -------------------------------
Class A Class B Class C Class D Class A Class B Class C Class D Class A Class B Class C Class D
Units Units Units Units Units Units Units Units Units Units Units Units
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unitholder
Transaction Expenses
Maximum Sales
Charge Imposed on
Purchases.......... None None None None None None None None None None None None
Sales Charge
Imposed on
Reinvested
Distributions...... None None None None None None None None None None None None
Deferred Sales
Charge Imposed on
Redemptions........ None None None None None None None None None None None None
Redemption Fees..... None None None None None None None None None None None None
Exchange Fees....... None None None None None None None None None None None None
Annual Operating
Expenses After
Expense
Reimbursements and
Fee Reductions (as a
percentage of
average net assets)
Management Fees
After Fee
Reductions(1)...... .15% .15% .15% .15% .25% .25% .25% .25% .70% .70% .70% .70%
12b-1 Fees.......... None None None None None None None None None None None None
Servicing Fees(2)... None .10% .15% .25% None .10% .15% .25% None .10% .15% .25%
Transfer Agency
Fees(2)............ .01% .05% .10% .15% .01% .05% .10% .15% .01% .05% .10% .15%
Other Expenses
After Expense
Reimbursements and
Fee Reductions(1).. .10% .10% .10% .10% .10% .10% .10% .10% .25% .25% .25% .25%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----- ----- -----
Total Operating
Expenses(1,2).... .26% .40% .50% .65% .36% .50% .60% .75% .96% 1.10% 1.20% 1.35%
==== ==== ==== ==== ==== ==== ==== ==== ==== ===== ===== =====
Example of Expenses.
Based on the
foregoing table, you
would pay the
following expenses
on a hypothetical
$1,000 investment,
assuming a 5% annual
return and
redemption at the
end of each time
period:
One Year............ $3 $4 $5 $7 $4 $5 $6 $8 $10 $11 $12 $14
Three Years......... $8 $13 $16 $21 $12 $16 $19 $24 $31 $35 $38 $43
Five Years.......... $15 $22 $28 $36 $20 $28 $33 $42 $53 $61 $66 $74
Ten Years........... $33 $51 $63 $81 $46 $63 $75 $93 $118 $134 $145 $162
</TABLE>
4
<PAGE>
- ----------
(1) For the fiscal year ending November 30, 1996, Northern has advised the
Trust that it intends to voluntarily reduce its advisory fee for the Short
Duration, U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios to .15%, .25%,
.25%, .15%, .25% and .70%, respectively, of the Portfolios' respective
average daily net assets (advisory fees are otherwise payable at the
annual rate of .40%, .60%, .60%, .40%, .60% and .90%, respectively, of the
Portfolios' respective average daily net assets). For the fiscal year
ending November 30, 1996, Goldman Sachs has advised the Trust that, except
with respect to the Short Duration Portfolio, it intends to voluntarily
reduce its administration fee, (otherwise payable with respect to each
Portfolio at the annual rate of .25% of the first $100 million, .15% of
the next $200 million, .075% of the next $450 million and .05% of any
excess over $750 million of the Portfolio's net assets) to .10% of each
Portfolio's average net assets. Goldman Sachs has advised the Trust that
it intends to reimburse expenses for the Short Duration, U.S. Government
Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond and
International Bond Portfolios to the extent that, in any fiscal year, the
sum of a Portfolio's expenses (including the fees payable to Goldman Sachs
as administrator, but excluding the fees payable to Northern for its
duties as adviser and certain other expenses) exceeds on an annualized
basis .25% of the International Bond Portfolio's average daily net assets
and .10% of each other Portfolio's average daily net assets for such
fiscal year. The expense information in the table has, accordingly, been
presented to reflect these fee reductions and reimbursements. Without the
undertakings of Northern and Goldman Sachs, and had all classes of units
been outstanding during the year ending November 30, 1995, "Other
Expenses" in the foregoing table would have been as follows: Short
Duration Portfolio -- 0.40%; U.S. Government Securities Portfolio --
0.48%; Short-Intermediate Bond Portfolio -- 0.30%; U.S. Treasury Index
Portfolio -- 0.48%; Bond Portfolio -- 0.23%; and International Bond
Portfolio -- 0.56%; and the total annual operating expenses would have
been as follows: Short Duration -- 0.80%; U.S. Government Securities Class
A, Class B, Class C and Class D units -- 1.09%, 1.23%, 1.33% and 1.48%,
respectively; Short-Intermediate Bond Class A, Class B, Class C and Class
D units -- 0.91%, 1.05%, 1.15% and 1.30%, respectively; U.S. Treasury
Index Class A, Class B, Class C and Class D units -- 0.89%, 1.03%, 1.13%
and 1.28%, respectively; Bond Class A, Class B, Class C and Class D units
-- 0.84%, 0.98%, 1.08% and 1.23%, respectively; and International Bond
Class A, Class B, Class C and Class D units -- 1.47%, 1.61%, 1.71% and
1.86%, respectively, based on actual expenses incurred during the fiscal
year ended November 30, 1995. For a more complete description of the
Portfolios' expenses, see "Trust Information" in this Prospectus.
(2) The Trust has adopted a Unitholder Servicing Plan pursuant to which the
Trust may enter into agreements with Institutions or other financial
intermediaries under which they render (or arrange to have rendered)
certain unitholder administrative support services for their Customers or
other Investors who beneficially own Class B, Class C and Class D units in
return for a fee ("Servicing Fee") of up to .10%, .15% and .25%,
respectively, per annum of the value of the outstanding Class B, Class C
and Class D units, respectively, of each Portfolio (other than the Short
Duration Portfolio). The Trust also allocates transfer agency fees, which
are attributable to the Class A, Class B, Class C and Class D units in
each such Portfolio separately to such units, as reflected in the table.
For further information, see "Investment Adviser, Transfer Agent and
Custodian" and "Unitholder Servicing Plan" under the heading "Trust
Information" in this Prospectus.
---------------------
THE PURPOSE OF THE FOREGOING TABLE IS TO ASSIST YOU IN UNDERSTANDING THE
VARIOUS UNITHOLDER TRANSACTION AND OPERATING EXPENSES OF EACH PORTFOLIO THAT
UNITHOLDERS BEAR DIRECTLY OR INDIRECTLY. IT DOES NOT, HOWEVER, REFLECT ANY
CHARGES WHICH MAY BE IMPOSED BY NORTHERN, ITS AFFILIATES AND CORRESPONDENT
BANKS AND OTHER INSTITUTIONS ON THEIR CUSTOMERS AS DESCRIBED UNDER
"INVESTING--PURCHASE OF UNITS." THE EXAMPLE SHOWN ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RATE OF RETURN.
ACTUAL EXPENSES AND RATE OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN.
5
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following data have been audited by Ernst & Young LLP, independent
auditors, as indicated in their report incorporated by reference into the
Additional Statement from the annual report to unitholders for the fiscal year
ended November 30, 1995 (the "Annual Report"), and should be read in
conjunction with the financial statements and related notes incorporated by
reference and attached to the Additional Statement. Information regarding units
other than Class A and Class D units with respect to the U.S. Government
Securities Portfolio, Short-Intermediate Bond Portfolio, U.S. Treasury Index
Portfolio and International Bond Portfolio has not been given since no such
units were outstanding. Information regarding Class B units with respect to the
Bond Portfolio has not been given since no such units were outstanding. The
Annual Report also contains performance information and is available upon
request and without charge by calling the telephone number or writing to the
address on the first page of this Prospectus.
For the Years Ended November 30,
<TABLE>
<CAPTION>
U.S. Government Securities Portfolio
--------------------------------------------
Class A Class D
--------------------------- ---------------
1995 1994 1993 (a) 1995 1994(b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PE-
RIOD $ 19.05 $ 20.07 $ 20.00 $19.05 $19.43
Income from investment opera-
tions:
Net investment income 1.05 0.91 0.55 0.96 0.22
Net realized and unrealized gain
(loss) on
investments 1.02 (1.02) 0.05 1.00 (0.38)
- -------------------------------------------------------------------------------
Total income (loss) from invest-
ment operations 2.07 (0.11) 0.60 1.96 (0.16)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (1.04) (0.91) (0.53) (0.97) (0.22)
- -------------------------------------------------------------------------------
Total distributions to
unitholders (1.04) (0.91) (0.53) (0.97) (0.22)
- -------------------------------------------------------------------------------
Net increase (decrease) 1.03 (1.02) 0.07 0.99 (0.38)
- -------------------------------------------------------------------------------
Net asset value, end of period $ 20.08 $ 19.05 $ 20.07 $20.04 $19.05
- -------------------------------------------------------------------------------
Total return (c) 11.18% (0.57)% 3.00% 10.66% (.89)%
Ratio to average net assets of:
(d)
Expenses, net of waivers and re-
imbursements 0.36% 0.36% 0.43% 0.75% 0.75%
Expenses, before waivers and
reimbursements 1.09% 1.12% 1.18% 1.48% 1.51%
Net investment income, net of
waivers and reimbursements 5.43% 4.62% 4.18% 5.08% 4.65%
Net investment income, before
waivers and reimbursements 4.70% 3.86% 3.43% 4.35% 3.89%
Portfolio turnover rate 141.14% 45.55% 20.59% 141.14% 45.55%
Net assets at end of period (in
thousands) $56,329 $25,293 $32,479 $ 67 $ 13
- -------------------------------------------------------------------------------
</TABLE>
(a)Commenced investment operations on April 5, 1993.
(b)Class D units were issued on September 15, 1994.
(c)Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d)Annualized for periods less than a full year.
6
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
Short-Intermediate Bond Portfolio
---------------------------------------------
Class A Class D
--------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 19.53 $ 20.33 $ 20.00 $19.53 $19.80
Income from investment opera-
tions:
Net investment income 1.02 0.97 0.85 0.94 0.23
Net realized and unrealized
gain (loss) on investments 1.19 (0.80) 0.31 1.18 (0.27)
- -------------------------------------------------------------------------------
Total income (loss) from in-
vestment operations 2.21 0.17 1.16 2.12 (0.04)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (1.01) (0.97) (0.83) (0.94) (0.23)
- -------------------------------------------------------------------------------
Total distributions to
unitholders (1.01) (0.97) (0.83) (0.94) (0.23)
- -------------------------------------------------------------------------------
Net increase (decrease) 1.20 (0.80) 0.33 1.18 (0.27)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 20.73 $ 19.53 $ 20.33 $20.71 $19.53
- -------------------------------------------------------------------------------
Total return (c) 11.58% 0.84% 5.90% 11.09% (0.38)%
Ratio to average net assets of:
(d)
Expenses, net of waivers and
reimbursements 0.36% 0.36% 0.36% 0.75% 0.75%
Expenses, before waivers and
reimbursements 0.91% 0.95% 1.00% 1.30% 1.34%
Net investment income, net of
waivers and reimbursements 5.14% 4.84% 4.79% 4.85% 4.42%
Net investment income, before
waivers and reimbursements 4.59% 4.25% 4.15% 4.30% 3.83%
Portfolio turnover rate 54.68% 48.67% 19.48% 54.68% 48.67%
Net assets at end of period (in
thousands) $158,678 $96,209 $107,550 $ 13 $ 1
- -------------------------------------------------------------------------------
</TABLE>
(a)Commenced investment operations on January 11, 1993.
(b)Class D units were issued on September 14, 1994.
(c)Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d)Annualized for periods less than a full year.
7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
U.S. Treasury Index Portfolio
---------------------------------------------
Class A Class D
--------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of pe-
riod $ 18.77 $ 21.05 $ 20.00 $18.77 $18.80
Income from investment opera-
tions:
Net investment income 1.11 1.15 0.95 1.00 0.09
Net realized and unrealized gain
(loss) on investments 2.01 (1.93) 1.02 2.03 (0.03)
- --------------------------------------------------------------------------------
Total income (loss) from invest-
ment operations 3.12 (0.78) 1.97 3.03 0.06
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (1.11) (1.14) (0.92) (1.05) (0.09)
Net realized gain on investments -- (0.36) -- -- --
- --------------------------------------------------------------------------------
Total distributions to
unitholders (1.11) (1.50) (0.92) (1.05) (0.09)
- --------------------------------------------------------------------------------
Net increase (decrease) 2.01 (2.28) 1.05 1.98 (0.03)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 20.78 $ 18.77 $ 21.05 $20.75 $18.77
- --------------------------------------------------------------------------------
Total return (c) 16.95% (3.80)% 9.94% 16.43% 0.58%
Ratio to average net assets of:
(d)
Expenses, net of waivers and re-
imbursements 0.26% 0.26% 0.26% 0.65% 0.65%
Expenses, before waivers and re-
imbursements 0.89% 0.79% 0.83% 1.28% 1.18%
Net investment income, net of
waivers and reimbursements 5.09% 5.60% 5.11% 5.41% 6.05%
Net investment income, before
waivers and reimbursements 4.46% 5.07% 4.54% 4.78% 5.52%
Portfolio turnover rate 80.36% 52.80% 77.75% 80.36% 52.80%
Net assets at end of period (in
thousands) $17,674 $37,305 $71,456 $ 286 $ --
- --------------------------------------------------------------------------------
</TABLE>
(a)Commenced investment operations on January 11, 1993.
(b)Class D units were issued on November 16, 1994.
(c)Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d)Annualized for periods less than a full year.
8
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
Bond Portfolio
---------------------------------------------------------
Class A Class C Class D
----------------------------- -------- -----------------
1995 1994 1993 (a) 1995 (b) 1995 1994 (c)
- ------------------------- -------- -------- -------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 18.29 $ 20.70 $ 20.00 $20.21 $18.29 $18.77
Income from investment
operations:
Net investment income 1.17 1.42 1.42 0.47 1.08 0.28
Net realized and
unrealized gain (loss)
on investments 2.66 (2.21) 0.66 0.74 2.66 (0.48)
- -----------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.83 (0.79) 2.08 1.21 3.74 (0.20)
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (1.14) (1.46) (1.38) (0.45) (1.09) (0.28)
Net realized gain on in-
vestments -- (0.15) -- -- -- --
Return of capital (0.02) (0.01) -- (0.01) -- --
- -----------------------------------------------------------------------------------
Total distributions to
unitholders (1.16) (1.62) (1.38) (0.46) (1.09) (0.28)
- -----------------------------------------------------------------------------------
Net increase (decrease) 2.67 (2.41) 0.70 0.75 2.65 (0.48)
- -----------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 20.96 $ 18.29 $ 20.70 $20.96 $20.94 $18.29
- -----------------------------------------------------------------------------------
Total return (d) 21.55% (4.04)% 10.61% 5.92% 21.06% (0.91)%
Ratio to average net as-
sets of: (e)
Expenses, net of waivers
and reimbursements 0.36% 0.36% 0.36% 0.60% 0.75% 0.75%
Expenses, before waivers
and reimbursements 0.84% 0.87% 0.92% 1.08% 1.23% 1.26%
Net investment income,
net of waivers and re-
imbursements 5.94% 7.31% 7.84% 5.59% 5.48% 6.31%
Net investment income,
before waivers and re-
imbursements 5.46% 6.80% 7.28% 5.11% 5.00% 5.80%
Portfolio turnover rate 74.19% 103.09% 89.06% 74.19% 74.19% 103.09%
Net assets at end of pe-
riod (in thousands) $286,301 $257,391 $245,112 $3,704 $ 120 $ 15
- -----------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class C units were issued on July 3, 1995.
(c) Class D units were issued on September 14, 1994.
(d) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(e) Annualized for periods less than a full year.
9
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
International Bond
Portfolio
---------------------------
Class A Class D Short Duration Portfolio
----------------- -------- ----------------------------
1995 1994 (a) 1995 (b) 1995 1994 1993 (c)
- ------------------------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 19.93 $ 20.00 $22.17 $ 9.97 $ 10.03 $ 10.00
Income from investment
operations:
Net investment income 1.26 0.79 0.02 0.59 0.40 0.14
Net realized and
unrealized gain (loss)
on
investments and for-
eign currency
transactions 2.28 0.01 (0.08) 0.01 (0.05) 0.03
- ------------------------------------------------------------------------------------
Total income (loss) from
investment
operations 3.54 0.80 (0.06) 0.60 0.35 0.17
- ------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income
(d) (1.73) (0.87) (0.37) (0.58) (0.40) (0.14)
Net realized gain on
investments -- -- -- -- (0.01) --
- ------------------------------------------------------------------------------------
Total distributions to
unitholders (1.73) (0.87) (0.37) (0.58) (0.41) (0.14)
- ------------------------------------------------------------------------------------
Net increase (decrease) 1.81 (0.07) (0.43) 0.02 (0.06) 0.03
- ------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 21.74 $ 19.93 $21.74 $ 9.99 $ 9.97 $ 10.03
- ------------------------------------------------------------------------------------
Total return (e) 18.20% 4.03% (0.78)% 6.14% 3.64% 1.73%
Ratio to average net as-
sets of: (f)
Expenses, net of waiv-
ers and reimbursements 0.96% 0.96% 1.35% 0.25% 0.25% 0.32%
Expenses, before waiv-
ers and reimbursements 1.47% 1.49% 1.86% 0.80% 0.77% 0.50%
Net investment income,
net of waivers and
reimbursements 5.92% 5.93% 3.26% 5.80% 3.93% 3.00%
Net investment income,
before waivers and
reimbursements 5.41% 5.40% 2.75% 5.25% 3.41% 2.82%
Portfolio turnover rate 54.46% 88.65% 54.46% 1,272.21% 1,364.00% 434.32%
Net assets at end of pe-
riod (in thousands) $32,673 $26,947 $9 $ 45,473 $ 89,803 $186,765
- ------------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
(b) Class D units were issued on November 22, 1995.
(c) Commenced investment operations on June 2, 1993.
(d) For the International Bond Portfolio, distributions to unitholders from
net investment income include amounts relating to foreign currency
transactions which are treated as ordinary income for Federal income tax
purposes.
(e) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(f) Annualized for periods less than a full year.
10
<PAGE>
INVESTMENT INFORMATION
INTRODUCTION
The Trust is an open-end management investment company registered under the
Investment Company Act of 1940 (the "1940 Act"). Each Portfolio consists of a
separate pool of assets with separate investment objectives and policies, as
described below. Each Portfolio, other than the International Bond Portfolio,
is classified as a diversified investment company. The International Bond
Portfolio is classified as a non-diversified investment company. Units of each
Portfolio have been classified into four classes--Class A units, Class B units,
Class C units and Class D units (other than the Short Duration Portfolio, which
has only been classified into one class of units). Northern serves as
investment adviser, transfer agent and custodian. Goldman Sachs serves as
distributor and administrator. The investment objective of a Portfolio may not
be changed without the vote of the majority of the outstanding units of the
particular Portfolio. Except as expressly noted below, however, a Portfolio's
investment policies may be changed without a vote of unitholders.
SHORT DURATION PORTFOLIO
In pursuing its objective, the Short Duration Portfolio invests in a broad
range of fixed income instruments and seeks capital appreciation from increases
that may occur in the market price of such instruments. Although there are no
maturity limitations with respect to individual instruments acquired by the
Portfolio, the Portfolio's dollar-weighted average portfolio maturity will not
exceed 12 months and the Portfolio's maximum duration will be 12 months. The
Portfolio will invest primarily in fixed income securities of all types and in
any proportion that generally are rated investment grade at the time of
purchase, although a portion of its assets may be invested in non-investment
grade securities.
The Portfolio is designed for investors who seek higher returns than those
typically offered by money market funds and who are willing to accept a
variable unit value to achieve that objective. Because the Portfolio is not a
money market fund which seeks to maintain a stable net asset value, the unit
value of the Portfolio will fluctuate so that units, when redeemed, may be
worth less than their original cost. Investors should note that, consistent
with its investment objective, the Portfolio may enter into repurchase
agreements and securities loans, acquire U.S. dollar-denominated instruments of
foreign issuers, invest in asset-backed securities, options, futures and
interest rate swaps, including interest rate floors and caps, engage in pair-
off transactions and make limited investments in illiquid securities and
securities issued by other investment companies. The Portfolio is also
authorized to enter into reverse repurchase agreements in an aggregate amount
not exceeding one third of its total assets for investment leveraging purposes.
These investment practices involve investment risks of varying degrees,
including the possibility of relatively high transaction costs, the possibility
that management techniques used for the Portfolio will result in losses rather
than additional income, and risks associated with foreign investments and with
compliance with tax requirements applicable to the Portfolio. In general, the
market value of fixed income obligations held by the Portfolio and,
consequently, the Portfolio's net asset value per unit can be expected to vary
inversely to changes in prevailing interest rates. In periods of declining
interest rates, the yield of the Portfolio will tend to be higher than
prevailing market rates and, in periods of rising interest rates, the yield
will tend to be somewhat lower. The Portfolio will not invest in instruments
denominated in foreign currency. See "Special Risk Considerations -- Foreign
Securities."
11
<PAGE>
The Portfolio expects to experience a very high portfolio turnover rate because
it invests significantly in shorter-term instruments in order to maintain a
dollar-weighted average portfolio maturity that does not exceed twelve months
and because it seeks a high level of total return through active management
techniques. A high rate of portfolio turnover involves correspondingly greater
brokerage commission expenses and other transaction costs, which must be borne
directly by the Portfolio and ultimately by its unitholders. High portfolio
turnover may result in the realization of substantial net capital gains; to the
extent net capital gains are realized, distributions resulting from such gains
may be ordinary income for Federal income tax purposes. (See "Investing--
Taxes").
The Portfolio's expected high turnover rate could cause the Portfolio to
realize gains in excess of the restrictions imposed by the Internal Revenue
Code of 1986. These restrictions require that less than 30% of the Portfolio's
gross income in each taxable year may be derived from sales or other
dispositions of securities held for less than three months. If this requirement
is not satisfied, the Portfolio would not qualify for the special Federal tax
treatment allowed to a regulated investment company. The Portfolio intends to
monitor its compliance with this requirement.
The Portfolio's duration is a measure of its price sensitivity, including
expected cash flow and mortgage prepayments under a wide range of interest rate
scenarios. The maturity of a security measures only the time until final
payment is due; it does not take into account the pattern of a security's cash
flows over time, including how cash flow is affected by prepayments and by
changes in interest rates. In computing the duration of the Portfolio, Northern
will estimate the duration of obligations that are subject to prepayment or
redemption by the issuer taking into account the influence of interest rates on
prepayments and coupon flows. This method of computing duration is known as
option-adjusted duration. Northern may use the following techniques to lengthen
or shorten the option-adjusted duration of the Portfolio: the acquisition of
debt obligations at a premium or discount, interest rate swaps, and interest
rate futures and options on such futures.
The Portfolio may enter into interest rate swaps and may invest in options and
futures contracts and related options. The Portfolio may also invest in certain
short-term fixed income securities as cash reserves. See "Description of
Securities and Common Investment Techniques" below for more information.
U.S. GOVERNMENT SECURITIES PORTFOLIO
In pursuing its investment objective, the U.S. Government Securities Portfolio
will, under normal market conditions, invest at least 65% of its total assets
in a broad range of securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities and repurchase agreements relating to such
securities, including mortgage-related securities issued by agencies of the
U.S. Government. The Portfolio's dollar-weighted average maturity will be
between one and five years.
The Portfolio may enter into interest rate swaps and may invest in options and
futures contracts and related options. The Portfolio may also invest in certain
short-term fixed income securities as cash reserves. See "Description of
Securities and Common Investment Techniques" below for more information.
12
<PAGE>
SHORT-INTERMEDIATE BOND PORTFOLIO
In pursuing its investment objective, the Short-Intermediate Bond Portfolio
invests in a broad range of bonds and other fixed income securities. The
Portfolio's dollar-weighted average maturity will be between two and five
years. The Portfolio will invest primarily in fixed income securities of all
types and in any proportion that generally are rated investment grade at the
time of purchase, and may include obligations of the U.S. Government, its
agencies or instrumentalities, obligations of foreign governments, obligations
of U.S. and foreign corporations and obligations of U.S. and foreign banks. The
Portfolio may also invest up to 10% of its total assets in non-investment grade
securities. Under normal market conditions, at least 65% of the Portfolio's
total assets will be invested in bonds, debentures, mortgage and other asset-
related securities, zero coupon bonds and convertible debentures. The Portfolio
may also invest in short-term notes, bills, commercial paper and certificates
of deposit.
The Portfolio may enter into forward currency contracts and interest rate swaps
and may invest in options and futures contracts and related options. The
Portfolio may also invest in certain short-term fixed income securities as cash
reserves. See "Description of Securities and Common Investment Techniques"
below for more information.
U.S. TREASURY INDEX PORTFOLIO
In seeking to attain its investment objective, the U.S. Treasury Index
Portfolio under normal conditions will invest at least 80% of its total assets
in a representative sample of the U.S. Treasury obligations included in the
Lehman Index. The Lehman Index is comprised of all public obligations of the
U.S. Treasury, excluding flower bonds and foreign-targeted issues. Northern
will select securities for the Portfolio based on their expected contribution
to its overall duration, quality and total return as compared to the Lehman
Index and comparable investment characteristics. Lehman Brothers ("Lehman")
makes no representation or warranty, implied or express, to purchasers of
Portfolio units or any member of the public regarding the advisability of
investing in the Portfolio or the ability of the Lehman Index to track general
bond market performance.
The Portfolio is managed through the use of a "passive" or "indexing"
investment approach, which attempts to duplicate the investment composition and
performance of the Lehman Index through statistical procedures. As a result,
Northern does not employ traditional methods of fund investment management,
such as selecting securities on the basis of economic, financial and market
analysis.
Northern believes that under normal market conditions, the quarterly
performance of the Portfolio will be within a .95 correlation with the Lehman
Index. However, there is no assurance that the Portfolio will be able to do so
on a consistent basis. Deviations from the performance of the Lehman Index
("tracking error") may result from unitholder purchases and redemptions of
units of the Portfolio that occur daily, as well as from the expenses borne by
the Portfolio. Such purchases and redemptions may necessitate the purchase and
sale of securities by the Portfolio and the resulting transaction costs which
may be substantial either because of the number or the characteristics of the
securities held. Tracking error may also occur due to factors such as the size
of the Portfolio, the maintenance of a cash reserve pending investment or to
meet expected redemptions, changes made in the Lehman Index or the manner in
which the Lehman Index is calculated, or because the indexing and investment
approach of Northern does not produce the intended goal of the Portfolio. In
the event the performance of the Portfolio is not comparable to the performance
of the Lehman Index, the Board of Trustees will evaluate the reasons for the
deviation and the availability of corrective
13
<PAGE>
measures. These measures may include adjustment to Northern's portfolio
management practices. If substantial deviation in the Portfolio's performance
were to continue for extended periods, it is expected that the Board of
Trustees would consider recommending to unitholders possible changes to the
Portfolio's investment objective.
The Portfolio may invest in options and futures contracts and related options.
The Portfolio may also invest in certain short-term fixed income securities as
cash reserves. See "Description of Securities and Common Investment Techniques"
below for more information.
BOND PORTFOLIO
In pursuing its investment objective, the Bond Portfolio invests in a broad
range of bonds and other fixed income securities. The Portfolio's dollar-
weighted average maturity will range between five and fifteen years.
The Portfolio will invest primarily in fixed income securities of all types and
in any proportion that generally are rated investment grade at the time of
purchase, and may include obligations of the U.S. Government, its agencies or
instrumentalities, obligations of foreign governments, obligations of U.S. and
foreign corporations and obligations of U.S. and foreign banks. The Portfolio
may also invest up to 10% of its total assets in non-investment grade
securities. Under normal market conditions, at least 65% of the Portfolio's
total assets will be invested in bonds, debentures, mortgage and other asset-
related securities, zero coupon bonds and convertible debentures. The Portfolio
may also invest in short-term notes, bills, commercial paper and certificates
of deposits.
The Portfolio may enter into forward currency contracts and interest rate swaps
and may invest in options and futures contracts and related options. The
Portfolio may also invest in certain short-term fixed income securities as cash
reserves. See "Description of Securities and Common Investment Techniques"
below for more information.
INTERNATIONAL BOND PORTFOLIO
In pursuing its investment objective, the International Bond Portfolio invests
primarily (at least 65% of its total assets under normal market conditions) in
a broad range of bonds and other fixed income securities of foreign issuers.
The Portfolio's dollar-weighted average maturity will range between three and
eleven years.
The Portfolio will be invested at all times in the securities of issuers
located in at least three different foreign countries. These countries include,
but are not limited to: Argentina, Australia, Belgium, Brazil, Canada, Chile,
Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary,
Indonesia, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, Peru, the Philippines, Poland, Portugal,
Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan,
Thailand, Turkey, the United Kingdom and Venezuela. Criteria for determining
the appropriate distribution of investments among various countries and regions
include prospects for relative economic growth, expected levels of inflation,
government policies influencing business conditions, the outlook for currency
relationships, and the range of investment opportunities available to
international investors.
Because the securities markets in the following countries are highly developed,
liquid and subject to extensive regulation, the International Bond Portfolio
may invest more than 25% of its total assets in the securities of issuers
located in Canada, France, Germany, Japan, the United Kingdom or the United
States. Investment
14
<PAGE>
in a particular country of 25% or more of the Portfolio's total assets will
make the Portfolio's performance more dependent upon the political and economic
circumstances of a particular country than a mutual fund that is more widely
diversified among issuers in different countries. Although the five foreign
countries listed above have developed economies, they are not immune from these
risks. For example, efforts by the member countries of the European Union to
move toward monetary union and a single currency have encountered opposition
arising from the conflicting economic, political and cultural interests and
traditions of the member countries and their citizens. The end of the Cold War,
the reunification of Germany, the accession of three new Western European
members to the European Union and the aspirations of Eastern European states to
join and other political and social events in Europe have caused considerable
economic, social and political dislocations. In addition, events in the
Japanese economy, as well as political and social developments and natural
disasters there, have affected Japanese securities and currency markets and
have disrupted the relationship of the Japanese yen with other currencies and
with the U.S. dollar. Future political, economic and social developments can be
expected to produce continuing effects on securities and currency markets.
The Portfolio will invest primarily in fixed income securities of all types as
set forth below and in any proportion that generally are rated investment-grade
at the time of purchase, although a portion of its assets may be invested in
non-investment grade securities. These securities may include obligations of
foreign governments, their agencies, instrumentalities and political
subdivisions; supranational organizations (e.g., European Investment Bank,
Inter-American Development Bank and the World Bank); and foreign corporations
and banks. These obligations may consist of bonds, debentures, mortgage and
other asset-related securities, zero coupon bonds and convertible debentures.
The Portfolio may also invest in obligations of the U.S. Government, its
agencies and instrumentalities (including repurchase agreements collateralized
by such obligations) and of U.S. corporations and banks as well as short-term
notes, bills, commercial paper and certificates of deposit. It is expected that
during the current fiscal year a substantial portion of the Portfolio's assets
will be invested in foreign governmental obligations.
The Portfolio may enter into forward currency exchange contracts and currency
and interest rate swaps and utilize options and futures contracts as more fully
described under "Description of Securities and Common Investment Techniques"
below. Pending investment, as a temporary defensive measure and to meet
anticipated redemption requests, the Portfolio may invest, in accordance with
its investment policy, in various short-term obligations, such as U.S.
Government obligations, high quality money market investments and repurchase
agreements.
The International Bond Portfolio is classified as a non-diversified portfolio
under the 1940 Act. Investment return on a non-diversified portfolio typically
is dependent upon the performance of a smaller number of securities relative to
the number held in a diversified portfolio. Consequently, the change in value
of any one security may affect the overall value of a non-diversified portfolio
more than it would a diversified portfolio.
SPECIAL RISK CONSIDERATIONS
FOREIGN SECURITIES. The Short Duration Portfolio may invest directly in U.S.
dollar-denominated securities of foreign issuers. The Short-Intermediate Bond,
Bond and International Bond Portfolios may invest directly in the securities of
foreign issuers, whether or not U.S. dollar-denominated. There are certain
risks and costs involved in investing in securities of companies and
governments of foreign nations, which are in addition to the usual risks
inherent in U.S. investments. Foreign securities held by a Portfolio are
sensitive to changes in interest rates and the interest rate environment.
Generally, the prices of bonds and debt securities fluctuate inversely with
interest rate changes. In addition, the performance of investments in
securities denominated in a foreign currency will depend on the strength of the
foreign currency against the U.S. dollar and the interest
15
<PAGE>
rate environment in the country issuing the currency. Absent other events which
could otherwise affect the value of a foreign security (such as a change in the
political climate or an issuer's credit quality), appreciation in the value of
the foreign currency generally can be expected to increase the value of a
foreign currency-denominated security in terms of U.S. dollars. A rise in
foreign interest rates or decline in the value of the foreign currency relative
to the U.S. dollar generally can be expected to depress the value of a foreign
currency-denominated security.
Investment in foreign securities also involves higher costs than investment in
U.S. securities, including higher transaction and custody costs as well as the
imposition of additional taxes by foreign governments. Foreign investments may
also involve risks associated with the level of currency exchange rates, less
complete financial information about the issuers, less market liquidity, more
market volatility and political instability. Future political and economic
developments, the possible imposition of withholding taxes on dividend income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls or freezes on the convertibility of
currency, or the adoption of other governmental restrictions might adversely
affect an investment in foreign securities. Additionally, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements, and to different accounting, auditing and recordkeeping
requirements.
A Portfolio's investment in foreign debt, or the securities of foreign
governments, will subject the Portfolio to risks, including the risk that
foreign governments may default on their obligations, may not respect the
integrity of such debt, may attempt to renegotiate the debt at a lower rate,
and may not honor investments by United States entities or citizens.
In addition, the International Bond Portfolio is subject to the additional
risks of investing in countries with emerging economies or securities markets.
These countries are located in the Asia-Pacific region, Eastern Europe, Latin
and South America and Africa. Political and economic structures in many of such
countries may be undergoing significant evolution and rapid development, and
such countries may lack the social, political and economic stability
characteristic of more developed countries. Some of these countries may have in
the past failed to recognize private property rights and have at times
nationalized or expropriated the assets of private companies. As a result, the
risks described above, including the risks of nationalization or expropriation
of assets, may be heightened.
While a Portfolio's investments in foreign securities may, in the case of the
Short-Intermediate Bond and Bond Portfolios, and will, in the case of the
International Bond Portfolio, be denominated in foreign currencies, its
portfolio securities and other assets held by it are valued in U.S. dollars.
Currency exchange rates may fluctuate significantly over short periods of time
causing, together with other factors, the Portfolio's net asset value to
fluctuate as well. Currency exchange rates can be affected unpredictably by the
intervention or the failure to intervene by U.S. or foreign governments or
central banks, or by currency controls or political developments in the U.S. or
abroad. A Portfolio's net long and short foreign currency exposure will not
exceed its total asset value. To the extent that the International Bond
Portfolio is fully invested in foreign securities while also maintaining
currency positions, it may be exposed to greater combined risk. A Portfolio's
net currency positions may expose it to risks independent of its securities
positions.
The obligations of a foreign issuer will not be purchased by the Short
Duration, Short-Intermediate Bond or Bond Portfolios if, as a result of the
purchase, more than 20% of the total assets of the Portfolio will be invested
in the obligations of issuers within a single foreign country.
16
<PAGE>
DERIVATIVE INSTRUMENTS. The Portfolios may also purchase certain "derivative"
instruments. "Derivative" instruments are instruments that derive value from
the performance of underlying assets, interest or currency exchange rates, or
indices, and include (but are not limited to) interest rate and currency swaps,
futures contracts, options, forward currency contracts and structured debt
obligations (including collateralized mortgage obligations and other types of
asset-backed securities, "stripped" securities and various floating rate
instruments, including "inverse floaters"). Derivative instruments present, to
varying degrees, market risk that the performance of the underlying assets,
exchange rates or indices will decline; credit risk that the dealer or other
counterparty to the transaction will fail to pay its obligations; volatility
and leveraging risk that, if interest or exchange rates change adversely, the
value of the derivative instrument will decline more than the assets, rates or
indices on which it is based; liquidity risk that a Portfolio will be unable to
sell a derivative instrument when it wants because of lack of market depth or
market disruption; pricing risk that the value of a derivative instrument (such
as an option) will not correlate exactly to the value of the underlying assets,
rates or indices on which it is based; and operations risk that loss will occur
as a result of inadequate systems and controls, human error or otherwise. Some
derivative instruments are complex, and for those instruments that have been
developed recently, data is lacking regarding their actual performance over
complete market cycles. Northern will evaluate the risks presented by the
derivative instruments purchased by the Portfolios, and will determine, in
connection with its day-to-day management of the Portfolios, how they will be
used in furtherance of the Portfolios' investment objectives. It is possible,
however, the Northern's evaluations will prove to be inaccurate or incomplete
and, even when accurate and complete, it is possible that the Portfolios will,
because of the risks discussed above, incur loss as a result of their
investments in derivative instruments.
DESCRIPTION OF SECURITIES AND COMMON INVESTMENT TECHNIQUES
UNITED STATES GOVERNMENT OBLIGATIONS. Each Portfolio may invest in a variety of
U.S. Treasury obligations consisting of bills, notes and bonds, which
principally differ only in their interest rates, maturities and time of
issuance. Each Portfolio (other than the U.S. Treasury Index Portfolio) may
also invest in other securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. Obligations of certain agencies and
instrumentalities, such as the Government National Mortgage Association
("GNMA"), are supported by the full faith and credit of the U.S. Treasury;
others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the Treasury; others, such
as those of the Federal National Mortgage Association ("FNMA"), are supported
by the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others are supported only by the credit of the
instrumentalities. No assurance can be given that the U.S. Government would
provide financial support to its agencies or instrumentalities if it is not
obligated to do so by law. There is no assurance that these commitments will be
undertaken or complied with in the future.
Securities guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities are deemed to include (a) securities for which
the payment of principal and interest is backed by an irrevocable letter of
credit issued by the U.S. Government or an agency or instrumentality thereof,
and (b) participations in loans made to foreign governments or their agencies
that are so guaranteed. The secondary market for certain of these
participations is limited. Such participations will therefore be regarded as
illiquid.
STRIPPED OBLIGATIONS. To the extent consistent with its investment objective,
each Portfolio may purchase Treasury receipts and other "stripped" securities
that evidence ownership in either the future interest
17
<PAGE>
payments or the future principal payments on U.S. Government and other domestic
and foreign obligations. These participations, which may be issued by the U.S.
Government (or a U.S. Government agency or instrumentality), foreign
governments or private issuers such as banks and other institutions, are issued
at a discount to their "face value," and may include stripped mortgage-backed
securities ("SMBS"), which are derivative multi-class mortgage securities.
Stripped securities, particularly SMBS, may exhibit greater price volatility
than ordinary debt securities because of the manner in which their principal
and interest are returned to investors.
CUSTODIAL RECEIPTS FOR TREASURY SECURITIES. Each Portfolio (other than the U.S.
Treasury Index and International Bond Portfolios) may also purchase
participations in trusts that hold U.S. Treasury securities (such as TIGRs and
CATS) where the trust participations evidence ownership in either the future
interest payments or the future principal payments on the U.S. Treasury
obligations. Like other stripped obligations, these participations are also
normally issued at a discount to their "face value," and may exhibit greater
price volatility than ordinary debt securities because of the manner in which
their principal and interest are returned to investors. Investments by a
Portfolio in such receipts will not exceed 5% of the value of that Portfolio's
total assets.
CORPORATE OBLIGATIONS. The Short Duration Portfolio, Short-Intermediate Bond
Portfolio, Bond Portfolio and International Bond Portfolio may purchase debt
obligations of domestic or foreign corporations that are rated "B" or better by
at least one major rating agency, or if unrated will be of comparable quality
as determined by Northern so long as, under normal market and economic
conditions, no more than 10% (5% in the case of the Short Duration Portfolio
and International Bond Portfolio) of the Portfolio's total assets are invested
in non-investment grade fixed income securities. See discussion of "Non-
Investment Grade Securities" below.
INVESTMENT GRADE SECURITIES. The Short Duration Portfolio, Short-Intermediate
Bond Portfolio, Bond Portfolio and International Bond Portfolio will invest
primarily in investment grade securities. Investment grade securities include
those securities which are rated BBB or higher by Standard & Poor's Ratings
Group ("S&P"), Baa or higher by Moody's Investors Service, Inc. ("Moody's"),
BBB or higher by Duff and Phelps, Inc. ("Duff") or BBB or higher by Fitch
Investors Service, Inc. ("Fitch") at the time of purchase or, if unrated, are
of comparable quality as determined by Northern in accordance with guidelines
approved by the Board of Trustees. Securities rated BBB by S&P, Duff or Fitch,
or Baa by Moody's have certain speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than in the case of
higher rated securities. Commercial paper and other short-term obligations
acquired by the Portfolio will be rated A-2 or higher by S&P, P-2 or higher by
Moody's, D-2 or higher by Duff, or F-2 or higher by Fitch at the time of
purchase or, if unrated, determined to be of comparable quality by Northern.
Subsequent to its purchase by a Portfolio, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Portfolio. Northern will consider such an event in determining
whether the Portfolio should continue to hold such security. In addition, a
Portfolio may acquire fixed income or convertible securities rated below
investment grade when Northern believes that the investment characteristics of
such securities make them desirable acquisitions for the Portfolio in light of
its investment objective. In either case, a Portfolio's total investment in
non-investment grade securities will not exceed the limitations set forth below
under "Non-Investment Grade Securities."
18
<PAGE>
NON-INVESTMENT GRADE SECURITIES. Although the fixed income and convertible
securities in which the Portfolios invest will normally be rated investment
grade at the time of purchase, the Short Duration Portfolio, Short-Intermediate
Bond Portfolio, Bond Portfolio and International Bond Portfolio may invest in
non-investment grade fixed income or convertible securities when Northern
believes that the investment characteristics of such securities make them
desirable in light of the Portfolios' investment objectives and current
portfolio mix, so long as under normal market and economic conditions, (i) no
more than 5% of the total assets of the Short Duration Portfolio or the
International Bond Portfolio and no more than 10% of the total assets of the
Short-Intermediate Bond Portfolio or Bond Portfolio are invested in non-
investment grade securities and (ii) such securities are rated "B" or higher at
the time of purchase by at least one major rating agency. Non-investment grade
securities (those that are rated "Ba" or lower by Moody's or "BB" or lower by
S&P, Duff or Fitch) are commonly referred to as "junk bonds." To the extent
that securities, including convertible securities, acquired by a Portfolio are
not rated investment grade, there is a greater risk as to the timely repayment
of the principal on, and timely payment of interest or dividends with respect
to, such securities. Particular risks associated with lower-rated securities
are (a) the relative youth and growth of the market for such securities, (b)
the sensitivity of such securities to interest rate and economic changes, (c)
the lower degree of protection of principal and interest payments, (d) the
relatively low trading market liquidity for the securities, (e) the impact that
legislation may have on the high yield bond market (and, in turn, on a
Portfolio's net asset value and investment practices), and (f) the
creditworthiness of the issuers of such securities. During an economic downturn
or substantial period of rising interest rates, leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals, and to obtain additional financing. An economic downturn could
also disrupt the market for lower-rated securities and adversely affect the
value of outstanding securities and the ability of the issuers to repay
principal and interest. If the issuer of a security held by a Portfolio
defaulted, the Portfolio could incur additional expenses to seek recovery.
BANK OBLIGATIONS. Each Portfolio may invest in domestic and foreign bank
obligations, including certificates of deposit, bank and deposit notes,
bankers' acceptances and fixed time deposits. Such obligations may be general
obligations of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of the specific obligation or by government regulation.
Total assets of a bank are determined on the basis of the bank's most recent
annual financial statements.
ASSET-BACKED SECURITIES. The U.S. Government Securities Portfolio may purchase
securities that are secured or backed by mortgages and issued by an agency of
the U.S. Government. The Short Duration, Short-Intermediate Bond, Bond and
International Bond Portfolios may purchase asset-backed securities that are
secured or backed by mortgages or other assets (e.g., automobile loans and
credit card receivables) and are issued by entities such as GNMA, FNMA, FHLMC,
commercial banks, financial companies, finance subsidiaries of industrial
companies, savings and loan associations, mortgage banks and investment banks.
Asset-backed securities acquired by such Portfolios will be rated BBB or better
by S&P, Duff or Fitch, or Baa or better by Moody's at the time of purchase or,
if not rated, will be determined by Northern to be of comparable quality. The
Portfolios will not purchase non-mortgage asset-backed securities that are not
rated by S&P, Duff, Fitch or Moody's.
Presently there are several types of mortgage-backed securities that may be
acquired by the Short Duration, Short-Intermediate Bond, Bond and International
Bond Portfolios, including guaranteed mortgage pass-
19
<PAGE>
through certificates, which provide the holder with a pro rata interest in the
underlying mortgages, and collateralized mortgage obligations ("CMOs"), which
provide the holder with a specified interest in the cash flow of a pool of
underlying mortgages or other mortgage-backed securities. Issuers of CMOs
ordinarily elect to be taxed as pass-through entities known as real estate
mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes,
each with a specified fixed or floating interest rate and a final distribution
date. The relative payment rights of the various CMO classes may be structured
in a variety of ways. The Portfolios will not purchase "residual" CMO
interests, which normally exhibit greater price volatility.
The yield characteristics of asset-backed securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is slower
than expected will have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments will increase, while slower than expected prepayments will
decrease, yield to maturity. In calculating the average weighted maturity of
the U.S. Government Securities, Short-Intermediate Bond, Bond and International
Bond Portfolios, the maturity of asset-backed securities will be based on
estimates of average life.
Prepayments on asset-backed securities generally increase with falling interest
rates and decrease with rising interest rates; furthermore, prepayment rates
are influenced by a variety of economic and social factors. In general, the
collateral supporting non-mortgage asset-backed securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments. Like other fixed income securities, when interest rates rise the
value of an asset-backed security generally will decline; however, when
interest rates decline, the value of an asset-backed security with prepayment
features may not increase as much as that of other fixed income securities.
CONVERTIBLE SECURITIES. The Short Duration, Short-Intermediate Bond, Bond and
International Bond Portfolios may each invest in convertible securities. A
convertible security is a security that may be converted either at a stated
price or rate within a specified period of time into a specified number of
shares of common stock. By investing in convertible securities, the Portfolios
seek the opportunity, through the conversion feature, to participate in the
capital appreciation of the common stock into which the securities are
convertible, while earning higher current income than is available from the
common stock. Convertible securities acquired by the Portfolios will be subject
to the same rating requirements as a Portfolio's investments in its fixed
income securities and will be included for purposes of a Portfolio's limitation
on non-investment grade securities. The Portfolios ordinarily will sell units
of common stock received upon conversion.
EXCHANGE RATE-RELATED SECURITIES. The Short Duration, Short-Intermediate Bond,
Bond and International Bond Portfolios may each invest in securities for which
the principal repayment at maturity, while paid in U.S. dollars, is determined
by reference to the exchange rate between the U.S. dollar and the currency of
one or more foreign countries ("Exchange Rate-Related Securities"). The
interest payable on these securities is denominated in U.S. dollars and is not
subject to foreign currency risk and, in most cases, is paid at rates higher
than most other similarly rated securities in recognition of the foreign
currency risk component of Exchange Rate-Related Securities. Investments in
Exchange Rate-Related Securities entail certain risks. There is the possibility
of significant changes in rates of exchange between the U.S. dollar and any
foreign
20
<PAGE>
currency to which an Exchange Rate-Related Security is linked. In addition,
potential illiquidity in the forward foreign exchange market and the high
volatility of the foreign exchange market may from time to time combine to make
it difficult to sell an Exchange Rate-Related Security prior to maturity
without incurring a significant price loss.
FORWARD CURRENCY EXCHANGE CONTRACTS. The Short-Intermediate Bond, Bond and
International Bond Portfolios may enter into forward currency exchange
contracts for hedging purposes in an effort to reduce the level of volatility
caused by changes in foreign currency exchange rates or where such transactions
are economically appropriate for the reduction of risks inherent in the ongoing
management of the Portfolios. The International Bond Portfolio may also enter
into forward currency exchange contracts for speculative purposes (to seek to
increase total return) when Northern anticipates that the foreign currency will
appreciate or depreciate in value, but securities denominated in that currency
do not in Northern's view present attractive investment opportunities and are
not held by a Portfolio. In addition, the International Bond Portfolio may
engage in cross-hedging by using forward contracts in one currency to hedge
against fluctuations in the value of securities denominated in a different
currency if Northern believes that there is a pattern of correlation between
the two currencies.
A forward currency exchange contract is an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of contract. Although such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, at the same time they tend to
limit any potential gain that might be realized should the value of such
currency increase. Consequently, a Portfolio may choose to refrain from
entering into such contracts. In connection with forward currency exchange
contracts, the Portfolios will create a segregated account of cash, U.S.
Government securities or other liquid high grade debt obligations, or will
otherwise cover their position in accordance with applicable requirements of
the SEC.
The International Bond Portfolio may also invest in debt securities denominated
in the European Currency Unit ("ECU"), which is a "basket" consisting of
specified amounts in the currencies of certain of the twelve member states of
the European Community. The specific amounts of currencies comprising the ECU
may be adjusted by the Council of Ministers of the European Community from time
to time to reflect changes in relative values of the underlying currencies. In
addition, the Portfolio may invest in securities denominated in other currency
"baskets."
OPTIONS. Each Portfolio may write covered call options, buy put options, buy
call options and write secured put options for hedging (or cross-hedging)
purposes or for the purpose of earning additional income. Such options may
relate to particular securities, financial instruments, foreign currencies or
bond indices and may or may not be listed on a foreign or domestic securities
exchange and issued by the Options Clearing Corporation. The Portfolios will
not purchase put and call options in an amount that exceeds 5% of their
respective net assets at the time of purchase. The aggregate value of a
Portfolio's assets that will be subject to options written by the Portfolio
will not exceed 25% of its net assets at the time the option is written.
In the case of a call option on a security or currency, the option is "covered"
if a Portfolio owns the security or currency underlying the call or has an
absolute and immediate right to acquire that security or currency without
additional cash consideration (or, if additional cash consideration is
required, liquid assets, such as cash, U.S. Government securities or other
liquid high grade debt obligations in such amount are held in a
21
<PAGE>
segregated account by its custodian) upon conversion or exchange of other
securities or instruments held by it. For a call option on an index, the option
is covered if a Portfolio maintains with its custodian a portfolio of
securities substantially replicating the movement of the index, or liquid
assets equal to the contract value. A call option is also covered if a
Portfolio holds a call on the same security, currency or index as the call
written where the exercise price of the call held is (i) equal to or less than
the exercise price of the call written, or (ii) greater than the exercise price
of the call written provided the difference is maintained by the Portfolio in
liquid assets in a segregated account with its custodian.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security or currency
gives the purchaser of the option the right to buy, and a writer the obligation
to sell, the underlying security or currency at the stated exercise price at
any time prior to the expiration of the option, regardless of the market price
of the security or currency. The premium paid to the writer is in consideration
for undertaking the obligation under the option contract. A put option for a
particular security or currency gives the purchaser the right to sell the
security or currency at the stated exercise price at any time prior to the
expiration date of the option, regardless of the market price of the security
or currency. In contrast to an option on a particular security, an option on an
index provides the holder with the right to make or receive a cash settlement
upon exercise of the option. The amount of this settlement will be equal to the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.
The Portfolios will invest and trade in unlisted over-the-counter options only
with firms deemed creditworthy by Northern. However, unlisted options are not
subject to the protections afforded purchasers of listed options by the Options
Clearing Corporation, which performs the obligations of its members which fail
to perform them in connection with the purchase or sale of options.
FUTURES CONTRACTS AND RELATED OPTIONS. Each Portfolio may invest in interest
rate futures contracts and options on futures contracts for hedging purposes or
to maintain liquidity to meet potential unitholder redemptions, invest cash
balances or dividends or minimize trading costs. However, the Portfolios may
not purchase or sell a futures contract unless immediately after any such
transaction the sum of the aggregate amount of margin deposits on their
respective existing futures positions and the amount of premiums paid for
related futures options is 5% or less of their respective total assets.
Futures contracts obligate a Portfolio, at maturity, to take or make delivery
of certain domestic or foreign securities, the cash value of a securities index
or a stated quantity of a foreign currency. A Portfolio may sell a futures
contract in order to offset a decrease in the market value of its portfolio
securities that might otherwise result from market declines or currency
exchange fluctuations. A Portfolio may do so either to hedge the value of its
portfolio of securities as a whole, or to protect against declines, occurring
prior to sales of securities, in the value of the securities to be sold.
Conversely, a Portfolio may purchase a futures contract in anticipation of
purchases of securities. In addition, a Portfolio may utilize futures contracts
in anticipation of changes in the composition of its portfolio holdings.
The Portfolios may purchase and sell call and put options on futures contracts
traded on a domestic or foreign exchange or board of trade. When a Portfolio
purchases an option on a futures contract, it has the right to assume a
position as a purchaser or seller of a futures contract at a specified exercise
price at any time during the option period. When a Portfolio sells an option on
a futures contract, it becomes obligated to purchase or
22
<PAGE>
sell a futures contract if the option is exercised. In anticipation of a market
advance, a Portfolio may purchase call options on futures contracts as a
substitute for the purchase of futures contracts to hedge against a possible
increase in the price of securities which the Portfolio intends to purchase.
Similarly, if the value of a Portfolio's portfolio securities is expected to
decline, the Portfolio might purchase put options or sell call options on
futures contracts rather than sell futures contracts. In connection with a
Portfolio's position in a futures contract or option thereon, the Portfolio
will create a segregated account of cash, U.S. Government securities or other
liquid high grade debt obligations, or will otherwise cover its position in
accordance with applicable requirements of the Securities and Exchange
Commission (the "SEC").
The primary risks associated with the use of futures contracts and options are:
(i) the imperfect correlation between the change in market value of the
securities held by a Portfolio and the price of the futures contract or option;
(ii) possible lack of a liquid secondary market for a futures contract and the
resulting inability to close a futures contract when desired; (iii) losses due
to unanticipated market movements which are potentially unlimited; and (iv)
Northern's ability to predict correctly the direction of securities prices,
interest rates, currency exchange rates and other economic factors. For a
further discussion see "Additional Investment Information--Futures Contracts
and Related Options" and Appendix B in the Additional Statement.
The Portfolios intend to comply with the regulations of the Commodity Futures
Trading Commission exempting the Portfolios from registration as a "commodity
pool operator."
INTEREST RATE SWAPS, FLOORS AND CAPS AND CURRENCY SWAPS. Each Portfolio (other
than the U.S. Treasury Index Portfolio) may, in order to protect its value from
interest rate fluctuations and to hedge against fluctuations in the floating
rate market, enter into interest rate swaps or purchase interest rate floors or
caps. The Portfolios expect to enter into these hedging transactions primarily
to preserve a return or spread of a particular investment or portion of its
holdings and to protect against an increase in the price of securities the
Portfolios anticipate purchasing at a later date. Interest rate swaps involve
the exchange by a Portfolio with another party of their respective commitments
to pay or receive interest (e.g., an exchange of floating rate payments for
fixed rate payments). The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal amount
from the party selling such interest rate floor. The purchase of an interest
rate cap entitles the purchaser, to the extent that a specified index exceeds a
predetermined interest rate, to receive payments of interest on a notional
principal amount from the party selling such interest rate cap.
In order to protect against currency rate fluctuations, the International Bond
Portfolio may also enter into currency swaps. Currency swaps involve the
exchange of the rights of the Portfolio and another party to make or receive
payments in specified currencies.
The net amount of the excess, if any, of a Portfolio's obligations over its
entitlements with respect to each interest rate or currency swap will be
accrued on a daily basis and an amount of liquid assets, such as cash, U.S.
Government securities or other liquid high grade debt obligations having an
aggregate net asset value at least equal to such accrued excess will be
maintained in a segregated account by the Portfolio's custodian. If the other
party to an interest rate swap defaults, a Portfolio's risk of loss consists of
the net amount of interest payments that the Portfolio is contractually
entitled to receive. In contrast, currency swaps usually involve the delivery
of the entire principal value of one designated currency in exchange for the
other designated
23
<PAGE>
currency. Therefore, the entire principal value of a currency swap is subject
to the risk that the other party to the swap will default on its contractual
delivery obligations. A Portfolio will not enter into any interest rate swap,
floor or cap transaction, or any currency swap unless the unsecured commercial
paper, senior debt, or claims paying ability of the other party is rated either
A or A-1 or better by S&P, Duff or Fitch or A or P-1 or better by Moody's.
PAIR-OFF TRANSACTIONS. Subject to the requirements of the 1940 Act, each
Portfolio (other than the U.S. Treasury Index Portfolio) may engage in pair-off
transactions involving securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities. In a pair-off transaction Northern will
commit to purchase or sell a security. Then, prior to the settlement date,
Northern will "pair-off" the purchase or sale with a matching sale or purchase
of the same security that settles prior to, or on, the original settlement
date. Profits or losses on the pair-off transaction are settled by a
Portfolio's paying or receiving the difference between the purchase and sale
prices from the counter-party in the transaction (which will be a bank, broker-
dealer or other financial institution determined to be creditworthy by
Northern).
A pair-off transaction that involves an initial sale by a Portfolio of a
security that it does not own (or does not have the right to obtain at no added
cost) will be considered a short sale of the security. Until the sale is
paired-off as described above, the Portfolio will maintain on a daily basis a
segregated account containing cash or U.S. Government securities at such a
level that (a) the amount deposited in the account will equal the current value
of the security sold short and (b) the amount deposited in the segregated
account will not be less than the market value of the security at the time it
was sold short. Similarly, a segregated account will be maintained for a pair-
off transaction that involves an initial purchase by the Portfolio of a
security on a forward commitment or when-issued basis as described more fully
in the Additional Statement.
The Portfolios will not enter into a pair-off transaction that involves either
a short sale or a forward commitment or when-issued purchase if, after effect
is given to the sale or purchase, the total market value of all open pair-off
transactions would exceed 25% of the value of the Portfolios' respective net
assets.
Although pair-off transactions represent a strategy that will be used by
Northern in attempting to earn additional income for the Portfolios resulting
from short-term price movements in the securities markets, the transactions may
result in losses instead. In addition, pair-off transactions may produce higher
than normal portfolio turnover which may result in increased transaction costs
to the Portfolios and gains from the sale of securities deemed to have been
held for less than three months. Such gains must not exceed 30% of a
Portfolio's gross income in a taxable year in order for the Portfolio to
qualify as a regulated investment company under the Internal Revenue Code of
1986.
GUARANTEED INVESTMENT CONTRACTS. The Short Duration, Short-Intermediate Bond
and Bond Portfolios may make limited investments in guaranteed investment
contracts ("GICs") issued by U.S. insurance companies. Pursuant to such
contracts, a Portfolio makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Portfolio on a monthly basis interest which is based on an index (in most cases
this index is expected to be the Salomon Brothers CD Index), but is guaranteed
not to be less than a certain minimum rate. A GIC is normally a general
obligation of the issuing insurance company and not a separate account. The
purchase price paid for a GIC becomes part of the general assets of the
insurance company, and the contract is paid from the company's general assets.
A Portfolio will only purchase GICs from insurance companies which, at the time
of purchase, have assets of
24
<PAGE>
$1 billion or more and meet quality and credit standards established by
Northern pursuant to guidelines approved by the Board of Trustees. Generally,
GICs are not assignable or transferable without the permission of the issuing
insurance companies, and an active secondary market in GICs does not currently
exist.
VARIABLE AND FLOATING RATE INSTRUMENTS. The Portfolios may purchase rated and
unrated variable and floating rate instruments. These instruments may include
variable amount master demand notes that permit the indebtedness thereunder to
vary in addition to providing for periodic adjustments in the interest rate.
The Portfolios may also invest in leveraged inverse floating rate debt
instruments ("inverse floaters"). The interest rate on an inverse floater
resets in the opposite direction from the market rate of interest to which the
inverse floater is indexed. An inverse floater may be considered to be
leveraged to the extent that its interest rate varies by a magnitude that
exceeds the magnitude of the change in the index rate of interest. The higher
degree of leverage inherent in inverse floaters is associated with greater
volatility in their market values. Accordingly, the duration of an inverse
floater may exceed its stated final maturity.
The absence of an active secondary market with respect to particular variable
and floating rate instruments could, however, make it difficult for the
Portfolios to dispose of instruments if the issuer defaulted on its payment
obligation or during periods that the Portfolios are not entitled to exercise
their demand rights, and the Portfolios could, for these or other reasons,
suffer a loss with respect to such instruments. Variable and floating rate
instruments including inverse floaters held by a Portfolio will be subject to
the Portfolio's 15% limitation on illiquid investments when the Portfolio may
not demand payment of the principal amount within seven days and a reliable
trading market is absent.
REPURCHASE AGREEMENTS. The Portfolios may agree to purchase portfolio
securities from financial institutions subject to the seller's agreement to
repurchase them at a mutually agreed upon date and price ("repurchase
agreements"). Although the securities subject to a repurchase agreement may
bear maturities exceeding one year, settlement for the repurchase agreement
will never be more than one year after a Portfolio's acquisition of the
securities and normally will be within a shorter period of time. Securities
subject to repurchase agreements are held either by the Trust's custodian or
subcustodian (if any), or in the Federal Reserve/Treasury Book-Entry System.
The seller under a repurchase agreement will be required to maintain the value
of the securities subject to the agreement in an amount exceeding the
repurchase price (including accrued interest). Default by the seller would,
however, expose a Portfolio to possible loss because of adverse market action
or delay in connection with the disposition of the underlying obligations.
REVERSE REPURCHASE AGREEMENTS. The Portfolios may enter into reverse repurchase
agreements which involve the sale of securities held by them, with an agreement
to repurchase the securities at an agreed upon price (including interest) and
date. The Portfolios will use the proceeds of reverse repurchase agreements to
purchase other money market securities either maturing, or under an agreement
to resell, at a date simultaneous with or prior to the expiration of the
reverse repurchase agreement. The Portfolios will utilize reverse repurchase
agreements, which may be viewed as borrowings (or leverage), when it is
anticipated that the interest income to be earned from the investment of the
proceeds of the transaction is greater than the interest expense of the reverse
repurchase transaction. Reverse repurchase agreements involve the risks that
the interest income earned in the investment of the proceeds of the transaction
will be less than the interest expense of the reverse repurchase agreement,
that the market value of the securities sold by the Portfolio may decline below
the price of the securities the Portfolio is obligated to repurchase and that
the securities may not be returned to the Portfolio. During the time a reverse
repurchase agreement is outstanding, a
25
<PAGE>
Portfolio will maintain a segregated account with the Trust's custodian
containing U.S. Government or other appropriate high-grade debt securities
having a value at least equal to the repurchase price. A Portfolio may enter
into reverse repurchase agreements with banks, brokers and dealers, and does
not have the authority to enter into reverse repurchase agreements exceeding in
the aggregate one-third of the Portfolio's total assets. See "Additional
Investment Information--Investment Restrictions" in the Additional Statement.
SECURITIES LENDING. The Portfolios may seek additional income from time to time
by lending their respective portfolio securities on a short-term basis to
banks, brokers and dealers under agreements requiring that the loans be secured
by collateral in the form of cash, cash equivalents, U.S. Government securities
or irrevocable bank letters of credit maintained on a current basis equal in
value to at least the market value of the securities loaned. A Portfolio may
not make such loans in excess of 33 1/3% of the value of the Portfolio's total
assets. Loans of securities involve risks of delay in receiving additional
collateral or in recovering the securities loaned, or possibly loss of rights
in the collateral should the borrower of the securities become insolvent. The
proceeds received by a Portfolio in connection with loans of portfolio
securities may be invested in U.S. Government securities and other liquid high
grade debt obligations.
FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS.
The Portfolios may purchase or sell securities on a when-issued or delayed-
delivery basis and make contracts to purchase or sell securities for a fixed
price at a future date beyond customary settlement time. Securities purchased
or sold on a when-issued, delayed-delivery or forward commitment basis involve
a risk of loss if the value of the security to be purchased declines prior to
the settlement date. A Portfolio is required to hold and maintain in a
segregated account with the Portfolio's custodian until the settlement date,
cash, U.S. Government Securities or other liquid high grade debt obligations
having a value (determined daily) at least equal to the amount of the
Portfolio's purchase commitments. Although the Portfolios would generally
purchase securities on a when-issued, delayed-delivery or a forward commitment
basis with the intention of acquiring securities, the Portfolios may dispose of
such securities prior to settlement if Northern deems it appropriate to do so.
BORROWINGS. The Portfolios are authorized to make limited borrowings for
temporary purposes to the extent described below under "Investment
Restrictions". If the securities held by the Portfolios should decline in value
while borrowings are outstanding, the net asset value of the Portfolios'
outstanding units will decline in value by proportionately more than the
decline in value suffered by the Portfolios' securities. Borrowings may be
effected through reverse repurchase agreements under which the Portfolios would
sell portfolio securities to financial institutions such as banks and broker-
dealers and agree to repurchase them at a particular date and price. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Portfolio may decline below the price of the securities it is
obligated to repurchase.
INVESTMENT COMPANIES. In connection with the management of their daily cash
positions, the Portfolios may invest in securities issued by other investment
companies which invest in short-term, high-quality debt securities and which
determine their net asset value per share based on the amortized cost or penny-
rounding method of valuation. The U.S. Treasury Index Portfolio may also invest
in shares of other investment companies that are structured to seek a similar
correlation to the performance of the Lehman Index. The International Bond
Portfolio may purchase shares of investment companies investing primarily in
foreign securities, including so-called "country funds." Country funds have
portfolios consisting primarily of securities of issuers located in one foreign
country or region. In addition, the Portfolios may invest in securities issued
by other investment companies if otherwise consistent with their respective
investment
26
<PAGE>
objectives and policies. As a shareholder of another investment company, a
Portfolio would bear, along with other shareholders, its pro rata portion of
the other investment company's expenses including advisory fees. These expenses
would be in addition to the advisory fees and other expenses the Portfolio
bears directly in connection with its own operations. Securities of the
investment companies will be acquired by the Portfolios within the limits
prescribed by the 1940 Act.
ILLIQUID OR RESTRICTED SECURITIES. Each Portfolio may invest up to 15% of its
net assets in securities which are illiquid. Illiquid securities would
generally include repurchase agreements, time deposits with notice/termination
dates in excess of seven days, SMBS issued by private issuers, interest rate
swaps, currency swaps, unlisted over-the-counter options, GICs and certain
securities that are traded in the United States but are subject to trading
restrictions because they are not registered under the Securities Act of 1933
(the "1933 Act").
If otherwise consistent with their respective investment objectives and
policies, the Short Duration, Short-Intermediate Bond, Bond and International
Bond Portfolios may purchase domestically-traded securities which are not
registered under the 1933 Act but which can be sold to "qualified institutional
buyers" in accordance with Rule 144A under the 1933 Act. Any such security will
not be considered illiquid so long as it is determined by Northern, under
guidelines approved by the Trust's Board of Trustees, that an adequate trading
market exists for that security. This investment practice could have the effect
of increasing the level of illiquidity in a Portfolio during any period that
qualified institutional buyers become uninterested in purchasing these
restricted securities.
PORTFOLIO TURNOVER. The Trust cannot accurately predict the turnover rate for
any Portfolio, which may vary from year to year, but expects that the annual
turnover rate for the Short Duration Portfolio will be very high for the
reasons stated above under "Investment Information--Short Duration Portfolio".
For the fiscal year ended November 30, 1995, the portfolio turnover rate for
the Short Duration Portfolio exceeded 1200%. High portfolio turnover (in excess
of 100%) may result in the realization of short-term capital gains which are
taxable to unitholders as ordinary income (See "Taxes"). In addition, high
portfolio turnover rates may result in corresponding increases in brokerage
commissions and other transaction costs. The Portfolios will not consider
portfolio turnover rate a limiting factor in making investment decisions
consistent with their respective objectives and policies. The portfolio
turnover rate of the International Bond Portfolio will be affected by changes
in country and currency weightings, as well as changes in the holdings of
specific issuers and investments in issuers in smaller or emerging markets.
MISCELLANEOUS. The Portfolios do not intend to purchase certificates of deposit
of Northern or its affiliate banks, commercial paper issued by Northern's
parent holding company or other securities issued or guaranteed by Northern,
its parent holding company or their subsidiaries or affiliates.
The value of the Portfolios' securities will vary inversely with changes in
prevailing interest rates.
For a description of applicable securities ratings, see Appendix A to the
Additional Statement.
INVESTMENT RESTRICTIONS
The Portfolios are subject to certain investment restrictions which, as
described in more detail in the Additional Statement, are fundamental policies
that cannot be changed without the approval of a majority of
27
<PAGE>
the outstanding units of a Portfolio. Each Portfolio (except the International
Bond Portfolio) will limit its investments so that, with respect to 75% of a
Portfolio's total assets, not more than 5% will be invested in the securities
of any one issuer (other than U.S. Government securities or repurchase
agreements collateralized by U.S. Government securities), and each Portfolio
will not invest more than 25% of its total assets in the securities (other than
U.S. Government securities and repurchase agreements collateralized by such
securities) of issuers in any one industry. Each Portfolio may borrow money
from banks for temporary or emergency purposes or to meet redemption requests,
provided that the Portfolio maintains asset coverage of at least 300% for all
such borrowings.
As a non-fundamental investment restriction that can be changed without
unitholder approval, the International Bond Portfolio may not, at the end of
any tax quarter, invest more than 5% of the total value of its assets in the
securities of any one issuer (except U.S. Government securities or repurchase
agreements collateralized by such securities), except that up to 50% of the
total value of the Portfolio's assets may be invested in any securities without
regard to this 5% limitation so long as no more than 25% of the total value of
its assets is invested in the securities of any one issuer (except U.S.
Government securities or repurchase agreements collateralized by such
securities).
In order to permit the sale of its units in certain states, the Trust may make
commitments more restrictive than the investment policies and restrictions
described in this Prospectus. Should the Trust determine that any such
commitment is no longer in the best interests of the Trust, it will revoke the
commitment by terminating sales of its units in the state involved.
TRUST INFORMATION
BOARD OF TRUSTEES
The business and affairs of the Trust and each Portfolio are managed under the
direction of the Trust's Board of Trustees. The Additional Statement contains
the name of each Trustee and background information regarding the Trustees.
INVESTMENT ADVISER, TRANSFER AGENT AND CUSTODIAN
Northern, which has offices at 50 S. LaSalle Street, Chicago, Illinois 60675,
serves as investment adviser, transfer agent and custodian for each Portfolio.
As transfer agent, Northern performs various administrative servicing
functions, and any unitholder inquiries should be directed to it.
Northern, a member of the Federal Reserve System, is an Illinois state-
chartered commercial bank and the principal subsidiary of Northern Trust
Corporation, a bank holding company. Northern was formed in 1889 with
capitalization of $1 million. As of December 31, 1995, Northern Trust
Corporation and its subsidiaries had approximately $19.9 billion in assets,
$12.5 billion in deposits and employed over 6,500 persons.
28
<PAGE>
Northern administered in various capacities (including as master trustee,
investment manager or custodian) approximately $613.9 billion of assets as of
December 31, 1995, including approximately $105.5 billion of assets for which
Northern had investment management responsibility.
Under its Advisory Agreement with the Trust, Northern, subject to the general
supervision of the Trust's Board of Trustees, is responsible for making
investment decisions for the Portfolios and placing purchase and sale orders
for portfolio securities. Northern is also responsible for monitoring and
preserving the records required to be maintained under the regulations of the
SEC (with certain exceptions unrelated to its activities for the Trust). As
compensation for its advisory services and its assumption of related expenses,
Northern is entitled to a fee, computed daily and payable monthly, at an annual
rate of .40%, .60%, .60%, .40%, .60% and .90% of the average daily net assets
of the Short Duration, U.S. Government Securities, Short-Intermediate Bond,
U.S. Treasury Index, Bond and International Bond Portfolios, respectively.
Although the advisory fee rate payable by the International Bond Portfolio is
higher than the rates payable by most mutual funds, the Board of Trustees
believes that it is comparable to the rates paid by many other international
funds.
For serving as investment adviser during the fiscal year ended November 30,
1995, Northern earned fees (after waivers) paid by the Short Duration, U.S.
Government Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond and
International Bond Portfolios at the annual rate of .15%, .25%, .25%, .15%,
.25% and .70%, respectively, of the Portfolios' average daily net assets.
Primary responsibility for the management of the Short Duration Portfolio lies
with the members of the Cash Investment Management Division of the Investment
Services Group of Northern who are described below. Thomas L. Mallman, Vice
President of Northern since 1980 and Senior Vice President since 1991, oversees
the management of short-term obligations in accounts administered by Northern
and is the head of the Cash Investment Management Division.
Jerry R. Pearson, Vice President in the Cash Investment Management Division,
joined Northern in 1987. During the past five years, Mr. Pearson has been a
portfolio manager at Northern and at an affiliated investment adviser and has
managed fixed income portfolios and mutual funds, including the Short Duration
Portfolio and a collective trust fund with a substantially similar investment
objective. Since commencement of operations on June 2, 1993, primary
responsibility for the management of the Short Duration Portfolio lies with Mr.
Pearson and Mary Ann Flynn, Investment Officer in the Cash Investment
Management Division. Ms. Flynn joined Northern in 1969. During the past five
years, Ms. Flynn has been a portfolio manager at Northern and has managed money
market funds and fixed income funds, including the Diversified Assets Portfolio
and the Short Duration Portfolio, and collective trust funds with substantially
similar investment objectives.
Primary responsibility for the management of the investment selections of the
U.S. Government Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond
and International Bond Portfolios lies with the members of the Fixed Income
Management Division of the Investment Services Group of Northern who are
described below.
Steve Schafer, Second Vice President in the Fixed Income Management Group of
Northern, has managed the U.S. Government Securities Portfolio since April 3,
1995. During the past three years, Mr. Schafer's
29
<PAGE>
responsibilities have included the management and trading of various
institutional accounts. Mr. Schafer also manages the Northern Trust Stable
Asset Account. He joined Northern in 1988 and was a credit analyst covering
both industrial companies and utilities until 1991.
Mark J. Wirth, Vice President and Senior Strategist in the Fixed Income
Management Division, has managed the Short-Intermediate Bond and Bond
Portfolios since the Portfolios commenced operations on January 11, 1993. Mr.
Wirth is presently the lead manager in Northern's mortgage-backed security
analysis and investing efforts. During the past five years Mr. Wirth has been a
portfolio manager at Northern and has managed active and passive fixed income
portfolios and mutual funds, including the Short-Intermediate Bond and Bond
Portfolios and their predecessor collective trust funds.
Since the Portfolio commenced operations on March 28, 1994, Michael J. Lannan,
Vice President in the Fixed Income Management Division, has managed the
International Bond Portfolio. Mr. Lannan joined Northern in 1986. During the
past five years, Mr. Lannan has managed various fixed income portfolios,
including common and collective trust funds invested in obligations of foreign
and domestic issuers.
Northern also receives compensation as the Trust's custodian and transfer agent
under separate agreements. The fees payable by the Portfolios for these
services are described in this Prospectus under "Summary of Expenses" and in
the Additional Statement. Different transfer agency fees are payable with
respect to the Class A, B, C and D units in the Portfolios.
ADMINISTRATOR AND DISTRIBUTOR
Goldman Sachs, 85 Broad Street, New York, New York 10004, acts as administrator
and distributor for the Portfolios. Subject to the limitations described below
as compensation for its administrative services (which include supervision with
respect to the Trust's non-investment advisory operations) and the assumption
of related expenses, Goldman Sachs is entitled to a fee from each Portfolio,
computed daily and payable monthly, at an annual rate of .25% of the first $100
million, .15% of the next $200 million, .075% of the next $450 million and .05%
of any excess over $750 million of the average daily net assets of each
Portfolio. No compensation is payable by the Trust to Goldman Sachs for its
distribution services.
Goldman Sachs has voluntarily agreed to reduce its administration fee to .10%
of each Portfolio's average daily net assets. Further, Goldman Sachs has
voluntarily agreed that if, for the current fiscal year, the sum of a
Portfolio's expenses (including the fees payable to Goldman Sachs as
administrator, but excluding the fees payable to Northern for its duties as
investment adviser and transfer agent, Servicing Fees and extraordinary
expenses, such as litigation, interest, taxes, and indemnification expenses)
exceeds on an annualized basis .25% of the International Bond Portfolio's and
.10% of each other Portfolio's average daily net assets for such fiscal year,
it will waive a portion of its fees and/or reimburse such Portfolio for the
amount of the excess. In addition, as stated under "Summary of Expenses,"
Northern intends to voluntarily reduce its advisory fee for the Short Duration,
U.S. Government Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond
and International Bond Portfolios during the Trust's current fiscal year. The
result of these reimbursements and fee reductions will be to increase the
performance of the Portfolios during the periods for which the reimbursements
and reductions are made.
30
<PAGE>
UNITHOLDER SERVICING PLAN
Pursuant to a Unitholder Servicing Plan ("Servicing Plan") adopted by the Board
of Trustees of the Trust, the Trust may enter into agreements ("Servicing
Agreements") with banks, corporations, brokers, dealers and other financial
institutions which may include Northern and its affiliates ("Servicing
Agents"), under which they will render (or arrange for the rendering of)
administrative support services for investors who beneficially own Class B, C
and D units of the U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios. Beneficial owners of
Class C and D units require extensive administrative support services while
beneficial owners of Class B units need only some of such services.
Administrative support services, which are described more fully in the
Additional Statement, may include processing purchase and redemption requests
from investors, placing net purchase and redemption orders with Northern acting
as the Trust's transfer agent, providing necessary personnel and facilities to
establish and maintain investor accounts and records, and providing information
periodically to investors showing their positions in Portfolio units.
For these services, fees are payable by the Trust to Servicing Agents at an
annual rate of up to .10%, .15% and .25% of the average daily net asset value
of Class B units, Class C units and Class D units, respectively, held or
serviced by such Servicing Agents for beneficial unitholders ("Servicing
Fees"). Servicing Agents are required to provide investors with a schedule of
any credits, fees or other conditions that may be applicable to the investment
of their assets in Portfolio units.
Conflict of interest restrictions may apply to the receipt of compensation paid
by the Trust to a Servicing Agent in connection with the investment of
fiduciary funds in Portfolio units. Banks and other institutions regulated by
the Office of Comptroller of the Currency, Board of Governors of the Federal
Reserve System and state banking commissions, and investment advisers and other
money managers subject to the jurisdiction of the SEC, the Department of Labor
or state securities commissions, are urged to consult legal counsel before
entering into Servicing Agreements.
SERVICE INFORMATION
Class A units of the U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios are designed to be
purchased by institutional investors or others who can obtain information about
their unitholder accounts and who do not require the Transfer Agent or
Servicing Agent services that are provided for Class B, C and D unitholders.
Class B units of the U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios are designed to be
purchased by organizations maintaining record ownership on behalf of beneficial
owners where certain services of the Transfer Agent and a Servicing Agent are
required that are incident to the separation of record and beneficial
ownership.
Class C units of the U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios are designed to be
purchased by institutional investors who require certain account related
services of the Transfer Agent and a Servicing Agent that are incident to the
investor being the beneficial owner of units.
31
<PAGE>
Class D units of the U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond and International Bond Portfolios are designed to be
purchased by investors having a relationship with an organization which
requires that account related services and information be provided to the
investor and organization by the Transfer Agent and a Servicing Agent.
Any person entitled to receive compensation for selling or servicing units of a
Portfolio may receive different compensation with respect to one particular
class of units over another in the same Portfolio.
INVESTING
PURCHASE OF UNITS
Units of the Portfolios are sold on a continuous basis by the Trust's
distributor, Goldman Sachs, to institutional investors that either maintain
certain qualified accounts at Northern or its affiliates or invest an aggregate
of at least $5 million in one or more Portfolios of the Trust. Goldman Sachs
has established several procedures for purchasing Portfolio units in order to
accommodate different types of institutional investors.
PURCHASE OF UNITS THROUGH QUALIFIED ACCOUNTS. Units of the Short Duration
Portfolio and Class A, B, C and D units of the U.S. Government Securities,
Short-Intermediate Bond, U.S. Treasury Index, Bond and International Bond
Portfolios are offered to Northern, its affiliates and other institutions and
organizations (the "Institutions") acting on behalf of their customers,
clients, employees and others (the "Customers"), and for their own account.
Institutions may purchase units of a class through procedures established by
Institutions in connection with the requirements of their qualified accounts or
through procedures set forth herein with respect to Institutions that invest
directly. Institutions should contact Northern or an affiliate for further
information regarding purchases through qualified accounts. There is no minimum
initial investment for Institutions that maintain qualified accounts with
Northern or its affiliates.
PURCHASE OF UNITS DIRECTLY FROM THE TRUST. Institutions that purchase units
directly may do so by means of one of the following procedures provided that
they make an aggregate minimum initial investment of $5 million in one or more
Portfolios of the Trust:
PURCHASE BY MAIL. An Institution desiring to purchase units of a Portfolio
by mail should mail a check or Federal Reserve draft payable to the
specific Portfolio together with a completed and signed new account
application to The Benchmark Funds, c/o The Northern Trust Company, P.O.
Box 75943, Chicago, Illinois 60675-5943. An application will be incomplete
if it does not include a corporate resolution with corporate seal and
secretary's certification within the preceding 30 days, or other acceptable
evidence of authority. If an Institution desires to purchase the units of
more than one Portfolio, the Institution should send a separate check for
each Portfolio. All checks must be payable in U.S. dollars and drawn on a
bank located in the United States. A $20 charge will be imposed if a check
does not clear. The Trust may delay transmittal of redemption proceeds for
units recently purchased by check until such time as it has assured itself
that good funds have been collected for the purchase of such units. This
may take up to fifteen (15) days. Cash and third party checks are not
acceptable for the purchase of Trust units.
32
<PAGE>
PURCHASE BY TELEPHONE. An Institution desiring to purchase units of a
Portfolio by telephone should call Northern acting as the Trust's transfer
agent ("Transfer Agent") at 1-800-637-1380. Please be prepared to identify
the name of the Portfolio with respect to which units are to be purchased
and the manner of payment. Please indicate whether a new account is being
established or an additional payment is being made to an existing account.
If an additional payment is being made to an existing account, please
provide the Institution's name and Portfolio Account Number. Purchase
orders are effected upon receipt by the Transfer Agent of Federal funds or
other immediately available funds in accordance with the terms set forth
below.
PURCHASE BY WIRE OR ACH TRANSFER. An Institution desiring to purchase units
of a Portfolio by wire or ACH Transfer should call the Transfer Agent at 1-
800-637-1380 for instructions if it is not making an additional payment to
an existing account. An Institution that wishes to add to an existing
account should wire Federal funds or effect an ACH Transfer to:
The Northern Trust Company
Chicago, Illinois
ABA Routing No. 0710-00152
(Reference 10 Digit Portfolio Account Number)
(Reference Unitholder's Name)
For more information concerning requirements for the purchase of units,
call the Transfer Agent at 1-800-637-1380.
EFFECTIVE TIME OF PURCHASES. A purchase order for Portfolio units received by
the Transfer Agent by 3:00 p.m., Chicago time, on a Business Day (as defined
under "Miscellaneous") will be effected on that Business Day at the net asset
value determined on that day with respect to a Portfolio, provided that either:
(a) the Transfer Agent receives the purchase price in Federal funds or other
immediately available funds prior to 3:00 p.m., Chicago time, on the same
Business Day such order is received; or (b) payment is received on the next
Business Day in the form of Federal funds or other immediately available funds
in a qualified account maintained by an Institution with Northern or an
affiliate. Orders received after 3:00 p.m. will be effected at the next
determined net asset value, provided that payment is made as provided herein.
If an Institution accepts a purchase order from a Customer on a non-Business
Day, the order will not be executed until it is received and accepted by the
Transfer Agent on a Business Day in accordance with the foregoing procedures.
MISCELLANEOUS PURCHASE INFORMATION. Units are purchased without a sales charge
imposed by the Trust. The minimum initial investment is $5 million for
Institutions that invest directly in one or more Portfolios. The Trust reserves
the right to waive this minimum and to determine the manner in which the
minimum investment is satisfied. There is no minimum for subsequent
investments.
Institutions may impose different minimum investment and other requirements on
Customers purchasing units through them. Depending on the terms governing the
particular account, Institutions may impose account charges such as asset
allocation fees, account maintenance fees, compensating balance requirements or
other charges based upon account transactions, assets or income which will have
the effect of reducing the net return on an investment in a Portfolio. In
addition, certain Institutions may enter into Servicing Agreements with the
Trust whereby they will perform (or arrange to have performed) various
administrative
33
<PAGE>
support services for Customers who are the beneficial owners of Class B, C and
D units and receive fees from the Portfolios for such services; such fees would
be borne exclusively by the beneficial owners of Class B, C and D units,
respectively. See "Trust Information--Unitholder Servicing Plan." The level of
administrative support services, as well as transfer agency services, required
by an Institution and its Customers generally will determine whether they
purchase units of Class A, B, C or D. The exercise of voting rights and the
delivery to Customers of unitholder communications from the Trust will be
governed by the Customers' account agreements with the Institutions. Customers
should read this Prospectus in connection with any relevant agreement
describing the services provided by an Institution and any related requirements
and charges, or contact the Institution at which the Customer maintains its
account for further information.
Institutions that purchase units on behalf of Customers are responsible for
transmitting purchase orders to the Transfer Agent and delivering required
funds on a timely basis. An Institution will be responsible for all losses and
expenses of a Portfolio as a result of a check that does not clear, an ACH
transfer that is rejected, or any other failure to make payment in the time and
manner described above, and Northern may redeem units from an account it
maintains to protect a Portfolio and Northern against loss. The Trust reserves
the right to reject any purchase order. Federal regulations require that the
Transfer Agent be furnished with a taxpayer identification number upon opening
or reopening an account. Purchase orders without such a number or an indication
that a number has been applied for will not be accepted. If a number has been
applied for, the number must be provided and certified within sixty days of the
date of the order.
Payment for units of a Portfolio may, in the discretion of Northern, be made in
the form of securities that are permissible investments for the Portfolio. For
further information, see the Additional Statement.
In the interests of economy and convenience, certificates representing units of
the Portfolios are not issued.
Institutions investing in the Portfolios on behalf of their Customers should
note that state securities laws regarding the registration of dealers may
differ from the interpretations of Federal law and such Institutions may be
required to register as dealers pursuant to state law.
Northern may, at its own expense, provide compensation to certain dealers whose
customers purchase significant amounts of units of a Portfolio. The amount of
such compensation may be made on a one-time and/or periodic basis, and may be
up to 25% of the annual fees that are earned by Northern as investment adviser
to such Portfolio (after adjustments) and are attributable to units held by
such customers. Such compensation will not represent an additional expense to
the Trust or its unitholders, since it will be paid from assets of Northern or
its affiliates.
REDEMPTION OF UNITS
REDEMPTION OF UNITS THROUGH QUALIFIED ACCOUNTS. Institutions may redeem units
of a class through procedures established by Northern and its affiliates in
connection with the requirements of their qualified accounts. Institutions
should contact Northern or an affiliate for further information regarding
redemptions through qualified accounts.
34
<PAGE>
REDEMPTION OF UNITS DIRECTLY. Institutions that purchase units directly may
redeem all or part of their Portfolio units in accordance with procedures set
forth below.
REDEMPTION BY MAIL. An Institution may redeem units by sending a written
request to The Benchmark Funds, c/o The Northern Trust Company, P.O. Box
75943, Chicago, Illinois 60675-5943. Redemption requests must be signed by
a duly authorized person and must state the number of units or the dollar
amount to be redeemed and identify the Portfolio Account Number. See "Other
Requirements."
REDEMPTION BY TELEPHONE. An Institution may redeem units by placing a
redemption order by telephone by calling the Transfer Agent at 1-800-637-
1380. During periods of unusual economic or market changes, telephone
redemptions may be difficult to implement. In such event, unitholders
should follow procedures outlined above under "Redemption by Mail."
REDEMPTION BY WIRE. If an Institution has given authorization for expedited
wire redemption, units can be redeemed and the proceeds sent by Federal
wire transfer to a single previously designated bank account. The minimum
amount which may be redeemed by this method is $10,000. The Trust reserves
the right to change or waive this minimum or to terminate the wire
redemption privilege. See "Other Requirements."
TELEPHONE PRIVILEGE. An Institution that has notified the Transfer Agent in
writing of the Institution's election to redeem or exchange units by
placing an order by telephone may do so by calling the Transfer Agent at 1-
800-637-1380. Neither the Trust nor its Transfer Agent will be responsible
for the authenticity of instructions received by telephone that are
reasonably believed to be genuine. To the extent that the Trust fails to
use reasonable procedures to verify the genuineness of telephone
instructions, it or its service providers may be liable for such
instructions that prove to be fraudulent or unauthorized. In all other
cases, the unitholder will bear the risk of loss for fraudulent telephone
transactions. However, the Transfer Agent has adopted procedures in an
effort to establish reasonable safeguards against fraudulent telephone
transactions. The proceeds of redemption orders received by telephone will
be sent by check, by wire or by transfer pursuant to proper instructions.
All checks will be made payable to the unitholder of record and mailed only
to the unitholder's address of record. See "Other Requirements."
Additionally, the Transfer Agent utilizes recorded lines for telephone
transactions and retains such tape recordings for six months, and will
request a form of identification if such identification has been furnished
to the Transfer Agent or the Trust.
OTHER REQUIREMENTS. A change of wiring instructions and a change of the
address of record may be effected only by a written request to the Transfer
Agent accompanied by (i) a corporate resolution which evidences authority
to sign on behalf of the Institution (including the corporate seal and
secretary's certification within the preceding 30 days), (ii) a signature
guarantee by a financial institution that is a participant in the Stock
Transfer Agency Medallion Program ("STAMP") in accordance with rules
promulgated by the SEC (a signature notarized by a notary public is not
acceptable) or (iii) such other evidence of authority as may be acceptable
to the Transfer Agent. A redemption request by mail will not be effective
unless signed by a person authorized by the corporate resolution or other
acceptable evidence of authority on file with the Transfer Agent.
35
<PAGE>
EXCHANGE PRIVILEGE. Institutions and, to the extent permitted by their account
agreements, Customers, may after appropriate prior authorization, exchange
Class A, B, C or D units of a Portfolio having a value of at least $1,000 for
Class A, B, C or D units, respectively, of other equity or bond (other than the
Short Duration Portfolio) portfolios of the Trust as to which the Institution
or Customer maintains an existing account with an identical title.
Exchanges will be effected by a redemption of Class A, B, C or D units of the
portfolio held and the purchase of units of the portfolio acquired. Customers
of Institutions should contact their Institutions for further information
regarding the Trust's exchange privilege and Institutions should contact the
Transfer Agent as appropriate. Customers and Institutions exercising the
exchange privilege should read the relevant Prospectus prior to making an
exchange. The Trust reserves the right to modify or terminate the exchange
privilege at any time upon 60 days' written notice to unitholders and to reject
any exchange request. Exchanges are only available in states where an exchange
can legally be made.
EFFECTIVE TIME OF REDEMPTIONS AND EXCHANGES. Redemption orders of Portfolio
units are effected at the net asset value per unit next determined after
receipt in good order by the Transfer Agent. Good order means that the request
includes the following: the account number and Portfolio name; the amount of
the transaction (as specified in dollars or units); and the signature of a duly
authorized person (except for telephone and wire redemptions). See "Investing--
Redemption of Units--Other Requirements." Exchange orders are effected at the
net asset value per unit next determined after receipt in good order by the
Transfer Agent. If received by Northern with respect to a qualified account it
maintains or the Transfer Agent by 3:00 p.m., Chicago time, on a Business Day,
a redemption request normally will result in proceeds being credited to such
account or sent on the next Business Day. Proceeds for redemption orders
received on a non-Business Day will normally be sent on the second Business Day
after receipt in good order.
MISCELLANEOUS REDEMPTION INFORMATION. All redemption proceeds will be sent by
check unless Northern or the Transfer Agent is directed otherwise. The ACH
system may be utilized for payment of redemption proceeds. Redemption of units
may not be effected if a unitholder has failed to submit a completed and
properly executed (with corporate resolution or other acceptable evidence of
authority) new account application. If units to be redeemed were recently
purchased by check, the Trust may delay transmittal of redemption proceeds
until such time as it has assured itself that good funds have been collected
for the purchase of such units. This may take up to fifteen (15) days. The
Trust reserves the right to defer crediting, sending or wiring redemption
proceeds for up to seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect a Portfolio.
The Trust may require any information reasonably necessary to ensure that a
redemption has been duly authorized.
It is the responsibility of Institutions acting on behalf of Customers to
transmit redemption orders and to credit Customers' accounts with the
redemption proceeds on a timely basis. If a Customer has agreed with a
particular Institution to maintain a minimum balance in his account at such
Institution and the balance in such account falls below that minimum, such
Customer may be obliged to redeem all or part of his units to the extent
necessary to maintain the required minimum balance.
36
<PAGE>
DISTRIBUTIONS
Dividends from net investment income of the Short Duration Portfolio are
declared daily on each Business Day as a dividend and paid at least monthly.
Dividends from net investment income of the U.S. Government Securities, Short-
Intermediate Bond, U.S. Treasury Index and Bond Portfolios are declared and
paid at least monthly. Dividends from the net investment income of the
International Bond Portfolio are declared and paid quarterly. Each Portfolio's
net realized capital gains are distributed at least annually.
Dividends and distributions will reduce a Portfolio's net asset value by the
amount of the dividend or distribution. All dividends and distributions are
automatically reinvested (without any sales charge or additional purchase price
amount) in additional units of the same Portfolio at their net asset value per
unit determined on the payment date. However, a holder may elect, upon written
notification to the Transfer Agent, to have dividends or capital gain
distributions (or both) paid in cash or reinvested in the same class of units
of another Portfolio at their net asset value per unit (plus an additional
purchase price amount equal to .75 of 1% in the case of the Small Company Index
Portfolio of the Trust) determined on the payment date (provided the holder
maintains an account in such Portfolio). Unitholders of record must make such
election, or any revocation thereof, in writing to the Transfer Agent. The
election will become effective with respect to dividends paid two days after
its receipt by the Transfer Agent.
Net loss, if any, from certain foreign currency transactions or instruments
that is otherwise taken into account with respect to the International Bond
Portfolio in calculating net investment income or net realized capital gains
for accounting purposes may not be taken into account in determining the amount
of dividends to be declared and paid, with the result that a portion of the
Portfolio's dividends may be treated as a return of capital, nontaxable to the
extent of a unitholder's tax basis in his units.
Because of the different servicing fees and transfer agency fees payable with
respect to the Class A, B, C and D units in a Portfolio, the amount of such
Portfolio's net investment income available for distribution to the holders of
such units will be effectively reduced by the amount of such fees. See
"Unitholder Service Plan" and "Investment Adviser, Transfer Agent and
Custodian" under the heading "Trust Information" in this Prospectus.
TAXES
Each Portfolio intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Such qualification
generally will relieve the Portfolios of liability for Federal income taxes to
the extent their earnings are distributed in accordance with the Code.
Qualification as a regulated investment company under the Code for a taxable
year requires, among other things, that each Portfolio distribute to its
unitholders an amount equal to at least the sum of 90% of its investment
company taxable income for such year. In general, a Portfolio's investment
company taxable income will be its taxable income, subject to certain
adjustments and excluding the excess of any net long-term capital gain for the
taxable year over the net short-term capital loss, if any, for such year. Each
Portfolio intends to distribute as dividends substantially all of its
investment company taxable income each year. Such dividends will be taxable as
ordinary income to the Portfolio's unitholders who are not currently exempt
from Federal income taxes whether they are received in cash or reinvested in
additional units. (Federal income taxes for distributions to an IRA or other
qualified retirement plan are deferred under the Code.) It is not expected that
any Portfolio distributions will qualify for the dividends received deduction
for corporations.
37
<PAGE>
Substantially all of each Portfolio's net realized long-term capital gains will
be distributed at least annually to its unitholders. The Portfolios will
generally have no tax liability with respect to such gains and the
distributions will be taxable to Portfolio unitholders who are not currently
exempt from Federal income taxes as long-term capital gains, regardless of how
long the unitholders have held the units and whether such gains
are received in cash or reinvested in additional units. Unitholders should note
that, upon the sale or exchange of Portfolio units, if the unitholder has not
held such units for more than six months, any loss on the sale or exchange of
those units will be treated as long term capital loss to the extent of the
capital gain dividends received with respect to the units.
Dividends declared in October, November or December of any year payable to
unitholders of record on a specified date in such months will be deemed for
Federal tax purposes to have been paid by the Portfolios and received by the
unitholders on December 31 of such year, if such dividends are paid during
January of the following year.
An investor considering buying units of a Portfolio on or just before the
record date of a dividend should be aware that the amount of the dividend,
although in effect a return of capital, will be taxable.
A taxable gain or loss may be realized by a unitholder upon the redemption,
transfer or exchange of units of a Portfolio depending upon their tax basis and
their price at the time of redemption, transfer or exchange.
It is expected that dividends and certain interest income earned by the
International Bond Portfolio from foreign securities will be subject to foreign
withholding taxes or other taxes. So long as more than 50% of the value of the
Portfolio's total assets at the close of any taxable year consists of debt
securities of foreign corporations, such Portfolio may elect, for Federal
income tax purposes, to treat certain foreign taxes paid by it, including
generally any withholding taxes and other foreign income taxes, as paid by its
unitholders. Should the Portfolio make this election, the amount of such
foreign taxes paid by the Portfolio will be included in its unitholders' income
pro rata (in addition to taxable distributions actually received by them), and
such unitholders will be entitled either (a) to credit their proportionate
amounts of such taxes against their Federal income tax liabilities, or (b) to
deduct such proportionate amounts from their Federal taxable income.
If the International Bond Portfolio invests in certain "passive foreign
investment companies" ("PFICs"), it will be subject to Federal income tax (and
possibly additional interest charges) on a portion of any "excess distribution"
or gain from the disposition of such investments, even if it distributes such
income to its unitholders. If the Portfolio elects to treat the PFIC as a
"qualified electing fund" ("QEF") and the PFIC furnishes certain financial
information in the required form, the Portfolio would instead be required to
include in income each year its allocable share of the ordinary earnings and
net capital gains of the QEF, regardless of whether such income is received,
and such amounts would be subject to the various distribution requirements
described above. In addition, the Portfolio may be permitted in the future to
elect instead to recognize any appreciation in the PFIC shares that it owns by
marking them to market as of the last Business Day of each taxable year (and on
certain other dates prescribed in the Code). Again, gain recognized under this
"mark-to-market" approach would be subject to the various distribution
requirements described above, even if no cash is received currently from the
PFIC investment.
38
<PAGE>
Unitholders of record will be advised by the Trust at least annually as to the
Federal income tax consequences of distributions made to them each year.
The foregoing discussion summarizes some of the important Federal tax
considerations generally affecting the Portfolios and their unitholders and is
not intended as a substitute for careful tax planning. Accordingly, potential
investors in the Portfolios should consult their tax advisers with specific
reference to their own Federal, state and local tax situation.
NET ASSET VALUE
The net asset value per unit of each Portfolio for purposes of pricing purchase
and redemption orders is calculated by Northern as of 3:00 p.m., Chicago Time,
on each Business Day. Net asset value per unit of a particular class in a
Portfolio is calculated by dividing the value of all securities and other
assets belonging to a Portfolio that are allocated to such class, less the
liabilities charged to that class, by the number of the outstanding units of
that class.
U.S. and foreign investments held by a Portfolio are valued at the last quoted
sale price on the exchange on which such securities are primarily traded,
except that securities listed on an exchange in the United Kingdom are valued
at the average of the closing bid and ask prices. If any securities listed on a
U.S. securities exchange are not traded on a valuation date, they will be
valued at the last quoted bid price. If securities listed on a foreign
securities exchange are not traded on a valuation date, they will be valued at
the most recent quoted sales price. Securities which are traded in the domestic
over-the-counter markets are valued at the last quoted bid price. Securities
which are traded in the foreign over-the-counter markets are valued at the last
sales price, except that such securities traded in the United Kingdom are
valued at the average of the closing bid and ask prices. Any securities,
including restricted securities, for which current quotations are not readily
available are valued at fair value as determined in good faith by Northern
under the supervision of the Board of Trustees. Short-term investments are
valued at amortized cost which Northern has determined, pursuant to Board
authorization, approximates market value. Securities may be valued on the basis
of prices provided by independent pricing services when such prices are
believed to reflect the fair market value of such securities.
PERFORMANCE INFORMATION
The performance of a class of units of a Portfolio may be compared to those of
other mutual funds with similar investment objectives and to bond and other
relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the performance of a class of units may be compared to data
prepared by Lipper Analytical Services,
39
<PAGE>
Inc. or other independent mutual fund reporting services. In addition, the
performance of a class may be compared to the Lehman Brothers Government Bond
Index (or its two components, the Treasury Bond Index and the Agency Bond
Index), the Lehman Brothers Corporate Bond Index, the Consumer Price Index or
other unmanaged stock and bond indices, including, but not limited to, the J.P.
Morgan Non-U.S. Government Bond Index, or the Dow Jones Industrial Average, a
recognized unmanaged index of common stocks of 30 industrial companies listed
on the New York Stock Exchange. Performance data as reported in national
financial publications such as Money Magazine, Morningstar, Forbes, Barron's,
The Wall Street Journal and The New York Times, or in publications of a local
or regional nature, may also be used in comparing the performance of a class of
units of a Portfolio.
The Portfolios calculate their total returns for each class of units on an
"average annual total return" basis for various periods from the dates the
respective Portfolios commenced investment operations and for other periods as
permitted under the rules of the SEC. Average annual total return reflects the
average annual percentage change in value of an investment in the class over
the measuring period. Total returns for each class of units may also be
calculated on an aggregate total return basis for various periods. Aggregate
total return reflects the total percentage change in value over the measuring
period. Both methods of calculating total return reflect changes in the price
of the units and assume that any dividends and capital gain distributions made
by the Portfolios with respect to a class during the period are reinvested in
the units of that class. When considering average total return figures for
periods longer than one year, it is important to note that the annual total
return of a class for any one year in the period might have been greater or
less than the average for the entire period. The Portfolios may also advertise
from time to time the total return of one or more classes of units on a year-
by-year or other basis for various specified periods by means of quotations,
charts, graphs or schedules.
The yield of a class of units in a Portfolio is computed based on the net
income of such class during a 30-day (or one month) period (which period will
be identified in connection with the particular yield quotation). More
specifically, the Portfolio's yield for a class of units is computed by
dividing the per unit net income for the class during a 30-day (or one month)
period by the net asset value per unit on the last day of the period and
annualizing the result on a semi-annual basis.
Because of the different servicing fees and transfer agency fees payable with
respect to the Class A, B, C and D units in a Portfolio, the performance of
such units will be effectively reduced by the amount of such fees. For example,
because Class A units bear the lowest servicing fees and transfer agency fees,
the return of Class A units will be more than the return of other classes of
units of the same Portfolio. See "Unitholder Servicing Plan" and "Investment
Adviser, Transfer Agent and Custodian" under the heading "Trust Information" in
this Prospectus.
The performance of each class of units of the Portfolios is based on historical
earnings and will fluctuate and is not intended to indicate future performance.
The investment return and principal value of an investment in a class will
fluctuate so that a unitholder's units, when redeemed, may be worth more or
less than their original cost. Performance data may not provide a basis for
comparison with bank deposits and other investments which provide a fixed yield
for a stated period of time. Changes in the net asset value of a class should
be considered in ascertaining the total return to unitholders for a given
period. Total return data should also be considered in light of the risks
associated with a Portfolio's composition, quality, maturity, operating
expenses and market conditions. Any fees charged by Institutions directly to
their Customer accounts in connection with investments in a Portfolio will not
be included in calculations of performance data.
40
<PAGE>
ORGANIZATION
The Trust was formed as a Massachusetts business trust on July 15, 1982 under
an Agreement and Declaration of Trust (the "Trust Agreement"). The Trust
Agreement permits the Board of Trustees to issue an unlimited number of units
of beneficial interest of one or more separate series representing interests in
one or more investment portfolios. As of the date of this Prospectus, the Trust
offers sixteen separate series of units of beneficial interest representing
interests in sixteen investment portfolios, six of which are described in this
Prospectus; the other series of units are described in separate prospectuses.
The Trust Agreement further permits the Board of Trustees to classify or
reclassify any unissued units into additional series or subseries within a
series. Pursuant to such authority, the Board of Trustees has classified four
subseries (sometimes referred to as "classes") of units in each Portfolio
(other than the Short Duration Portfolio which has only been classified into
one class of units): the Class A units, Class B units, Class C units and Class
D units. Each unit of a Portfolio is without par value, represents an equal
proportionate interest in that Portfolio with each other unit of its class in
that Portfolio and is entitled to such dividends and distributions earned on
such Portfolio's assets as are declared in the discretion of the Board of
Trustees.
The Trust's unitholders are entitled to one vote for each full unit held and
proportionate fractional votes for fractional units held. Each series entitled
to vote on a matter will vote thereon in the aggregate and not by series,
except as otherwise required by law or when the matter to be voted on affects
only the interests of unitholders of a particular series. The Additional
Statement gives examples of situations in which the law requires voting by
series. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate units of the Trust may elect all of the Trustees
irrespective of the vote of the other unitholders. In addition, holders of each
of the Class A, B, C and D units representing interests in the same Portfolio
have equal voting rights except that only units of a particular class within
the Portfolio will be entitled to vote on matters submitted to a vote of
unitholders (if any) relating to unitholder servicing expenses and transfer
agency fees that are payable by that class.
As of March 1, 1996, the Navistar International Corporation Retirement Health
Benefits Trust owned beneficially and of record 28.3% of the units of the Short
Duration Portfolio. As of the same date, Schlumberger Limited Master Profit
Sharing Trust owned beneficially and of record 40.1% of the units of the U.S.
Government Securities Portfolio. As of the same date, The Northern Trust
Company Pension Plan owned beneficially and of record 54.3% of the units of the
International Bond Portfolio.
The Trust does not presently intend to hold annual meetings of unitholders
except as required by the 1940 Act or other applicable law. Pursuant to the
Trust Agreement, the Trustees will promptly call a meeting of unitholders to
vote upon the removal of any Trustee when so requested in writing by the record
holders of 10% or more of the outstanding units. To the extent required by law,
the Trust will assist in unitholder communications in connection with such a
meeting.
The term "majority of the outstanding units" of either the Trust or a
particular Portfolio means the vote of the lesser of (i) 67% or more of the
units of the Trust or such Portfolio present at a meeting, if the holders of
more than 50% of the outstanding units of the Trust or such Portfolio are
present or represented by proxy, or (ii) more than 50% of the outstanding units
of the Trust or such Portfolio.
The Trust Agreement provides that each unitholder, by virtue of becoming such,
will be held to have expressly assented and agreed to the terms of the Trust
Agreement and to have become a party thereto.
41
<PAGE>
MISCELLANEOUS
The address of the Trust is 4900 Sears Tower, Chicago, Illinois 60606 and the
telephone number is 1-800-621-2550.
As used in this Prospectus, the term "Business Day" refers to each day when
Northern and the New York Stock Exchange are open, which is Monday through
Friday, except for holidays observed by Northern and/or the Exchange. For 1996
the holidays of Northern and/or the Exchange are: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veteran's Day, Thanksgiving and Christmas Day.
On those days when Northern or the Exchange closes early as a result of
unusual weather or other circumstances, the right is reserved to advance the
time on that day by which purchase and redemption requests must be received.
In addition, on any Business Day when the Public Securities Association (PSA)
recommends that the securities markets close early, the Portfolios reserve the
right to cease, or to advance the deadline for, accepting purchase and
redemption orders for same Business Day credit up to one hour before the PSA
recommended closing time. Purchase and redemption requests received after the
advanced closing time will be effected on the next Business Day.
---------------------
The U.S. Treasury Index Portfolio is not sponsored, endorsed, sold or promoted
by Lehman, nor does Lehman guarantee the accuracy and/or completeness of the
Lehman Index or any data included therein. Lehman makes no warranty, express
or implied, as to the results to be obtained by the Portfolio, owners of the
Portfolio, any person or any entity from the use of the Lehman Index or any
data included therein. Lehman makes no express or implied warranties and
expressly disclaims all such warranties of merchantability or fitness for a
particular purpose for use with respect to the Lehman Index or any data
included therein.
---------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE TRUST'S STATEMENT
OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
42
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
THE BENCHMARK FUNDS
4900 Sears Tower
Chicago, Illinois 60606
BALANCED PORTFOLIO
EQUITY INDEX PORTFOLIO
DIVERSIFIED GROWTH PORTFOLIO
FOCUSED GROWTH PORTFOLIO
SMALL COMPANY INDEX PORTFOLIO
INTERNATIONAL GROWTH PORTFOLIO
This Statement of Additional Information (the "Additional Statement")
dated April 1, 1996 is not a prospectus. This Additional Statement should be
read in conjunction with the Prospectus for the Balanced Portfolio, Equity Index
Portfolio, Diversified Growth Portfolio, Focused Growth Portfolio, Small Company
Index Portfolio, and International Growth Portfolio (the "Portfolios") of The
Benchmark Funds (the "Prospectus") dated April 1, 1996. Copies of the Prospectus
may be obtained without charge by calling Goldman, Sachs & Co. ("Goldman Sachs")
toll-free at 1-800-621-2550 (outside Illinois) or by writing to the address
stated above. Capitalized terms not otherwise defined have the same meaning as
in the Prospectus.
------------------------------------
INDEX
Page
----
ADDITIONAL INVESTMENT INFORMATION B-3
Investment Objectives and Policies B-3
Investment Restrictions B-18
ADDITIONAL TRUST INFORMATION B-22
Trustees and Officers B-22
Investment Adviser, Transfer Agent and Custodian B-29
Portfolio Transactions B-35
Administrator and Distributor B-39
Unitholder Servicing Plan B-42
Counsel and Auditors B-44
In-Kind Purchases B-44
PERFORMANCE INFORMATION B-45
<PAGE>
TAXES B-52
General B-52
Taxation of Certain Financial Instruments B-54
Foreign Investors B-56
Conclusion B-57
DESCRIPTION OF UNITS B-58
OTHER INFORMATION B-62
FINANCIAL STATEMENTS B-63
APPENDIX A (Description of Bond Ratings) 1-A
APPENDIX B (Futures Contracts) 1-B
No person has been authorized to give any information or to make any
representations not contained in this Additional Statement or in the Prospectus
in connection with the offering made by the Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Trust or its distributor. The Prospectus does not constitute
an offering by the Trust or by the distributor in any jurisdiction in which such
offering may not lawfully be made.
UNITS OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS PARENT
COMPANY OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THE PORTFOLIOS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
B-2
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
Investment Objectives and Policies
The following supplements the investment objectives and policies of the
Balanced, Equity Index, Diversified Growth, Focused Growth, Small Company Index
and International Growth Portfolios of The Benchmark Funds (the "Trust") as set
forth in the Prospectus.
Warrants. The Balanced, Diversified Growth, Focused Growth and
International Growth Portfolios may purchase warrants and similar rights, which
are privileges issued by corporations enabling the owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. The purchase of warrants involves the risk
that a Portfolio could lose the purchase value of a warrant if the right to
subscribe to additional shares is not exercised prior to the warrant's
expiration. Also, the purchase of warrants involves the risk that the effective
price paid for the warrant added to the subscription price of the related
security may exceed the value of the subscribed security's market price such as
when there is no movement in the level of the underlying security. A Portfolio
will not invest more than 5% of its total assets, taken at market value, in
warrants, or more than 2% of its total assets, taken at market value, in
warrants not listed on the New York or American Stock Exchanges or a major
foreign exchange. Warrants acquired by a Portfolio in units or attached to other
securities are not subject to this restriction.
U.S. Government Obligations. Examples of types of U.S. Government
obligations that may be acquired by the Portfolios includes U.S. Treasury Bills,
Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, General Services Administration, Student
Loan Marketing Association, Central Bank for Cooperatives, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, and the Maritime
Administration.
Foreign Securities. Unanticipated political or social developments may also
affect the value of a Portfolio's investments in emerging market countries and
the availability to a Portfolio of additional investments in those countries.
The small size and inexperience of the securities markets in certain of such
countries and the limited volume of trading in securities in those countries may
make a Portfolio's investments in such countries illiquid and more volatile than
investments in Japan or most Western European countries, and a Portfolio may be
required
B-3
<PAGE>
to establish special custodial or other arrangements before making certain
investments in those countries. There may be little financial or accounting
information available with respect to issuers located in certain of such
countries, and it may be difficult as a result to assess the value or prospects
of an investment in such issuers.
Investors should understand that the expense ratio of the International Growth
Portfolio can be expected to be higher than those funds investing primarily in
domestic securities. The costs attributable to investing abroad are usually
higher for several reasons, such as the higher cost of investment research,
higher cost of custody of foreign securities, higher commissions paid on
comparable transactions on foreign markets and additional costs arising from
delays in settlements of transactions involving foreign securities.
Foreign Currency Transactions. In order to protect against a possible loss
on investments resulting from a decline or appreciation in the value of a
particular foreign currency against the U.S. dollar or another foreign currency
or for other reasons, the Balanced, Diversified Growth, Focused Growth and
International Growth Portfolios are authorized to enter into forward currency
exchange contracts. In addition, with respect to the International Growth
Portfolio, Northern may purchase or sell forward foreign currency exchange
contracts to seek to increase total return when Northern anticipates that the
foreign currency will appreciate or depreciate in value, but securities
denominated in that currency do not in Northern's view present attractive
investment opportunities and are not held by a Portfolio. These contracts
involve an obligation to purchase or sell a specified currency at a future date
at a price set at the time of the contract. Forward currency contracts do not
eliminate fluctuations in the values of portfolio securities but rather allow a
Portfolio to establish a rate of exchange for a future point in time.
When entering into a contract for the purchase or sale of a security, a
Portfolio may enter into a forward foreign currency exchange contract for the
amount of the purchase or sale price to protect against variations, between the
date the security is purchased or sold and the date on which payment is made or
received, in the value of the foreign currency relative to the U.S. dollar or
other foreign currency.
When Northern anticipates that a particular foreign currency may decline
substantially relative to the U.S. dollar or other leading currencies, in order
to reduce risk, a Portfolio may enter into a forward contract to sell, for a
fixed amount, the amount of foreign currency approximating the value of some or
all of the Portfolio's securities denominated in such foreign currency.
Similarly, when the securities held by a Portfolio
B-4
<PAGE>
create a short position in a foreign currency, the Portfolio may enter into a
forward contract to buy, for a fixed amount, an amount of foreign currency
approximating the short position. With respect to any forward foreign currency
contract, it will not generally be possible to match precisely the amount
covered by that contract and the value of the securities involved due to the
changes in the values of such securities resulting from market movements between
the date the forward contract is entered into and the date it matures. In
addition, while forward contracts may offer protection from losses resulting
from declines or appreciation in the value of a particular foreign currency,
they also limit potential gains which might result from changes in the value of
such currency. A Portfolio will also incur costs in connection with forward
foreign currency exchange contracts and conversions of foreign currencies and
U.S. dollars.
A separate account consisting of liquid assets, such as cash, U.S.
Government securities or other liquid high grade debt obligations, equal to the
amount of a Portfolio's assets that could be required to consummate forward
contracts will be established with the Portfolios' Custodian except to the
extent the contracts are otherwise "covered." For the purpose of determining the
adequacy of the securities in the account, the deposited securities will be
valued at market or fair value. If the market or fair value of such securities
declines, additional cash or securities will be placed in the account daily so
that the value of the account will equal the amount of such commitments by the
Portfolio. A forward contract to sell a foreign currency is "covered" if a
Portfolio owns the currency (or securities denominated in the currency)
underlying the contract, or holds a forward contract (or call option) permitting
the Portfolio to buy the same currency at a price no higher than the Portfolio's
price to sell the currency. A forward contract to buy a foreign currency is
"covered" if a Portfolio holds a forward contract (or call option) permitting
the Portfolio to sell the same currency at a price as high as or higher than the
Portfolio's price to buy the currency.
Options. Each Portfolio may buy put options and buy call options and write
covered call and secured put options. Such options may relate to particular
securities, stock indices, financial instruments, or foreign currencies and may
or may not be listed on a domestic or foreign securities exchange or issued by
the Options Clearing Corporation. Options trading is a highly specialized
activity which entails greater than ordinary investment risk. Options on
particular securities may be more volatile than the underlying instruments, and
therefore, on a percentage basis, an investment in options may be subject to
greater fluctuation than an investment in the underlying instruments themselves.
B-5
<PAGE>
The Portfolios will write call options only if they are "covered." In the
case of a call option on a security or currency, the option is "covered" if a
Portfolio owns the security or currency underlying the call or has an absolute
and immediate right to acquire that security or currency without additional cash
consideration (or, if additional cash consideration is required, liquid assets,
such as cash, U.S. Government securities or other liquid high grade debt
obligations, in such amount as are held in a segregated account by its
custodian) upon conversion or exchange of other securities held by it. For a
call option on an index, the option is covered if a Portfolio maintains with its
custodian a portfolio of securities substantially replicating the movement of
the index, or liquid assets equal to the contract value. A call option is also
covered if a Portfolio holds a call on the same security, currency or index as
the call written where the exercise price of the call held is (i) equal to or
less than the exercise price of the call written, or (ii) greater than the
exercise price of the call written provided the difference is maintained by the
Portfolio in liquid assets in a segregated account with its custodian. The
Portfolios will write put options only if they are "secured" by liquid assets
maintained in a segregated account by the Portfolios' custodian in an amount not
less than the exercise price of the option at all times during the option
period.
A Portfolio's obligation to sell a security subject to a covered call
option written by it, or to purchase a security or currency subject to a secured
put option written by it, may be terminated prior to the expiration date of the
option by the Portfolio's execution of a closing purchase transaction, which is
effected by purchasing on an exchange an option of the same series (i.e., same
underlying security or currency, exercise price and expiration date) as the
option previously written. Such a purchase does not result in the ownership of
an option. A closing purchase transaction will ordinarily be effected to realize
a profit on an outstanding option, to prevent an underlying security or currency
from being called, to permit the sale of the underlying security or currency or
to permit the writing of a new option containing different terms on such
underlying security. The cost of such a liquidation purchase plus transaction
costs may be greater than the premium received upon the original option, in
which event the Portfolio will have incurred a loss in the transaction. There is
no assurance that a liquid secondary market will exist for any particular
option. An option writer, unable to effect a closing purchase transaction, will
not be able to sell the underlying security or currency (in the case of a
covered call option) or liquidate the segregated account (in the case of a
secured put option) until the option expires or the optioned security or
currency is delivered upon exercise with the result that the writer in such
circumstances
B-6
<PAGE>
will be subject to the risk of market decline or appreciation in the security or
currency during such period.
When a Portfolio purchases an option, the premium paid by it is recorded
as an asset of the Portfolio. When the Portfolio writes an option, an amount
equal to the net premium (the premium less the commission) received by the
Portfolio is included in the liability section of the Portfolio's statement of
assets and liabilities as a deferred credit. The amount of this asset or
deferred credit will be subsequently marked-to-market to reflect the current
value of the option purchased or written. The current value of the traded option
is the last sale price or, in the absence of a sale, the current bid price. If
an option purchased by the Portfolio expires unexercised the Portfolio realizes
a loss equal to the premium paid. If the Portfolio enters into a closing sale
transaction on an option purchased by it, the Portfolio will realize a gain if
the premium received by the Portfolio on the closing transaction is more than
the premium paid to purchase the option, or a loss if it is less. If an option
written by the Portfolio expires on the stipulated expiration date or if the
Portfolio enters into a closing purchase transaction, it will realize a gain (or
loss if the cost of a closing purchase transaction exceeds the net premium
received when the option is sold) and the deferred credit related to such option
will be eliminated. If an option written by the Portfolio is exercised, the
proceeds of the sale will be increased by the net premium originally received
and the Portfolio will realize a gain or loss.
There are several risks associated with transactions in certain options.
For example, there are significant differences between the securities, currency
and options markets that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its objectives. In addition,
a liquid secondary market for particular options, whether traded
over-the-counter or on a national securities exchange ("Exchange") may be absent
for reasons which include the following: there may be insufficient trading
interest in certain options; restrictions may be imposed by an Exchange on
opening transactions or closing transactions or both; trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities or currencies; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation
B-7
<PAGE>
as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
Supranational Bank Obligations. The Balanced Portfolio may invest in
obligations of supranational banks. Supranational banks are international
banking institutions designed or supported by national governments to promote
economic reconstruction, development or trade between nations (e.g., the World
Bank). Obligations of supranational banks may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance that
these commitments will be undertaken or met in the future.
Stripped Securities. The Balanced Portfolio may purchase stripped
securities. Within the past several years, the Treasury Department has
facilitated transfers of ownership of zero coupon securities by accounting
separately for the beneficial ownership of particular interest coupon and
principal payments on Treasury securities through the Federal Reserve book-entry
record-keeping system. The Federal Reserve program as established by the
Treasury Department is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities." The Portfolio may purchase securities
registered in the STRIPS program. Under the STRIPS program, the Portfolio will
be able to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying U.S. Treasury
securities.
In addition, the Balanced Portfolio may acquire U.S. Government
obligations and their unmatured interest coupons that have been separated
("stripped") by their holder, typically a custodian bank or investment brokerage
firm. Having separated the interest coupons from the underlying principal of the
U.S. Government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. Government obligations for Federal tax
purposes. The Trust is
B-8
<PAGE>
not aware of any binding legislative, judicial or administrative
authority on this issue.
The Prospectus discusses other types of stripped securities that may be
purchased by the Portfolio, including stripped mortgage-backed securities.
Asset-Backed Securities. The Balanced Portfolio may purchase asset backed
securities, which are securities backed by mortgages, installment contracts,
credit card receivables or other assets. Asset-backed securities represent
interests in "pools" of assets in which payments of both interest and principal
on the securities are made monthly, thus in effect "passing through" monthly
payments made by the individual borrowers on the assets that underlie the
securities, net of any fees paid to the issuer or guarantor of the securities.
The average life of asset-backed securities varies with the maturities of the
underlying instruments, and the average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as a result of mortgage prepayments.
For this and other reasons, an asset-backed security's stated maturity may be
shortened, and the security's total return may be difficult to predict
precisely. Asset-backed securities acquired by the Portfolio may include
collateralized mortgage obligations ("CMOs") issued by private companies.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities guaranteed
by the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. 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 the Federal National Mortgage Association
("FNMA") include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of the FNMA and are not
backed by or entitled to the full faith and credit of the United States, but are
supported by the right of the issuer to borrow from the Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of the principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the United
B-9
<PAGE>
States, created pursuant to an Act of 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. FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When 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.
Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such receivables.
Therefore, there is a possibility that recoveries on repossessed collateral may
not, in some cases, be able to support payments on these securities.
Interest Rate and Currency Swaps. The Balanced Portfolio may enter into
interest rate swaps for hedging purposes and not for speculation. The Portfolio
will typically use interest rate swaps to preserve a return on a particular
investment or portion of its portfolio or to shorten the effective duration of
its portfolio investments. Interest rate swaps involve the exchange by the
Portfolio with another party of their respective commitments to pay or receive
interest, such as an exchange of fixed rate payments for floating rate payments.
The Portfolio will only enter into interest rate swaps on a net basis, i.e. the
two payment streams are netted out, with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments.
The International Growth Portfolio may enter into currency swaps, which
involve the exchange of the rights of the Portfolio and another party to make or
receive payments in specified
B-10
<PAGE>
currencies. Currency swaps usually involve the delivery of the entire principal
value of one designated currency in exchange for the other designated currency.
Inasmuch as interest rate and currency swaps are entered into for good
faith hedging purposes, the Balanced and International Growth Portfolios and
Northern believe that such transactions do not constitute senior securities as
defined in the 1940 Act and, accordingly, will not treat them as being subject
to the Portfolios' borrowing restrictions.
The Balanced and International Growth Portfolios will not enter into an
interest rate swap or a currency swap, respectively, unless the unsecured
commercial paper, senior debt or the claims-paying ability of the other party
thereto is rated either A or A-l or better by S&P, Duff or Fitch, or A or P-1 or
better by Moody's. If there is a default by the other party to such transaction,
the Portfolios will have contractual remedies pursuant to the agreements related
to the transaction. The swap market has grown substantially in recent years with
a large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid in comparison with markets for other similar
instruments which are traded in the Interbank market.
Futures Contracts and Related Options. Each Portfolio may purchase and
sell futures contracts and may purchase and sell call and put options on futures
contracts. For a detailed description of futures contracts and related options,
see Appendix B to this Additional Statement.
Real Estate Investment Trusts. The Small Company Index Portfolio may
invest in equity real estate investment trusts ("REITs") that constitute a part
of the Russell 2000 Small Stock Index. REITs pool investors' funds for
investment primarily in commercial real estate properties. Investments in REITs
may subject the Portfolio to certain risks. REITs may be affected by changes in
the value of the underlying property owned by the trust. REITs are dependent
upon specialized management skill, may not be diversified and are subject to the
risks of financing projects. REITs are also subject to heavy cash flow
dependency, defaults by borrowers, self liquidation and the possibility of
failing to qualify for the beneficial tax treatment available to REITs under the
Internal Revenue Code of 1986, as amended, and to maintain exemption from the
1940 Act. As a shareholder in a REIT, the Portfolio would bear, along with other
shareholders, its pro rata portion of the REIT's operating expenses. These
expenses would be in addition to the advisory and other expenses the Portfolio
bears directly in connection with its own operations.
B-11
<PAGE>
Securities Lending. Collateral for loans of portfolio securities made by a
Portfolio may consist of cash, securities issued or guaranteed by the U.S.
Government or its agencies or irrevocable bank letters of credit (or any
combination thereof). The borrower of securities will be required to maintain
the market value of the collateral at not less than the market value of the
loaned securities, and such value will be monitored on a daily basis. When a
Portfolio lends its securities, it continues to receive dividends and interest
on the securities loaned and may simultaneously earn interest on the investment
of the cash collateral. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans will be called so that
the securities may be voted by a Portfolio if a material event affecting the
investment is to occur.
Forward Commitments, When-Issued Securities and Delayed Delivery
Transactions. When a Portfolio purchases securities on a when-issued, delayed
delivery or forward commitment basis, the Portfolio's custodian (or
subcustodian) will maintain in a segregated account cash, U.S. Government
securities or other liquid high grade debt obligations having a value
(determined daily) at least equal to the amount of the Portfolio's purchase
commitments. In the case of a forward commitment to sell portfolio securities,
the custodian or subcustodian will hold the portfolio securities themselves in a
segregated account while the commitment is outstanding. These procedures are
designed to ensure that the Portfolio will maintain sufficient assets at all
times to cover its obligations under when-issued purchases, forward commitments
and delayed delivery transactions.
Commercial Paper, Bankers' Acceptances, Certificates of Deposit, Time
Deposits and Bank Notes. Commercial paper represents short-term unsecured
promissory notes issued in bearer form by banks or bank holding companies,
corporations and finance companies. Certificates of deposit are negotiable
certificates issued against funds deposited in a commercial bank for a definite
period of time and earning a specified return. Bankers' acceptances are
negotiable drafts or bills of exchange, normally drawn by an importer or
exporter to pay for specific merchandise, which are "accepted" by a bank,
meaning, in effect, that the bank unconditionally agrees to pay the face value
of the instrument on maturity. Fixed time deposits are bank obligations payable
at a stated maturity date and bearing interest at a fixed rate. Fixed time
deposits may be withdrawn on demand by the investor, but may be subject to early
withdrawal penalties that vary depending upon market conditions and the
remaining maturity of the obligation. There are no contractual restrictions on
the right to transfer a beneficial interest in a fixed time deposit to a third
party, although there is no market for such deposits. Bank notes usually
represent senior debt of the bank which ranks pari passu with deposits and all
other senior, unsecured obligations of the bank, except those required by law to
be secured or subject to
B-12
<PAGE>
any priorities or preferences. Some states have "depositor preference" laws that
give depositors of their state chartered banks priority over holders of bank
notes and other general creditors. In addition, the U.S. Congress has recently
adopted legislation which creates a Federal "depositor preference" law providing
the claims of certain creditors of an insured depository institution (including
its depositors) with priority over the claims of that institution's unsecured
creditors (including holders of its notes) in the event of that institution's
insolvency or other resolution. Bank notes are classified as "other borrowings"
on bank's balance sheet, while deposit notes and certificates of deposit are
classified as deposits. Bank notes are not insured by the Federal Deposit
Insurance Corporation or any other insurer.
Each Portfolio may invest a portion of its assets in the obligations of
foreign banks and foreign branches of domestic banks. Such obligations include
Eurodollar Certificates of Deposit ("ECDs") which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs") which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs,
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs") which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs") which are U.S.
dollar-denominated bankers' acceptances issued by a U.S. branch of a foreign
bank and held in the United States.
Variable and Floating Rate Instruments. With respect to the variable and
floating rate instruments that may be acquired by the Portfolios, Northern will
consider the earning power, cash flows and other liquidity ratios of the issuers
and guarantors of such instruments and, if the instruments are subject to demand
features, will continuously monitor their financial status to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument
meets the Portfolios' quality requirements the issuer's obligation to pay the
principal of the instrument will be backed by an unconditional bank letter or
line of credit, guarantee or commitment to lend.
Repurchase Agreements. Each Portfolio may enter into repurchase agreements
with financial institutions, such as banks and broker-dealers, as are deemed
creditworthy by Northern under guidelines approved by the Trust's Board of
Trustees. The repurchase price under the repurchase agreements will generally
equal the price paid by a Portfolio plus interest negotiated on the basis of
current short-term rates (which may be more or less
B-13
<PAGE>
than the rate on the securities underlying the repurchase agreement). Securities
subject to repurchase agreements will be held by the Trust's custodian (or
subcustodian), in the Federal Reserve/Treasury book-entry system or by another
authorized securities depository. Repurchase agreements are considered to be
loans by a Portfolio under the 1940 Act.
Reverse Repurchase Agreements. Each Portfolio may borrow funds for
temporary or emergency purposes by selling portfolio securities to financial
institutions such as banks and broker/dealers and agreeing to repurchase them at
a mutually specified date and price ("reverse repurchase agreements"). Reverse
repurchase agreements involve the risk that the market value of the securities
sold by a Portfolio may decline below the repurchase price. The Portfolio will
pay interest on amounts obtained pursuant to a reverse repurchase agreement.
While reverse repurchase agreements are outstanding, a Portfolio will maintain
in a segregated account cash, U.S. Government securities or other liquid
high-grade debt securities of an amount at least equal to the market value of
the securities, plus accrued interest, subject to the agreement. Reverse
repurchase agreements are considered to be borrowings by a Portfolio under the
1940 Act.
Pair-Off Transactions. Subject to the requirements of the 1940 Act, the
Balanced Portfolio may engage in pair-off transactions involving securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities.
In a pair-off transaction Northern will commit to purchase or sell a security.
Then, prior to the settlement date, Northern will "pair-off" the purchase or
sale with a matching sale or purchase of the same security that settles prior
to, or on, the original settlement date. Profits or losses on the pair-off
transaction are settled by the Portfolio's paying or receiving the difference
between the purchase and sale prices from the counter-party in the transaction
(which will be a bank, broker-dealer or other financial institution determined
to be creditworthy by Northern).
A pair-off transaction that it involves an initial sale by the Portfolio
of a security that it does not own (or does not have the right to obtain at no
added cost) will be considered a short sale of the security. Until the sale is
paired-off as described above, the Portfolio will maintain on a daily basis a
segregated account containing cash or U.S. Government securities at such a level
that (a) the amount deposited in the account will equal the current value of the
security sold short and (b) the amount deposited in the segregated account will
not be less than the market value of the security sold short and (b) the amount
deposited in the segregated account will not be less than the market value of
the security at the time it was sold short. Similarly, a segregated account will
be maintained for a pair-off transaction that involves an initial purchase by
the Portfolio of
B-14
<PAGE>
a security on a forward commitment or when-issued basis as described more fully
in the Additional Statement.
The Portfolio will not enter into a pair-off transaction that involves
either a short sale or a forward commitment or when-issued purchase if, after
effect is given to the sale or purchase, the total market value of all open
pair-off transactions would exceed 5% of the value of the Portfolio's total
assets.
Although pair-off transactions represent a strategy that may be used by
Northern in attempting to earn additional income for the Portfolio resulting
from short-term price movements in the securities markets, the transactions may
result in losses instead. In addition, pair-off transactions may produce higher
than normal portfolio turnover which may result in increased transaction costs
to the Portfolio and gains from the sale of securities deemed to have been held
for less than three months. Such gains must not exceed 30% of the Portfolio's
gross income in a taxable year in order for the Portfolio to qualify as a
regulated investment company under the Internal Revenue Code of 1986.
Investment Companies. Each Portfolio currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made, not more
than 3% of the total outstanding stock of any one investment company will be
owned by the Portfolio, the Trust as a whole and their affiliated persons (as
defined in the 1940 Act). An investment company whose securities are purchased
by a Portfolio or the Trust is not obligated to redeem such securities in an
amount exceeding 1% of the investment company's total outstanding securities
during any period of less than 30 days. Therefore, such securities that exceed
this amount may be illiquid.
Risks Related to Lower-Rated Securities. While any investment carries some
risk, certain risks associated with lower-rated securities are different than
those for investment-grade securities. The risk of loss through default is
greater because lower-rated securities are usually unsecured and are often
subordinate to an issuer's other obligations. Additionally, the issuers of these
securities frequently have high debt levels and are thus more sensitive to
difficult economic conditions, individual corporate developments and rising
interest rates. Consequently, the market price of these securities may be quite
volatile and may result in wider fluctuations of a Portfolio's net asset value
per unit.
Because the market for lower-rated securities, at least in its present
size and form, is relatively new, there remains some uncertainty about its
performance level under adverse market and economic environments. An economic
downturn or increase in
B-15
<PAGE>
interest rates could have a negative impact on both the markets for lower-rated
securities (resulting in a greater number of bond defaults) and the value of
lower-rated securities held in the portfolio of investments.
The economy and interest rates can affect lower-rated securities
differently than other securities. For example, the prices of lower-rated
securities are more sensitive to adverse economic changes or individual
corporate developments than are the prices of higher-rated investments. In
addition, during an economic downturn or period in which interest rates are
rising significantly, highly leveraged issuers may experience financial
difficulties, which, in turn, would adversely affect their ability to service
their principal and interest payment obligations, meet projected business goals
and obtain additional financing.
If an issuer of a security defaults, a Portfolio may incur additional
expenses to seek recovery. In addition, periods of economic uncertainty would
likely result in increased volatility for the market prices of lower-rated
securities as well as a Portfolio's net asset value. In general, both the prices
and yields of lower-rated securities will fluctuate.
In certain circumstances it may be difficult to determine a security's
fair value due to a lack of reliable objective information. Such instances occur
where there is not an established secondary market for the security or the
security is lightly traded. As a result, a Portfolio's valuation of a security
and the price it is actually able to obtain when it sells the security could
differ.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the value and liquidity of lower-rated
securities held by a Portfolio, especially in a thinly traded market. Illiquid
or restricted securities held by the Portfolio may involve special registration
responsibilities, liabilities and costs, and could involve other liquidity and
valuation difficulties.
The rating of S&P, Moody's, Duff and Fitch evaluate the safety of a
lower-rated security's principal and interest payments, but do not address
market value risk. Because the ratings of the rating agencies may not always
reflect current conditions and events, in addition to using recognized rating
agencies and other sources, Northern performs its own analysis of the issuers
whose lower-rated securities the Portfolio purchases. Because of this, the
Portfolio's performance may depend more on its own credit analysis than is the
case of mutual funds investing in higher-rated securities.
B-16
<PAGE>
In selecting convertible securities, Northern considers factors such as
those relating to the creditworthiness of issuers, the ratings and performance
of the securities, the protections afforded the securities and the diversity of
a Portfolio's portfolio. Northern continuously monitors the issuers of
lower-rated securities held by a Portfolio for their ability to make required
principal and interest payments, as well as in an effort to control the
liquidity of the Portfolio so that it can meet redemption requests.
Yields and Ratings. The yields on certain obligations, including the
instruments in which the Portfolios may invest, are dependent on a variety of
factors, including general market conditions, conditions in the particular
market for the obligation, financial condition of the issuer, size of the
offering, maturity of the obligation and ratings of the issue. The ratings of
S&P, Moody's, Duff, Fitch and TBW represent their respective opinions as to the
quality of the obligations they undertake to rate. Ratings, however, are general
and are not absolute standards of quality. Consequently, obligations with the
same rating, maturity and interest rate may have different market prices.
Subject to the limitations stated in the Prospectus, if a portfolio
security undergoes a rating revision, a Portfolio may continue to hold the
security if Northern determines such retention is warranted.
Portfolio Transactions. Northern's Advisory Agreement with the Trust
provides that in selecting brokers or dealers to place orders for transactions
(a) involving common and preferred stocks, Northern shall use its best judgment
to obtain the best overall terms available and (b) involving bonds and other
fixed income obligations, Northern shall attempt to obtain best net price and
execution. In assessing the best overall terms available for any transaction,
Northern is to consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available and in selecting the broker or
dealer to execute a particular transaction, Northern may consider the brokerage
and research services provided to the Portfolios and/or other accounts over
which Northern or an affiliate of Northern exercises investment discretion.
These brokerage and research services may include industry and company analyses,
portfolio services, quantitative data, market information systems and economic
and political consulting and analytical services.
B-17
<PAGE>
Calculation of Portfolio Turnover Rate. The portfolio turnover rate for
the Portfolios is calculated by dividing the lesser of purchases or sales of
portfolio investments for the reporting period by the monthly average value of
the portfolio investments owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration dates
at the time of acquisition are one year or less. Portfolio turnover may vary
greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of units and by requirements which
enable the Portfolios to receive favorable tax treatment.
Investment Restrictions
In addition to the fundamental investment restrictions disclosed in the
Prospectus, each Portfolio is subject to the fundamental investment restrictions
enumerated below which may be changed with respect to a particular Portfolio
only by a vote of the holders of a majority of such Portfolio's outstanding
units.
No Portfolio may:
(1) Make loans, except (a) through the purchase of debt obligations
in accordance with the Portfolio's investment objective and
policies, (b) through repurchase agreements with banks, brokers,
dealers and other financial institutions, and (c) loans of
securities.
(2) Mortgage, pledge or hypothecate any assets (other than pursuant
to reverse repurchase agreements) except to secure permitted
borrowings.
(3) Purchase or sell real estate, but this restriction shall not
prevent a Portfolio from investing directly or indirectly in
portfolio instruments secured by real estate or interests therein or
acquiring securities of real estate investment trusts or other
issuers that deal in real estate.
(4) Purchase or sell commodities or commodity contracts or oil or
gas or other mineral exploration or development programs, except
that each Portfolio may, to the extent appropriate to its investment
policies, purchase securities of companies engaging in whole or in
part in such activities, enter into futures contracts and related
options, and enter into forward currency contracts in accordance
with its investment objective and policies.
B-18
<PAGE>
(5) Invest in companies for the purpose of exercising control.
(6) Act as underwriter of securities, except as a Portfolio may be
deemed to be an underwriter under the Securities Act of 1933 in
connection with the purchase and sale of portfolio instruments in
accordance with its investment objective and portfolio management
policies.
(7) Write puts, calls or combinations thereof, except for
transactions in options on securities, financial instruments,
currencies and indices of securities (and in the case of the
International Growth Portfolio, yield curve options); futures
contracts; options on futures contracts; forward currency contracts;
short sales of securities against the box; interest rate swaps; and
pair-off transactions (except in the case of the International
Growth Portfolio).
(8) Purchase the securities of any issuer if such purchase would
cause more than 10% of the voting securities of such issuer to be
held by the Portfolio, except that up to 25% of the value of its
total assets may be invested without regard to this 10% limitation.
(9) Purchase securities (other than obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities) if such
purchase would cause more than 25% in the aggregate of the market
value of the total assets of a Portfolio to be invested in the
securities of one or more issuers having their principal business
activities in the same industry. For the purposes of this
restriction, as to utility companies, the gas, electric, water and
telephone businesses are considered separate industries; personal
credit finance companies and business credit finance companies are
deemed to be separate industries; and wholly-owned finance companies
are considered to be in the industries of their parents if their
activities are primarily related to financing the activities of
their parents.
(10) Borrow money (other than pursuant to reverse repurchase
agreements), except (a) as a temporary measure, and then only in
amounts not exceeding 5% of the value of the Portfolio's total
assets or (b) from banks, provided that immediately after any such
borrowing all borrowings of the Portfolio do not exceed one-third of
the Portfolio's total assets. No purchases of securities will be
made if borrowings subject to this restriction exceed 5% of the
value of
B-19
<PAGE>
the Portfolio's assets. The exceptions in (a) and (b) to this
restriction are not for investment leverage purposes but are solely
for extraordinary or emergency purposes or to facilitate management
of the Portfolios by enabling the Trust to meet redemption requests
when the liquidation of Portfolio instruments is deemed to be
disadvantageous or not possible. If due to market fluctuations or
other reasons the total assets of a Portfolio fall below 300% of its
borrowings, the Trust will promptly reduce the borrowings of such
Portfolio in accordance with the 1940 Act.
(11) Purchase the securities of any one issuer, other than
obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, if immediately after such purchase
more than 5% of the value of such Portfolio's total assets would be
invested in such issuer, except that: (a) up to 25% of the value of
the total assets of each Portfolio may be invested in any securities
without regard to this 5% limitation; and (b) with respect to each
Portfolio, such 5% limitation shall not apply to repurchase
agreements collateralized by obligations of the U.S. Government, its
agencies or instrumentalities.
* * *
In applying Restriction No. 11 above, a security is considered to be
issued by the entity, or entities, whose assets and revenues back the security.
A guarantee of a security is not deemed to be a security issued by the guarantor
when the value of all securities issued and guaranteed by the guarantor, and
owned by a Portfolio, does not exceed 10% of the value of the Portfolio's total
assets.
Except to the extent otherwise provided in Investment Restriction (9) for
the purpose of such restriction, in determining industry classification the
Trust intends to use the industry classification titles in the Standard
Industrial Classification Manual (except that the International Growth Portfolio
will use The Morgan Stanley Capital International industry classification
titles). Securities held in escrow or separate accounts in connection with a
Portfolio's investment practices described in this Additional Statement and in
the Prospectus are not deemed to be mortgaged, pledged or hypothecated for
purposes of the foregoing Investment Restrictions.
In addition, as a matter of fundamental policy, the International Growth
Portfolio will not issue senior securities except as stated in the Prospectus or
this Additional Statement.
B-20
<PAGE>
Any restriction which involves a maximum percentage will not be considered
violated unless an excess over the percentage occurs immediately after, and is
caused by, an acquisition or encumbrance of securities or assets of, or
borrowings by, a Portfolio.
In order to permit the sale of the Portfolio's units in certain states,
the Trust may make commitments with respect to the Portfolios more restrictive
than the investment policies listed above and in the Prospectus. Should the
Trust determine that any commitment made to permit the sale of a Portfolio's
units in any state is no longer in the best interests of the Portfolio, it will
revoke the commitment by terminating sales of the Portfolio's units in the state
involved.
B-21
<PAGE>
ADDITIONAL TRUST INFORMATION
Trustees and Officers
Information pertaining to the Trustees and officers of the Trust is set forth
below.
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
William H. Springer, 66 Chairman Vice Chairman of Ameritech
701 Morningside Drive and (a telecommunications holding
Lake Forest, IL 60045 Trustee company; February 1987 to re-
tirement in August 1992); Vice
Chairman, Chief Financial and
Adminis trative Officer, prior
thereto; Director, Walgreen
Co. (a retail drug store busi-
ness); Director of Baker,
Fentress & Co. (a closed-end,
non-diversified management
investment company) (April
1992 to present).
Edward J. Condon, Jr.,54 Trustee Chairman of The Pardigm Group,
227 West Monroe Street Ltd. (a financial advisor)
Chicago, IL 60606. since July 1993. Vice
President and Treasurer of
Sears, Roebuck and Co. (a
retail corporation) from
February 1989 to July 1993.
Within the last five years he
has served as a Director of:
Sears Roebuck Acceptance
Corp.; Discover Credit Corp.;
Sears Receivables Financing
Group, Inc.; Sears Credit
Corp.; and Sears Overseas
Finance N.V.
John W. English, 61 Trustee Private Investor. Vice Pres-
50-H New England Avenue ident and Chief Investment
P.O. Box 640 Officer of The Ford Foundation
Summit, NJ 07902-0640. (a charitable trust) from 1981
until 1993. Trustee: The
China Fund, Inc.; Paribas
Trust for the Institutions;
Retail Property Trust; Sierra
Trust; American Red Cross in
Greater New York; Mote Marine
Laboratory; and United Board
for Christian Higher Education
B-22
<PAGE>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
in Asia. Director: University
of Iowa Foundation; Blanton-
Peale Institutes of Religion
and Health; Community Found-
ation of Sarasota County; Duke
Management Company; and John
Ringling Centre Foundation.
James J. Gavin, Jr., 72 Trustee Vice Chairman from January
161 Thorntree Lane 1985 to August 1987 and Senior
Winnetka, Illinois 60093 Vice President-Finance and
Chief Financial Officer from 1975 to
January 1985 of Borg-Warner
Corporation (a diversified
manufacturing company also engaged in
providing financial and protective
services). Director of Service
Corporation International (a funeral
service/cemetery company), Stepan
Corporation (a producer of basic and
intermediate chemicals), Borg-Warner
Industrial Products, Inc. (a supplier
of advanced technology fluid transfer
and control equipment, systems and
services).
B-23
<PAGE>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
Frederick T. Kelsey, 67 Trustee Consultant to Goldman Sachs
3133 Laughing Gull Court from December 1985 through
Johns Island, February 1988. Director of
South Carolina 29455. Goldman Sachs Funds Group and
Vice President of Goldman Sachs from
May 1981 until his retirement in
November 1985. President and Treasurer
of the Trust through August 1985.
Trustee, various management investment
companies affiliated with Kemper
Financial Companies.
Richard P. Strubel, 56 Trustee President and Chief Executive
70 West Madison St Officer, Tandem Partners, Inc.
Suite 1400 (a diversified manufacturer
Chicago, IL 60602 of fastening systems and
connectors)(since January
1984).
Marcia L. Beck, 40 President Director, Institutional Funds
One New York Plaza Group, GSAM (since September
New York, NY 1992); Vice President and
10004 Senior Portfolio Manager,
Goldman Sachs Asset Management from
June 1988 to Present; Vice President,
Funds Group of Goldman Sachs Asset
Management May 1985 to June 1988.
B-24
<PAGE>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
Paul Klug, 44 Vice Vice President of Goldman
One New York Plaza President Sachs; Director of Proprietary
New York, NY 10004 Mutual Funds of GSAM (since
February 1994); Chief
Operating Officer, Vista
Capital Management, Chase
Manhattan Bank (from January
1990 to February 1994); Vice
President, JP Morgan (February
1984 to January 1990).
Pauline Taylor, 49 Vice Vice President of Goldman
4900 Sears Tower President Sachs since June 1992.
Chicago, IL Consultant since 1989. Senior
60606 Vice President of Fidelity
Investments prior to 1989.
Nancy L. Mucker, 46 Vice Vice President, Goldman Sachs
4900 Sears Tower President and Co-Manager of Shareholder
Chicago, IL Services for GSAM Funds Group
60606
John W. Mosior, 57 Vice Vice President, Goldman Sachs
4900 Sears Tower President and Co-Manager of Shareholder
Chicago, IL Services for GSAM Funds Group.
60606
Scott M. Gilman, 36 Treasurer Director, Mutual Funds Admin-
One New York Plaza istration, Goldman Sachs Asset
New York, NY Management (since April 1994),
10004 Assistant Treasurer, Goldman
Sachs Funds Management, Inc.
(since March 1993); Vice Pre-
sident, Goldman Sachs (since
March 1990); Assistant Trea-
surer of the Trust (April 1990
to October 1991); Manager,
Arthur Andersen & Co.(prior
thereto).
Michael J. Richman, 35 Secretary Vice President and Assistant
85 Broad Street General Counsel of Goldman
New York, NY Sachs (since June 1992);
10004 Associate General Counsel,
Goldman Sachs Asset Management,
Counsel to the Funds Group, GSAM
(since June 1992); Partner, Hale and
Dorr (September 1991 to June 1992).
B-25
<PAGE>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
Howard B. Surloff, 30 Assistant Vice President and Assistant
85 Broad Street Secretary General Counsel, Goldman Sachs
New York, NY 10004 (since November 1993 and May
1994, respectively ); Counsel
to the Funds Group, Goldman
Sachs Asset Management (since
November 1993); Formerly Asso-
ciate of Shereff Friedman,
Hoffman & Goodman (prior
thereto).
Steven E. Hartstein, 32 Assistant Legal Products Analyst,
85 Broad Street Secretary Goldman Sachs (June 1993 to
New York, NY 10004 present); Funds Compliance
Officer, Citibank Global Asset
Management (August 1991 to June 1993);
Legal Assistant, Brown & Wood (prior
thereto).
Deborah A. Robinson 24 Assistant Administrative Assistant,
85 Broad Street Secretary Goldman Sachs since January
New York, NY 10004 1994. Formerly at Cleary,
Gottlieb, Steen & Hamilton.
Certain of the Trustees and officers and the organizations with which they are
associated have had in the past, and may have in the future, transactions with
Northern, Goldman Sachs and their respective affiliates. The Trust has been
advised by such Trustees and officers that all such transactions have been and
are expected to be in the ordinary course of business and the terms of such
transactions, including all loans and loan commitments by such persons, have
been and are expected to be substantially the same as the prevailing terms for
comparable transactions for other customers. Messrs. Springer, Kelsey, Strubel,
Klug, Mosior, Gilman, Richman, Surloff and Hartstein and Mmes. Beck, Mucker,
Taylor and Robinson hold similar positions with one or more investment companies
that are advised by Goldman Sachs. As a result of the responsibilities assumed
by Northern under its Advisory Agreement, Transfer Agency Agreement and
Custodian Agreement with the Trust and by Goldman Sachs under its Administration
Agreement and Distribution Agreement with the Trust, the Trust itself requires
no employees.
Each officer holds comparable positions with certain other investment companies
of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser,
administrator and/or distributor.
B-26
<PAGE>
For the first three quarters of fiscal 1995, each Trustee earned a quarterly
retainer of $3,750 and an additional fee of $1,250 for each meeting attended,
plus reimbursement of expenses incurred as a Trustee. For the same period, the
Chairman of the Board earned a quarterly retainer of $5,625 and an additional
fee of $1,250 for each meeting attended, plus reimbursement of expenses incurred
as a Trustee.
Effective September 1, 1995 and until further notice, each Trustee earns a
quarterly retainer of $6,250 and the Chairman of the Board earns a quarterly
retainer of $9,375. Each Trustee, including the Chairman of the Board, earns an
additional fee of $1,500 for each meeting attended, plus reimbursement of
expenses incurred as a Trustee.
In addition, the Trustees established an Audit Committee consisting of three
members including a Chairman of the Committee. Each member earns a fee of $1,500
for each meeting attended and the Chairman earns a quarterly retainer of $1,250.
The Trust's officers do not receive fees from the Trust for services in such
capacities, although Goldman Sachs, of which they are also officers, receives
fees from the Trust for administrative services.
B-27
<PAGE>
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year period ended
November 30, 1995:
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total Compensation
Aggregate Accrued as from Registrant and
Compensation Part of Fund Complex Paid to
Name of Trustee from Registrant Trust's Expenses Trustees
- --------------- --------------- ---------------- --------
<S> <C> <C> <C>
William H. Springer $34,000 $0 $34,000
Edward J. Condon, Jr. $25,250 $0 $25,250
John W. English $24,000 $0 $24,000
James J. Gavin $26,750 $0 $26,750
William B. Jordan* $25,250 $0 $25,250
Frederick T. Kelsey $26,750 $3,822 $30,572
Richard P. Strubel $28,000 $0 $28,000
*Retired as of December 31, 1995.
</TABLE>
B-28
<PAGE>
Investment Adviser, Transfer Agent and Custodian
Northern is one of the nation's leading providers of trust and investment
management services. As of December 31, 1995, Northern had over $105.5 billion
in assets under management for clients including public and private retirement
funds, endowments, foundations, trusts, corporations, other investment companies
and individuals. Northern is one of the strongest banking organizations in the
United States. Northern believes it has built its organization by serving
clients with integrity, a commitment to quality, and personal attention. Its
stated mission with respect to all its financial products and services is to
achieve unrivaled client satisfaction. With respect to such clients, the Trust
is designed to assist (i) defined contribution plan sponsors and their employees
by offering a range of diverse investment options to help comply with 404(c)
regulation and may also provide educational material to their employees, (ii)
employers who provide post-retirement Employees' Beneficiary Associations
("VEBA") and require investments that respond to the impact of federal
regulations, (iii) insurance companies with the day-to-day management of
uninvested cash balances as well as with longer-term investment needs, and (iv)
charitable and not-for-profit organizations, such as endowments and foundations,
demanding investment management solutions that balance the requirement for
sufficient current income to meet operating expenses and the need for capital
appreciation to meet future investment objectives.
Subject to the general supervision of the Board of Trustees, Northern
makes decisions with respect to and places orders for all purchases and sales of
portfolio securities for the Portfolios. Northern's Advisory Agreement with the
Trust provides that in selecting brokers or dealers to place orders for
transactions (a) on common and preferred stocks, Northern shall use its best
judgment to obtain the best overall terms available, and (b) on bonds and other
fixed income obligations, Northern shall attempt to obtain best net price and
execution. Transactions on U.S. stock exchanges involve the payment of
negotiated brokerage commissions. On exchanges on which commissions are
negotiated, the cost of transactions may vary among different brokers.
Transactions on foreign stock exchanges involve payment for brokerage
commissions which are generally fixed. Over-the-counter issues, including
corporate debt and government securities, are normally traded on a "net" basis
(i.e., without commission) through dealers, or otherwise involve transactions
directly with the issuer of an instrument. With respect to over-the-counter
transactions, Northern will normally deal directly with dealers who make a
market in the instruments involved except in those circumstances where more
favorable prices and execution are available elsewhere. The cost of foreign and
domestic securities purchased from underwriters includes an underwriting
commission or concession, and the prices
B-29
<PAGE>
at which securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.
The Portfolios may participate, if and when practicable, in bidding for
the purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Portfolios will engage in this practice, however, only when Northern
believes such practice to be in the Portfolios' interests.
Northern's investment advisory duties for the Trust are carried out
through its Trust Department. On occasions when Northern deems the purchase or
sale of a security to be in the best interests of a Portfolio as well as other
fiduciary or agency accounts managed by it (including any other Portfolio,
investment company or account for which Northern acts as adviser), the Agreement
provides that Northern, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be sold or purchased for such
Portfolio with those to be sold or purchased for such other accounts in order to
obtain best overall terms available with respect to common and preferred stock,
and best net price and execution with respect to bonds and other fixed income
obligations. In such event, allocation of the securities so purchased or sold,
as well as the expenses incurred in the transaction, will be made by Northern in
the manner it considers to be most equitable and consistent with its fiduciary
obligations to the Portfolio and other accounts involved. In some instances,
this procedure may adversely affect the size of the position obtainable for a
Portfolio or the amount of the securities that are able to be sold for a
Portfolio. To the extent that the execution and price available from more than
one broker or dealer are believed to be comparable, the Agreement permits
Northern, at is discretion but subject to applicable law, to select the
executing broker or dealer on the basis of Northern's opinion of the reliability
and quality of such broker or dealer.
The Advisory Agreement provides that Northern may render similar services
to others so long as its services under such Agreement are not impaired thereby.
The Advisory Agreement also provides that the Trust will indemnify Northern
against certain liabilities (including liabilities under the Federal securities
laws relating to untrue statements or omissions of material fact and actions
that are in accordance with the terms of the Agreement) or, in lieu thereof,
contribute to resulting losses.
Under its Transfer Agency Agreement with the Trust, with respect to units
held by Institutions, Northern has undertaken to perform some or all of the
following services: (1) establish and maintain an omnibus account in the name of
each Institution; (2) process purchase orders and redemption requests from an
Institution, furnish confirmations and disburse redemption
B-30
<PAGE>
proceeds; (3) act as the income disbursing agent of the Trust; (4) answer
inquiries from Institutions; (5) provide periodic statements of account to each
Institution; (6) process and record the issuance and redemption of units in
accordance with instructions from the Trust or its administrator; (7) if
required by law, prepare and forward to Institutions unitholder communications
(such as proxy statements and proxies, annual and semi-annual financial
statements, and dividend, distribution and tax notices); (8) preserve all
records; and (9) furnish necessary office space, facilities and personnel. Under
the Transfer Agency Agreement, with respect to units held by investors, Northern
has also undertaken to perform some or all of the following services: (1)
establish and maintain separate accounts in the name of the investors; (2)
process purchase orders and redemption requests, and furnish confirmations in
accordance with applicable law; (3) disburse redemption proceeds; (4) process
and record the issuance and redemption of units in accordance with instructions
from the Trust or its administrator; (5) act as income disbursing agent of the
Trust in accordance with the terms of the prospectus and instructions from the
Trust or its administrator; (6) provide periodic statements of account; (7)
answer inquiries (including requests for prospectuses and Additional Statements,
and assistance in the completion of new account applications) from investors and
respond to all requests for information regarding the Trust (such as current
price, recent performance, and yield data) and questions relating to accounts of
investors (such as possible errors in statements, and transactions); (8) respond
to and seek to resolve all complaints of investors with respect to the Trust or
their accounts; (9) furnish proxy statements and proxies, annual and semi-annual
financial statements, and dividend, distribution and tax notices to investors;
(10) furnish the Trust all pertinent Blue Sky information; (11) perform all
required tax withholding; (12) preserve records; and (13) furnish necessary
office space, facilities and personnel. Northern may appoint one or more
sub-transfer agents in the performance of its services.
As compensation for the services rendered by Northern under the Transfer
Agency Agreement and the assumption by Northern of related expenses, Northern is
entitled to a fee from the Trust, payable monthly, at an annual rate of .01%,
.05%, .10% and .15% of the average daily net asset value of the Class A, B, C
and D units, respectively, in the Portfolios.
Under its Custodian Agreement (and in the case of the International Growth
Portfolio its Foreign Custody Agreement) with the Trust, Northern (1) holds each
Portfolio's cash and securities, (2) maintains such cash and securities in
separate accounts in the name of the Portfolio, (3) makes receipts and
disbursements of funds on behalf of the Portfolio, (4) receives, delivers and
releases securities on behalf of the Portfolio, (5) collects and receives all
income, principal and other payments in
B-31
<PAGE>
respect of the Portfolio's investments held by Northern under the Agreement, and
(6) maintains the accounting records of the Trust. Northern may employ one or
more subcustodians, provided that Northern shall have no more responsibility or
liability to the Trust on account of any action or omission of any subcustodian
so employed than such subcustodian has to Northern and that the responsibility
or liability of the subcustodian to Northern shall conform to the resolution of
the Trustees of the Trust authorizing the appointment of the particular
subcustodian (or, in the case of the Foreign Custody Agreement, to the terms of
any agreement entered into between Northern and such subcustodian to which such
resolution relates). In addition, the Foreign Custody Agreement provides that
Northern shall not be: (i) responsible for the solvency of any subcustodian
appointed by it with reasonable care; (ii) responsible for any act, omission,
default or for the solvency of any eligible foreign securities depository; and
(iii) liable for any loss, damage, cost, expense, liability or claim resulting
from nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the subcustodian has otherwise exercised reasonable
care. Northern may also appoint an agent to carry out such of the provisions of
the Custodian Agreement and the Foreign Custody Agreement as Northern may from
time to time direct, provided that the appointment of such an agent shall not
relieve Northern of any of its responsibilities under either Agreement. Northern
has entered into agreements with financial institutions and depositories located
in foreign countries with respect to the custody of the Portfolio's foreign
securities.
As compensation for the services rendered to the Trust by Northern as
Custodian with respect to each Portfolio except the International Growth
Portfolio, and the assumption by Northern of certain related expenses, Northern
is entitled to payment from the Trust as follows: (i) $18,000 annually for each
Portfolio, plus (ii) 1/100th of 1% annually of each Portfolio's average daily
net assets to the extent they exceed $100 million, plus (iii) a fixed dollar fee
for each trade in portfolio securities, plus (iv) a fixed dollar fee for each
time that Northern as Custodian receives or transmits funds via wire, plus (v)
reimbursement of expenses incurred by Northern as Custodian for telephone,
postage, courier fees, office supplies and duplicating. The fees referred to in
clauses (iii) and (iv) are subject to annual upward adjustments based on
increases in the Consumer Price Index for All Urban Consumers, provided that
Northern may permanently or temporarily waive all or any portion of any upward
adjustment.
As compensation for the services rendered to the Trust under the Foreign
Custody Agreement with respect to the International Growth Portfolio, and the
assumption by Northern of certain related expenses, Northern is entitled to
payment from the Trust as follows: (i) $35,000 annually for the International
Growth
B-32
<PAGE>
Portfolio, plus (ii) 9/100th of 1% annually of the Portfolio's average daily net
assets, plus (iii) reimbursement for fees incurred by Northern as foreign
Custodian for telephone, postage, courier fees, office supplies and duplicating.
Unless sooner terminated, the Advisory Agreement, Custodian Agreement (or
in the case of the International Growth Portfolio the Foreign Custody Agreement)
and Transfer Agency Agreement between Northern and the Trust will continue in
effect with respect to a particular Portfolio until April 30, 1997 and
thereafter for successive 12-month periods, provided that the continuance is
approved at least annually (1) by the vote of a majority of the Trustees who are
not parties to the agreement or "interested persons" (as such term is defined in
the 1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval, and (2) by the Trustees or by the vote of a
majority of the outstanding units of such Portfolio (as defined under
"Organization" in the Prospectus). Each agreement is terminable at any time
without penalty by the Trust (by specified Trustee or unitholder action) on 60
days' written notice to Northern and by Northern on 60 days' written notice to
the Trust.
For the fiscal periods ended November 30 as indicated, the amount of the
Advisory Fee incurred by each Portfolio (after fee waivers) was:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 181,249 $ 118,582 $ 31,151
Equity Index Portfolio (2) 380,061 265,647 147,005
Diversified Growth Portfolio (2) 845,029 1,019,000 877,490
Focused Growth Portfolio (1) 609,180 389,125 85,531
Small Company Index Portfolio (2) 172,085 148,538 75,583
International Growth Portfolio (3) 1,180,413 648,520 N/A
</TABLE>
------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
For the same fiscal periods ended November 30 as indicated, Northern
waived advisory fees as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 108,249 $ 71,150 $ 18,766
Equity Index Portfolio (2) 760,122 531,397 294,369
Diversified Growth Portfolio (2) 384,104 463,246 306,495
Focused Growth Portfolio (1) 228,443 145,930 32,079
Small Company Index Portfolio (2) 172,085 148,544 75,894
International Growth Portfolio (3) 295,103 161,282 N/A
</TABLE>
B-33
<PAGE>
------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
For the fiscal periods ended November 30 as indicated, the amount of the
Transfer Agency Fee incurred by each Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 3,624 $ 2,372 $ 622
Equity Index Portfolio (2) 40,881 26,570 14,695
Diversified Growth Portfolio (2) 15,548 18,530 14,796
Focused Growth Portfolio (1) 7,810 4,864 1,069
Small Company Index Portfolio (2) 8,647 7,427 3,778
International Growth Portfolio (3) 14,784 8,107 N/A
</TABLE>
- ------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
For the fiscal periods ended November 30 as indicated, the amount of the
Custodian Fee (and in the case of the International Growth Portfolio, the
Foreign Custodian Fee) incurred by each Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $25,924 $24,023 $18,000
Equity Index Portfolio (2) 126,649 108,000 72,000
Diversified Growth Portfolio (2) 34,074 30,346 35,000
Focused Growth Portfolio (1) 25,698 19,578 18,000
Small Company Index Portfolio (2) 65,810 120,118 72,000
International Growth Portfolio (3) 160,492 17,124 N/A
</TABLE>
- -------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, but such banking laws and regulations do
not prohibit such a holding company or affiliate or banks generally from acting
as investment adviser, transfer agent or
B-34
<PAGE>
custodian to such an investment company, or from purchasing shares of such a
company as agent for and upon the order of customers. Northern believes that it
may perform the services contemplated by its agreements with the Trust without
violation of such banking laws or regulations, which are applicable to it. It
should be noted, however, that future changes in either Federal or state
statutes and regulations relating to the permissible activities of banks and
their subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Northern from continuing to perform such services for the Trust.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of Northern in connection with the provision of services
on behalf of the Trust, the Trust might be required to alter materially or
discontinue its arrangements with Northern and change its method of operations.
It is not anticipated, however, that any change in the Trust's method of
operations would affect the net asset value per unit of any Portfolio or result
in a financial loss to any unitholder. Moreover, if current restrictions
preventing a bank from legally sponsoring, organizing, controlling or
distributing units of an open-end investment company were relaxed, the Trust
expects that Northern would consider the possibility of offering to perform some
or all of the services now provided by Goldman Sachs. It is not possible, of
course, to predict whether or in what form such restrictions might be relaxed or
the terms upon which Northern might offer to provide services for consideration
by the Trustees.
Goldman Sachs is also an active investor, dealer and/or underwriter in
many types of stocks, bonds and other instruments. Its activities in this regard
could have some effect on the market for those instruments which the Portfolios
acquire, hold or sell.
In the Advisory Agreement, Northern agrees that the name "The Benchmark"
may be used in connection with the Trust's business on a royalty-free basis.
Northern has reserved to itself the right to grant the non-exclusive right to
use the name "The Benchmark" to any other person. The Advisory Agreement
provides that at such time as the Agreement is no longer in effect, the Trust
will cease using the name "The Benchmark." (This undertaking by the Trust may be
subject to certain legal limitations.)
Portfolio Transactions
To the extent that a Portfolio effects brokerage transactions with Goldman
Sachs or any broker-dealer affiliated directly or indirectly with Northern or
its manager, such
B-35
<PAGE>
transactions, including the frequency thereof, the receipt of any commissions
payable in connection therewith, and the selection of the affiliated
broker-dealer effecting such transactions, will be fair and reasonable to the
unitholders of the Portfolio.
For the fiscal periods ended November 30 as indicated each Portfolio paid
brokerage commissions as follows:
<TABLE>
<CAPTION>
Total Total Brokerage
Fiscal Brokerage Amount of Commissions
Year Total Commissions Transactions Paid
Ended Brokerage Paid to On Which to Brokers
November Commissions Affiliated Commissions Providing
30, 1995: Paid Persons Paid Research
- --------- ---- ------- ---- --------
<S> <C> <C> <C> <C>
Balanced $ 45,837 $ 0 $ 24,906,175 $ 39,287
Portfolio
Equity 112,575 0 152,546,455 112,575
Index
Portfolio
Focused 192,628 0 111,053,831 146,993
Growth
Portfolio
Diversified 438,884 3,360 248,311,354 367,010
Growth (.76%)* (.51%)**
Portfolio
Small 102,688 0 58,429,480 51,692
Company
Index
Portfolio
International 2,121,410 4,425 575,340,692 787,039
Growth (.21%)* (.36%)**
Portfolio
</TABLE>
(*) Percentage of total commissions paid
(**) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons.
B-36
<PAGE>
<TABLE>
<CAPTION>
Total Total Brokerage
Fiscal Brokerage Amount of Commissions
Year Total Commissions Transactions Paid
Ended Brokerage Paid to On Which to Brokers
November Commissions Affiliated Commissions Providing
30, 1995: Paid Persons Paid Research
- --------- ---- ------- ---- --------
<S> <C> <C> <C> <C>
Balanced $37,199 $0 $20,763,184 23,386
Portfolio (0%)* (0%)**
Equity 100,947 322 191,367,381 70,919
Index (.32%)* (.08%)**
Portfolio
Diversified 357,742 0 220,310,149 267,491
Growth (0%)* (0%)**
Portfolio
Focused 118,543 0 100,491,832 96,058
Growth (0%)* (0%)**
Portfolio
Small $188,410 $0 $110,249,401 114,478
Company (0%)* (0%)**
Index
Portfolio
International $843,097 $194 $205,832,703 0
Growth (.02%)* (.04%)**
Portfolio***
</TABLE>
(*) Percentage of total commissions paid
(**) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons.
(***) For the period March 28, 1994 through November 30, 1994.
B-37
<PAGE>
<TABLE>
<CAPTION>
Total Total Brokerage
Fiscal Brokerage Amount of Commissions
Year Total Commissions Transactions Paid
Ended Brokerage Paid to On Which to Brokers
November Commissions Affiliated Commissions Providing
30, 1995: Paid Persons Paid Research
- --------- ---- ------- ---- --------
<S> <C> <C> <C> <C>
Balanced $21,180 $ 0 $ 12,013,041 $ 9,125
Portfolio (0%)(1) (0%)(2)
Equity 17,000 0 108,940,196 15,314
Index (0%)(1) (0%)(2)
Portfolio
Diversified 566,788 1,134 337,911,051 375,794
Growth (.97%)(1) (2.01%)(2)
Portfolio
Focused 74,059 0 38,843,350 29,465
Growth (0%)(1) (0%)(2)
Portfolio
Small 51,431 0 27,706,454 49,816
Company (0%)(1) (0%)(2)
Index
</TABLE>
(1) Percentage of total commissions paid.
(2) Percentage of total amount of transactions involving the payment of
commissions effected through affiliated persons.
B-38
<PAGE>
During the fiscal year ended November 30, 1995, the Equity Index Portfolio
acquired and sold securities of Merrill Lynch & Co., Inc, Salomon Brothers,
Inc., Morgan Stanley Group, Inc., and J.P. Morgan & Co., Inc., each a regular
broker/dealer. At November 30, 1995, the Equity Index Portfolio owned the
following amounts of securities of its regular broker/dealers, as defined in
Rule 10b- 1 under the 1940 Act, or their parents: Merrill Lynch with an
aggregate value of $1,057,000, Salomon Brothers with an aggregate value of
$418,000, Morgan Stanley with an aggregate value of $716,000, and J.P. Morgan
with an aggregate value of $1,594,000.
During the fiscal year ended November 30, 1995, the International Equity
Portfolio acquired and sold securities of Nomura Securities Co., Ltd., a regular
broker/dealer. At November 30, 1995, the International Equity Portfolio owned
the following amounts of securities of its regular broker/dealers, as defined in
Rule 10b-1 under the 1940 Act, or their parents: Nomura Securities with an
aggregate value of $1,674,000.
Administrator and Distributor
Under its Administration Agreement with the Trust, Goldman Sachs, subject
to the general supervision of the Trust's Board of Trustees, acts as the Trust's
Administrator. In this capacity, Goldman Sachs (1) provides supervision of
certain aspects of the Trust's non-investment advisory operations (the parties
giving due recognition to the fact that certain of such operations are performed
by Northern pursuant to the Trust's agreements with Northern), (2) provides the
Trust, to the extent not provided pursuant to such agreements, with such
personnel as are reasonably necessary for the conduct of the Trust's affairs,
(3) arranges, to the extent not provided pursuant to such agreements, for the
preparation at the Trust's expense of its tax returns, reports to unitholders,
periodic updating of the Prospectus issued by the Trust, and reports filed with
the SEC and other regulatory authorities (including qualification under state
securities or Blue Sky laws of the Trust's units), and (4) provides the Trust,
to the extent not provided pursuant to such agreements, with adequate office
space and equipment and certain related services in Chicago.
For the fiscal periods ended November 30 as indicated, Goldman Sachs
received fees under the Administration Agreement (after fee waivers) in the
amount of:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 36,250 $ 23,716 $ 6,230
Equity Index Portfolio (2) 380,061 265,699 146,739
Diversified Growth Portfolio (2) 153,642 185,295 147,749
Focused Growth Portfolio (1) 76,148 48,643 10,693
Small Company Index Portfolio (2) 86,043 74,272 37,715
International Growth Portfolio (3) 147,552 81,070 N/A
</TABLE>
B-39
<PAGE>
- -----------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
Goldman Sachs has agreed in its Administration Agreement with the Trust
that if for the current fiscal year the sum of a Portfolio's expenses (including
the fees paid to Goldman Sachs as Administrator, but excluding Northern's
investment advisory fee, taxes, interest, brokerage and extraordinary expenses
such as for litigation) exceeds on an annualized basis .10% of the Portfolio's
average net assets, Goldman Sachs will reimburse the Portfolios in the amount of
such excess in such year. In addition, pursuant to an undertaking that commenced
August 1, 1992, Goldman Sachs has agreed that, if its administration fees (less
expense reimbursements paid by Goldman Sachs to the Trust and less certain
marketing expenses paid by Goldman Sachs) exceed a specified amount ($1 million
for the Trust's first twelve investment portfolios plus $50,000 for each
additional portfolio) during the current fiscal year, Goldman Sachs will waive a
portion of its administration fees during the following fiscal year. This
undertaking may be terminated by Goldman Sachs at any time without the consent
of the Trust or the unitholders. For the fiscal periods ended November 30 as
indicated, the fees waived as a result of this voluntary agreement by Goldman
Sachs were:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 54,375 $ 34,000 $ 9,383
Equity Index Portfolio (2) 229,985 232,849 159,354
Diversified Growth Portfolio (2) 176,821 192,499 158,608
Focused Growth Portfolio (1) 114,221 72,967 16,040
Small Company Index Portfolio (2) 129,064 111,408 57,027
International Growth Portfolio (3) 173,776 187,000 N/A
</TABLE>
- ------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
Goldman Sachs has voluntarily agreed to reimburse the Portfolios for
certain expenses in the event that such expenses, as defined, exceed on an
annualized basis .25% of the International Growth Portfolio's average daily net
assets and .10% of each other Portfolio's average daily net assets. The effect
of these reimbursements by Goldman Sachs for the fiscal periods ended November
30 as indicated were to reduce the expenses of each Portfolio by:
B-40
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balanced Portfolio (1) $ 79,928 $104,929 $ 36,031
Equity Index Portfolio (2) 194,615 208,610 207,897
Diversified Growth Portfolio (2) 100,038 118,579 166,469
Focused Growth Portfolio (1) 87,261 91,040 57,149
Small Company Index Portfolio (2) 116,594 132,794 134,527
International Growth Portfolio (3) N/A N/A N/A
</TABLE>
- ------------------
(1) Commenced investment operations on July 1, 1993.
(2) Commenced investment operations on January 11, 1993.
(3) Commenced investment operations on March 28, 1994.
Goldman Sachs has agreed with the Trust that if, in any fiscal year, the
sum of a Portfolio's expenses (including the fees payable to Goldman Sachs and
Northern, but excluding taxes, interest, brokerage and extraordinary expenses
such as litigation) exceeds the expense limitations applicable to such Portfolio
imposed by state securities administrators, as such limitations may be lowered
or raised from time to time, it will reimburse the Portfolio in the amount of
such excess to the extent required by such expense limitations. As of the date
of this Additional Statement the most restrictive expense limitation imposed by
state securities administrators of which the Trust is aware provides that
aggregate annual expenses (as defined) may not exceed 2 1/2% of the first
$30,000,000 of a Portfolio's average net assets, plus 2% of the next $70,000,000
of such assets plus 1 1/2% of such assets in excess of $100,000,000; provided
that under the Missouri expense limitation the aggregate annual expenses of
every type paid or incurred by the Portfolios or unitholders must be
substantially comparable with the aggregate annual operating and advisory
expenses incurred by other investment companies with similar objectives and
operating policies.
Unless sooner terminated the Administration Agreement will continue in
effect with respect to a particular Portfolio until April 30, 1997, and
thereafter for successive 12-month periods, provided that the agreement is
approved annually (1) by the vote of a majority of the Trustees who are not
parties to the agreement or "interested persons" (as such term is defined by the
1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval, and (2) by the Trustees or by the vote of a
majority of the outstanding units of such Portfolio (as defined under
"Organization" in the Prospectus). The Administration Agreement is terminable at
any time without penalty by the Trust (upon specified Trustee or unitholder
action) on 60 days' written notice to Goldman Sachs and by Goldman Sachs on 60
days' written notice to the Trust.
The Trust has entered into a Distribution Agreement under which Goldman
Sachs, as agent, sells units of each Portfolio on a
B-41
<PAGE>
continuous basis. Goldman Sachs pays the cost of printing and distributing
prospectuses to persons who are not unitholders of the Trust (excluding
preparation and typesetting expenses) and of certain other distribution efforts.
No compensation is payable by the Trust to Goldman Sachs for such distribution
services.
The Administration Agreement and the Distribution Agreement provide that
Goldman Sachs may render similar services to others so long as its services
under such Agreements are not impaired thereby. The Administration Agreement
provides that the Trust will indemnify Goldman Sachs against certain liabilities
(including liabilities under the Federal securities laws relating to untrue
statements or omissions of material fact and actions that are in accordance with
the terms of the Administration Agreement and Distribution Agreement) or, in
lieu thereof, contribute to resulting losses.
Unitholder Servicing Plan
As stated in the Portfolios' Prospectus, Institutions may enter into
Servicing Agreements with the Trust under which they provide (or arrange to have
provided) support services to their Customers or other investors who
beneficially own such units in consideration of the Portfolios' payment of not
more than .10%, .15% and .25% (on an annualized basis) of the average daily net
asset value of the Class B, C and D units, respectively, beneficially owned by
such Customers or Investors.
For the fiscal periods ended November 30 as indicated, the aggregate amount
of the Unitholder Service Fee incurred by each class of each Portfolio then in
existence was as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Balanced Portfolio
Class B N/A N/A
Class C N/A N/A
Class D N/A N/A
Equity Index Portfolio
Class B N/A N/A
Class C (1) $4,339.08 N/A
Class D (2) 479.72 $0.34
Diversified Growth Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (2) 326.04 10.94
Focused Growth Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (3) 436.94 N/A
Small Company Index Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (4) 44.71 N/A
</TABLE>
B-42
<PAGE>
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
International Growth Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (5) 4.25 0.20
</TABLE>
- ----------
(1) Commenced operations on September 29, 1995.
(2) Commenced operations on September 14, 1994.
(3) Commenced operations on December 8, 1994.
(4) Commenced operations on December 11, 1994.
(5) Commenced operations on November 16, 1994.
Services provided by or arranged to be provided by Institutions under
their Service Agreements may include: (1) establishing and maintaining separate
account records of Customers or other investors; (2) providing Customers or
other investors with a service that invests their assets in units of certain
classes pursuant to specific or pre-authorized instructions, and assistance with
new account applications; (3) aggregating and processing purchase and redemption
requests for units of certain classes from Customers or other investors, and
placing purchase and redemption orders with the Transfer Agent; (4) issuing
confirmations to Customers or other investors in accordance with applicable law;
(5) arranging for the timely transmission of funds representing the net purchase
price or redemption proceeds; (6) processing dividend payments on behalf of
Customers or other investors; (7) providing information periodically to
Customers or other investors showing their positions in units; (8) responding to
Customer or other Investor inquiries (including requests for prospectuses), and
complaints relating to the services performed by the Institutions; (9) acting as
liaison with respect to all inquiries and complaints from Customers and other
investors relating to errors committed by the Trust or its agents, and other
matters pertaining to the Trust; (10) providing or arranging for another person
to provide subaccounting with respect to units of certain classes beneficially
owned by Customers or other investors; (11) if required by law, forwarding
unitholder communications from the Trust (such as proxy statements and proxies,
unitholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to Customers and other investors; (12) providing
such office space, facilities and personnel as may be required to perform its
services under the Service Agreement; (13) maintaining appropriate management
reporting and statistical information; (14) paying expenses related to the
preparation of educational and other explanatory materials in connection with
the development of investor services; (15) developing and monitoring investment
programs; and (16) providing such other similar services as the Trust may
reasonably request to the extent the Institutions are permitted to do so under
applicable statutes, rules and regulations.
B-43
<PAGE>
The Trust's agreements with Institutions are governed by a Plan (called
the "Unitholder Servicing Plan"), which has been adopted by the Board of
Trustees. Pursuant to the Unitholder Servicing Plan, the Board of Trustees will
review, at least quarterly, a written report of the amounts expended under the
Trust's agreements with Institutions and the purposes for which the expenditures
were made. In addition, the arrangements with Institutions must be approved
annually by a majority of the Board of Trustees, including a majority of the
Trustees who are not "interested persons" of the Trust, as defined in the 1940
Act, and have no direct or indirect financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Institutions
based on information provided by the Trust's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Portfolios and
their unitholders by affording the Portfolios greater flexibility in connection
with the servicing of the accounts of the beneficial owners of their units in an
efficient manner.
Counsel and Auditors
Drinker Biddle & Reath, with offices at 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, serve as counsel to the Trust.
Ernst & Young LLP, independent auditors, Sears Tower, 233 S. Wacker Drive,
Chicago, Illinois 60606-6301, have been selected as auditors of the Trust. In
addition to audit services, Ernst & Young LLP reviews the Trust's Federal and
state tax returns, and provides consultation and assistance on accounting,
internal control and related matters.
In-Kind Purchases
Payment for units of a Portfolio may, in the discretion of Northern, be
made in the form of securities that are permissible investments for the
Portfolio as described in the Prospectus. For further information about this
form of payment, contact Northern. In connection with an in-kind securities
payment, a Portfolio will require, among other things, that the securities be
valued on the day of purchase in accordance with the pricing methods used by the
Portfolio and that the Portfolio receive satisfactory assurances that it will
have good and marketable title to the securities received by it; that the
securities be in proper form for transfer to the Portfolio; and that adequate
information be provided concerning the basis and other tax matters relating to
the securities. In addition, the Portfolios have represented to the Texas State
Securities Board that so long as units in a Portfolio are offered or sold in
Texas any securities that are accepted as payment for Portfolio units will
B-44
<PAGE>
be limited to securities that are issued in transactions that involve a bona
fide reorganization or statutory merger, or will be limited to other
acquisitions of portfolio securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
that: (a) meet the investment objective and policies of the Portfolio; (b) are
acquired for investment and not for resale; (c) are liquid securities that are
not restricted as to transfer either by law or liquidity of market; and (d) have
a value that is readily ascertainable (and not established only by valuation
procedures) as evidenced by a listing on the American Stock Exchange, New York
Stock Exchange or NASDAQ or as evidenced by their status as U.S. Government
securities, bank certificates of deposit, bankers' acceptances, corporate and
other debt securities that are actively traded, money market securities and
other like securities with a readily ascertainable market value.
PERFORMANCE INFORMATION
Each Portfolio that advertises an "average annual total return" for a
class of units computes such return by determining the average annual compounded
rate of return during specified periods that equates the initial amount invested
to the ending redeemable value of such investment according to the following
formula:
T=(ERV/P)(1/n)-1
Where: T = average annual total return.
ERV = ending redeemable value at the end of the applicable period
(or fractional portion thereof) of a hypothetical $1,000 payment
made at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in
terms of years.
Each Portfolio that advertises an "aggregate total return" for a class of
units computes such return by determining the aggregate compounded rates of
return during specified periods that likewise equate the initial amount invested
to the ending redeemable value of such investment. The formula for calculating
aggregate total return is as follows:
B-45
<PAGE>
T=[(ERV/P)]-1
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per unit
existing on the reinvestment date, (2) all recurring fees charged to all
unitholder accounts are included, and (3) the portfolio transaction fee is taken
into account for purchases of Small Company Index Portfolio units. The ending
redeemable value (variable "ERV" in the formula) is determined by assuming
complete redemption of the hypothetical investment after deduction of all
nonrecurring charges at the end of the measuring period.
B-46
<PAGE>
For the fiscal year ended November 30, 1995, the average annual total
returns and aggregate total returns for the Class A, Class B, Class C and Class
D units were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
------------------------------- ------------------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Balanced Portfolio
Class A (1) 20.22% 7.11% 20.22% 18.07%
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D N/A N/A N/A N/A
Equity Index Portfolio
Class A (2) 36.60 15.52 36.60 51.69
Class B N/A N/A N/A N/A
Class C (4) N/A N/A 3.94 3.73
Class D (3) 36.20 26.17 36.20 32.59
Diversified Growth Portfolio
Class A (2) 24.55 7.86 24.55 24.42
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (3) 24.19 14.42 24.19 17.76
Focused Growth Portfolio
Class A (1) 28.38 9.92 28.38 25.70
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (5) N/A N/A 31.00 31.00
- ----------
(1) Commenced operations on July 1, 1993.
(2) Commenced operations on January 11, 1993.
(3) Commenced operations on September 14, 1994.
(4) Commenced operations on September 29, 1995.
(5) Commenced operations on December 8, 1994.
</TABLE>
B-47
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
------------------------------- ------------------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Small Company Index Portfolio
Class A (1) 27.76% 13.33% 27.76% 41.17%
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (2) N/A N/A 30.50 30.50
International Growth Portfolio
Class A (3) (2.32) (.15) (2.32) (.26)
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (4) (2.78) (5.02) (2.78) (5.22)
- ----------
(1) Commenced operations on January 11, 1993.
(2) Commenced operations on December 11, 1994.
(3) Commenced operations on March 28, 1994.
(4) Commenced operations on November 16, 1994.
</TABLE>
B-48
<PAGE>
During such period, Goldman Sachs reimbursed expenses to the Portfolios
and voluntarily agreed to reduce a portion of its administration fee for each
Portfolio pursuant to the undertaking described above under "Additional Trust
Information Administrator and Distributor" and "-Investment Adviser, Transfer
Agent and Custodian," and Northern waived a portion of its investment advisory
fees with respect to the Portfolios. In the absence of such fee reductions and
expense limitations, the average annual return and aggregate total return of
each Portfolio with respect to Class A, Class B, Class C and Class D units would
have been as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
------------------------------- ------------------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Balanced Portfolio
Class A (1) 19.42% 6.24% 19.42% 15.76%
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D N/A N/A N/A N/A
Equity Index Portfolio
Class A (2) 36.17 15.09 36.17 50.07
Class B N/A N/A N/A N/A
Class C (3) N/A N/A 3.89 3.89
Class D (4) 35.77 25.76 35.77 32.08
Diversified Growth Portfolio
Class A (2) 24.03 7.41 24.03 22.92
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (4) 23.67 13.93 23.67 17.14
- ----------
(1) Commenced operations on July 1, 1993.
(2) Commenced operations on January 11, 1993.
(3) Commenced operations on September 29, 1995.
(4) Commenced operations on September 14, 1994.
</TABLE>
B-49
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
------------------------------- ------------------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Focused Growth Portfolio
Class A (1) 27.67 9.19 27.67 23.71
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (2) N/A N/A 30.30 30.30
Small Company Index Portfolio
Class A (3) 27.14 12.68 27.14 41.71
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (4) N/A N/A 29.89 29.89
International Growth Portfolio
Class A (5) (2.63) (0.53) (2.63) (0.90)
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (6) (3.09) (5.33) (3.09) (5.54)
- ----------
(1) Commenced operations on July 1, 1993.
(2) Commenced operations on December 8, 1994.
(3) Commenced operations on January 11, 1993.
(4) Commenced operations on December 11, 1994.
(5) Commenced operations on March 28, 1994.
(6) Commenced operations on November 16, 1994.
</TABLE>
B-50
<PAGE>
The Balanced Portfolio calculates its 30-day (or one month) standard yield
as described in the Prospectus for a class of units in accordance with the
method prescribed by the SEC for mutual funds:
Yield=2[((a-b/cd)+1) TO THE 6TH POWER -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of units outstanding during the
period that were entitled to receive dividends.
d = maximum offering price per unit on the last of
the period.
For the 30 day period ended November 30, 1995, the annualized yield of the
Class A units was 2.80%. During such period, Goldman Sachs reimbursed expenses
to the Portfolio and voluntarily agreed to reduce a portion of its
administration fees under "Additional Trust Information - Administrator and
Distributor", and Northern waived a portion of its investment advisory fees with
respect to the Portfolio. In the absence of such advisory and administration fee
reductions and expense limitations, the 30-day yield for Class A units would
have been 2.13%.
The performance of any investment is generally a function of portfolio
quality and maturity, type of investment and operating expenses.
Because of the different Servicing Fees and transfer agency fees payable
with respect to Class A, B, C and D units in a Portfolio, performance quotations
for units of Class B, C and D of the Portfolio will be lower than the quotations
for Class A units of the Portfolio which will not bear any fees for unitholder
support services and will bear minimal transfer agency fees.
B-51
<PAGE>
TAXES
The following summarizes certain additional tax considerations generally
affecting the Portfolios and their unitholders that are not described in the
Portfolios' Prospectuses. No attempt is made to present a detailed explanation
of the tax treatment of the Portfolios or their unitholders, and the discussion
here and in the applicable Prospectus is not intended as a substitute for
careful tax planning. Potential investors should consult their tax advisers with
specific reference to their own tax situations.
General
Each Portfolio will elect to be taxed separately as a regulated investment
company under Part I of Subchapter M of Subtitle A, Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, each Portfolio generally is exempt from Federal income tax on its net
investment income and realized capital gains which it distributes to
unitholders, provided that it distributes an amount equal to at least 90% of its
investment company taxable income (net investment income and the excess of net
short-term capital gain over net long-term capital loss), if any, for the year
(the "Distribution Requirement") and satisfies certain other requirements of the
Code that are described below.
In addition to satisfying the Distribution Requirement, each Portfolio
must derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement") and derive less than
30% of its gross income from the sale or other disposition of securities and
certain other investments held for less than three months (the "Short-Short
Test"). Interest (including original issue discount and "accrued market
discount") received by a Portfolio at maturity or on disposition of a security
held for less than three months will not be treated as gross income derived from
the sale or other disposition of such security within the meaning of this
requirement. However, any other income which is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
In addition to the foregoing requirements, at the close of each quarter of
its taxable year, at least 50% of the value of each Portfolio's assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Portfolio has not invested more than 5% of the value of its total
B-52
<PAGE>
assets in securities of such issuer and as to which a Portfolio does not hold
more than 10% of the outstanding voting securities of such issuer) and no more
than 25% of the value of each Portfolio's total assets may be invested in the
securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which such Portfolio controls and which are engaged in the same or similar
trades or businesses.
Each Portfolio intends to distribute to unitholders any excess of net
long-term capital gain over net short-term capital loss ("net capital gain") for
each taxable year. Such gain is distributed as a capital gain dividend and is
taxable to unitholders as long-term capital gain, regardless of the length of
time the unitholder has held the units, whether such gain was recognized by the
Portfolio prior to the date on which a unitholder acquired units of the
Portfolio and whether the distribution was paid in cash or reinvested in units.
In addition, investors should be aware that any loss realized upon the sale,
exchange or redemption of units held for six months or less will be treated as a
long-term capital loss to the extent of the capital gain dividends the
unitholder has received with respect to such units.
In the case of corporate unitholders, distributions of a Portfolio for any
taxable year generally qualify for the dividends received deduction to the
extent of the gross amount of "qualifying dividends" received by such Portfolio
for the year. Generally, a dividend will be treated as a "qualifying dividend"
if it has been received from a domestic corporation.
Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, but because of limitations on itemized deductions otherwise allowable and
the phase-out of personal exemptions, the maximum effective marginal rate of tax
for some taxpayers may be higher. An individual's long-term capital gains are
taxable at a maximum nominal rate of 28%. Capital gains and ordinary income of
corporate taxpayers are both taxed at a nominal maximum rate of 35% (an
effective marginal rate of 39% applies in the case of corporations having
taxable income between $100,000 and $335,000 and an effective marginal rate of
38% applies in the case of corporations having taxable income between $15
million and $18,333,333).
If for any taxable year any Portfolio does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to unitholders. In such
event, all distributions (whether or not derived from exempt-interest income)
would be taxable as ordinary income, to the extent of such Portfolio's current
and accumulated earnings and profits
B-53
<PAGE>
and would be eligible for the dividends received deduction in the case of
corporate unitholders.
Unitholders will be advised annually as to the Federal income tax
consequences of distributions made by the Portfolios each year.
The Code imposes a non-deductible 4% excise tax on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Portfolio intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and capital
gain net income each calendar year to avoid liability for this excise tax.
The Trust will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or 31% of gross sale proceeds
paid to any unitholder (i) who has provided either an incorrect tax
identification number or no number at all, (ii) who is subject to backup
withholding by the Internal Revenue Service for failure to report the receipt of
taxable interest or dividend income properly, or (iii) who has failed to certify
to the Trust, when required to do so, that he is not subject to backup
withholding or that he is an "exempt recipient."
Taxation of Certain Financial Instruments
Special rules govern the Federal income tax treatment of financial
instruments that may be held by the Portfolios. These rules may have a
particular impact on the amount of income or gain that the Portfolios must
distribute to their respective unitholders to comply with the Distribution
Requirement, on the income or gain qualifying under the Income Requirement and
on their ability to comply with the Short-Short Test described above.
Generally, futures contracts, options on futures contracts and certain
foreign currency contracts held by a Portfolio (collectively, the "Instruments")
at the close of its taxable year are treated for Federal income tax purposes as
sold for their fair market value on the last business day of such year, a
process known as "mark-to-market." Forty percent of any gain or loss resulting
from such constructive sales will be treated as short-term capital gain or loss
and 60% of such gain or loss will be treated as long-term capital gain or loss
without regard to the period a Portfolio has held the Instruments ("the 40%-60%
rule"). The amount of any capital gain or loss actually realized by a Portfolio
in a subsequent sale or other disposition of those
B-54
<PAGE>
Instruments is adjusted to reflect any capital gain or loss taken into account
by the Portfolio in a prior year as a result of the constructive sale of the
Instruments. Losses with respect to futures contracts to sell, related options
and certain foreign currency contracts, which are regarded as parts of a "mixed
straddle" because their values fluctuate inversely to the values of specific
securities held by the Portfolios, are subject to certain loss deferral rules
which limit the amount of loss currently deductible on either part of the
straddle to the amount thereof which exceeds the unrecognized gain (if any) with
respect to the other part of the straddle, and to certain wash sales
regulations. Under short sales rules, which are also applicable, the holding
period of the securities forming part of the straddle (if they have not been
held for the long-term holding period) will be deemed not to begin prior to
termination of the straddle. With respect to certain Instruments, deductions for
interest and carrying charges may not be allowed. Notwithstanding the rules
described above, with respect to futures contracts which are part of a "mixed
straddle" to sell related options and certain foreign currency contracts which
are properly identified as such, a Portfolio may make an election which will
exempt (in whole or in part) those identified futures contracts, options and
foreign currency contracts from the Rules of Section 1256 of the Code including
"the 40%-60% rule" and the mark-to-market on gains and losses being treated for
Federal income tax purposes as sold on the last business day of the Portfolio's
taxable year, but gains and losses will be subject to such short sales, wash
sales and loss deferral rules and the requirement to capitalize interest and
carrying charges. Under Temporary Regulations, each Portfolio would be allowed
(in lieu of the foregoing) to elect either (1) to offset gains or losses from
portions which are part of a mixed straddle by separately identifying each mixed
straddle to which such treatment applies, or (2) to establish a mixed straddle
account for which gains and losses would be recognized and offset on a periodic
basis during the taxable year. Under either election, "the 40%-60% rule" will
apply to the net gain or loss attributable to the Instruments, but, in the case
of a mixed straddle account election, not more than 50% of any net gain may be
treated as long-term and no more than 40% of any net loss may be treated as
short-term.
A foreign currency contract must meet the following conditions in order to
be subject to the mark-to-market rules described above: (1) the contract must
require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract depends;
(2) the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts. As
of the date of this Additional Statement, the
B-55
<PAGE>
Treasury Department has not issued any such regulations. Other foreign currency
contracts entered into by a Portfolio may result in the creation of one or more
straddles for Federal income tax purposes, in which case certain loss deferral,
short sales, and wash sales rules and the requirement to capitalize interest and
carrying charges may apply.
Some of the non-U.S. dollar denominated investments that the Portfolios
may make, such as foreign debt securities and foreign currency contracts, may be
subject to provisions of the Code which govern the Federal income tax treatment
of certain transactions denominated in terms of a currency other than the U.S.
dollar or determined by reference to the value of one or more currencies other
than the U.S. dollar. The types of transactions covered by these provisions
include the following: (1) the acquisition of, or becoming the obligor under, a
bond or other debt instrument (including, to the extent provided in Treasury
regulations, preferred stock); (2) the accruing of certain trade receivables and
payables; and (3) the entering into or acquisition of any forward contract,
futures contract, option and similar financial instrument. The disposition of a
currency other than the U.S. dollar by a U.S. taxpayer also is treated as a
transaction subject to the special currency rules. However, regulated futures
contracts and nonequity options are generally not subject to the special
currency rules if they are or would be treated as sold for their fair market
value at year-end under the mark-to-market rules, unless an election is made to
have such currency rules apply. With respect to transactions covered by the
special rules, foreign currency gain or loss is calculated separately from any
gain or loss on the underlying transaction and is normally taxable as ordinary
gain or loss. A taxpayer may elect to treat as capital gain or loss foreign
currency gain or loss arising from certain identified forward contracts, futures
contracts and options that are capital assets in the hands of the taxpayer and
which are not part of a straddle. In accordance with Treasury regulations,
certain transactions that are part of a "Section 988 hedging transaction" (as
defined in the Code and Treasury regulations) may be integrated and treated as a
single transaction or otherwise treated consistently for purposes of the Code.
"Section 988 hedging transactions" are not subject to the mark-to-market or loss
deferral rules under the Code. Gain or loss attributable to the foreign currency
component of transactions engaged in by the Portfolios which are not subject to
the special currency rules (such as foreign equity investments other than
certain preferred stocks) is treated as capital gain or loss and is not
segregated from the gain or loss on the underlying transaction.
B-56
<PAGE>
Foreign Investors
Foreign unitholders generally will be subject to U.S. withholding tax at a rate
of 30% (or a lower treaty rate, if applicable) on distributions by a Portfolio
of net interest income, other ordinary income, and the excess, if any, of net
short-term capital gain over net long-term capital loss for the year. For this
purpose, foreign unitholders include individuals other than U.S. citizens,
residents and certain nonresident aliens, and foreign corporations,
partnerships, trusts and estates. A foreign unitholder generally will not be
subject to U.S. income or withholding tax in respect of proceeds from or gain on
the redemption of units or in respect of capital gain dividends, provided such
unitholder submits a statement, signed under penalties of perjury, attesting to
such unitholder's exempt status. Different tax consequences apply to a foreign
unitholder engaged in a U.S. trade or business. Foreign unitholders should
consult their tax advisers regarding the U.S. and foreign tax consequences of
investing in a Portfolio.
Conclusion
The foregoing discussion is based on Federal tax laws and regulations which are
in effect on the date of this Additional Statement. Such laws and regulations
may be changed by legislative or administrative action. No attempt is made to
present a detailed explanation of the tax treatment of the Portfolio or its
unitholders, and the discussion here and in the Prospectus is not intended as a
substitute for careful tax planning. Unitholders are advised to consult their
tax advisers with specific reference to their own tax situation, including the
application of state and local taxes.
Although each Portfolio expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in which
its offices are maintained, in which its agents or independent contractors are
located or in which it is otherwise deemed to be conducting business, each
Portfolio may be subject to the tax laws of such states or localities.
B-57
<PAGE>
DESCRIPTION OF UNITS
The Trust Agreement permits the Trust's Board of Trustees to issue an
unlimited number of full and fractional units of beneficial interest of one or
more separate series representing interests in one or more investment
portfolios. The Trust may hereafter create series in addition to the Trust's
sixteen existing series, which represent interests in the Trust's sixteen
respective portfolios, six of which are discussed in this Additional Statement.
The Trust Agreement further permits the Board of Trustees to classify or
reclassify any unissued units into additional series or subseries within a
series. Pursuant to such authority, the Trustees have authorized the issuance of
an unlimited number of units of beneficial interest in four separate subseries
(sometimes referred to as "classes") of units in each of the Trust's Non-Money
Market Portfolios (except the Short Duration Portfolio): Class A, B, C and D
units. Under the terms of the Trust Agreement, each unit of each Portfolio is
without par value, represents an equal proportionate interest in the particular
Portfolio with each other unit of its class in the same Portfolio and is
entitled to such dividends and distributions out of the income belonging to the
Portfolio as are declared by the Trustees. Upon any liquidation of a Portfolio,
unitholders of each class of a Portfolio are entitled to share pro rata in the
net assets belonging to that class available for distribution. Units do not have
any preemptive or conversion rights. The right of redemption is described under
"Investing-Redemption of Units" in the Prospectus. In addition, pursuant to the
terms of the 1940 Act, the right of a unitholder to redeem units and the date of
payment by a Portfolio may be suspended for more than seven days (a) for any
period during which the New York Stock Exchange is closed, other than the
customary weekends or holidays, or trading in the markets the Portfolio normally
utilizes is closed or is restricted as determined by the SEC, (b) during any
emergency, as determined by the SEC, as a result of which it is not reasonably
practicable for the Portfolio to dispose of instruments owned by it or fairly to
determine the value of its net assets, or (c) for such other period as the SEC
may by order permit for the protection of the unitholders of the Portfolio. The
Trust may also suspend or postpone the recordation of the transfer of its units
upon the occurrence of any of the foregoing conditions. In addition, units of
each Portfolio are redeemable at the unilateral option of the Trust if the
Trustees determine in their sole discretion that failure to so redeem may have
material adverse consequences to the unitholders of the Portfolio. Units when
issued as described in the Prospectus are validly issued, fully paid and
nonassessable, except as stated below.
The proceeds received by each Portfolio for each issue or sale of its
units, and all net investment income, realized and unrealized gain and proceeds
thereof, subject only to the rights
B-58
<PAGE>
of creditors, will be specifically allocated to and constitute the underlying
assets of that Portfolio. The underlying assets of each Portfolio will be
segregated on the books of account, and will be charged with the liabilities in
respect to that Portfolio and with a share of the general liabilities of the
Trust. Expenses with respect to the Portfolios are normally allocated in
proportion to the net asset value of the respective Portfolios except where
allocations of direct expenses can otherwise be fairly made.
Rule 18f-2 under the 1940 Act provides that any matter required by the
provisions of the 1940 Act or applicable state law, or otherwise, to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding units of
each investment portfolio affected by such matter. Rule 18f-2 further provides
that an investment portfolio shall be deemed to be affected by a matter unless
the interests of each investment portfolio in the matter are substantially
identical or the matter does not affect any interest of the investment
portfolio. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to an investment portfolio only if approved by a majority of the
outstanding units of such investment portfolio. However, the Rule also provides
that the ratification of the appointment of independent accountants, the
approval of principal underwriting contracts and the election of Trustees may be
effectively acted upon by unitholders of the Trust voting together in the
aggregate without regard to a particular investment portfolio. In addition,
unitholders of each of the classes in a particular investment portfolio have
equal voting rights except that only units of a particular class of an
investment portfolio will be entitled to vote on matters submitted to a vote of
unitholders (if any) relating to unitholder servicing expenses and transfer
agency fees that are payable by that class.
As a general matter, the Trust does not hold annual or other meetings of
unitholders. This is because the Trust Agreement provides for unitholder voting
only for the election or removal of one or more Trustees, if a meeting is called
for that purpose, and for certain other designated matters. Each Trustee serves
until the next meeting of unitholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification of his successor, if any,
elected at such meeting, or until such Trustee sooner dies, resigns, retires or
is removed by the unitholders or two-thirds of the Trustees.
Under Massachusetts law, there is a possibility that unitholders of a
business trust could, under certain
B-59
<PAGE>
circumstances, be held personally liable as partners for the obligations of the
Trust. The Trust Agreement contains an express disclaimer of unitholder (as well
as Trustee and officer) liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each contract, undertaking
or instrument entered into or executed by the Trust or the Trustees. The Trust
Agreement provides for indemnification out of Trust property of any unitholder
charged or held personally liable for the obligations or liabilities of the
Trust solely by reason of being or having been a unitholder of the Trust and not
because of such unitholder's acts or omissions or for some other reason. The
Trust Agreement also provides that the Trust shall, upon proper and timely
request, assume the defense of any charge made against any unitholder as such
for any obligation or liability of the Trust and satisfy any judgment thereon.
Thus, the risk of a unitholder incurring financial loss on account of unitholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its obligations.
The Trust Agreement provides that each Trustee of the Trust will be liable
for his own wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee
("disabling conduct"), and for nothing else, and will not be liable for errors
of judgment or mistakes of fact or law. The Trust Agreement provides further
that the Trust will indemnify Trustees and officers of the Trust against
liabilities and expenses incurred in connection with litigation and other
proceedings in which they may be involved (or with which they may be threatened)
by reason of their positions with the Trust, except that no Trustee or officer
will be indemnified against any liability to the Trust or its unitholders to
which he would otherwise be subject by reason of disabling conduct.
As of March 1, 1996 substantially all of the Portfolios' outstanding units
were held of record by Northern for the benefit of its customers and the
customers of its affiliates and correspondent banks that have invested in the
Portfolios. As of the same date, the Trust's Trustees and officers owned
beneficially less than 1% of the outstanding units of each Portfolio. Northern
has advised the Trust that the following persons (whose mailing address is: c/o
The Northern Trust Company, 50 South LaSalle, Chicago, IL 60675) beneficially
owned five percent or more of the outstanding units of the Portfolios as of
March 1, 1996:
B-60
<PAGE>
<TABLE>
<CAPTION>
Number Percentage
of Outstanding
Units Units
----- -----------
<S> <C> <C>
BALANCED PORTFOLIO
The Northern Trust Company
Thrift Incentive Plan 1,466,736 41.1%
Retirement Trust for Employees
of Tetra Pak Inc. 786,999 22.1
DIVERSIFIED GROWTH PORTFOLIO
The Northern Trust Company
Pension Plan 4,258,918 36.3
EQUITY INDEX PORTFOLIO
The Northern Trust Company
Thrift Incentive Plan 7,264,850 19.2
Libby-Owens-Ford Company
Savings Trust 3,137,911 8.3
The Northern Trust Company
Pension Plan 2,434,757 6.4
Presbyterian Healthcare
Service 2,360,428 6.2
American Bankers Association 2,142,750 5.7
FOCUSED GROWTH PORTFOLIO
The Northern Trust Company
Thrift Incentive Plan 3,213,220 43.2
Doe Run Resources Corporation
Retirement Plan 827,933 11.1
Rexene Corporation
Retirement Plan 457,335 6.2
Graham Foundation for Advanced
Studies in the Fine Arts 430,373 5.8
SMALL COMPANY PORTFOLIO
The Northern Trust Company
Pension Plan 2,406,184 30.3
Doe Run Resources Corporation
Retirement Plan 628,456 7.9
Tuthill Corporation Master
Retirement Trust 498,556 6.3
</TABLE>
B-61
<PAGE>
<TABLE>
<CAPTION>
Number Percentage
of Outstanding
Units Units
----- -----------
<S> <C> <C>
INTERNATIONAL GROWTH PORTFOLIO
The Northern Trust Company
Pension Plan 2,067,492 15.3%
First National Bank of
North Dakota 981,959 7.3
Global Industrial Technologies, Inc.
Master Retirement Trust 904,632 6.7
Doe Run Resources Corporation
Retirement Plan 891,417 6.6
</TABLE>
OTHER INFORMATION
The Prospectus and this Additional Statement do not contain all the
information included in the Registration Statement filed with the SEC under the
Securities Act of 1933 with respect to the securities offered by the Trust's
Prospectus. Certain portions of the Registration Statement have been omitted
from the Prospectus and this Additional Statement pursuant to the rules and
regulations of the SEC. The Registration Statement including the exhibits filed
therewith may be examined at the office of the SEC in Washington, D.C.
Each Portfolio is responsible for the payment of its expenses. Such
expenses include, without limitation, the fees and expenses payable to Northern
and Goldman Sachs, brokerage fees and commissions, any portfolio losses, fees
for the registration or qualification of Portfolio units under Federal or state
securities laws, expenses of the organization of the Portfolios, taxes,
interest, costs of liability insurance, fidelity bonds, indemnification or
contribution, any costs, expenses or losses arising out of any liability of, or
claim for damages or other relief asserted against the Trust for violation of
any law, legal, tax and auditing fees and expenses, Servicing Fees, expenses of
preparing and printing prospectuses, statements of additional information, proxy
materials, reports and notices and the printing and distributing of the same to
the Trust's unitholders and regulatory authorities, compensation and expenses of
its Trustees, expenses of industry organizations such as the Investment Company
Institute, miscellaneous expenses and extraordinary expenses incurred by the
Trust.
Statements contained in the Prospectus or in this Additional Statement
as to the contents of any contract or other documents referred to are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement of
which the Prospectus and this Additional Statement form a part,
B-62
<PAGE>
each such statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
The audited financial statements and related report of Ernst & Young
LLP, independent auditors, contained in the Annual Report for the fiscal year
ended November 30, 1995 are hereby incorporated herein by reference and attached
hereto. No other parts of the Annual Report, including without limitation
"Management's Discussion of Portfolio Performance," are incorporated by
reference herein. Copies of the Annual Report may be obtained by writing to
Goldman, Sachs & Co., Funds Group, 4900 Sears Tower, Chicago, Illinois 60606, or
by calling Goldman, Sachs toll-free at 800-621-2550.
B-63
<PAGE>
APPENDIX A
Description of Bond Ratings
The following summarizes the highest six ratings used by Standard & Poor's
Ratings Group, Inc., a division of McGraw Hill ("S&P") for corporate and
municipal debt:
AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in a small degree.
A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those in
higher rated categories.
BB and B-Debt rated BB and B is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligation. Debt rated BB has less
near-term vulnerability to default than other speculative issues. However,
it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to inadequate capacity
to meet timely interest and principal payments. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
To provide more detailed indications of credit quality, the ratings AA and
lower may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
1-A
<PAGE>
S&P may attach the rating "r" to highlight derivative, hybrid and certain
other obligations that S&P believes may experience high volatility or high
variability in expected returns due to non-credit risks.
The following summarizes the highest six ratings used by Moody's Investors
Service, Inc. ("Moody's") for corporate and municipal long-term debt:
Aaa-Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa-Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A-Bonds that are rated A possess many favorable investment attributes and
are to be considered upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa-Bonds that are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba and B-Bonds that possess one of these ratings provide questionable
protection of interest and principal. Ba indicates some speculative
elements. B indicates a general lack of characteristics of desirable
investment.
The foregoing ratings for corporates and municipal long-term debt are
sometimes presented in parenthesis preceded with a "con" indicating the bonds
are rated conditionally. Such
2-A
<PAGE>
parenthetical rating denotes the probable credit stature upon completion of
construction or elimination of the basis of the condition. The notation (P) when
applied to forward delivery bonds indicates that the rating is provisional
pending delivery of the bonds. The rating may be revised prior to delivery if
changes occur in the legal documents or the underlying credit quality of the
bond.
The following summarizes the highest six ratings used by Duff & Phelps
Credit Rating Co. ("D&P") for corporate and municipal long term debt:
AAA-Debt rated AAA is of the highest credit quality. The risk factors are
considered to be negligible, being only slightly more than for risk-free
U.S. Treasury debt.
AA-Debt rated AA is of high credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of economic
conditions.
A-Bonds that are rated A have protection factors which are average but
adequate. However risk factors are more variable and greater in periods of
economic stress.
BBB-Bonds that are rated BBB have below average protection factors but
such protection factors are still considered sufficient for prudent
investment. Considerable variability in risk during economic cycles.
BB and B-Bonds that are rated BB or B are below investment grade. Bonds
rated BB are deemed likely to meet obligations when due. Bonds rated B
possess the risk that the obligations will not be met when due.
To provide more detailed indications of credit quality, the ratings AA and
lower may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.
The following summarizes the highest six ratings used by Fitch Investors
Service, Inc. ("Fitch") for corporate and municipal bonds:
AAA-Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA-Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA". Because bonds
related in the "AAA"
3-A
<PAGE>
and "AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."
A-Bonds 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 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 an 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.
BB and B-Bonds considered to be speculative investments with respect to
the timely payment of principal and interest in accordance with the terms
of the obligation.
To provide more detailed indications of credit quality, the Fitch ratings
"AA" and lower may be modified by the addition of a plus (+) or minus (-) sign
to show relative standing within these major rating categories.
Description of Municipal Note Ratings
The following summarizes the two highest ratings by S&P for short-term
municipal notes:
SP-1-Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given
a "plus" (+) designation.
SP-2-Satisfactory capacity to pay principal and interest.
The following summarizes the two highest ratings used by Moody's for
short-term municipal notes and variable rate demand obligations:
MIG-1/VMIG-1. Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2/VMIG-2. Obligations bearing these designations are of high quality
with margins of protection ample although not as large as in the preceding
group.
4-A
<PAGE>
The two highest rating categories of D&P for short-term debt are D1 and
D2. D&P employs three designations, D1+, D1 and D1-, within the highest rating
category. D1+ indicates 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. D1 indicates very high certainty of timely
payment. Liquidity factors are excellent and supported by good fundamental
protection factors. Risk factors are minor. D1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small. D2 indicates good certainty of
timely payment. Liquidity factors and company fundamentals are sound. Although
ongoing funding needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.
D&P uses the fixed-income ratings described above under "Description of
Bond Ratings" for tax-exempt notes and other short-term obligations. Fitch uses
the short-term ratings described below under "Description of Commercial Paper
Ratings" for new municipal notes.
Description of Commercial Paper Ratings
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted in A-1+. Capacity for timely payment
on commercial paper rated A-2 is satisfactory but the relative degree of safety
is not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers or related supporting institutions rated Prime-1 are considered
to have a superior capacity for repayment of short-term promissory obligations.
Issuers or related supporting institutions rated Prime-2 are considered to have
a strong capacity for repayment of short-term promissory 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, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
The following summarizes the highest ratings used by Fitch for short-term
obligations:
F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
5-A
<PAGE>
F-1 securities possess 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 securities possess 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 the F-1+ and F-1 categories.
D&P uses the short-term ratings described above under "Description of Note
Ratings" for commercial paper.
6-A
<PAGE>
APPENDIX B
As stated in their Prospectus, the Portfolios may enter into certain futures
transactions and options for hedging purposes. Such transactions are described
in this Appendix.
I. Interest Rate Futures Contracts
Use of Interest Rate Futures Contracts. Bond prices are established in
both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within three business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, a Portfolio could use interest rate
futures contracts as a defense, or hedge, against anticipated interest rate
changes. As described below, this could include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
A Portfolio presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by a Portfolio, through using futures contracts.
Description of Interest Rate Futures Contracts. An interest rate futures
contract sale would create an obligation by a Portfolio, as seller, to deliver
the specific type of financial instrument called for in the contract at a
specific future time for a specified price. A futures contract purchase would
create an obligation by a Portfolio, as purchaser, to take delivery of the
specific type of financial instrument at a specific future time at a specific
price. The specific securities delivered or taken, respectively, at settlement
date, would not be determined until at or near that date. The determination
would be in accordance with the rules of the exchange on which the futures
contract sale or purchase was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases
1-B
<PAGE>
the contracts are closed out before a settlement date without the making or
taking of delivery of securities. Closing out a futures contract sale is
effected by a Portfolio's entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument and the same
delivery date. If the price of a sale exceeds the price of the offsetting
purchase, a Portfolio is immediately paid the difference and thus realizes a
gain. If the offsetting purchase price exceeds the sale price, a Portfolio pays
the difference and realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by a Portfolio entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, a Portfolio
realizes a gain, and if the purchase price exceeds the offsetting sale price, a
Portfolio realizes a loss.
Interest rate futures contracts are traded in an auction environment on
the floors of several exchanges -- principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. A Portfolio would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. A Portfolio may trade in any interest rate futures contracts
for which there exists a public market, including, without limitation, the
foregoing instruments.
II. Index Futures Contracts
General. A stock or bond index assigns relative values to the securities
included in the index and the index fluctuates with changes in the market values
of the securities included.
A Portfolio may sell index futures contracts in order to offset a decrease
in market value of its portfolio securities that might otherwise result from a
market decline. A Portfolio may do so either to hedge the value of its portfolio
as a whole, or to protect against declines, occurring prior to sales of
securities, in the value of the securities to be sold. Conversely, a Portfolio
may purchase index futures contracts in anticipation of purchases of securities.
A long futures position may be terminated without a corresponding purchase of
securities.
2-B
<PAGE>
In addition, a Portfolio may utilize index futures contracts in
anticipation of changes in the composition of its portfolio holdings. For
example, in the event that a Portfolio expects to narrow the range of industry
groups represented in its holdings it may, prior to making purchases of the
actual securities, establish a long futures position based on a more restricted
index, such as an index comprised of securities of a particular industry group.
A Portfolio may also sell futures contracts in connection with this strategy, in
order to protect against the possibility that the value of the securities to be
sold as part of the restructuring of the portfolio will decline prior to the
time of sale.
III. Futures Contracts on Foreign Currencies (International
Growth Portfolio)
A futures contract on foreign currency creates a binding obligation on one
party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of foreign currency, for an amount fixed in U.S.
dollars. Foreign currency futures may be used by a Portfolio to hedge against
exposure to fluctuations in exchange rates between the U.S. dollars and other
currencies arising from multinational transactions.
IV. Margin Payments
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Portfolio upon the purchase or sale of a futures contract.
Initially, the Portfolio will be required to deposit with the broker or in a
segregated account with the Custodian or a sub-custodian an amount of cash or
cash equivalents, known as initial margin, based on the value of the contract.
The nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
the borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Portfolio upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying instruments fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as marking-to-the-market. For example, when a particular Portfolio
has purchased a futures contract and the price of the contract has risen in
response to a rise in the underlying instruments, that position will have
increased in value and the Portfolio will be entitled to receive from the broker
a variation margin payment equal to that increase in value. Conversely, where
the Portfolio has purchased a futures contract and the price of the future
contract has
3-B
<PAGE>
declined in response to a decrease in the underlying instruments, the position
would be less valuable and the Portfolio would be required to make a variation
margin payment to the broker. At any time prior to expiration of the futures
contract, the Portfolio's adviser may elect to close the position by taking an
opposite position, subject to the availability of a secondary market, which will
operate to terminate the Portfolio's position in the futures contract. A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Portfolio, and the Portfolio realizes a loss or
gain.
V. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures by the
Portfolios as hedging devices. One risk arises because of the imperfect
correlation between movements in the price of the futures and movements in the
price of the instruments which are the subject of the hedge. The price of the
future may move more than or less than the price of the instruments being
hedged. If the price of the futures moves less than the price of the instruments
which are the subject of the hedge, the hedge will not be fully effective but,
if the price of the instruments being hedged has moved in an unfavorable
direction, the Portfolio would be in a better position than if it had not hedged
at all. If the price of the instruments being hedged has moved in a favorable
direction, this advantage will be partially offset by the loss on the futures.
If the price of the futures moves more than the price of the hedged instruments,
the Portfolio involved will experience either a loss or gain on the futures
which will not be completely offset by movements in the price of the instruments
which are the subject of the hedge. To compensate for the imperfect correlation
of movements in the price of instruments being hedged and movements in the price
of futures contracts, the Portfolio may buy or sell futures contracts in a
greater dollar amount than the dollar amount of instruments being hedged if the
volatility over a particular time period of the prices of such instruments has
been greater than the volatility over such time period of the futures, or if
otherwise deemed to be appropriate by Northern. Conversely, the Portfolios may
buy or sell fewer futures contracts if the volatility over a particular time
period of the prices of the instruments being hedged is less than the volatility
over such time period of the futures contract being used, or if otherwise deemed
to be appropriate by Northern. It is also possible that, where a Portfolio had
sold futures to hedge its portfolio against a decline in the market, the market
may advance and the value of instruments held in the Portfolio may decline. If
this occurred, the Portfolio would lose money on the futures and also experience
a decline in value in its portfolio securities.
4-B
<PAGE>
When futures are purchased to hedge against a possible increase in the
price of securities before a Portfolio is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Portfolio then concludes not to invest its cash at that time
because of concern as to possible further market decline or for other reasons,
the Portfolio will realize a loss on the futures contract that is not offset by
a reduction in the price of the instruments that were to be purchased.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by Northern may still not result in a
successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the
Portfolios intend to purchase or sell futures only on exchanges or boards of
trade where there appear to be active secondary markets, there is no assurance
that a liquid secondary market on any exchange or board of trade will exist for
any particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Portfolios would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been
used to hedge portfolio securities, such securities will not be sold until the
futures contract can be terminated. In such circumstances, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities will in fact
5-B
<PAGE>
correlate with the price movements in the futures contract and thus provide an
offset on a futures contract.
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Portfolios is also subject to Northern's
ability to predict correctly movements in the direction of the market. For
example, if a particular Portfolio has hedged against the possibility of a
decline in the market adversely affecting securities held by it and securities
prices increase instead, the Portfolio will lose part or all of the benefit to
the increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Portfolio has insufficient cash, it may have to sell securities to meet
daily variation margin requirements. Such sales of securities may be, but will
not necessarily be, at increased prices which reflect the rising market. The
Portfolios may have to sell securities at a time when they may be
disadvantageous to do so.
Futures purchased or sold by the International Growth Portfolio (and
related options) may be traded in foreign securities. Participation in foreign
futures and foreign options transactions involves the execution and clearing of
trades on or subject to the rules of a foreign board of trade. Neither the
National Futures Association nor any domestic exchange regulates activities of
any foreign boards of trade, including the execution, delivery and clearing of
transaction, or has the power to compel enforcement of the rules of a foreign
board of trade or any applicable foreign law. This is true even if the exchange
is formally linked to a domestic market so that a position taken on the market
may be liquidated by a transaction on another market. Moreover, such laws or
regulations will vary depending on the foreign country in which the foreign
futures or foreign options transaction occurs. For these reasons, customers who
trade foreign futures of foreign options contracts may not be afforded certain
of the protective measures provided by the Commodity Exchange Act, the Commodity
Futures Trading Commission's ("CFTC") regulations and the rules of the National
Futures Association and any domestic exchange, including the right to use
reparations proceedings before the CFTC and arbitration proceedings provided by
the National Futures Association or any domestic futures
6-B
<PAGE>
exchange. In particular, the International Growth Portfolio's investments in
foreign futures or foreign options transactions may not be provided the same
protections in respect of transactions on United States futures exchanges. In
addition, the price of any foreign futures or foreign options contract and,
therefore the potential profit and loss thereon may be affected by any variance
in the foreign exchange rate between the time an order is placed and the time it
is liquidated, offset or exercised.
VI. Options on Futures Contracts
The Portfolios may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of, the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Portfolio will be required to deposit initial margin and
variation margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those described
above. Net option premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). See "Risks of Transactions
in Futures Contracts" above. In addition, the purchase or sale of an option also
entails the risk that changes in the value of the underlying futures contract
will not correspond to changes in the value of the option purchased. Depending
on the pricing of the option compared to either the futures contract upon which
it is based, or upon the price of the instruments being hedged, an option may or
may not be less risky than ownership of the futures contract or such
instruments. In general, the market prices of options can be expected to be more
volatile than the market prices on the underlying futures contract. Compared to
the purchase or sale of futures contracts, however, the purchase of call or put
options on futures contracts may frequently involve less potential risk to the
Portfolio because the maximum amount at risk is the premium paid for the options
(plus transaction costs). The writing of an option on a futures contract
involves
7-B
<PAGE>
risks similar to those risks relating to the sale of futures contracts.
8-B
<PAGE>
VII. Other Matters
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
9-B
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
THE BENCHMARK FUNDS
4900 Sears Tower
Chicago, Illinois 60606
GOVERNMENT SELECT PORTFOLIO
GOVERNMENT PORTFOLIO
DIVERSIFIED ASSETS PORTFOLIO
TAX-EXEMPT PORTFOLIO
This Statement of Additional Information (the "Additional Statement") dated
April 1, 1996 is not a prospectus. This Additional Statement should be read in
conjunction with the Prospectus for the Government Select, Government,
Diversified Assets and Tax-Exempt Portfolios of The Benchmark Funds (the
"Prospectus") dated April 1, 1996. Copies of the Prospectus may be obtained
without charge by calling Goldman, Sachs & Co. ("Goldman Sachs") toll-free at
1-800-621-2550 (outside Illinois) or by writing to the address stated above.
Capitalized terms not otherwise defined have the same meaning as in the
Prospectus.
------------------
INDEX
Page
----
ADDITIONAL INVESTMENT INFORMATION B-3
Investment Objectives and Policies B-3
Investment Restrictions B-9
ADDITIONAL TRUST INFORMATION B-13
Trustees and Officers B-13
Investment Adviser,
Transfer Agent and Custodian B-20
Administrator and Distributor B-25
Counsel and Auditors B-27
PERFORMANCE INFORMATION B-28
AMORTIZED COST VALUATION B-29
DESCRIPTION OF UNITS B-31
ADDITIONAL INFORMATION CONCERNING TAXES B-34
General B-34
Special Tax Considerations
Pertaining to the
Tax-Exempt Portfolio B-36
Foreign Investors B-37
Conclusion B-37
OTHER INFORMATION B-37
FINANCIAL STATEMENTS B-39
APPENDIX A (Description of Securities Ratings) 1-A
----------------
<PAGE>
No person has been authorized to give any information or to make any
representations not contained in this Additional Statement or in the Prospectus
in connection with the offering made by the Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Trust or its distributor. The Prospectus does not constitute
an offering by the Trust or by the distributor in any jurisdiction in which such
offering may not lawfully be made.
Units of the Trust are not bank deposits or obligations of, or guaranteed,
endorsed or otherwise supported by, The Northern Trust Company, its parent
company or its affiliates and are not federally insured or guaranteed by the
U.S. Government, the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other governmental agency. There can be no assurance that any
Portfolio will be able to maintain a stable net asset value of $1.00 per unit.
An investment in a Portfolio involves investment risk, including possible loss
of principal.
B-2
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
Investment Objectives and Policies
The following supplements the investment objectives and policies of the
Government Select, Government, Diversified Assets and Tax-Exempt Portfolios (the
"Portfolios") of The Benchmark Funds (the "Trust") as set forth in the
Prospectus.
Description of Commercial Paper, Bankers' Acceptances, Certificates
of Deposit and Time Deposits
Commercial paper represents short-term unsecured promissory notes issued in
bearer form by banks or bank holding companies, corporations and finance
companies. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a stated maturity date and
bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand
by the investor, but may be subject to early withdrawal penalties that vary
depending upon market conditions and the remaining maturity of the obligation.
There are no contractual restrictions on the right to transfer a beneficial
interest in a fixed time deposit to a third party, although there is no market
for such deposits.
As stated in the Prospectus, the Diversified Assets Portfolio may invest a
portion of its assets in the obligations of foreign banks and foreign branches
of domestic banks. Such obligations include Eurodollar Certificates of Deposit
("ECDs") which are U.S. dollar-denominated certificates of deposit issued by
offices of foreign and domestic banks located outside the United States;
Eurodollar Time Deposits ("ETDs") which are U.S. dollar-denominated deposits in
a foreign branch of a U.S. bank or a foreign bank; Canadian Time Deposits
("CTDs") which are essentially the same as ETDs except they are issued by
Canadian offices of major Canadian banks; Schedule Bs, which are obligations
issued by Canadian branches of foreign or domestic banks; Yankee Certificates of
Deposit ("Yankee CDs") which are U.S. dollar-denominated certificates of deposit
issued by a U.S. branch of a foreign bank and held in the United States; and
Yankee Bankers' Acceptances ("Yankee BAs") which are U.S. dollar-denominated
bankers' acceptances issued by a U.S. branch of a foreign bank and held in the
United States.
B-3
<PAGE>
Description of Asset-Backed Securities
The Diversified Assets Portfolio may purchase asset-backed securities, which are
securities backed by mortgages, installment contracts, credit card receivables
or other assets. The average life of asset-backed securities varies with the
maturities of the underlying instruments, and the average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgage pools underlying the securities as a
result of mortgage prepayments. For this and other reasons, an asset-backed
security's stated maturity may be shortened, and the security's total return may
be difficult to predict precisely. Such difficulties are not, however, expected
to have a significant effect on the Portfolio since the remaining maturity of
any asset-backed security acquired will be 13 months or less. Asset-backed
securities acquired by the Portfolio may include collateralized mortgage
obligations ("CMOs") issued by private companies.
U.S. Government Obligations
Examples of the types of U.S. Government obligations that may be acquired by the
Portfolios include U.S. Treasury Bills, Treasury Notes and Treasury Bonds and
the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal
Land Banks, the Federal Housing Administration, Farmers Home Administration,
Export- Import Bank of the United States, Small Business Administration, Federal
National Mortgage Association, Government National Mortgage Association, General
Services Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks, and the Maritime Administration.
Custodial Receipts for Treasury Securities
The Portfolios (other than the Government Select Portfolio) may acquire U.S.
Government obligations and their unmatured interest coupons that have been
separated ("stripped") by their holder, typically a custodian bank or investment
brokerage firm. Having separated the interest coupons from the underlying
principal of the U.S. Government obligations, the holder will resell the
stripped securities in custodial receipt programs with a number of different
names, including "Treasury Income Growth Receipts" ("TIGRs") and "Certificate of
Accrual on Treasury Securities" ("CATS"). The stripped coupons are sold
separately from the underlying principal, which is usually sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. The underlying U.S. Treasury bonds and notes themselves are
held in book-entry form at the Federal Reserve Bank or, in the case of bearer
securities (i.e., unregistered securities which are ostensibly owned by the
bearer or holder), in trust on behalf of the owners. Counsel to the underwriters
of these certificates or other evidences of
B-4
<PAGE>
ownership of U.S. Treasury securities have stated that, in their opinion,
purchasers of the stripped securities most likely will be deemed the beneficial
holders of the underlying U.S. Government obligations for Federal tax purposes.
The Trust is not aware of any binding legislative, judicial or administrative
authority on this issue.
U.S. Treasury STRIPS
Within the past several years, the Treasury Department has facilitated transfers
of ownership of zero coupon securities by accounting separately for the
beneficial ownership of particular interest coupon and principal payments on
Treasury securities through the Federal Reserve book-entry record-keeping
system. The Federal Reserve program as established by the Treasury Department is
known as "STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." Under the STRIPS program, a Portfolio will be able to have its
beneficial ownership of zero coupon securities recorded directly in the
book-entry record-keeping system in lieu of having to hold certificates or other
evidences of ownership of the underlying U.S. Treasury securities. All
Portfolios, including the Government Select Portfolio, may acquire securities
registered under the STRIPS program.
Bank and Deposit Notes
The Diversified Assets Portfolio may purchase bank and deposit notes. Bank notes
rank junior to deposit liabilities of the bank and pari passu with other senior,
unsecured obligations of the bank. Bank notes are classified as "other
borrowings" on a bank's balance sheet, while deposit notes and certificates of
deposit are classified as deposits. Bank notes are not insured by the Federal
Deposit Insurance Corporation or any other insurer. Deposit notes are insured by
the Federal Deposit Insurance Corporation only to the extent of $100,000 per
depositor per bank.
Variable and Floating Rate Instruments
With respect to the variable and floating rate instruments that may be acquired
by the Portfolios as described in the Prospectus, Northern will consider the
earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instruments are subject to demand
features, will continuously monitor their financial status to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument is
of "high quality," the issuer's obligation to pay the principal of the
instrument will be backed by an unconditional bank letter or line of credit,
guarantee or commitment to lend. The Portfolios will invest in variable and
floating rate instruments only when Northern deems the investment to involve
minimal credit risk. In determining weighted average portfolio maturity, an
instrument will usually be deemed to have a maturity equal to the longer of the
B-5
<PAGE>
period remaining until the next interest rate adjustment or the time the
Portfolio involved can recover payment of principal as specified in the
instrument. Variable rate U.S. Government obligations held by the Portfolios,
however, will be deemed to have maturities equal to the period remaining until
the next interest rate adjustment.
Investment Companies
Each Portfolio currently intends to limit its investments in securities issued
by other investment companies so that, as determined immediately after a
purchase of such securities is made, not more than 3% of the total outstanding
stock of any one investment company will be owned by the Portfolio, the Trust as
a whole and their affiliated persons (as defined in the 1940 Act). An investment
company whose securities are purchased by a Portfolio or the Trust is not
obligated to redeem such securities in an amount exceeding 1% of the investment
company's total outstanding securities during any period of less than 30 days.
Therefore, such securities that exceed this amount may be illiquid.
Repurchase Agreements
Each Portfolio may enter into repurchase agreements with financial institutions,
such as banks and broker-dealers, as are deemed creditworthy by Northern under
guidelines approved by the Trust's Board of Trustees. The repurchase price under
the repurchase agreements will generally equal the price paid by a Portfolio
plus interest negotiated on the basis of current short-term rates (which may be
more or less than the rate on the securities underlying the repurchase
agreement). Securities subject to repurchase agreements will be held by the
Trust's custodian (or subcustodian), in the Federal Reserve/Treasury book-entry
system or by another authorized securities depository. Repurchase agreements are
considered to be loans by a Portfolio under the 1940 Act.
Lending Securities
Collateral for loans of portfolio securities made by a Portfolio may consist of
cash, securities issued or guaranteed by the U.S. Government or its agencies or
(with respect to the Diversified Assets Portfolio) irrevocable bank letters of
credit (or any combination thereof). The borrower of securities will be required
to maintain the market value of the collateral at not less than the market value
of the loaned securities, and such value will be monitored on a daily basis.
When a Portfolio lends its securities, it continues to receive interest on the
securities loaned and may simultaneously earn interest on the investment of the
cash collateral which will be invested in readily marketable, high-quality,
short-term obligations. Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans will be called so that
the securities may be voted by a Portfolio if a material event affecting the
investment is to occur.
B-6
<PAGE>
Forward Commitments and When-Issued Securities
Each Portfolio may purchase securities on a when-issued basis or purchase or
sell securities on a forward commitment (sometimes called delayed delivery)
basis. These transactions involve a commitment by the Portfolio to purchase or
sell securities at a future date. The price of the underlying securities
(usually expressed in terms of yield) and the date when the securities will be
delivered and paid for (the settlement date) are fixed at the time the
transaction is negotiated. When-issued purchases and forward commitment
transactions are normally negotiated directly with the other party.
A Portfolio will purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing
the transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, a Portfolio may dispose
of or negotiate a commitment after entering into it. A Portfolio also may sell
securities it has committed to purchase before those securities are delivered to
the Portfolio on the settlement date. The Portfolio may realize a capital gain
or loss in connection with these transactions. For purposes of determining a
Portfolio's average dollar-weighted maturity, the maturity of when-issued or
forward commitment securities will be calculated from the commitment date.
When a Portfolio purchases securities on a when-issued or forward commitment
basis, the Portfolio's custodian (or subcustodian) will maintain in a segregated
account cash, U.S. Government securities or other high-grade debt obligations
having a value (determined daily) at least equal to the amount of the
Portfolio's purchase commitments. In the case of a forward commitment to sell
portfolio securities, the custodian or subcustodian will hold the portfolio
securities themselves in a segregated account while the commitment is
outstanding. These procedures are designed to ensure that the Portfolio will
maintain sufficient assets at all times to cover its obligations under
when-issued purchases and forward commitments.
Yields and Ratings
The yields on certain obligations, including the money market instruments in
which the Portfolios invest (such as commercial paper and bank obligations), are
dependent on a variety of factors, including general money market conditions,
conditions in the particular market for the obligation, financial condition of
the issuer, size of the offering, maturity of the obligation and ratings of the
issue. The ratings of S&P, Moody's, D&P, Fitch and TBW represent their
respective opinions as to the quality of the obligations they undertake to rate.
Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices.
B-7
<PAGE>
Municipal Instruments
Opinions relating to the validity of Municipal Instruments and to the exemption
of interest thereon from regular Federal income tax are rendered by bond counsel
to the respective issuing authorities at the time of issuance. Neither the Trust
nor Northern will review the proceedings relating to the issuance of Municipal
Instruments or the bases for such opinions.
An issuer's obligations under its Municipal Instruments 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 Federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
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 Instruments may be materially
adversely affected by litigation or other conditions.
From time to time proposals have been introduced before Congress for the purpose
of restricting or eliminating the Federal income tax exemption for interest on
Municipal Instruments. For example, under the Tax Reform Act of 1986 interest on
certain private activity bonds must be included in an investor's Federal
alternative minimum taxable income, and corporate investors must include all
tax-exempt interest in their Federal alternative minimum taxable income. The
Trust cannot predict what legislation, if any, may be proposed in the future in
Congress as regards the Federal income tax status of interest on Municipal
Instruments. Future proposals could materially adversely affect the availability
of Municipal Instruments for investment by the Tax-Exempt Portfolio and the
liquidity and value of the Portfolio. In such an event the Board of Trustees
would reevaluate the Portfolio's investment objective and policies and consider
changes in its structure or possible dissolution.
Interest earned by the Tax-Exempt Portfolio on private activity bonds (if any)
that is treated as a specific tax preference item under the Federal alternative
minimum tax will not be deemed to have been derived from Municipal Instruments
for purposes of determining whether that Portfolio meets its fundamental policy
that at least 80% of its annual gross income be derived from Municipal
Instruments.
Standby Commitments
The Tax-Exempt Portfolio may enter into standby commitments with respect to
Municipal Instruments held by it. Under a standby commitment, a dealer agrees to
purchase at the Portfolio's option a specified Municipal Instrument at its
amortized cost value to the Portfolio plus accrued interest, if any. Standby
commitments may be exercisable by the Portfolio at any time before the maturity
of the
B-8
<PAGE>
underlying Municipal Instruments and may be sold, transferred or assigned only
with the instruments involved.
The Tax-Exempt Portfolio expects that standby commitments will generally be
available without the payment of any direct or indirect consideration. However,
if necessary or advisable, the Portfolio may pay for a standby commitment either
separately in cash or by paying a higher price for Municipal Instruments which
are acquired subject to the commitment (thus reducing the yield to maturity
otherwise available for the same securities). The total amount paid in either
manner for outstanding standby commitments held by the Portfolio will not exceed
1/2 of 1% of the value of the Portfolio's total assets calculated immediately
after each standby commitment is acquired.
The Portfolio intends to enter into standby commitments only with dealers, banks
and broker-dealers which, in Northern's opinion, present minimal credit risks.
The Portfolio will acquire standby commitments solely to facilitate portfolio
liquidity and does not intend to exercise its rights thereunder for trading
purposes. The acquisition of a standby commitment will not affect the valuation
or assumed maturity of the underlying Municipal Instrument which will continue
to be valued in accordance with the amortized cost method. The actual standby
commitment will be valued at zero in determining net asset value. Accordingly,
where the Portfolio pays directly or indirectly for a standby commitment, its
cost will be reflected as an unrealized loss for the period during which the
commitment is held by the Portfolio and will be reflected in realized gain or
loss when the commitment is exercised or expires.
Investment Restrictions
Each Portfolio is subject to the fundamental investment restrictions enumerated
below which may be changed with respect to a particular Portfolio only by a vote
of the holders of a majority of such Portfolio's outstanding units.
No Portfolio may:
(1) Make loans, except (a) through the purchase of debt obligations in
accordance with the Portfolio's investment objective and policies, (b)
through repurchase agreements with banks, brokers, dealers and other
financial institutions, and (c) loans of securities.
(2) Mortgage, pledge or hypothecate any assets (other than pursuant to
reverse repurchase agreements for the Diversified Assets, Government and
Government Select Portfolios) except to secure permitted borrowings.
(3) Purchase or sell real estate or securities issued by real estate
investment trusts, but this restriction shall not prevent
B-9
<PAGE>
a Portfolio from investing directly or indirectly in portfolio instruments
secured by real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts or oil or gas or
other mineral exploration or development programs.
(5) Invest in companies for the purpose of exercising control or
management.
(6) Act as underwriter of securities (except as a Portfolio may be deemed
to be an underwriter under the Securities Act of 1933 in connection with
the purchase and sale of portfolio instruments in accordance with its
investment objective and portfolio management policies), purchase
securities on margin (except for delayed delivery or when-issued
transactions or such short-term credits as are necessary for the clearance
of transactions), make short sales of securities or maintain a short
position, or write puts, calls or combinations thereof.
(7) Purchase the securities of any issuer if such purchase would cause more
than 10% of the voting securities of such issuer to be held by the
Portfolio, except that up to 25% of the value of its total assets may be
invested without regard to this 10% limitation.
(8) Purchase the securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, if immediately after such purchase more than 5% of the
value of such Portfolio's total assets would be invested in such issuer,
except that: (a) up to 25% of the value of the total assets of the
Tax-Exempt Portfolio may be invested in any securities, and up to 25% of
the value of the total assets of each of the other Portfolios may be
invested in repurchase agreements, certificates of deposit and bankers'
acceptances, without regard to this 5% limitation; and (b) with respect to
each Portfolio, such 5% limitation shall not apply to repurchase agreements
collateralized by obligations of the U.S. Government, its agencies or
instrumentalities.
(9) Purchase securities if such purchase would cause more than 25% in the
aggregate of the market value of the total assets of a Portfolio to be
invested in the securities of one or more issuers having their principal
business activities in the same industry, provided that there is no
limitation with respect to, and each Portfolio reserves freedom of action,
when otherwise consistent with its investment policies, to concentrate its
investments in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, obligations (other than commercial paper)
issued or guaranteed by U.S. banks and U.S. branches of foreign banks and
repurchase agreements and securities loans collateralized by such U.S.
Government obligations or such bank obligations. For the purposes of this
B-10
<PAGE>
restriction, state and municipal governments and their agencies and
authorities are not deemed to be industries; as to utility companies, the
gas, electric, water and telephone businesses are considered separate
industries; personal credit finance companies and business credit finance
companies are deemed to be separate industries; and wholly-owned finance
companies are considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their
parents.
(10) Borrow money (other than pursuant to reverse repurchase agreements for
the Portfolios described above), except (a) as a temporary measure, and
then only in amounts not exceeding 5% of the value of the Portfolio's total
assets or (b) from banks, provided that immediately after any such
borrowing all borrowings of the Portfolio do not exceed one-third of the
Portfolio's total assets. No purchases of securities will be made if
borrowings subject to this restriction exceed 5% of the value of the
Portfolio's assets. The exceptions in (a) and (b) to this restriction are
not for investment leverage purposes but are solely for extraordinary or
emergency purposes or to facilitate management of the Trust's Portfolios by
enabling the Trust to meet redemption requests when the liquidation of
portfolio instruments is deemed to be disadvantageous or not possible. If
due to market fluctuations or other reasons the total assets of a Portfolio
fall below 300% of its borrowings, the Trust will promptly reduce the
borrowings of such Portfolio in accordance with the 1940 Act.
* * *
The freedom of action reserved in Restriction No. 9 with respect to U.S.
branches of foreign banks is subject to the requirement that they are subject to
the same regulation as domestic branches of U.S. banks.
In addition, as matters of fundamental policy, the Government Select Portfolio,
Government Portfolio and Diversified Assets Portfolio may not enter into reverse
repurchase agreements exceeding in the aggregate one-third of the applicable
Portfolio's total assets; and the Tax-Exempt Portfolio may not acquire direct
ownership of industrial development bonds if, as a result of such acquisition,
more than 5% of the value of its total assets would be invested in industrial
development bonds where payment of principal and interest is the responsibility
of companies (including their predecessors) with less than three years of
operating history and such bonds are not guaranteed as to principal and interest
by companies (including their predecessors) with three years or more of
operating history.
Except to the extent otherwise provided in Investment Restriction (9) for the
purpose of such restriction, in determining industry
B-11
<PAGE>
classification the Trust intends to use the industry classification titles in
the Standard Industrial Classification Manual.
In applying Restriction No. 8 and Restriction No. 9 above, a security is
considered to be issued by the entity, or entities, whose assets and revenues
back the security. A guarantee of a security is not deemed to be a security
issued by the guarantor when the value of all securities issued and guaranteed
by the guarantor, and owned by a Portfolio, does not exceed 10% of the value of
the Portfolio's total assets.
Any restriction which involves a maximum percentage will not be considered
violated unless an excess over the percentage occurs immediately after, and is
caused by, an acquisition or encumbrance of securities or assets of, or
borrowings by, a Portfolio.
In order to permit the sale of the Portfolio's units in certain states, the
Trust may make commitments with respect to the Portfolios that are more
restrictive than the investment policies listed above and in the Prospectus. To
permit the sale of the units of the Government Select Portfolio in Texas, the
Trust has agreed that the Portfolio will not invest in real estate limited
partnership interests, or in oil, gas or mineral leases. Should the Trust
determine that the above commitments (or any other commitment made to permit the
sale of a Portfolio's units in any state) are no longer in the best interests of
the Portfolio, it will revoke the commitment by terminating sales of the
Portfolio's units in the state involved.
B-12
<PAGE>
ADDITIONAL TRUST INFORMATION
Trustees and Officers
Information pertaining to the Trustees and officers of the Trust is set forth
below.
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
William H. Springer, 66 Chairman Vice Chairman of Ameritech
701 Morningside Drive and (a telecommunications
Lake Forest, IL 60045 Trustee holding company; February
1987 to retirement in
August 1992); Vice Chair-
man, Chief Financial and
Administrative Officer,
prior thereto; Director,
Walgreen Co. (a retail
drug store business);
Director of Baker,
Fentress & Co. (a closed-
end, non-diversified
management investment
company) (April 1992 to
present).
Edward J. Condon, Jr., 54 Trustee Chairman of The Paradigm
227 West Monroe Street Group, Ltd. (a financial
Chicago, IL 60606. advisor) since July 1993.
Vice President and
Treasurer of Sears, Roebuck
and Co. (a retail
corporation) from February
1989 to July 1993. Within
the last five years he has
served as a Director of:
Sears Roebuck Acceptance
Corp.; Discover Credit
Corp.; Sears Receivables
Financing Group, Inc.;
Sears Credit Corp.; and
Sears Overseas Finance N.V.
John W. English, 61 Trustee Private Investor. Vice
50-H New England Avenue President and Chief
P.O. Box 640 Investment Officer of The
Summit, NJ 07902-0640. Ford Foundation (a
charitable trust) from 1981
until 1993. Trustee: The
China Fund, Inc.; Paribas
Trust for the Institutions;
</TABLE>
B-13
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Retail Property Trust;
Sierra Trust; American Red
Cross in Greater New York;
Mote Marine Laboratory; and
United Board for Christian
Higher Education in Asia.
Director: University of
Iowa Foundation; Blanton-
Peale Institutes of
Religion and Health;
Community Foundation of
Sarasota County; Duke
Management Company; and
John Ringling Centre
Foundation.
James J. Gavin, Jr., 72 Trustee Vice Chairman from January
161 Thorntree Lane 1985 to August 1987 and
Winnetka, IL 60093 Senior Vice President-
Finance and Chief Financial
Officer from 1975 to
January 1985 of Borg-Warner
Corporation (a diversified
manufacturing company also
engaged in providing
financial and protective
services). Director of
Service Corporation
International (a funeral
service/cemetery company),
Stepan Corporation (a
producer of basic and
intermediate chemicals),
Borg-Warner Industrial
Products, Inc. (a
supplier of advanced
technology fluid transfer
and control equipment,
systems and services).
Frederick T. Kelsey, 67 Trustee Consultant to Goldman Sachs
3133 Laughing Gull Court from December 1985 through
Johns Island, February 1988. Director of
South Carolina 29455. Goldman Sachs Funds Group
and Vice President of
Goldman Sachs from May 1981
until his retirement in
November 1985. President
and Treasurer of the Trust
through August 1985.
</TABLE>
B-14
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Trustee, various management
investment companies
affiliated with Kemper
Financial Companies.
Richard P. Strubel, 56 Trustee President and Chief
70 West Madison St Executive Officer, Tandem
Inc. Suite 1400 Partners, (a diversified
Chicago, IL 60602 manufacturer of fastening
systems and connectors)
(since January 1984)
Marcia L. Beck, 40 President Director, Institutional
One New York Plaza Funds Group, GSAM (since
New York, NY September 1992); Vice
10004 President and Senior
Portfolio Manager, Goldman
Sachs Asset Management from
June 1988 to Present; Vice
President, Funds Group of
Goldman Sachs Asset
Management May 1985 to June
1988
Paul Klug, 44 Vice Vice President of Goldman
One New York Plaza President Sachs; Director of
New York, NY 10004 Proprietary Mutual Funds of
GSAM (since February 1994);
Chief Operating Officer,
Vista Capital Management,
Chase Manhattan Bank (from
January 1990 to February
1994); Vice President,
JP Morgan (February 1984 to
January 1990).
Pauline Taylor, 49 Vice Vice President of Goldman
4900 Sears Tower President Sachs since June 1992.
Chicago, IL 60606 Consultant since 1989.
Senior Vice President of
Fidelity Investments prior
to 1989.
Nancy L. Mucker, 46 Vice Vice President, Goldman
4900 Sears Tower President Sachs and Co-Manager of
Chicago, IL Shareholder Services for
60606 GSAM Funds Group.
</TABLE>
B-15
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
John W. Mosior, 57 Vice Vice President, Goldman
4900 Sears Tower President Sachs and Co-Manager of
Chicago, IL Shareholder Services for
60606 GSAM Funds Group.
Scott M. Gilman, 36 Treasurer Director, Mutual Funds
One New York Plaza Administration, Goldman
New York, NY 10004 Sachs Asset Management
(since April 1994),
Assistant Treasurer,
Goldman Sachs Funds
Management, Inc. (since
March 1993); Vice Pre-
sident, Goldman Sachs
(since March 1990); Assis-
tant Treasurer of the
Trust (April 1990 to Octo-
ber 1991); Manager,
Arthur Andersen & Co.
(prior thereto).
Michael J. Richman, 35 Secretary Vice President and
85 Broad Street Assistant General Counsel
New York, NY 10004 of Goldman Sachs (since June
1992); Associate General
Counsel, Goldman Sachs
Asset Management, Counsel
to the Funds Group, GSAM
(since June 1992);
Partner, Hale and Dorr
(September 1991 to June
1992).
Howard B. Surloff, 30 Assistant Vice President and
85 Broad Street Secretary Assistant General Counsel,
New York, NY 10004 Goldman Sachs (since Novem-
ber 1993 and May 1994,
respectively); Counsel
to the Funds Group,
Goldman Sachs Asset
Management (since November
1993); Formerly Associate
of Shereff Friedman,
Hoffman & Goodman (prior
thereto).
Steven E. Hartstein, 32 Assistant Legal Products Analyst,
85 Broad Street Secretary Goldman Sachs (June 1993 to
New York, NY 10004 present); Funds Compliance
</TABLE>
B-16
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Officer, Citibank Global
Asset Management (August
1991 to June 1993); Legal
Assistant, Brown & Wood
(prior thereto).
Deborah A. Robinson, 24 Assistant Administrative Assistant,
85 Broad Street Secretary Goldman Sachs since
New York, NY 10004 January 1995. Formerly at
Cleary, Gottlieb, Steen &
Hamilton.
</TABLE>
Certain of the Trustees and officers and the organizations with which they are
associated have had in the past, and may have in the future, transactions with
Northern, Goldman Sachs and their respective affiliates. The Trust has been
advised by such Trustees and officers that all such transactions have been and
are expected to be in the ordinary course of business and the terms of such
transactions, including all loans and loan commitments by such persons, have
been and are expected to be substantially the same as the prevailing terms for
comparable transactions for other customers. Messrs. Springer, Kelsey, Strubel,
Klug, Mosior, Gilman, Richman, Surloff, Hartstein and Mmes. Beck, Mucker, Taylor
and Robinson hold similar positions with one or more investment companies that
are advised by Goldman Sachs. As a result of the responsibilities assumed by
Northern under its Advisory Agreement, Transfer Agency Agreement and Custodian
Agreement with the Trust and by Goldman Sachs under its Administration Agreement
and Distribution Agreement with the Trust, the Trust itself requires no
employees.
Each officer holds comparable positions with certain other investment companies
of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser,
administrator and/or distributor.
For the first three quarters of fiscal 1995, each Trustee earned a quarterly
retainer of $3,750 and an additional fee of $1,250 for each meeting attended,
plus reimbursement of expenses incurred as a Trustee. For the same period, the
Chairman of the Board earned a quarterly retainer of $5,625 and an additional
fee of $1,250 for each meeting attended, plus reimbursement of expenses incurred
as a Trustee.
Effective September 1, 1995 and until further notice, each Trustee earns a
quarterly retainer of $6,250 and the Chairman of the Board earns a quarterly
retainer of $9,375. Each Trustee, including the Chairman of the Board, earns an
additional fee of $1,500 for each
B-17
<PAGE>
meeting attended, plus reimbursement of expenses incurred as a Trustee.
In addition, the Trustees established an Audit Committee consisting of three
members including a Chairman of the Committee. Each member earns a fee of $1,500
for each meeting attended and the Chairman earns a quarterly retainer of $1,250.
The Trust's officers do not receive fees from the Trust for services in such
capacities, although Goldman Sachs, of which they are also officers, receives
fees from the Trust for administrative services.
B-18
<PAGE>
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year period ended November
30, 1995:
<TABLE>
<CAPTION>
Pension or
Retirement Total
Benefits Compensation from
Aggregate Accrued as Registrant and
Compensation Part of Fund Complex Paid
Name of Trustee from the Registrant Trust's Expenses to Trustees
- --------------- ------------------- ---------------- -----------
<S> <C> <C> <C>
William H. Springer $34,000 $ 0 $34,000
Edward J. Condon, Jr. $25,250 $ 0 $25,250
John W. English $24,000 $ 0 $24,000
James J. Gavin $26,750 $ 0 $26,750
William B. Jordan* $25,250 $ 0 $25,250
Frederick T. Kelsey $26,750 $3,822 $30,572
Richard P. Strubel $28,000 $ 0 $28,000
</TABLE>
*Retired as of December 31, 1995.
B-19
<PAGE>
Investment Adviser, Transfer Agent and Custodian
Northern is one of the nation's leading providers of trust and investment
management services. As of December 31, 1995, Northern had over $105.5 billion
in assets under management for clients including public and private retirement
funds, endowments, foundations, trusts, corporations, and individuals. Northern
is one of the strongest banking organizations in the United States. Northern
believes it has built its organization by serving clients with integrity, a
commitment to quality, and personal attention. Its stated mission with respect
to all its financial products and services is to achieve unrivaled client
satisfaction. With respect to such clients, the Trust is designed to assist (i)
defined contribution plan sponsors and their employees by offering a range of
diverse investment options to help comply with 404(c) regulation and may also
provide educational material to their employees, (ii) employers who provide
post-retirement Employees' Beneficiary Associations ("VEBA") and require
investments that respond to the impact of federal regulations, (iii) insurance
companies with the day-to-day management of uninvested cash balances as well as
with longer-term investment needs, and (iv) charitable and not-for-profit
organizations, such as endowments and foundations, demanding investment
management solutions that balance the requirement for sufficient current income
to meet operating expenses and the need for capital appreciation to meet future
investment objectives.
Under its Advisory Agreement with the Trust, Northern, subject to the general
supervision of the Trust's Board of Trustees, is responsible for making
investment decisions for each Portfolio and placing purchase and sale orders for
the portfolio transactions of the Portfolios.
Under its Transfer Agency Agreement with the Trust, Northern has undertaken to
(1) answer customer inquiries regarding the current yield of, and certain other
matters (e.g. account status information) pertaining to, the Trust, (2) process
purchase and redemption transactions, including transactions generated by any
service provided outside of the Agreement by Northern, its affiliates or
correspondent banks whereby customer account cash balances are automatically
invested in units of the Portfolios, and the disbursement of the proceeds of
redemptions, (3) establish and maintain separate omnibus accounts with respect
to unitholders investing through Northern or any of its affiliates and
correspondent banks and act as transfer agent and perform sub-accounting
services with respect to each such account, (4) provide periodic statements
showing account balances, (5) mail reports and proxy materials to unitholders,
and (6) provide information in connection with the preparation by the Trust of
various regulatory reports and prepare reports to the Trustees and management.
Northern may appoint one or more sub-transfer agents in the performance of its
services.
B-20
<PAGE>
As compensation for the services rendered by Northern under the Transfer Agency
Agreement and the assumption by Northern of related expenses, Northern is
entitled to a fee from the Trust, payable monthly, at an annual rate equal to
$18 for each subaccount relating to units of the Trust. This fee is subject to
annual upward adjustments based on increases in the Consumer Price Index for All
Urban Consumers, provided that Northern may permanently or temporarily waive all
or any portion of any upward adjustment. Northern's affiliates and correspondent
banks may receive compensation for performing the services described in the
preceding paragraph that Northern would otherwise receive. Conflict-of-interest
restrictions under state and Federal law (including the Employee Retirement
Income Security Act of 1974) may apply to the receipt by such affiliates or
correspondent banks of such compensation in connection with the investment of
fiduciary funds in Portfolio units.
Under its Custodian Agreement with the Trust, Northern (1) holds each
Portfolio's cash and securities, (2) maintains such cash and securities in
separate accounts in the name of the Portfolio, (3) makes receipts and
disbursements of funds on behalf of the Portfolio, (4) receives, delivers and
releases securities on behalf of the Portfolio, (5) collects and receives all
income, principal and other payments in respect of the Portfolio's securities
held by Northern under the Agreement, and (6) maintains the accounting records
of the Trust. Northern may employ one or more subcustodians, provided that
Northern shall have no more responsibility or liability to the Trust on account
of any action or omission of any subcustodian so employed than such subcustodian
has to Northern and that the responsibility or liability of the subcustodian to
Northern shall conform to the resolution of the Trustees of the Trust
authorizing the appointment of the particular subcustodian. Northern has
appointed Morgan Guaranty Trust Company, 30 West Broadway, New York, New York
10015, as subcustodian to hold certain types of tax-exempt securities in a form
of private book-entry system. Other banks may also serve as subcustodians for
Northern in similar arrangements in the future. Northern may also appoint an
agent to carry out such of the provisions of the Custodian Agreement as Northern
may from time to time direct, provided that the appointment of such an agent
shall not relieve Northern of any of its responsibilities under the Agreement.
As compensation for the services rendered to the Trust by Northern as Custodian,
and the assumption by Northern of certain related expenses, Northern is entitled
to payment from the Trust as follows: (i) $18,000 annually for each Portfolio,
plus (ii) 1/100th of 1% annually of each Portfolio's average daily net assets to
the extent they exceed $100 million, plus (iii) a fixed dollar fee for each
trade in portfolio securities, plus (iv) a fixed dollar fee for each time that
Northern as Custodian receives or transmits funds via wire, plus (v)
reimbursement of expenses incurred by
B-21
<PAGE>
Northern as Custodian for telephone, postage, courier fees, office supplies and
duplicating. The fees referred to in clauses (iii) and (iv) are subject to
annual upward adjustments based on increases in the Consumer Price Index for All
Urban Consumers, provided that Northern may permanently or temporarily waive all
or any portion of any upward adjustment.
For the fiscal years ended November 30, 1995, November 30, 1994 and November 30,
1993, the amount of the Advisory Fee (after fee waivers) incurred by each
Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Government Select
Portfolio $ 569,065 $ 412,427 $ 358,237
Government Portfolio 1,938,878 2,217,731 2,927,719
Diversified Assets
Portfolio 7,080,710 7,778,438 8,092,577
Tax-Exempt Portfolio 1,687,136 2,619,554 3,047,456
</TABLE>
In addition, for the fiscal years ended November 30, 1995, 1994 and 1993,
Northern waived additional advisory fees with respect to the Government Select
Portfolio in the amounts of $853,605, $622,131 and $537,356. Northern waived
additional advisory fees with respect to the Government Portfolio for the period
from June 1, 1994 through July 31, 1994 in the amount of $69,721.
For the fiscal years ended November 30, 1995, November 30, 1994 and November 30,
1993, the amount of the Transfer Agency Fee incurred by each Portfolio was as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Government Select
Portfolio $ 25,000 $ 24,000 $ 46,968
Government Portfolio 32,000 42,000 55,212
Diversified Assets
Portfolio 110,000 171,999 205,346
Tax-Exempt Portfolio 32,000 61,000 74,010
</TABLE>
For the fiscal years ended November 30, 1995, November 30, 1994 and November 30,
1993, the amount of the Custodian Fees incurred by each Portfolio was as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Government Select
Portfolio $ 75,122 $ 55,000 $ 49,939
Government Portfolio 101,086 110,235 151,825
Diversified Assets
Portfolio 317,635 345,186 373,584
Tax-Exempt Portfolio 97,551 126,449 155,017
</TABLE>
B-22
<PAGE>
In connection with portfolio transactions for the Portfolios, which are
generally done at a net price without a broker's commission, Northern's Advisory
Agreement provides that Northern shall attempt to obtain the best net price and
execution. For the fiscal years ended November 30, 1995, 1994 and 1993, all
portfolio transactions for the Portfolios were executed on a principal basis
and, therefore, no brokerage commissions were paid by the Portfolios. Purchases
by the Portfolios from underwriters of portfolio securities, however, normally
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers include the spread between the dealer's cost for a given
security and the resale price of the security.
Northern's investment advisory duties for the Trust are carried out through its
Trust Department. On occasions when Northern deems the purchase or sale of a
security to be in the best interests of a Portfolio as well as other fiduciary
or agency accounts managed by it (including any other Portfolio, investment
company or account for which Northern acts as adviser), the Agreement provides
that Northern, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased for such Portfolio with those
to be sold or purchased for such other accounts in order to obtain best net
price and execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Northern in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Portfolio and other accounts involved. In some
instances, this procedure may adversely affect the size of the position
obtainable for a Portfolio or the amount of the securities that are able to be
sold for a Portfolio. To the extent that the execution and price available from
more than one broker or dealer are believed to be comparable, the Agreement
permits Northern, at its discretion but subject to applicable law, to select the
executing broker or dealer on the basis of Northern's opinion of the reliability
and quality of such broker or dealer.
Northern is active as an underwriter of municipal instruments. Under the 1940
Act the Portfolios are precluded, subject to certain exceptions, from purchasing
in the primary market those municipal instruments with respect to which Northern
is serving as a principal underwriter. In the opinion of Northern, this
limitation will not significantly affect the ability of the Portfolios to pursue
their respective investment objectives.
Goldman Sachs is also an active investor, dealer and/or underwriter in many
types of money market instruments. Its activities in this regard could have some
effect on the market for those instruments which the Portfolios acquire, hold or
sell.
In the Advisory Agreement, Northern agrees that the name "The Benchmark" may be
used in connection with the Trust's business on a
B-23
<PAGE>
royalty-free basis. Northern has reserved to itself the right to grant the
non-exclusive right to use the name "The Benchmark" to any other person. The
Advisory Agreement provides that at such time as the Agreement is no longer in
effect, the Trust will cease using the name "The Benchmark." (This undertaking
by the Trust may be subject to certain legal limitations.)
Unless sooner terminated, each of the Advisory Agreement, Transfer Agency
Agreement and Custodian Agreement between Northern and the Trust will continue
in effect with respect to a particular Portfolio until April 30, 1997, and
thereafter for successive 12-month periods, provided that the continuance is
approved at least annually (1) by the vote of a majority of the Trustees who are
not parties to the agreement or "interested persons" (as such term is defined in
the 1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval and (2) by the Trustees or by the vote of a
majority of the outstanding units of such Portfolio (as defined under
"Organization" in the Prospectus). Each agreement is terminable at any time
without penalty by the Trust (by specified Trustee or unitholder action) on 60
days' written notice to Northern and by Northern on 60 days' written notice to
the Trust. The Advisory Agreement provides that Northern may render similar
services to others so long as its services under such Agreement are not impaired
thereby. The Advisory Agreement also provides that the Trust will indemnify
Northern against certain liabilities (including liabilities under the Federal
securities laws relating to untrue statements or omissions of material fact and
actions that are in accordance with the terms of the Agreement) or, in lieu
thereof, contribute to resulting losses.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered open-end investment company continuously
engaged in the issuance of its shares, but such banking laws and regulations do
not prohibit such a holding company or affiliate or banks generally from acting
as investment adviser, transfer agent or custodian to such an investment
company, or from purchasing shares of such a company as agent for and upon the
order of customers. Northern believes that it may perform the services
contemplated by its agreements with the Trust without violation of such banking
laws or regulations, which are applicable to it. It should be noted, however,
that future changes in either Federal or state statutes and regulations relating
to the permissible activities of banks and their subsidiaries or affiliates, as
well as future judicial or administrative decisions or interpretations of
current and future statutes and regulations, could prevent Northern from
continuing to perform such services for the Trust. Should future legislative,
judicial or administrative action prohibit or restrict the activities of
Northern in connection with
B-24
<PAGE>
the provision of services on behalf of the Trust, the Trust might be required to
alter materially or discontinue its arrangements with Northern and change its
method of operations. It is not anticipated, however, that any change in the
Trust's method of operations would affect the net asset value per unit of any
Portfolio or result in a financial loss to any unitholder. Moreover, if current
restrictions preventing a bank from legally sponsoring, organizing, controlling
or distributing units of an open-end investment company were relaxed, the Trust
expects that Northern would consider the possibility of offering to perform some
or all of the services now provided by Goldman Sachs. It is not possible, of
course, to predict whether or in what form such restrictions might be relaxed or
the terms upon which Northern might offer to provide services for consideration
by the Trustees.
Administrator and Distributor
Under its Administration Agreement with the Trust, Goldman Sachs, subject to the
general supervision of the Trust's Board of Trustees, acts as the Trust's
Administrator. In this capacity, Goldman Sachs (1) provides supervision of all
aspects of the Trust's non-investment advisory operations (the parties giving
due recognition to the fact that certain of such operations are performed by
Northern pursuant to the Trust's agreements with Northern), (2) provides the
Trust, to the extent not provided pursuant to such agreements, with such
personnel as are reasonably necessary for the conduct of the Trust's affairs,
(3) arranges, to the extent not provided pursuant to such agreements, for the
preparation at the Trust's expense of its tax returns, reports to unitholders,
periodic updating of the Prospectus issued by the Trust, and reports filed with
the SEC and other regulatory authorities (including qualification under state
securities or Blue Sky laws of the Trust's units), and (4) provides the Trust,
to the extent not provided pursuant to such agreements, with adequate office
space and equipment and certain related services in Chicago.
For the fiscal years ended November 30, 1995, 1994 and 1993, the amount of the
Administration Fee incurred by each Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Government Select
Portfolio $ 751,804 $ 590,000 $ 569,472
Government Portfolio 895,112 1,118,000 1,016,309
Diversified Assets
Portfolio 1,928,672 1,917,000 1,879,468
Tax-Exempt Portfolio 828,163 777,000 1,032,752
</TABLE>
For the fiscal years ended November 30, 1995, 1994 and 1993, pursuant to a
voluntary undertaking, Goldman Sachs reimbursed each Portfolio as follows:
B-25
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Government Select
Portfolio $346,936 $348,837 $478,314
Government Portfolio 369,546 525,528 414,954
Diversified Assets
Portfolio 0 0 26,792
Tax-Exempt Portfolio 389,481 66,927 383,252
</TABLE>
Goldman Sachs has agreed in its Administration Agreement with the Trust that if
for the current fiscal year the sum of a Portfolio's expenses (including the
fees paid to Goldman Sachs as Administrator, but excluding Northern's investment
advisory fee, taxes, interest, brokerage and extraordinary expenses such as for
litigation) exceeds on an annualized basis .10% of the Portfolio's average net
assets, Goldman Sachs will reimburse the Portfolios in the amount of such excess
in such year. In addition, pursuant to an undertaking that commenced August 1,
1992, Goldman Sachs has agreed that, if its administration fees (less expense
reimbursements paid by Goldman Sachs to the Trust and less certain marketing
expenses paid by Goldman Sachs) exceed a specified amount ($1 million for the
Trust's first twelve investment portfolios plus $50,000 for each additional
portfolio) during the current fiscal year, Goldman Sachs will waive a portion of
its administration fees during the following fiscal year. This undertaking may
be terminated by Goldman Sachs at any time without the consent of the Trust or
the unitholders.
Pursuant to this undertaking, for the fiscal years ended November 30, 1995, 1994
and 1993, reductions in the administration fee were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Government Select
Portfolio $ 0 $ 0 $ 19,255
Government Portfolio 0 0 81,643
Diversified Assets
Portfolio 0 0 251,309
Tax-Exempt Portfolio 0 0 89,130
</TABLE>
Goldman Sachs has also agreed that if, in any fiscal year, the sum of a
Portfolio's expenses (including the fees payable to Goldman Sachs and Northern,
but excluding taxes, interest, brokerage and extraordinary expenses such as
litigation) exceeds the expense limitations applicable to such Portfolio imposed
by state securities administrators, as such limitations may be lowered or raised
from time to time, it will reimburse the Portfolio in the amount of such excess
to the extent required by such expense
B-26
<PAGE>
limitations. As of the date of this Additional Statement the most restrictive
expense limitation imposed by state securities administrators of which the Trust
is aware provides that aggregate annual expenses (as defined) may not exceed 2
1/2% of the first $30,000,000 of a Portfolio's average net assets, plus 2% of
the next $70,000,000 of such assets plus 1 1/2% of such assets in excess of
$100,000,000; provided that under the Missouri expense limitation the aggregate
annual expenses of every type paid or incurred by the Portfolios or unitholders
must be substantially comparable with the aggregate annual operating and
advisory expenses incurred by other investment companies with similar objectives
and operating policies.
Unless sooner terminated the Administration Agreement will continue in effect
with respect to a particular Portfolio until April 30, 1997, and thereafter for
successive 12-month periods, provided that the agreement is approved annually
(1) by the vote of a majority of the Trustees who are not parties to the
agreement or "interested persons" (as such term is defined by the 1940 Act) of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval, and (2) by the Trustees or by the vote of a majority of the
outstanding units of such Portfolio (as defined under "Organization" in the
Prospectus). The Administration Agreement is terminable at any time without
penalty by the Trust (upon specified Trustee or unitholder action) on 60 days'
written notice to Goldman Sachs and by Goldman Sachs on 60 days' written notice
to the Trust.
The Trust has entered into a Distribution Agreement under which Goldman Sachs,
as agent, sells shares of each Portfolio on a continuous basis. Goldman Sachs
pays the cost of printing and distributing prospectuses to persons who are not
unitholders of Trust shares (excluding preparation and typesetting expenses) and
of all other sales presentations, mailings, advertising and other distribution
efforts. No compensation is payable by the Trust to Goldman Sachs for such
distribution services.
The Administration Agreement and the Distribution Agreement provide that Goldman
Sachs may render similar services to others so long as its services under such
Agreements are not impaired thereby. The Administration Agreement provides that
the Trust will indemnify Goldman Sachs against certain liabilities (including
liabilities under the Federal securities laws relating to untrue statements or
omissions of material fact and actions that are in accordance with the terms of
the Administration Agreement and Distribution Agreement) or, in lieu thereof,
contribute to resulting losses.
Counsel and Auditors
Drinker Biddle & Reath, with offices at 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, serve as counsel to the Trust.
B-27
<PAGE>
Ernst & Young LLP, independent auditors, 233 S. Wacker Drive, Chicago, Illinois
60606, have been selected as auditors of the Trust. In addition to audit
services, Ernst & Young LLP prepares the Trust's Federal and state tax returns,
and provides consultation and assistance on accounting, internal control and
related matters.
PERFORMANCE INFORMATION
From time to time the Trust may advertise quotations of "yields" and "effective
yields" with respect to each Portfolio's units, and "tax-equivalent yields" with
respect to units of the Government Select Portfolio and Tax-Exempt Portfolio
computed in accordance with a standardized method, based upon the seven-day
period ended on the date of calculation. In arriving at such quotations as to
"yield," the Trust first determines the net change during the period in the
value of a hypothetical pre-existing account having a balance of one unit at the
beginning of the period (such net change being inclusive of the value of any
additional units issued in connection with distributions of net investment
income as well as net investment income accrued on both the original unit and
any such additional units, but exclusive of realized gains and losses from the
sale of securities and unrealized appreciation and depreciation), then divides
such net change by the value of the account at the beginning of the period to
obtain the base period return, and then multiplies the base period return by
365/7.
The "effective yield" with respect to the units of a Portfolio is computed by
adding 1 to the base period return (calculated as above), raising the sum to a
power equal to 365 divided by 7, and subtracting 1 from the result.
"Tax-equivalent yield" is computed by dividing the tax-exempt portion of the
yield by 1 minus a stated income tax rate, and then adding the product to the
taxable portion of the yield, if any. There may be more than one tax-equivalent
yield if more than one stated income tax rate is used.
Quotations of yield, effective yield and tax-equivalent yield provided by the
Trust are carried to at least the nearest hundredth of one percent. Any fees
imposed by Northern, its affiliates or correspondent banks on their customers in
connection with investments in units of the Portfolios are not reflected in the
calculation of yields for the Portfolios.
B-28
<PAGE>
The annualized yield of each Portfolio with respect to units for the seven-day
period ended November 30, 1995 was as follows:
B-29
<PAGE>
<TABLE>
<CAPTION>
Effective Tax-Equivalent
Yield Yield Yield
----- ----- -----
<S> <C> <C> <C>
Government Select
Portfolio 5.50% 5.65% N/A
Government Portfolio 5.45 5.60 N/A
Diversified Assets
Portfolio 5.57 5.72 N/A
Tax-Exempt Portfolio 3.56 3.62 5.89%
</TABLE>
The information set forth in the foregoing table reflects certain fee reductions
and expense limitations. See "Additional Trust Information - Administrator and
Distributor" or "-- Investment Adviser, Transfer Agent and Custodian." In the
absence of such fee reductions and expense limitations, the annualized yield of
each Portfolio with respect to units for the same seven-day period would have
been as follows:
<TABLE>
<CAPTION>
Effective Tax-Equivalent
Yield Yield Yield
----- ----- -----
<S> <C> <C> <C>
Government Select
Portfolio 5.30% 5.44% N/A
Government Portfolio 5.41 5.56 N/A
Diversified Assets
Portfolio 5.57 5.72 N/A
Tax-Exempt Portfolio 3.53 3.59 5.84%
</TABLE>
Each Portfolio's yield fluctuates, unlike bank deposits or other investments
which pay a fixed yield for a stated period of time. The annualization of one
week's income is not necessarily indicative of future actual yields. Actual
yields will depend on such variables as portfolio quality, average portfolio
maturity, the type of portfolio instruments acquired, changes in money market
interest rates, portfolio expenses and other factors. Yields are one basis
investors may use to analyze a Portfolio as compared to other money market funds
and other investment vehicles. However, yields of other money market funds and
other investment vehicles may not be comparable because of the foregoing
variables, and differences in the methods used in valuing their portfolio
instruments, computing net asset value and determining yield.
AMORTIZED COST VALUATION
As stated in the Prospectus, each Portfolio seeks to maintain a net asset value
of $1.00 per unit and, in this connection, values its instruments on the basis
of amortized cost pursuant to Rule 2a-7 under the 1940 Act. This method values a
security at its cost on the date of purchase and thereafter assumes a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.
B-30
<PAGE>
While this method provides certainty in valuation, it may result in periods
during which value, as determined by amortized cost, is higher or lower than the
price a Portfolio would receive if the Portfolio sold the instrument. During
such periods the yield to investors in the Portfolio may differ somewhat from
that obtained in a similar entity which uses available indications as to market
value to value its portfolio instruments. For example, if the use of amortized
cost resulted in a lower (higher) aggregate Portfolio value on a particular day,
a prospective investor in the Portfolio would be able to obtain a somewhat
higher (lower) yield and ownership interest than would result from investment in
such similar entity and existing investors would receive less (more) investment
income and ownership interest. However, the Trust expects that the procedures
and limitations referred to in the following paragraphs of this section will
tend to minimize the differences referred to above.
Under Rule 2a-7, the Trust's Board of Trustees, in supervising the Trust's
operations and delegating special responsibilities involving portfolio
management to Northern, has established procedures that are intended, taking
into account current market conditions and the Portfolios' investment
objectives, to stabilize the net asset value of each Portfolio, as computed for
the purposes of purchases and redemptions, at $1.00 per unit. The Trustees'
procedures include periodic monitoring of the difference (the "Market Value
Difference") between the amortized cost value per unit and the net asset value
per unit based upon available indications of market value. Available indications
of market value used by the Trust consist of actual market quotations or
appropriate substitutes which reflect current market conditions and include (a)
quotations or estimates of market value for individual portfolio instruments
and/or (b) values for individual portfolio instruments derived from market
quotations relating to varying maturities of a class of money market
instruments. In the event the Market Value Difference of a given Portfolio
exceeds certain limits or Northern believes that the Market Value Difference may
result in material dilution or other unfair results to investors or existing
unitholders, the Trust will take action in accordance with the 1940 Act and the
Trustees will take such steps as they consider appropriate (e.g., selling
portfolio instruments to shorten average portfolio maturity or to realize
capital gains or losses, reducing or suspending unitholder income accruals,
redeeming units in kind, or utilizing a net asset value per unit based upon
available indications of market value which under such circumstances would vary
from $1.00) to eliminate or reduce to the extent reasonably practicable any
material dilution or other unfair results to investors or existing unitholders
which might arise from Market Value Differences. In particular, if losses were
sustained by a Portfolio, the number of outstanding units might be reduced in
order to maintain a net asset value per unit of $1.00. Such reduction would be
effected by having each unitholder proportionately contribute to the Portfolio's
capital the necessary
B-31
<PAGE>
units to restore such net asset value per unit. Each unitholder will be deemed
to have agreed to such contribution in these circumstances by investing in the
Portfolio.
Rule 2a-7 requires that each Portfolio limit its investments to instruments
which Northern determines (pursuant to guidelines established by the Board of
Trustees) to present minimal credit risks and which are "Eligible Securities" as
defined by the SEC and described in the Prospectus. The Rule also requires that
each Portfolio maintain a dollar-weighted average portfolio maturity (not more
than 90 days) appropriate to its policy of maintaining a stable net asset value
per unit and precludes the purchase of any instrument deemed under the Rule to
have a remaining maturity of more than 13 months. Should the disposition of a
portfolio security result in a dollar-weighted average portfolio maturity of
more than 90 days, the Rule requires a Portfolio to invest its available cash in
such a manner as to reduce such maturity to the prescribed limit as soon as
reasonably practicable.
DESCRIPTION OF UNITS
The Trust Agreement permits the Trust's Board of Trustees to issue an unlimited
number of full and fractional units of beneficial interest of one or more
separate series representing interests in different investment portfolios. The
Trustees may hereafter create series in addition to the Trust's existing sixteen
series which represent interests in the sixteen respective Portfolios. The
Prospectus and this Additional Statement relate only to the Government Select,
Government, Diversified Assets and Tax-Exempt Portfolios. For information on the
Trust's other investment portfolios call Goldman Sachs at the toll-free number
on page 1.
Under the terms of the Trust Agreement, each unit of each Portfolio is without
par value, represents an interest in the particular Portfolio with each other
unit of the same Portfolio and is entitled to such dividends and distributions
out of the income belonging to such Portfolio as are declared by the Trustees.
Upon any liquidation of a Portfolio, its unitholders are entitled to share pro
rata in the net assets belonging to that Portfolio available for distribution.
Units do not have any preemptive or conversion rights. The right of redemption
is described under "Investing-Redemption of Units" in the Prospectus and under
"Amortized Cost Valuation" in this Additional Statement. In addition, pursuant
to the terms of the 1940 Act, the right of a unitholder to redeem units and the
date of payment by a Portfolio may be suspended for more than seven days (a) for
any period during which the New York Stock Exchange is closed, other than the
customary weekends or holidays, or trading in the markets the Portfolio normally
utilizes is closed or is restricted as determined by the SEC, (b) during any
emergency, as determined by the SEC, as a result of which it is not reasonably
practicable for the
B-32
<PAGE>
Portfolio to dispose of instruments owned by it or fairly to determine the value
of its net assets, or (c) for such other period as the SEC may by order permit
for the protection of the unitholders of the Portfolio. The Trust may also
suspend or postpone the recordation of the transfer of its units upon the
occurrence of any of the foregoing conditions. In addition, units of each
Portfolio are redeemable at the unilateral option of the Trust if the Trustees
determine in their sole discretion that failure to so redeem may have material
adverse consequences to the unitholders of the Portfolio. Units when issued as
described in the Prospectus are validly issued, fully paid and nonassessable,
except as stated below.
The proceeds received by each Portfolio for each issue or sale of its units, and
all net investment income, realized and unrealized gain and proceeds thereof,
subject only to the rights of creditors, will be specifically allocated to and
constitute the underlying assets of that Portfolio. The underlying assets of
each Portfolio will be segregated on the books of account, and will be charged
with the liabilities in respect to that Portfolio and with a share of the
general liabilities of the Trust. Expenses with respect to the Portfolios are
normally allocated in proportion to the net asset value of the respective
Portfolios except where allocations of direct expenses can otherwise be fairly
made.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding units of each Portfolio
affected by the matter. A Portfolio is affected by a matter unless it is clear
that the interests of each Portfolio in the matter are substantially identical
or that the matter does not affect any interest of the Portfolio. Under the
Rule, the approval of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon with respect to a
Portfolio only if approved by a majority of the outstanding units of such
Portfolio. However, the Rule also provides that the ratification of the
appointment of independent accountants, the approval of principal underwriting
contracts and the election of Trustees may be effectively acted upon by
unitholders of the Trust voting together in the aggregate without regard to a
particular Portfolio.
As a general matter, the Trust does not hold annual or other meetings of
unitholders. This is because the Trust Agreement provides for unitholder voting
only for the election or removal of one or more Trustees, if a meeting is called
for that purpose, and for certain other designated matters. Each Trustee serves
until the next meeting of unitholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification
B-33
<PAGE>
of his successor, if any, elected at such meeting, or until such Trustee sooner
dies, resigns, retires or is removed by the unitholders or two-thirds of the
Trustees.
Under Massachusetts law, there is a possibility that unitholders of a business
trust could, under certain circumstances, be held personally liable as partners
for the obligations of the trust. The Trust Agreement contains an express
disclaimer of unitholder (as well as Trustee and officer) liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each contract, undertaking or instrument entered into or executed by the Trust
or the Trustees. The Trust Agreement provides for indemnification out of Trust
property of any unitholder charged or held personally liable for the obligations
or liabilities of the Trust solely by reason of being or having been a
unitholder of the Trust and not because of such unitholder's acts or omissions
or for some other reason. The Trust Agreement also provides that the Trust
shall, upon proper and timely request, assume the defense of any charge made
against any unitholder as such for any obligation or liability of the Trust and
satisfy any judgment thereon. Thus, the risk of a unitholder incurring financial
loss on account of unitholder liability is limited to circumstances in which the
Trust itself would be unable to meet its obligations.
The Trust Agreement provides that each Trustee of the Trust will be liable for
his own willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee ("disabling
conduct"), and for nothing else, and will not be liable for errors of judgment
or mistakes of fact or law. The Trust Agreement provides further that the Trust
will indemnify Trustees and officers of the Trust against liabilities and
expenses incurred in connection with litigation and other proceedings in which
they may be involved (or with which they may be threatened) by reason of their
positions with the Trust, except that no Trustee or officer will be indemnified
against any liability to the Trust or its unitholders to which he would
otherwise be subject by reason of disabling conduct.
Units are held of record by Northern for the benefit of its customers and the
customers of its affiliates and correspondent banks who have invested in the
Portfolios. As of March 1, 1996, the trustees and officers of the Trust as a
group owned less than 1% of the outstanding units of beneficial interest of each
Portfolio. Northern has advised the Trust that the following persons (whose
mailing address is: c/o The Northern Trust Company, 50 South LaSalle, Chicago,
IL 60675) beneficially owned five percent or more of the outstanding units of
the Portfolios as of March 1, 1996:
B-34
<PAGE>
<TABLE>
<CAPTION>
Percentage
of
Outstand-
Number of ing
Units Units
----- -----
<S> <C> <C>
GOVERNMENT SELECT PORTFOLIO
Acadia Trust Company 60,017,350 6.9%
Mercantile Bank NA (St. Louis) 48,287,507 5.6
GOVERNMENT PORTFOLIO
Grinnell College Endowment Fund 79,322,262 8.6
Dauphin Deposit Bank
and Trust Company 54,183,000 5.8
TAX-EXEMPT PORTFOLIO
Health Care Indemnity Inc. 75,889,554 10.2
Laurence A. & Preston R. Tisch
Tenants in Common 55,884,527 7.5
</TABLE>
ADDITIONAL INFORMATION CONCERNING TAXES
General
Each Portfolio is treated as a separate corporate entity under the Internal
Revenue Code of 1986, as amended (the "Code"), and intends to qualify as a
regulated investment company. By following this policy, each Portfolio expects
to eliminate or reduce to a nominal amount the Federal income taxes to which it
may be subject. If for any taxable year a Portfolio does not qualify for the
special Federal tax treatment afforded regulated investment companies, all of
the Portfolio's taxable income would be subject to tax at regular corporate
rates without any deduction for distributions to unitholders. In such event, the
Portfolio's distributions (including amounts derived from interest on Municipal
Instruments in the case of the Tax-Exempt Portfolio) would be taxable as
ordinary income for Federal income tax purposes to the Portfolio's unitholders,
to the extent of its current and accumulated earnings and profits, and would be
eligible for the dividends received deduction in the case of corporate
unitholders.
In order to qualify as a regulated investment company for a taxable year under
the Code, each Portfolio must comply with certain requirements. First, each
Portfolio must distribute to its unitholders an amount equal to at least the sum
of 90% of its investment company taxable income and 90% of its net tax-exempt
interest income (if any) (the "90% distribution requirement"). At least 90% of
the gross income of each Portfolio must be derived from dividends, interest,
payments with respect to securities
B-35
<PAGE>
loans, gains from the sale or other disposition of stock, securities or foreign
currencies, and other income (including, but not limited to, gains from options,
futures or forward contracts) derived with respect to the Portfolio's business
of investing in such stock, securities or currencies (the "90% gross income
test"). In addition, a Portfolio must derive less than 30% of its gross income
for a taxable year from gains realized on the sale or other disposition of
securities and certain other investments held for less than three months (the
"30% test"). Interest (including original issue discount and accrued market
discount) received by a Portfolio upon maturity or disposition of a security
held for less than three months will not be treated as gross income derived from
the sale or other disposition of such security within the meaning of this
requirement. However, any other income attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose. Finally, at the close of each quarter of its
taxable year, at least 50% of the value of each Portfolio's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Portfolio has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Portfolio does not hold more than
10% of the outstanding voting securities of such issuer) and no more than 25% of
the value of each Portfolio's total assets may be invested in the securities of
any one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or in two or more issuers which such Portfolio
controls and which are engaged in the same or similar trades or businesses.
Each Portfolio will designate any distribution of the excess of net long-term
capital gain over net short-term capital loss as a capital gain dividend in a
written notice mailed to unitholders within 60 days after the close of the
Portfolio's taxable year.
Ordinary income of individuals (including short-term capital gains) is taxable
at a maximum nominal rate of 39.6%, but because of limitations on itemized
deductions otherwise allowable and the phase-out of personal exemptions, the
maximum effective marginal rate of tax for some taxpayers may be higher. An
individual's long-term capital gains are taxable at a maximum nominal rate of
28%. For corporations, long-term capital gains and ordinary income are both
taxable at a maximum marginal rate of 35% (or at a maximum effective marginal
rate of 39% in the case of corporations having taxable income between $100,000
and $335,000 and an effective marginal rate of 38% applies in the case of
corporations having taxable income between $15 million and $18,333,333).
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute specified percentages of their ordinary taxable
income and capital gain net income (excess of capital gains over capital
losses). Each Portfolio
B-36
<PAGE>
intends to make sufficient distributions or deemed distributions of its ordinary
taxable income and any capital gain net income prior to the end of each calendar
year to avoid liability for this excise tax.
The Trust will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends and gross sale proceeds paid to any unitholder
(i) who has provided either an incorrect tax identification number or no number
at all, (ii) who is subject to backup withholding by the Internal Revenue
Service for failure to report the receipt of taxable interest or dividend income
properly, or (iii) who has failed to certify to the Trust, when required to do
so, that he or she is not subject to backup withholding or that he or she is an
"exempt recipient."
Special Tax Considerations Pertaining to the Tax-Exempt Portfolio
As described above and in the Prospectus, the Tax-Exempt Portfolio is designed
to provide investors with current tax-exempt interest income. The Portfolio is
not intended to constitute a balanced investment program and is not designed for
investors seeking capital appreciation or maximum tax-exempt income irrespective
of fluctuations in principal. Units of the Portfolio would not be suitable for
tax-exempt institutions and may not be suitable for retirement plans qualified
under Section 401 of the Code, H.R.10 plans and individual retirement accounts
because such plans and accounts are generally tax-exempt and, therefore, would
not gain any additional benefit from the Portfolio's dividends being tax-exempt.
In addition, the Portfolio may not be an appropriate investment for persons or
entities that are "substantial users" of facilities financed by private activity
bonds or "related persons" thereof. "Substantial user" is defined under U.S.
Treasury Regulations to include a non-exempt person which regularly uses a part
of such facilities in its trade or business and whose gross revenues derived
with respect to the facilities financed by the issuance of bonds are more than
5% of the total revenues derived by all users of such facilities, or which
occupies more than 5% of the usable area of such facilities or for which such
facilities or a part thereof were specifically constructed, reconstructed or
acquired. "Related persons" include certain related natural persons, affiliated
corporations, partnerships and its partners and an S corporation and its
shareholders.
In order for the Tax-Exempt Portfolio to pay Federal exempt-interest dividends
with respect to any taxable year, at the close of each taxable quarter at least
50% of the aggregate value of the Portfolio must consist of tax-exempt
obligations. An exempt-interest dividend is any dividend or part thereof (other
than a capital gain dividend) paid by the Portfolio and designated as an
exempt-interest dividend in a written notice mailed to unitholders not later
than 60 days after the close of the Portfolio's taxable year. However, the
aggregate amount of
B-37
<PAGE>
dividends so designated by the Portfolio cannot exceed the excess of the amount
of interest exempt from tax under Section 103 of the Code received by the
Portfolio during the taxable year over any amounts disallowed as deductions
under Sections 265 and 171(a)(2) of the Code. The percentage of total dividends
paid by the Portfolio with respect to any taxable year which qualifies as
Federal exempt-interest dividends will be the same for all unitholders receiving
dividends from the Portfolio with respect to such year.
Interest on indebtedness incurred by a unitholder to purchase or carry Portfolio
units generally is not deductible for Federal income tax purposes if the
Portfolio's distributions are not subject to Federal income tax.
Foreign Investors
Foreign unitholders generally will be subject to U.S. withholding tax at a rate
of 30% (or a lower treaty rate, if applicable) on distributions by a Portfolio
of net interest income, other ordinary income, and the excess, if any, of net
short-term capital gain over net long-term capital loss for the year. For this
purpose, foreign unitholders include individuals other than U.S. citizens,
residents and certain nonresident aliens, and foreign corporations,
partnerships, trusts and estates. A foreign unitholder generally will not be
subject to U.S. income or withholding tax in respect of proceeds from or gain on
the redemption of units or in respect of capital gain dividends, provided such
unitholder submits a statement, signed under penalties of perjury, attesting to
such unitholder's exempt status. Different tax consequences apply to a foreign
unitholder engaged in a U.S. trade or business. Foreign unitholders should
consult their tax advisers regarding the U.S. and foreign tax consequences of
investing in the Trust.
Conclusion
The foregoing discussion is based on tax laws and regulations which are in
effect on the date of this Additional Statement. Such laws and regulations may
be changed by legislative or administrative action. No attempt is made to
present a detailed explanation of the tax treatment of the Portfolios or their
unitholders, and the discussion here and in the Prospectus is not intended as a
substitute for careful tax planning. Unitholders are advised to consult their
tax advisers with specific reference to their own tax situation, including the
application of state and local taxes.
OTHER INFORMATION
During the fiscal year ended November 30, 1995, the Diversified Assets Portfolio
acquired and sold securities of SBC Capital Markets, Merrill Lynch & Co., Inc.,
UBS Securities, Inc. and J.P.
B-38
<PAGE>
Morgan Securities, Inc., each a regular broker/dealer or parent. At November 30,
1995, the Diversified Assets Portfolio owned the following amounts of securities
of its regular broker/dealers, as defined in Rule 10b-1 under the 1940 Act, or
their parents: SBC Capital Markets with an aggregate value of $200,000,000,
Merrill Lynch with an aggregate value of $67,084,000, UBS Securities with an
aggregate value of $100,000,000 and J.P. Morgan Securities with an aggregate
value of $128,305,000.
During the fiscal year ended November 30, 1995, the Government Portfolio
acquired and sold securities of J.P. Morgan Securities, Inc. and SBC Capital
Markets, each a regular broker/dealer. At November 30, 1995, the Government
Portfolio owned the following amounts of securities of its regular
broker/dealers, as defined in Rule 10b-1 under the 1940 Act, or their parents:
SBC Capital Markets with an aggregate value of $200,000,000 and J.P. Morgan
Securities with an aggregate value of $99,763,000.
The Prospectus and this Additional Statement do not contain all the information
included in the Registration Statement filed with the SEC under the Securities
Act of 1933 with respect to the securities offered by the Trust's Prospectus.
Certain portions of the Registration Statement have been omitted from the
Prospectus and this Additional Statement pursuant to the rules and regulations
of the SEC. The Registration Statement including the exhibits filed therewith
may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or in this Additional Statement as to the
contents of any contract or other documents referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement of which the
Prospectus and this Additional Statement form a part, each such statement being
qualified in all respects by such reference.
Each Portfolio is responsible for the payment of its expenses. Such expenses
include, without limitation, the fees and expenses payable to Northern and
Goldman Sachs, brokerage fees and commissions, any portfolio losses, fees for
the registration or qualification of Portfolio units under Federal or state
securities laws, expenses of the organization of the Trust or of additional
Portfolios, taxes, interest, costs of liability insurance, fidelity bonds,
indemnification or contribution, any costs, expenses or losses arising out of
any liability of or claim for damages or other relief asserted against the Trust
for violation of any law, legal, tax services and auditing fees and expenses,
expenses of preparing and printing prospectuses, statements of additional
information, proxy materials, reports and notices and the printing and
distributing of the same to the Trust's unitholders and regulatory authorities,
compensation and expenses of its Trustees, expenses for industry organizations
such as the Investment Company
B-39
<PAGE>
Institute, miscellaneous expenses and extraordinary expenses incurred by the
Trust.
FINANCIAL STATEMENTS
The audited financial statements and related report of Ernst & Young LLP,
independent auditors, contained in the annual report to unitholders for the
fiscal year ended November 30, 1995 (the "Annual Report") are hereby
incorporated herein by reference. No other part of the Annual Report is
incorporated by reference herein. Copies of the Annual Report may be obtained by
writing to Goldman, Sachs & Co., Funds Group, 4900 Sears Tower, Chicago,
Illinois 60606, or by calling Goldman Sachs toll-free at 800-621-2550.
B-40
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
The following is a description of the securities ratings of Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's Ratings Group, Inc., a division of
McGraw Hill ("S&P"), Duff & Phelps Credit Rating Co. ("D&P"), Fitch Investors
Service, Inc. ("Fitch") and Thomson BankWatch, Inc. ("TBW").
Long-Term Corporate and Tax-Exempt Debt Ratings
The two highest ratings of Moody's for tax-exempt and corporate bonds are Aaa
and Aa. Tax-exempt and corporate bonds rated Aaa are judged to be of the "best
quality." The rating of Aa is assigned to bonds which are of "high quality by
all standards." Aa bonds are rated lower than Aaa bonds because margins of
protection may not be as large or fluctuations of protective elements may be of
greater amplitude or there may be other elements which make the long-term risks
appear somewhat larger. Moody's may modify a rating of Aa by adding numerical
modifiers of 1, 2 or 3 to show relative standing within the Aa category. The
foregoing ratings for tax-exempt bonds are sometimes presented in parentheses
preceded with a "con" indicating the bonds are rated conditionally. Such
parenthetical rating denotes the probable credit stature upon completion of
construction or elimination of the basis of the condition. The notation (P) when
applied to forward delivery bonds indicates that the rating is provisional
pending delivery of the bonds. The rating may be revised prior to delivery if
changes occur in the legal documents or the underlying credit quality of the
bonds. In addition, Moody's has advised that the short-term credit risk of a
long-term instrument sometimes carries a MIG rating or one of the commercial
paper ratings described below.
The two highest ratings of S&P for tax-exempt and corporate bonds are AAA and
AA. Bonds rated AAA bear the highest rating assigned by S&P to a debt obligation
and the AAA rating indicates in its opinion an extremely strong capacity to pay
interest and repay principal. Bonds rated AA by S&P are judged by it to have a
very strong capacity to pay interest and repay principal, and differ from AAA
issues only in small degree. The AA rating may be modified by an addition of a
plus (+) or minus (-) sign to show relative standing within the major rating
category. S&P may attach the rating "r" to highlight derivative, hybrid and
certain other obligations that S&P believes may experience high volatility or
high variability in expected returns due to non-credit risks.
The two highest ratings of D&P for tax-exempt and corporate fixed-income
securities are AAA and AA. Securities rated AAA are of the highest credit
quality. The risk factors are considered to be negligible, being only slightly
more than for risk-free U.S. Treasury debt. Securities rated AA are of high
credit quality.
1-A
<PAGE>
Protection factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions. The AA rating may be modified by an
addition of a plus (+) or minus (-) sign to show relative standing within the
major rating category.
The two highest ratings of Fitch for tax-exempt and corporate bonds are AAA and
AA. AAA bonds are considered to be investment grade and of the highest credit
quality. The obligor is judged to have an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. AA bonds are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+. Plus (+) and minus (-) signs are used with the AA rating symbol to
indicate relative standing within the rating category.
The two highest ratings of TBW for corporate bonds are AAA and AA. Bonds rated
AAA are of the highest credit quality. The ability of the obligor to repay
principal and interest on a timely basis is considered to be extremely high.
Bonds rated AA indicate a very strong ability on the part of the obligor to
repay principal and interest on a timely basis with limited incremental risk
versus issues rated in the highest category. These ratings may be modified by
the addition of a plus (+) or minus (-) sign to show relative standing within
the rating categories. TBW does not rate tax-exempt bonds.
Tax-Exempt Note Ratings
Moody's ratings for state and municipal notes and other short-term obligations
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade. MIG-1/VMIG-1
denotes best quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based access to the
market for refinancing. MIG-2/VMIG-2 denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
S&P describes its SP-1 rating of municipal notes as follows: "Very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics will be given a plus (+)
designation." Municipal notes rated SP-2 are deemed to have satisfactory
capacity to pay principal and interest.
D&P uses the fixed-income ratings described above under "Corporate and
Tax-Exempt Bond Ratings" for tax-exempt notes and other short-term obligations.
2-A
<PAGE>
Fitch's short-term ratings apply to tax-exempt and corporate debt obligations
that are payable on demand or have original maturities of up to three years,
including commercial paper and municipal and investment notes. The highest
ratings of Fitch for short-term securities are F-1+, F-1 and F-2. F-1+
securities possess exceptionally strong credit quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for timely
payment. F-1 securities possess 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 securities possess good credit quality. Issues carrying
this rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the F-1+ and F-1 ratings.
TBW does not rate tax-exempt notes.
Short-Term Corporate and Tax-Exempt Debt Ratings
Short-term ratings, set forth below (except TBW's), are applied to tax-exempt as
well as taxable debt.
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually promissory obligations not having an original maturity in excess of
nine months. Issuers rated Prime-1 (or related supporting institutions) in the
opinion of Moody's have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2 (or related supporting
institutions) are considered to have a strong capacity for repayment of
short-term promissory obligations.
S&P's commercial paper ratings are current assessments of the likelihood of
timely payment of debt considered short-term in the relevant market. The A-1
designation indicates that the degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics will be denoted with a plus (+) sign designation. The A-2
designation indicates that capacity for timely payment is satisfactory. However,
the relative degree of safety is not as high as for issues designated A-1.
The two highest ratings of D&P for commercial paper are D1 and D2. D&P employs
three designations, D1 plus, D1 and D1 minus, within the highest rating
category. D1 plus indicates highest certainty of timely payment. Short-term
liquidity including internal operating factors, and/or ready access to
alternative sources of funds, is judged to be outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations. D1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
strong fundamental protection factors. Risk factors are considered to be minor.
D1 minus indicates high certainty of timely payment. Liquidity
3-A
<PAGE>
factors are strong and supported by good fundamental protection factors. Risk
factors are very small. D2 indicates good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
Fitch uses the short-term ratings described above under "Tax-Exempt Note
Ratings" for commercial paper.
TBW's short-term ratings assess the likelihood of an untimely or incomplete
payment of principal or interest of unsubordinated debt instruments having a
maturity of one year or less which are issued by United States commercial banks,
thrifts and non-bank banks; nonUnited States banks; and broker-dealers and other
financial institutions. The two highest short-term ratings of TBW are TBW-1 and
TBW-2. Debt rated TBW-1 indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis. The TBW-2 designation
indicates that while the degree of safety regarding timely payment of principal
and interest is strong, the relative degree of safety is not as high as for
issues rated TBW-1.
4-A
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
THE BENCHMARK FUNDS
4900 Sears Tower
Chicago, Illinois 60606
SHORT DURATION PORTFOLIO
U.S. GOVERNMENT SECURITIES PORTFOLIO
SHORT-INTERMEDIATE BOND PORTFOLIO
U.S. TREASURY INDEX PORTFOLIO
BOND PORTFOLIO
INTERNATIONAL BOND PORTFOLIO
This Statement of Additional Information (the "Additional Statement") dated
April 1, 1996 is not a prospectus. This Additional Statement should be read in
conjunction with the Prospectus for the Short Duration, U.S. Government
Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond and International
Bond Portfolios (the "Portfolios") of The Benchmark Funds (the "Prospectus")
dated April 1, 1996. Copies of the Prospectus may be obtained without charge by
calling Goldman, Sachs & Co. ("Goldman Sachs") toll-free at 1-800-621-2550
(outside Illinois) or by writing to the address stated above. Capitalized terms
not otherwise defined have the same meaning as in the Prospectus.
-----------------------
INDEX
Page
----
ADDITIONAL INVESTMENT INFORMATION B-3
Investment Objectives and Policies B-3
Investment Restrictions Applicable to the
Short Duration Portfolio B-17
Investment Restrictions Applicable to the
U.S. Government Securities, Short-Intermediate
Bond, U.S. Treasury Index, Bond and
International Bond Portfolios B-20
ADDITIONAL TRUST INFORMATION B-23
Trustees and Officers B-23
Investment Adviser, Transfer
Agent and Custodian B-31
Administrator and Distributor B-38
Unitholder Servicing Plan B-41
Counsel and Auditors B-43
In-Kind Purchases B-44
PERFORMANCE INFORMATION B-44
TAXES B-52
General B-52
B-1
<PAGE>
Taxation of Certain Financial Instruments B-54
Foreign Investors B-56
Conclusion B-57
DESCRIPTION OF UNITS B-57
OTHER INFORMATION B-61
FINANCIAL STATEMENTS B-62
APPENDIX A (Description of Bond Ratings) 1-A
APPENDIX B (Futures Contracts) 1-B
No person has been authorized to give any information or to make any
representations not contained in this Additional Statement or in the Prospectus
in connection with the offering made by the Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Trust or its distributor. The Prospectus does not constitute
an offering by the Trust or by the distributor in any jurisdiction in which such
offering may not lawfully be made.
UNITS OF THE TRUST ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
ENDORSED OR OTHERWISE SUPPORTED BY, THE NORTHERN TRUST COMPANY, ITS PARENT
COMPANY OR ITS AFFILIATES, AND ARE NOT FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THE PORTFOLIOS INVOLVES
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OR PRINCIPAL.
B-2
<PAGE>
ADDITIONAL INVESTMENT INFORMATION
Investment Objectives and Policies
The following supplements the investment objectives and policies of the Short
Duration, U.S. Government Securities, Short-Intermediate Bond, U.S. Treasury
Index, Bond and International Bond Portfolios of The Benchmark Funds (the
"Trust") as set forth in the Prospectus.
U.S. Government Obligations. Examples of other types of U.S. Government
obligations that may be acquired by the Portfolios include U.S. Treasury Bills,
Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, General Services Administration, Student
Loan Marketing Association, Central Bank for Cooperatives, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks, and the Maritime
Administration.
Supranational Bank Obligations. Each Portfolio (other than the U.S. Treasury
Index Portfolio) may invest in obligations of supranational banks. Supranational
banks are international banking institutions designed or supported by national
governments to promote economic reconstruction, development or trade between
nations (e.g., the World Bank). Obligations of supranational banks may be
supported by appropriated but unpaid commitments of their member countries and
there is no assurance that these commitments will be undertaken or met in the
future.
Stripped Securities. Within the past several years, the Treasury Department has
facilitated transfers of ownership of zero coupon securities by accounting
separately for the beneficial ownership of particular interest coupon and
principal payments on Treasury securities through the Federal Reserve book-entry
record-keeping system. The Federal Reserve program as established by the
Treasury Department is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities." Each Portfolio may purchase securities
registered in the STRIPS program. Under the STRIPS program, a Portfolio will be
able to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying U.S. Treasury
securities.
In addition, each Portfolio (other than the U.S. Treasury Index Portfolio) may
acquire U.S. Government obligations and their unmatured interest coupons that
have been separated ("stripped") by their holder, typically a custodian bank or
investment brokerage firm. Having separated the interest coupons from the
B-3
<PAGE>
underlying principal of the U.S. Government obligations, the holder will resell
the stripped securities in custodial receipt programs with a number of different
names, including "Treasury Income Growth Receipts" ("TIGRs") and "Certificate of
Accrual on Treasury Securities" ("CATS"). The stripped coupons are sold
separately from the underlying principal, which is usually sold at a deep
discount because the buyer receives only the right to receive a future fixed
payment on the security and does not receive any rights to periodic interest
(cash) payments. The underlying U.S. Treasury bonds and notes themselves are
held in book-entry form at the Federal Reserve Bank or, in the case of bearer
securities (i.e., unregistered securities which are ostensibly owned by the
bearer or holder), in trust on behalf of the owners. Counsel to the underwriters
of these certificates or other evidences of ownership of U.S. Treasury
securities have stated that, in their opinion, purchasers of the stripped
securities most likely will be deemed the beneficial holders of the underlying
U.S. Government obligations for Federal tax purposes. The Trust is not aware of
any binding legislative, judicial or administrative authority on this issue.
To the extent consistent with its investment objectives, each Portfolio may
purchase stripped mortgage-backed securities ("SMBS"). SMBS are usually
structured with two or more classes that receive different proportions of the
interest and principal distributions from a pool of mortgage-backed obligations.
A common type of SMBS will have one class receiving all of the interest, while
the other class receives all of the principal. However, in some instances, one
class will receive some of the interest and most of the principal while the
other class will receive most of the interest and the remainder of the
principal. If the underlying obligations experience greater than anticipated
prepayments of principal, the Portfolio may fail to fully recoup its initial
investment in these securities. The market value of the class consisting
entirely of principal payments generally is extremely volatile in response to
changes in interest rates. The yields on a class of SMBS that receives all or
most of the interest are generally higher than prevailing market yields on other
mortgage-backed obligations because their cash flow patterns are also volatile
and there is a risk that the initial investment will not be fully recouped. SMBS
issued by the U.S. Government (or a U.S. Government agency or instrumentality)
may be considered liquid under guidelines established by the Trust's Board of
Trustees if they can be disposed of promptly in the ordinary course of business
at a value reasonably close to that used in the calculation of the net asset
value per unit.
Asset-Backed Securities. The U.S. Government Securities Portfolio may purchase
securities that are secured or backed by mortgages and issued by an agency of
the U.S. Government, and the Short Duration, Short-Intermediate Bond, Bond and
International Bond Portfolios may purchase asset-backed securities, which are
B-4
<PAGE>
securities backed by mortgages, installment contracts, credit card receivables
or other assets. Asset-backed securities represent interests in "pools" of
assets in which payments of both interest and principal on the securities are
made monthly, thus in effect "passing through" monthly payments made by the
individual borrowers on the assets that underlie the securities, net of any fees
paid to the issuer or guarantor of the securities. The average life of
asset-backed securities varies with the maturities of the underlying
instruments, and the average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as a result of mortgage prepayments.
For this and other reasons, an asset-backed security's stated maturity may be
shortened, and the security's total return may be difficult to predict
precisely. Asset-backed securities acquired by a Portfolio may include
collateralized mortgage obligations ("CMOs") issued by private companies.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities guaranteed
by the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest by GNMA and such guarantee is
backed by the full faith and credit of the United States. GNMA is a wholly-owned
U.S. Government corporation within the Department of Housing and Urban
Development. 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 the Federal National Mortgage Association
("FNMA") include FNMA Guaranteed Mortgage Pass-Through Certificates (also known
as "Fannie Maes") which are solely the obligations of the FNMA and are not
backed by or entitled to the full faith and credit of the United States, but are
supported by the right of the issuer to borrow from the U.S. Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of the principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of 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. FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When FHLMC does not guarantee timely
payment of
B-5
<PAGE>
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.
Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such receivables.
Therefore, there is a possibility that recoveries on repossessed collateral may
not, in some cases, be able to support payments on these securities.
Foreign Securities. Unanticipated political or social developments may affect
the value of the International Bond Portfolio's investments in emerging market
countries and the availability to the Portfolio of additional investments in
those countries. The small size and inexperience of the securities markets in
certain of such countries and the limited volume of trading in securities in
those countries may make the Portfolio's investments in such countries illiquid
and more volatile than investments in Japan or most Western European countries,
and the Portfolio may be required to establish special custodial or other
arrangements before making certain investments in those countries. There may be
little financial or accounting information available with respect to issuers
located in certain of such countries, and it may be difficult as a result to
assess the value or prospects of an investment in such issuers.
Investors should understand that the expense ratio of the International Bond
Portfolio can be expected to be higher than those of funds investing in domestic
securities. The costs attributable to investing abroad are usually higher for
several reasons, such as the higher cost of investment research, higher cost of
custody of foreign securities, higher commissions paid on comparable
transactions on foreign markets and additional costs arising from delays in
settlements of transactions involving foreign securities.
B-6
<PAGE>
Foreign Currency Transactions. In order to protect against a possible loss on
investments resulting from a decline or appreciation in the value of a
particular foreign currency against the U.S. dollar or another foreign currency
or for other reasons, the Short-Intermediate Bond, Bond and International Bond
Portfolios are authorized to enter into forward currency exchange contracts. In
addition, with respect to the International Bond Portfolio, Northern may
purchase or sell forward foreign currency exchange contracts to seek to increase
total return when Northern anticipates that the foreign currency will appreciate
or depreciate in value, but securities denominated in that currency do not in
Northern's view present attractive investment opportunities and are not held by
the Portfolio. These contracts involve an obligation to purchase or sell a
specified currency at a future date at a price set at the time of the contract.
Forward currency contracts do not eliminate fluctuations in the values of
portfolio securities but rather allow a Portfolio to establish a rate of
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security, a
Portfolio may enter into a forward foreign currency exchange contract for the
amount of the purchase or sale price to protect against variations, between the
date the security is purchased or sold and the date on which payment is made or
received, in the value of the foreign currency relative to the U.S. dollar or
other foreign currency.
When Northern anticipates that a particular foreign currency may decline
substantially relative to the U.S. dollar or other leading currencies, in order
to reduce risk, a Portfolio may enter into a forward contract to sell, for a
fixed amount, the amount of foreign currency approximating the value of some or
all of the Portfolio's securities denominated in such foreign currency.
Similarly, when the obligations held by a Portfolio create a short position in a
foreign currency, the Portfolio may enter into a forward contract to buy, for a
fixed amount, an amount of foreign currency approximating the short position.
With respect to any forward foreign currency contract, it will not generally be
possible to match precisely the amount covered by that contract and the value of
the securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is entered
into and the date it matures. In addition, while forward contracts may offer
protection from losses resulting from declines or appreciation in the value of a
particular foreign currency, they also limit potential gains which might result
from changes in the value of such currency. A Portfolio will also incur costs in
connection with forward foreign currency exchange contracts and conversions of
foreign currencies and U.S. dollars.
B-7
<PAGE>
A separate account consisting of liquid assets, such as cash, U.S. Government
securities or other liquid high grade debt obligations, equal to the amount of a
Portfolio's assets that could be required to consummate forward contracts will
be established with the Portfolios' Custodian except to the extent the contracts
are otherwise "covered." For the purpose of determining the adequacy of the
securities in the account, the deposited securities will be valued at market or
fair value. If the market or fair value of such securities declines, additional
liquid securities will be placed in the account daily so that the value of the
account will equal the amount of such commitments by the Portfolio. A forward
contract to sell a foreign currency is "covered" if a Portfolio owns the
currency (or securities denominated in the currency) underlying the contract, or
holds a forward contract (or call option) permitting the Portfolio to buy the
same currency at a price no higher than the Portfolio's price to sell the
currency. A forward contract to buy a foreign currency is "covered" if a
Portfolio holds a forward contract (or call option) permitting the Portfolio to
sell the same currency at a price as high as or higher than the Portfolio's
price to buy the currency.
Interest Rate Swaps, Floors and Caps and Currency Swaps. The Portfolios (other
than the U.S. Treasury Index Portfolio) may enter into interest rate swaps,
floors and caps for hedging purposes and not for speculation. A Portfolio will
typically use interest rate swaps to preserve a return on a particular
investment or portion of its portfolio or to shorten the effective duration of
its portfolio investments. Interest rate swaps involve the exchange by a
Portfolio with another party of their respective commitments to pay or receive
interest, such as an exchange of fixed rate payments for floating rate payments.
The purchase of an interest rate floor or cap entitles the purchaser to receive
payments of interest on a notional principal amount from the seller, to the
extent the specified index falls below (floor) or exceeds (cap) a predetermined
interest rate.
The Portfolios will only enter into interest rate swaps or interest rate floor
or cap transactions on a net basis, i.e. the two payment streams are netted out,
with a Portfolio receiving or paying, as the case may be, only the net amount of
the two payments. Inasmuch as these transactions are entered into for good faith
hedging purposes, the Portfolios and Northern believe that such obligations do
not constitute senior securities as defined in the 1940 Act and, accordingly,
will not treat them as being subject to the Portfolios' borrowing restrictions.
The net amount of the excess, if any, of the Portfolios' obligations over their
entitlements with respect to each interest rate swap will be accrued on a daily
basis and an amount of liquid assets, such as cash, U.S. Government securities
or other liquid high grade debt securities, having an aggregate net asset value
at least
B-8
<PAGE>
equal to such accrued excess will be maintained in a segregated account by the
Portfolios' custodian.
The International Bond Portfolio may enter into currency swaps, which involve
the exchange of the rights of the Portfolio and another party to make or receive
payments in specified currencies. Currency swaps usually involve the delivery of
the entire principal value of one designated currency in exchange for the other
designated currency. Inasmuch as these transactions are entered into for good
faith hedging purposes, the Portfolio and Northern believe that such
transactions do not constitute senior securities as defined in the 1940 Act and,
accordingly, will not treat them as being subject to the Portfolios' borrowing
restrictions.
The Portfolios will not enter into an interest rate or currency swap or interest
rate floor or cap transaction unless the unsecured commercial paper, senior debt
or the claims-paying ability of the other party thereto is rated either A or A-1
or better by S&P, Duff or Fitch, or A or P-1 or better by Moody's. If there is a
default by the other party to such transaction, the Portfolios will have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with markets for other similar instruments which
are traded in the Interbank market.
Options. Each Portfolio may buy put options and call options and write covered
call and secured put options. Such options may relate to particular securities,
financial instruments, foreign currencies, bond indices or (in the case of the
International Bond Portfolio) the yield differential between two securities
("yield curve options") and may or may not be listed on a domestic or foreign
securities exchange (an "Exchange") or issued by the Options Clearing
Corporation. Options trading is a highly specialized activity which entails
greater than ordinary investment risk. Options on particular securities may be
more volatile than the underlying instruments and, therefore, on a percentage
basis, an investment in options may be subject to greater fluctuation than an
investment in the underlying instruments themselves.
The Portfolios will write call options only if they are "covered." In the case
of a call option on a security or currency, the option is "covered" if a
Portfolio owns the security or currency underlying the call or has an absolute
and immediate right to acquire that security or currency without additional cash
consideration (or, if additional cash consideration is required, liquid assets,
such as cash, U.S.
B-9
<PAGE>
Government securities or other liquid high grade debt obligations, in such
amount as are held in a segregated account by its custodian) upon conversion or
exchange of other securities or instruments held by it. For a call option on an
index, the option is covered if a Portfolio maintains with its custodian
diversified debt securities, a portfolio of securities substantially replicating
the movement of the index or liquid assets equal to the contract value. A call
option is also covered if a Portfolio holds a call on the same security,
currency or index as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written, or (ii)
greater than the exercise price of the call written provided the difference is
maintained by the Portfolio in liquid assets in a segregated account with its
custodian. The Portfolios will write put options only if they are "secured" by
liquid assets maintained in a segregated account by the Portfolios' custodian in
an amount not less than the exercise price of the option at all times during the
option period.
With respect to yield curve options, a call (or put) option is covered if the
International Bond Portfolio holds another call (or put) option on the spread
between the same two securities and maintains in a segregated account with its
custodian cash or cash equivalents sufficient to cover the Portfolio's net
liability under the two options. Therefore, the Portfolio's liability for such a
covered option is generally limited to the difference between the amount of the
Portfolio's liability under the option written by the Portfolio less the value
of the option held by the Portfolio. Yield curve options may also be covered in
such other manner as may be in accordance with the requirements of the
counterparty with which the option is traded and applicable laws and
regulations. Yield curve options are traded over-the-counter and because they
have been only recently introduced, established trading markets for these
securities have not yet developed.
A Portfolio's obligation to sell a security or currency subject to a covered
call option written by it, or to purchase a security or currency subject to a
secured put option written by it, may be terminated prior to the expiration date
of the option by the Portfolio's execution of a closing purchase transaction,
which is effected by purchasing on an exchange an option of the same series
(i.e., same underlying security or currency, exercise price and expiration date)
as the option previously written. Such a purchase does not result in the
ownership of an option. A closing purchase transaction will ordinarily be
effected to realize a profit on an outstanding option, to prevent an underlying
security or currency from being called, to permit the sale of the underlying
security or currency or to permit the writing of a new option containing
different terms on such underlying security. The cost of such a liquidation
purchase plus transaction costs may be greater than the premium received
B-10
<PAGE>
upon the original option, in which event the Portfolio will have incurred a loss
in the transaction. There is no assurance that a liquid secondary market will
exist for any particular option. An option writer, unable to effect a closing
purchase transaction, will not be able to sell the underlying security or
currency (in the case of a covered call option) or liquidate the segregated
account (in the case of a secured put option) until the option expires or the
optioned security or currency is delivered upon exercise with the result that
the writer in such circumstances will be subject to the risk of market decline
or appreciation in the security or currency during such period.
When a Portfolio purchases an option, the premium paid by it is recorded as an
asset of the Portfolio. When the Portfolio writes an option, an amount equal to
the net premium (the premium less the commission) received by the Portfolio is
included in the liability section of the Portfolio's statement of assets and
liabilities as a deferred credit. The amount of this asset or deferred credit
will be subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the current bid price. If an option
purchased by the Portfolio expires unexercised the Portfolio realizes a loss
equal to the premium paid. If the Portfolio enters into a closing sale
transaction on an option purchased by it, the Portfolio will realize a gain if
the premium received by the Portfolio on the closing transaction is more than
the premium paid to purchase the option, or a loss if it is less. If an option
written by the Portfolio expires on the stipulated expiration date or if the
Portfolio enters into a closing purchase transaction, it will realize a gain (or
loss if the cost of a closing purchase transaction exceeds the net premium
received when the option is sold) and the deferred credit related to such option
will be eliminated. If an option written by the Portfolio is exercised, the
proceeds of the sale will be increased by the net premium originally received
and the Portfolio will realize a gain or loss.
There are several risks associated with transactions in certain options. For
example, there are significant differences between the securities and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. In addition, a liquid
secondary market for particular options, whether traded over-the-counter or on
an Exchange may be absent for reasons which include the following: there may be
insufficient trading interest in certain options; restrictions may be imposed by
an Exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an
Exchange; the facilities of an
B-11
<PAGE>
Exchange or the Options Clearing Corporation may not at all times be adequate to
handle current trading value; or one or more Exchanges could, for economic or
other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.
Futures Contracts and Related Options. Each Portfolio may purchase and sell
futures contracts and may purchase and sell call and put options on futures
contracts. For a detailed description of futures contracts and related options,
see Appendix B to this Additional Statement.
Securities Lending. Collateral for loans of portfolio securities made by a
Portfolio may consist of cash, securities issued or guaranteed by the U.S.
Government or its agencies or irrevocable bank letters of credit (or any
combination thereof). The borrower of securities will be required to maintain
the market value of the collateral at not less than the market value of the
loaned securities, and such value will be monitored on a daily basis. When a
Portfolio lends its securities, it continues to receive dividends and/or
interest on the securities loaned and may simultaneously earn interest on the
investment of the cash collateral which will be invested in readily marketable,
high quality, short-term obligations. Although voting rights, or rights to
consent, attendant to securities on loan pass to the borrower, such loans will
be called so that the securities may be voted by a Portfolio if a material event
affecting the investment is to occur.
Forward Commitments, When-Issued Securities and Delayed Delivery Transactions.
When a Portfolio purchases securities on a when-issued, delayed delivery or
forward commitment basis, the Portfolio's custodian (or subcustodian) will
maintain in a segregated account cash, U.S. Government securities or other high
grade liquid debt obligations having a value (determined daily) at least equal
to the amount of the Portfolio's purchase commitments. In the case of a forward
commitment to sell portfolio securities, the custodian or subcustodian will hold
the portfolio securities themselves in a segregated account while the commitment
is outstanding. These procedures are designed to ensure that the Portfolio will
maintain sufficient assets at all times to cover its obligations under
when-issued purchases, forward commitments and delayed delivery transactions.
As described in the Prospectus, the Short Duration, U.S. Government Securities,
Short-Intermediate Bond, Bond and International Bond Portfolios may dispose of
or negotiate a when-
B-12
<PAGE>
issued or forward commitment after entering into it in connection with pair-off
transactions. A Portfolio will normally realize a capital gain or loss in
connection with these transactions. For purposes of determining a Portfolio's
average dollar-weighted maturity, the maturity of when-issued or forward
commitment securities will be calculated from the commitment date.
Commercial Paper, Bankers' Acceptances, Certificates of Deposit, Time Deposits
and Bank Notes. Commercial paper represents short-term unsecured promissory
notes issued in bearer form by banks or bank holding companies, corporations and
finance companies. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a stated maturity date and
bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand
by the investor, but may be subject to early withdrawal penalties that vary
depending upon market conditions and the remaining maturity of the obligation.
There are no contractual restrictions on the right to transfer a beneficial
interest in a fixed time deposit to a third party, although there is no market
for such deposits. Bank notes rank junior to deposit liabilities of banks and
pari passu with other senior, unsecured obligations of the bank. Bank notes are
classified as "other borrowings" on a bank's balance sheet, while deposit notes
and certificates of deposit are classified as deposits. Bank notes are not
insured by the Federal Deposit Insurance Corporation or any other insurer.
Deposit notes are insured by the Federal Deposit Insurance Corporation only to
the extent of $100,000 per depositor per bank.
A Portfolio may invest a portion of its assets in the obligations of foreign
banks and foreign branches of domestic banks. Such obligations include
Eurodollar Certificates of Deposit ("ECDs") which are U.S. dollar-denominated
certificates of deposit issued by offices of foreign and domestic banks located
outside the United States; Eurodollar Time Deposits ("ETDs") which are U.S.
dollar-denominated deposits in a foreign branch of a U.S. bank or a foreign
bank; Canadian Time Deposits ("CTDs") which are essentially the same as ETDs
except they are issued by Canadian offices of major Canadian banks; Schedule Bs,
which are obligations issued by Canadian branches of foreign or domestic banks;
Yankee Certificates of Deposit ("Yankee CDs") which are U.S. dollar-denominated
certificates of deposit issued by a U.S. branch of a foreign bank and held in
the United States; and Yankee Bankers' Acceptances ("Yankee BAs") which are U.S.
dollar-denominated bankers' acceptances issued by a U.S. branch of a foreign
bank and held in the United States.
B-13
<PAGE>
Variable and Floating Rate Instruments. With respect to the variable and
floating rate instruments that may be acquired by the Portfolios, Northern will
consider the earning power, cash flows and other liquidity ratios of the issuers
and guarantors of such instruments and, if the instruments are subject to demand
features, will continuously monitor their financial status to meet payment on
demand. Where necessary to ensure that a variable or floating rate instrument
meets the Portfolios' quality requirements the issuer's obligation to pay the
principal of the instrument will be backed by an unconditional bank letter or
line of credit, guarantee or commitment to lend.
Investment Companies. Each Portfolio currently intends to limit its investments
in securities issued by other investment companies so that, as determined
immediately after a purchase of such securities is made, not more than 3% of the
total outstanding stock of any one investment company will be owned by a
Portfolio, the Trust as a whole and their affiliated persons (as defined in the
1940 Act). An investment company whose securities are purchased by a Portfolio
or the Trust is not obligated to redeem such securities in an amount exceeding
1% of the investment company's total outstanding securities during any period of
less than 30 days. Therefore, such securities that exceed this amount may be
illiquid.
Repurchase Agreements. Each Portfolio may enter into repurchase agreements with
financial institutions, such as banks and broker-dealers, as are deemed
creditworthy by Northern under guidelines approved by the Trust's Board of
Trustees. The repurchase price under the repurchase agreements will generally
equal the price paid by a Portfolio plus interest negotiated on the basis of
current short-term rates (which may be more or less than the rate on the
securities underlying the repurchase agreement). Securities subject to
repurchase agreements will be held by the Trust's custodian (or subcustodian),
in the Federal Reserve/Treasury book-entry system or by another authorized
securities depository. Repurchase agreements are considered to be loans by a
Portfolio under the 1940 Act.
Reverse Repurchase Agreements. Each Portfolio may borrow funds for temporary or
emergency purposes by selling portfolio securities to financial institutions
such as banks and broker/dealers and agreeing to repurchase them at a mutually
specified date and price ("reverse repurchase agreements"). Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Portfolio may decline below the repurchase price. The Portfolios will pay
interest on amounts obtained pursuant to a reverse repurchase agreement. While
reverse repurchase agreements are outstanding, a Portfolio will maintain in a
segregated account cash, U.S. Government securities or other liquid high-grade
debt securities of an amount at least equal to the market value of the
securities, plus
B-14
<PAGE>
accrued interest, subject to the agreement. Reverse repurchase agreements are
considered to be borrowings by a Portfolio under the 1940 Act.
Risks Related to Lower-Rated Securities. While any investment carries some risk,
certain risks associated with lower-rated securities are different than those
for investment-grade securities. The risk of loss through default is greater
because lower-rated securities are usually unsecured and are often subordinate
to an issuer's other obligations. Additionally, the issuers of these securities
frequently have high debt levels and are thus more sensitive to difficult
economic conditions, individual corporate developments and rising interest
rates. Consequently, the market price of these securities may be quite volatile
and may result in wider fluctuations of a Portfolio's net asset value per unit.
There remains some uncertainty about the performance of the market for
lower-rated securities under adverse market and economic environments. An
economic downturn or increase in interest rates could have a negative impact on
both the markets for lower-rated securities (resulting in a greater number of
bond defaults) and the value of lower-rated securities held in a portfolio of
investments.
The economy and interest rates can affect lower-rated securities differently
than other securities. For example, the prices of lower-rated securities are
more sensitive to adverse economic changes or individual corporate developments
than are the prices of higher-rated investments. In addition, during an economic
downturn or period in which interest rates are rising significantly, highly
leveraged issuers may experience financial difficulties, which, in turn, would
adversely affect their ability to service their principal and interest payment
obligations, meet projected business goals and obtain additional financing.
If an issuer of a security defaults, a Portfolio may incur additional expenses
to seek recovery. In addition, periods of economic uncertainty would likely
result in increased volatility for the market prices of lower-rated securities
as well as a Portfolio's net asset value. In general, both the prices and yields
of lower-rated securities will fluctuate.
In certain circumstances it may be difficult to determine a security's fair
value due to a lack of reliable objective information. Such instances occur
where there is not an established secondary market for the security or the
security is lightly traded. As a result, a Portfolio's valuation of a security
and the price it is actually able to obtain when it sells the security could
differ.
B-15
<PAGE>
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of lower-rated securities held by
a Portfolio, especially in a thinly traded market. Illiquid or restricted
securities held by the Portfolio may involve special registration
responsibilities, liabilities and costs, and could involve other liquidity and
valuation difficulties.
The rating assigned by a rating agency evaluates the safety of a lower-rated
security's principal and interest payments, but does not address market value
risk. Because the ratings of the rating agencies may not always reflect current
conditions and events, in addition to using recognized rating agencies and other
sources, Northern performs its own analysis of the issuers whose lower-rated
securities the Portfolios hold. Because of this, the Portfolios' performance may
depend more on Northern's own credit analysis than in the case of mutual funds
investing in higher-rated securities.
In selecting convertible securities, Northern considers factors such as those
relating to the creditworthiness of issuers, the ratings and performance of the
securities, the protections afforded the securities and the diversity of a
Portfolio. Northern continuously monitors the issuers of lower-rated securities
held by a Portfolio for their ability to make required principal and interest
payments, as well as in an effort to control the liquidity of the Portfolio so
that it can meet redemption requests.
Subject to the limitations stated in the Prospectus, if a Portfolio security
undergoes a rating revision, a Portfolio may continue to hold the security if
Northern determines that retention is warranted.
Dollar-Weighted Average Maturity. Because the Short Duration Portfolio's
duration takes into account the cash flows from the securities held by the
Portfolio, the Portfolio's duration will never be longer than its
dollar-weighted average maturity. As stated, for purposes of calculating the
Portfolio's dollar-weighted average maturity, the maturity of a security will
normally be the date when final payment is due, with these exceptions: (a)
variable and floating rate instruments without demand features will be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate, (b) floating rate instruments which incorporate a demand feature
will be deemed to have a maturity equal to the period remaining until the
principal amount can be recovered through demand, (c) variable rate instruments
which incorporate a demand feature will be deemed to have a maturity equal to
the shorter of the period remaining until (i) the next readjustment of the
B-16
<PAGE>
interest rate or (ii) the principal amount can be recovered through demand, and
(d) a repurchase agreement will be deemed to
have a maturity equal to the period remaining until the date on which the
repurchase agreement is to be repaid (whether at maturity or on demand). A
fixed-rate mortgage-backed or other asset-backed security will be deemed to have
a maturity equal to the security's weighted average life (i.e., the average time
to receipt of expected cash flows on the security).
Yields and Ratings. The yields on certain obligations, including the instruments
in which the Portfolios may invest, are dependent on a variety of factors,
including general market conditions, conditions in the particular market for the
obligation, financial condition of the issuer, size of the offering, maturity of
the obligation and ratings of the issue. The ratings of S&P, Moody's, Duff,
Fitch and TBW represent their respective opinions as to the quality of the
obligations they undertake to rate. Ratings, however, are general and are not
absolute standards of quality. Consequently, obligations with the same rating,
maturity and interest rate may have different market prices.
Calculation of Portfolio Turnover Rate. The portfolio turnover rate for the
Portfolios is calculated by dividing the lesser of purchases or sales of
portfolio investments for the reporting period by the monthly average value of
the portfolio investments owned during the reporting period. The calculation
excludes all securities, including options, whose maturities or expiration dates
at the time of acquisition are one year or less. Portfolio turnover may vary
greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of units and by requirements which
enable the Portfolios to receive favorable tax treatment.
Investment Restrictions Applicable to the Short Duration
Portfolio
The Short Duration Portfolio is subject to the fundamental investment
restrictions enumerated below which may be changed with respect to the Short
Duration Portfolio only by a vote of the holders of a majority of the Short
Duration Portfolio's outstanding units.
The Portfolio may not:
(1) Make loans, except (a) through the purchase of debt obligations in
accordance with the Portfolio's investment objective and policies, (b) through
repurchase agreements with banks, brokers, dealers and other financial
institutions, and (c) loans of securities.
B-17
<PAGE>
(2) Mortgage, pledge or hypothecate any assets (other than pursuant to
reverse repurchase agreements) except to secure permitted borrowings.
(3) Purchase or sell real estate, but this restriction shall not prevent
the Portfolio from investing directly or indirectly in portfolio instruments
secured by real estate or interests therein.
(4) Purchase or sell commodities or commodity contracts or oil or gas or
other mineral exploration or development programs, except that the Portfolio
may, to the extent appropriate to its investment policies, purchase securities
of companies engaging in whole or in part in such activities, and enter into
futures contracts and related options.
(5) Invest in companies for the purpose of exercising control or
management.
(6) Act as underwriter of securities, except as the Portfolio may be
deemed to be an underwriter under the Securities Act of 1933 in connection with
the purchase and sale of portfolio instruments in accordance with its investment
objective and portfolio management policies.
(7) Write puts, calls or combinations thereof, except for transactions in
options on securities, financial instruments, currencies and indices of
securities; futures contracts; options on futures contracts; forward currency
contracts; short sales of securities against the box; interest rate swaps,
floors, caps and related options; and pair-off transactions.
(8) Purchase the securities of any issuer if such purchase would cause
more than 10% of the voting securities of such issuer to be held by the
Portfolio, except that up to 25% of the value of its total assets may be
invested without regard to this 10% limitation.
(9) Purchase the securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
if immediately after such purchase more than 5% of the value of the Portfolio's
total assets would be invested in such issuer, except that: (a) up to 25% of the
value of the total assets of the Portfolio may be invested in any securities
without regard to this 5% limitation; and (b) such 5% limitation shall not apply
to repurchase agreements collateralized by obligations of the U.S. Government,
its agencies or instrumentalities.
(10) Purchase securities if such purchase would cause more than 25% in the
aggregate of the market value of the total assets of the Portfolio to be
invested in the securities of one or more
B-18
<PAGE>
issuers having their principal business activities in the same industry,
provided that there is no limitation with respect to, and the Portfolio reserves
freedom of action, when otherwise consistent with its investment policies, to
concentrate its investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, and repurchase agreements and
securities loans collateralized by such U.S. Government obligations. For the
purposes of this restriction, state and municipal governments and their agencies
and authorities are not deemed to be industries; as to utility companies, the
gas, electric, water and telephone businesses are considered separate
industries; personal credit finance companies and business credit finance
companies are deemed to be separate industries; and wholly-owned finance
companies are considered to be in the industries of their parents if their
activities are primarily related to financing the activities of their parents.
(11) Borrow money (other than pursuant to reverse repurchase agreements)
except (a) as a temporary measure, and then only in amounts not exceeding 5% of
the value of the Portfolio's total assets or (b) from banks, provided that
immediately after any such borrowing all borrowings of the Portfolio do not
exceed one-third of the Portfolio's total assets. No purchases of securities
will be made if borrowings subject to this restriction exceed 5% of the value of
the Portfolio's assets. The exception in (a) and (b) to this restriction are not
for investment leverage purposes but are solely for extraordinary or emergency
purposes or to facilitate management of the Portfolio by enabling it to meet
redemption requests when the liquidation of portfolio instruments is deemed to
be disadvantageous or not possible. If due to market fluctuations or other
reasons the total assets of the Portfolio fall below 300% of its borrowings, the
Trust will promptly reduce the borrowings of the Portfolio in accordance with
the 1940 Act.
In applying Restriction No. 9 above, a security is considered to be issued by
the entity, or entities, whose assets and revenues back the security. A
guarantee of a security is not deemed to be a security issued by the guarantor
when the value of all securities issued and guaranteed by the guarantor, and
owned by the Portfolio, does not exceed 10% of the value of the Portfolio's
total assets.
In addition, as matter of fundamental policy, the Portfolio may not enter into
reverse repurchase agreements exceeding in the aggregate one-third of the
Portfolio's total assets.
Except to the extent otherwise provided in Investment Restriction (10) for the
purpose of such restriction, in determining industry classification the Trust
intends to use the industry classification titles in the Standard Industrial
Classification Manual. Securities held in escrow or separate accounts in
connection with the Portfolio's investment practices described in this
Additional Statement and in the Prospectus are not deemed to be mortgaged,
pledged or hypothecated for purposes of the foregoing Investment Restrictions.
B-19
<PAGE>
Any restriction which involves a maximum percentage will not be considered
violated unless an excess over the percentage occurs immediately after, and is
caused by, an acquisition or encumbrance of securities or assets of, or
borrowings by, the Portfolio.
In order to permit the sale of the Portfolio's units in certain states, the
Trust may make commitments with respect to the Portfolio more restrictive than
the investment policies listed above and in the Prospectus. The Portfolio has,
among other commitments, represented to the Texas State Securities Board that it
will not (i) invest in real estate limited partnership interests, excluding
readily marketable REITS or (ii) invest more than 5% of the Portfolio's net
assets in warrants, of which not more than 2% will be invested in warrants that
are not listed on the New York Stock Exchange or the American Stock Exchange.
Should the Trust determine that any commitment made to permit the sale of the
Portfolio's units in any state is no longer in the best interests of the
Portfolio, it will revoke the commitment by terminating sales of the Portfolio's
units in the state involved.
Investment Restrictions Applicable to the U.S. Government
Securities, Short-Intermediate Bond, U.S. Treasury Index, Bond
and International Bond Portfolios
The U.S. Government Securities, Short-Intermediate Bond, U.S. Treasury Index,
Bond and International Bond Portfolios are subject to the fundamental investment
restrictions enumerated below which may be changed with respect to these
particular Portfolios only by a vote of the holders of a majority of a
Portfolio's outstanding units.
No Portfolio may:
(1) Make loans, except (a) through the purchase of debt obligations in
accordance with the Portfolio's investment objective and policies, (b) through
repurchase agreements with banks, brokers, dealers and other financial
institutions, and (c) loans of securities.
(2) Mortgage, pledge or hypothecate any assets (other than pursuant to
reverse repurchase agreements) except to secure permitted borrowings.
(3) Purchase or sell real estate, but this restriction shall not prevent a
Portfolio from investing directly or indirectly in portfolio instruments secured
by real estate or interests therein or acquiring securities of real estate
investment trusts or other issuers that deal in real estate.
(4) Purchase or sell commodities or commodity contracts or oil or gas or
other mineral exploration or development programs,
B-20
<PAGE>
except that each Portfolio may, to the extent appropriate to its investment
policies, purchase securities of companies engaging in whole or in part in such
activities, enter into futures contracts and related options, and enter into
forward currency contracts in accordance with its investment objective and
policies.
(5) Invest in companies for the purpose of exercising control.
(6) Act as underwriter of securities, except as a Portfolio may be deemed
to be an underwriter under the Securities Act of 1933 in connection with the
purchase and sale of portfolio instruments in accordance with its investment
objective and portfolio management policies.
(7) Write puts, calls or combinations thereof, except for transactions in
options on securities, financial instruments, currencies and indices of
securities (and in the case of the International Bond Portfolio, yield curve
options); futures contracts; options on futures contracts; forward currency
contracts; short sales of securities against the box; interest rate swaps (and
in the case of the International Bond Portfolio, currency swaps); and pair-off
transactions (except in the case of the International Bond Portfolio).
(8) Purchase the securities of any issuer if such purchase would cause
more than 10% of the voting securities of such issuer to be held by the
Portfolio, except that up to 25% of the value of its total assets may be
invested without regard to this 10% limitation; provided that this restriction
does not apply to the International Bond Portfolio.
(9) Purchase securities (other than obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities) if such purchase would
cause more than 25% in the aggregate of the market value of the total assets of
a Portfolio to be invested in the securities of one or more issuers having their
principal business activities in the same industry. For the purposes of this
restriction, as to utility companies, the gas, electric, water and telephone
businesses are considered separate industries; personal credit finance companies
and business credit finance companies are deemed to be separate industries; and
wholly-owned finance companies are considered to be in the industries of their
parents if their activities are primarily related to financing the activities of
their parents.
B-21
<PAGE>
(10) Borrow money (other than pursuant to reverse repurchase agreements),
except (a) as a temporary measure, and then only in amounts not exceeding 5% of
the value of the Portfolio's total assets or (b) from banks, provided that
immediately after any such borrowing all borrowings of the Portfolio do not
exceed one-third of the Portfolio's total assets. No purchases of securities
will be made if borrowings subject to this restriction exceed 5% of the value of
the Portfolio's assets. The exceptions in (a) and (b) to this restriction are
not for investment leverage purposes but are solely for extraordinary or
emergency purposes or to facilitate management of the Portfolios by enabling the
Trust to meet redemption requests when the liquidation of Portfolio instruments
is deemed to be disadvantageous or not possible. If due to market fluctuations
or other reasons the total assets of a Portfolio fall below 300% of its
borrowings, the Trust will promptly reduce the borrowings of such Portfolio in
accordance with the 1940 Act.
The U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index and Bond Portfolios may not:
(11) Purchase the securities of any one issuer, other than obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities,
if immediately after such purchase more than 5% of the value of such Portfolio's
total assets would be invested in such issuer, except that: (a) up to 25% of the
value of the total assets of each Portfolio may be invested in any securities
without regard to this 5% limitation; and (b) with respect to each Portfolio,
such 5% limitation shall not apply to repurchase agreements collateralized by
obligations of the U.S. Government, its agencies or instrumentalities.
In applying Restriction No. 11 above, a security is considered to be issued by
the entity, or entities, whose assets and revenues back the security. A
guarantee of a security is not deemed to be a security issued by the guarantor
when the value of all securities issued and guaranteed by the guarantor, and
owned by the Portfolio, does not exceed 10% of the value of the Portfolio's
total assets.
Except to the extent otherwise provided in Investment Restriction (9) for the
purpose of such restriction, in determining industry classification the Trust
intends to use the industry classification titles in the Standard Industrial
Classification Manual (except that the International Bond Portfolio will use the
Morgan Stanley Capital International industry classification titles). Securities
held in escrow or separate accounts in connection with a Portfolio's investment
practices described in this Additional Statement and in the Prospectus are not
deemed to be mortgaged, pledged or hypothecated for purposes of the foregoing
Investment Restrictions.
B-22
<PAGE>
In addition, as a matter of fundamental policy, the International Bond Portfolio
will not issue senior securities except as stated in the Prospectus or this
Additional Statement.
As a non-fundamental investment restriction, the International Bond Portfolio
may not, at the end of any tax quarter, hold more than 10% of the outstanding
voting securities of any one issuer, except that up to 50% of the total value of
the assets of the Portfolio may be invested in any securities without regard to
this 10% limitation so long as no more than 25% of the total value of its assets
is invested in the securities of any one issuer (except the U.S. Government). As
a non-fundamental investment restriction that can be changed without unitholder
approval, the International Bond Portfolio may not, at the end of any tax
quarter, invest more than 5% of the total value of its assets in the securities
of any one issuer (except U.S. Government securities or repurchase agreements
collateralized by such securities), except that up to 50% of the total value of
the Portfolio's assets may be invested in any securities without regard to this
5% limitation so long as no more than 25% of the total value of its assets is
invested in the securities of any one issuer (except U.S. Government securities
or repurchase agreements collateralized by such securities).
Any restriction which involves a maximum percentage will not be considered
violated unless an excess over the percentage occurs immediately after, and is
caused by, an acquisition or encumbrance of securities or assets of, or
borrowings by, a Portfolio.
In order to permit the sale of the Portfolio's units in certain states, the
Trust may make commitments with respect to the Portfolios more restrictive than
the investment policies listed above and in the Prospectus. Should the Trust
determine that any commitment made to permit the sale of a Portfolio's units in
any state is no longer in the best interests of the Portfolio, it will revoke
the commitment by terminating sales of the Portfolio's units in the state
involved.
ADDITIONAL TRUST INFORMATION
Trustees and Officers
Information pertaining to the Trustees and officers of the Trust is set forth
below.
B-23
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
William H. Springer, 66 Chairman Vice Chairman of Ameritech
701 Morningside Drive and (a telecommunications holding
Lake Forest, IL 60045 Trustee company; February 1987 to
retirement in August 1992);
Vice Chairman, Chief Financial
and Administrative Officer,
prior thereto; Director,
Walgreen Co. (a retail drug
store business); Director of
Baker, Fentress & Co. (a
closed-end, non-diversified
management investment company)
(April 1992 to present).
Edward J. Condon, Jr., 54 Trustee Chairman of The Pardigm Group,
227 West Monroe Street Ltd. (a financial advisor)
Chicago, IL 60606. since July 1993. Vice Presi-
dent and Treasurer of Sears, Roebuck
and Co. (a retail corporation) from
February 1989 to July 1993. Within the
last five years he has served as a
Director of: Sears Roebuck Acceptance
Corp.; Discover Credit Corp.; Sears
Receivables Financing Group, Inc.;
Sears Credit Corp.; and Sears Overseas
Finance N.V.
</TABLE>
B-24
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
John W. English, 61 Trustee Private Investor. Vice Pres-
50-H New England Avenue ident and Chief Investment
P.O. Box 640 Officer of The Ford Foundation
Summit, NJ 07902-0640. (a charitable trust) from 1981
until 1993. Trustee: The
China Fund, Inc.; Paribas
Trust for the Institutions;
Retail Property Trust; Sierra
Trust; American Red Cross in
Greater New York; Mote Marine
Laboratory; and United Board
for Christian Higher Education
in Asia. Director: University
of Iowa Foundation; Blanton-
Peale Institutes of Religion
and Health; Community Found-
ation of Sarasota County; Duke
Management Company; and John
Ringling Centre Foundation.
James J. Gavin, Jr., 72 Trustee Vice Chairman from January
161 Thorntree Lane 1985 to August 1987 and Senior
Winnetka, Illinois 60093 Vice President-Finance and
Chief Financial Officer from 1975 to
January 1985 of Borg-Warner
Corporation (a diversified
manufacturing company also engaged in
providing financial and protective
services). Director of Service
Corporation International (a funeral
service/ cemetery company), Stepan
Corporation (a producer of basic and
inter-mediate chemicals), Borg-Warner
Industrial Products, Inc. (a supplier
of advanced technology fluid transfer
and control equipment, systems and
services).
</TABLE>
B-25
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Frederick T. Kelsey, 67 Trustee Consultant to Goldman Sachs
3133 Laughing Gull Court from December 1985 through
Johns Island, SC 29455 February 1988. Director of
Goldman Sachs Funds Group and Vice
President of Goldman Sachs from May
1981 until his retirement in November
1985. President and Treasurer of the
Trust through August 1985. Trustee,
various management investment
companies affiliated with Kemper
Financial Companies.
Richard P. Strubel, 56 Trustee President and Chief Executive
70 West Madison St Officer, Tandem Partners,
Suite 1400 Inc. (a diversified
Chicago, IL 60602 manufacturer of fastening
systems and connectors)(since
January 1984).
Marcia L. Beck, 40 President Director, Institutional Funds
One New York Plaza Group, GSAM (since September
New York, NY 10004 1992); Vice President and
Senior Portfolio Manager, Goldman
Sachs Asset Management from June 1988
to Present; Vice President, Funds
Group of Goldman Sachs Asset
Management May 1985 to June 1988.
Paul Klug, 44 Vice Vice President of Goldman
One New York Plaza President Sachs; Director of Proprietary
New York, NY 10004 Mutual Funds of GSAM (since
February 1994); Chief Operating
Officer, Vista Capital Management,
Chase Manhattan Bank (from January
1990 to February 1994); Vice
President, JP Morgan (February 1984 to
January 1990).
Pauline Taylor, 49 Vice Vice President of Goldman
4900 Sears Tower President Sachs since June 1992.
Chicago, IL 60606 Consultant since 1989. Senior
Vice President of Fidelity Investments
prior to 1989.
</TABLE>
B-26
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Nancy L. Mucker, 46 Vice Vice President, Goldman Sachs
4900 Sears Tower President and Co-Manager of Shareholder
Chicago, IL 60606 Services for GSAM Funds Group
John W. Mosior, 57 Vice Vice President, Goldman Sachs
4900 Sears Tower President and Co-Manager of Shareholder
Chicago, IL 60606 Services for GSAM Funds Group.
Scott M. Gilman, 36 Treasurer Director, Mutual Funds Admin-
One New York Plaza istration, Goldman Sachs Asset
New York, NY 10004 Management (since April 1994),
Assistant Treasurer, Goldman Sachs
Funds Management, Inc. (since March
1993); Vice President, Goldman Sachs
(since March 1990); Assistant
Treasurer of the Trust (April 1990 to
October 1991); Manager, Arthur
Andersen & Co.(prior thereto).
Michael J. Richman, 35 Secretary Vice President and Assistant
85 Broad Street General Counsel of Goldman
New York, NY 10004 Sachs (since June 1992); Asso-
ciate General Counsel, Goldman Sachs
Asset Management, Counsel to the Funds
Group, GSAM (since June 1992);
Partner, Hale and Dorr (September 1991
to June 1992).
Howard B. Surloff, 30 Assistant Vice President and Assistant
85 Broad Street Secretary General Counsel, Goldman Sachs
New York, NY 10004 (since November 1993 and May
1994, respectively ); Counsel to the
Funds Group, Goldman Sachs Asset
Management (since November 1993);
Formerly Associate of Shereff
Friedman, Hoffman & Goodman (prior
thereto).
Steven E. Hartstein, 32 Assistant Legal Products Analyst,
85 Broad Street Secretary Goldman Sachs (June 1993 to
New York, NY 10004 present); Funds Compliance
Officer, Citibank Global Asset
Management (August 1991 to June 1993);
Legal Assistant, Brown & Wood (prior
thereto).
</TABLE>
B-27
<PAGE>
<TABLE>
<CAPTION>
Name, Age Positions Principal Occupation(s)
and Address with Trust During Past 5 Years
- ----------- ---------- -------------------
<S> <C> <C>
Deborah A. Robinson, 24 Assistant Administrative Assistant,
85 Broad Street Secretary Goldman Sachs since
New York, NY 10004 January 1994. Formerly at
Cleary, Gottlieb, Steen & Ham-
ilton.
</TABLE>
Certain of the Trustees and officers and the organizations with which they are
associated have had in the past, and may have in the future, transactions with
Northern, Goldman Sachs and their respective affiliates. The Trust has been
advised by such Trustees and officers that all such transactions have been and
are expected to be in the ordinary course of business and the terms of such
transactions, including all loans and loan commitments by such persons, have
been and are expected to be substantially the same as the prevailing terms for
comparable transactions for other customers. Messrs. Springer, Kelsey, Strubel,
Klug, Mosior, Gilman, Richman, Surloff and Hartstein and Mmes. Beck, Mucker,
Taylor and Robinson hold similar positions with one or more investment companies
that are advised by Goldman Sachs. As a result of the responsibilities assumed
by Northern under its Advisory Agreement, Transfer Agency Agreement and
Custodian Agreement with the Trust and by Goldman Sachs under its Administration
Agreement and Distribution Agreement with the Trust, the Trust itself requires
no employees.
Each officer holds comparable positions with certain other investment companies
of which Goldman Sachs, GSAM or an affiliate thereof is the investment adviser,
administrator and/or distributor.
For the first three quarters of fiscal 1995, each Trustee earned a quarterly
retainer of $3,750 and an additional fee of $1,250 for each meeting attended,
plus reimbursement of expenses incurred as a Trustee. For the same period, the
Chairman of the Board earned a quarterly retainer of $5,625 and an additional
fee of $1,250 for each meeting attended, plus reimbursement of expenses incurred
as a Trustee.
Effective September 1, 1995 and until further notice, each Trustee earns a
quarterly retainer of $6,250 and the Chairman of the Board earns a quarterly
retainer of $9,375. Each Trustee, including the Chairman of the Board, earns an
additional fee of $1,500 for each meeting attended, plus reimbursement of
expenses incurred as a Trustee.
In addition, the Trustees established an Audit Committee consisting of three
members including a Chairman of the Committee. Each member earns a fee of $1,500
for each meeting attended and the Chairman earns a quarterly retainer of $1,250.
B-28
<PAGE>
The Trust's officers do not receive fees from the Trust for services in such
capacities, although Goldman Sachs, of which they are also officers, receives
fees from the Trust for administrative services.
B-29
<PAGE>
The following table sets forth certain information with respect to the
compensation of each Trustee of the Trust for the one-year period ended November
30, 1995:
<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total Compensation
Aggregate Accrued as from Registrant and
Compensation Part of Fund Complex Paid to
Name of Trustee from Registrant Trust's Expenses Trustees
- --------------- --------------- ---------------- --------
<S> <C> <C> <C>
William H. Springer $34,000 $0 $34,000
Edward J. Condon, Jr. $25,250 $0 $25,250
John W. English $24,000 $0 $24,000
James J. Gavin $26,750 $0 $26,750
William B. Jordan* $25,250 $0 $25,250
Frederick T. Kelsey $26,750 $3,822 $30,572
Richard P. Strubel $28,000 $0 $28,000
</TABLE>
* Retired as of December 31, 1995
B-30
<PAGE>
Investment Adviser, Transfer Agent and Custodian
Northern is one of the nation's leading providers of trust and investment
management services. As of December 31, 1995, Northern had approximately $105.5
billion in assets under management for clients including public and private
retirement funds, endowments, foundations, trusts, corporations, other
investment companies and individuals. Northern is one of the strongest banking
organizations in the United States. Northern believes it has built its
organization by serving clients with integrity, a commitment to quality, and
personal attention. Its stated mission with respect to all its financial
products and services is to achieve unrivaled client satisfaction. With respect
to such clients, the Trust is designed to assist (i) defined contribution plan
sponsors and their employees by offering a range of diverse investment options
to help comply with 404(c) regulation and may also provide educational material
to their employees, (ii) employers who provide post-retirement Employees'
Beneficiary Associations ("VEBA") and require investments that respond to the
impact of federal regulations, (iii) insurance companies with the day-to-day
management of uninvested cash balances as well as with longer-term investment
needs, and (iv) charitable and not-for-profit organizations, such as endowments
and foundations, demanding investment management solutions that balance the
requirement for sufficient current income to meet operating expenses and the
need for capital appreciation to meet future investment objectives.
Subject to the general supervision of the Board of Trustees, Northern makes
decisions with respect to and places orders for all purchases and sales of
portfolio securities for each Portfolio. Transactions on U.S. stock exchanges
involve the payment of negotiated brokerage commissions. Northern's Advisory
Agreement with the Trust provides that in selecting brokers or dealers to place
orders for transactions Northern shall attempt to obtain best net price and
execution. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions on foreign
securities exchanges involve payment for brokerage commissions which are
generally fixed. Over-the-counter issues, including corporate debt and
government securities, are normally traded on a "net" basis (i.e., without
commission) through dealers, or otherwise involve transactions directly with the
issuer of an instrument. With respect to over-the-counter transactions, Northern
will normally deal directly with dealers who make a market in the instruments
involved except in those circumstances where more favorable prices and execution
are available elsewhere. The cost of foreign and domestic securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down.
B-31
<PAGE>
The Portfolios may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Portfolios will engage in this practice, however, only when Northern
believes such practice to be in the Portfolios' interests.
Northern's investment advisory duties for the Trust are carried out through its
Trust Department. On occasions when Northern deems the purchase or sale of a
security to be in the best interests of a Portfolio as well as other fiduciary
or agency accounts managed by it (including any other Portfolio, investment
company or account for which Northern acts as adviser), the Agreement provides
that Northern, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be sold or purchased for such Portfolio with those
to be sold or purchased for such other accounts in order to obtain the best net
price and execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
Northern in the manner it considers to be most equitable and consistent with its
fiduciary obligations to the Portfolio and other accounts involved. In some
instances, this procedure may adversely affect the size of the position
obtainable for a Portfolio or the amount of the securities that are able to be
sold for a Portfolio. To the extent that the execution and price available from
more than one broker or dealer are believed to be comparable, the Agreement
permits Northern, at its discretion but subject to applicable law, to select the
executing broker or dealer on the basis of Northern's opinion of the reliability
and quality of such broker or dealer.
The Advisory Agreement provides that Northern may render similar services to
others so long as its services under such Agreement are not impaired thereby.
The Advisory Agreement also provides that the Trust will indemnify Northern
against certain liabilities (including liabilities under the Federal securities
laws relating to untrue statements or omissions of material fact and actions
that are in accordance with the terms of the Agreement) or, in lieu thereof,
contribute to resulting losses.
Under its Transfer Agency Agreement with the Trust, with respect to units held
by Institutions, Northern has undertaken to perform some or all of the following
services: (1) establish and maintain an omnibus account in the name of each
Institution; (2) process purchase orders and redemption requests from an
Institution, furnish confirmations and disburse redemption proceeds; (3) act as
the income disbursing agent of the Trust; (4) answer inquiries from
Institutions; (5) provide periodic statements of account to each Institution;
(6) process and record the issuance and redemption of units in accordance with
instructions from the Trust or its administrator; (7) if required by law,
prepare and
B-32
<PAGE>
forward to Institutions unitholder communications (such as proxy statements and
proxies, annual and semi-annual financial statements, and dividend, distribution
and tax notices); (8) preserve all records; and (9) furnish necessary office
space, facilities and personnel. Under the Transfer Agency Agreement, with
respect to units held by investors, Northern has also undertaken to perform some
or all of the following services: (1) establish and maintain separate accounts
in the name of the investors; (2) process purchase orders and redemption
requests, and furnish confirmations in accordance with applicable law; (3)
disburse redemption proceeds; (4) process and record the issuance and redemption
of units in accordance with instructions from the Trust or its administrator;
(5) act as income disbursing agent of the Trust in accordance with the terms of
the prospectus and instructions from the Trust or its administrator; (6) provide
periodic statements of account; (7) answer inquiries (including requests for
prospectuses and Additional Statements, and assistance in the completion of new
account applications) from investors and respond to all requests for information
regarding the Trust (such as current price, recent performance, and yield data)
and questions relating to accounts of investors (such as possible errors in
statements, and transactions); (8) respond to and seek to resolve all complaints
of investors with respect to the Trust or their accounts; (9) furnish proxy
statements and proxies, annual and semi-annual financial statements, and
dividend, distribution and tax notices to investors; (10) furnish the Trust all
pertinent Blue Sky information; (11) perform all required tax withholding; (12)
preserve records; and (13) furnish necessary office space, facilities and
personnel. Northern may appoint one or more sub-transfer agents in the
performance of its services.
As compensation for the services rendered by Northern under the Transfer Agency
Agreement and the assumption by Northern of related expenses, Northern is
entitled to a fee from the Trust, payable monthly, at an annual rate of .01%,
.05%, .10% and .15% of the average daily net asset value of the Class A, B, C
and D units, respectively, in the Portfolios.
Under its Custodian Agreement (and in the case of the International Bond
Portfolio its Foreign Custody Agreement) with the Trust, Northern (1) holds each
Portfolio's cash and securities, (2) maintains such cash and securities in
separate accounts in the name of the Portfolio, (3) makes receipts and
disbursements of funds on behalf of the Portfolio, (4) receives, delivers and
releases securities on behalf of the Portfolio, (5) collects and receives all
income, principal and other payments in respect of the Portfolio's investments
held by Northern under the Agreement, and (6) maintains the accounting records
of the Trust. Northern may employ one or more subcustodians, provided that
Northern shall have no more responsibility or liability to the Trust on account
of any action or omission of any subcustodian so
B-33
<PAGE>
employed than such subcustodian has to Northern and that the responsibility or
liability of the subcustodian to Northern shall conform to the resolution of the
Trustees of the Trust authorizing the appointment of the particular subcustodian
(or, in the case of the Foreign Custody Agreement, to the terms of any agreement
entered into between Northern and such subcustodian to which such resolution
relates). In addition, the Foreign Custody Agreement provides that Northern
shall not be: (i) responsible for the solvency of any subcustodian appointed by
it with reasonable care; (ii) responsible for any act, omission, default or for
the solvency of any eligible foreign securities depository; or (iii) liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the subcustodian has otherwise exercised reasonable
care. Northern may also appoint an agent to carry out such of the provisions of
the Custodian Agreement and the Foreign Custody Agreement as Northern may from
time to time direct, provided that the appointment of such an agent shall not
relieve Northern of any of its responsibilities under either Agreement. Northern
has entered into agreements with financial institutions and depositories located
in foreign countries with respect to the custody of the Portfolios' foreign
securities.
As compensation for the services rendered to the Trust by Northern as Custodian
to the Short Duration, U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index and Bond Portfolios, and the assumption by Northern of certain
related expenses, Northern is entitled to payment from the Trust as follows: (i)
$18,000 annually for each Portfolio, plus (ii) 1/100th of 1% annually of each
Portfolio's average daily net assets to the extent they exceed $100 million,
plus (iii) a fixed dollar fee for each trade in portfolio securities, plus (iv)
a fixed dollar fee for each time that Northern as Custodian receives or
transmits funds via wire, plus (v) reimbursement of expenses incurred by
Northern as Custodian for telephone, postage, courier fees, office supplies and
duplicating. The fees referred to in clauses (iii) and (iv) are subject to
annual upward adjustments based on increases in the Consumer Price Index for All
Urban Consumers, provided that Northern may permanently or temporarily waive all
or any portion of any upward adjustment.
As compensation for the services rendered to the Trust under the Foreign Custody
Agreement with respect to the International Bond Portfolio, and the assumption
by Northern of certain related expenses, Northern is entitled to payment from
the Trust as follows: (i) $35,000 annually for the International Bond Portfolio,
plus (ii) 9/100th of 1% annually of the Portfolio's average daily net assets,
plus (iii) reimbursement for fees incurred by Northern as foreign Custodian for
telephone, postage, courier fees, office supplies and duplicating.
B-34
<PAGE>
Unless sooner terminated, the Advisory Agreement, Custodian Agreement (or in the
case of the International Bond Portfolio the Foreign Custody Agreement) and
Transfer Agency Agreement between Northern and the Trust will continue in effect
with respect to a particular Portfolio until April 30, 1997 and thereafter for
successive 12-month periods, provided that the continuance is approved at least
annually (1) by the vote of a majority of the Trustees who are not parties to
the agreement or "interested persons" (as such term is defined in the 1940 Act)
of any party thereto, cast in person at a meeting called for the purpose of
voting on such approval and (2) by the Trustees or by the vote of a majority of
the outstanding units of such Portfolio (as defined under "Organization" in the
Prospectus). Each agreement is terminable at any time without penalty by the
Trust (by specified Trustee or unitholder action) on 60 days' written notice to
Northern and by Northern on 60 days' written notice to the Trust.
For the fiscal periods ended November 30 as indicated, the amount of the
Advisory Fee incurred by each Portfolio (after fee waivers) was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Short Duration Portfolio (1) $108,537 $230,429 $ 56,653
U.S. Government Securities
Portfolio (2) 77,685 67,880 65,663
Short-Intermediate Bond
Portfolio (3) 305,155 260,009 190,425
U.S. Treasury Index Portfolio (3) 49,400 83,790 82,598
Bond Portfolio (3) 663,400 608,504 371,422
International Bond Portfolio (4) 224,564 $122,985 N/A
</TABLE>
- --------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
For the same fiscal periods ended November 30 as indicated. Northern waived
additional advisory fees as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Short Duration Portfolio (1) $180,999 $384,049 $ 47,618
U.S. Government Securities
Portfolio (2) 108,759 95,031 57,259
Short-Intermediate Bond
Portfolio (3) 427,217 364,019 267,059
U.S. Treasury Index Portfolio (3) 82,333 139,653 137,884
Bond Portfolio (3) 928,746 851,339 521,303
International Bond Portfolio (4) 64,150 34,908 N/A
</TABLE>
B-35
<PAGE>
- --------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
For the fiscal periods ended November 30 as indicated, the amount of the
Transfer Agency Fee incurred by each Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Short Duration Portfolio (1) $ 1,135 $ 1,000 $ 400
U.S. Government Securities
Portfolio (2) 3,163 2,980 2,052
Short-Intermediate Bond
Portfolio (3) 12,216 10,000 7,617
U.S. Treasury Index Portfolio (3) 3,366 6,173 5,506
Bond Portfolio (3) 28,014 24,006 14,857
International Bond Portfolio (4) 3,209 2,000 N/A
</TABLE>
- ---------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
For the fiscal periods ended November 30 as indicated, the amount of the
Custodian Fee (and, in the case of the International Bond Portfolio, the Foreign
Custodian Fee) incurred by each Portfolio was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Short Duration Portfolio (1) 48,371 $47,000 $20,000
U.S. Government Securities
Portfolio (2) 23,744 24,000 16,000
Short-Intermediate Bond
Portfolio (3) 24,834 22,343 24,000
U.S. Treasury Index Portfolio (3) 22,734 23,070 22,000
Bond Portfolio (3) 35,344 36,609 30,000
International Bond Portfolio (4) 46,838 25,000 N/A
</TABLE>
- --------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of
B-36
<PAGE>
1956 or any bank or non-bank affiliate thereof from sponsoring, organizing,
controlling or distributing the shares of a registered open-end investment
company continuously engaged in the issuance of its shares, but such banking
laws and regulations do not prohibit such a holding company or affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company, or from purchasing shares of such a company as
agent for and upon the order of customers. Northern believes that it may perform
the services contemplated by its agreements with the Trust without violation of
such banking laws or regulations, which are applicable to it. It should be
noted, however, that future changes in either Federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future judicial or administrative
decisions or interpretations of current and future statutes and regulations,
could prevent Northern from continuing to perform such services for the Trust.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of Northern in connection with the provision of services
on behalf of the Trust, the Trust might be required to alter materially or
discontinue its arrangements with Northern and change its method of operations.
It is not anticipated, however, that any change in the Trust's method of
operations would affect the net asset value per unit of any Portfolio or result
in a financial loss to any unitholder. Moreover, if current restrictions
preventing a bank from legally sponsoring, organizing, controlling or
distributing units of an open-end investment company were relaxed, the Trust
expects that Northern would consider the possibility of offering to perform some
or all of the services now provided by Goldman Sachs. It is not possible, of
course, to predict whether or in what form such restrictions might be relaxed or
the terms upon which Northern might offer to provide services for consideration
by the Trustees.
Goldman Sachs is also an active investor, dealer and/or underwriter in many
types of fixed income securities and other instruments. Its activities in this
regard could have some effect on the market for those instruments which the
Portfolios acquire, hold or sell.
Portfolio Transactions. To the extent that a Portfolio effects brokerage
transactions with Goldman Sachs or any broker-dealer affiliated directly or
indirectly with Northern, such transactions, including the frequency thereof,
the receipt of any commissions payable in connection therewith, and the
selection of the affiliated broker-dealer effecting such transactions, will be
fair and reasonable to the unitholders of the Portfolio. For the past three
fiscal years, none of the Portfolios paid brokerage commissions.
B-37
<PAGE>
During the fiscal year ended November 30, 1995, the Short Duration Portfolio
acquired and sold securities of SBC Capital Markets, Merrill Lynch & Co., Inc.
and UBS Securities, Inc., each a regular broker/dealer. At November 30, 1995,
the Short Duration Portfolio owned the following amounts of securities of its
regular broker/dealers, as defined in Rule 10b-1 under the 1940 Act, or their
parents: SBC Capital Markets with an aggregate value of $10,000,000, Merrill
Lynch with an aggregate value of $1,975,000 and UBS Securities with an aggregate
value of $10,000,000.
During the fiscal year ended November 30, 1995, the Short-Intermediate Bond
Portfolio acquired and sold securities of Salomon Brothers, Inc., a regular
broker/dealer. At November 30, 1995, the Government Portfolio owned the
following amounts of securities of its regular broker/dealers, as defined in
Rule 10b- 1 under the 1940 Act, or their parents: Salomon Brothers, Inc.
with an aggregate value of $1,969,000.
In the Advisory Agreement, Northern agrees that the name "The Benchmark" may be
used in connection with the Trust's business on a royalty-free basis. Northern
has reserved to itself the right to grant the non-exclusive right to use the
name "The Benchmark" to any other person. The Advisory Agreement provides that
at such time as the Agreement is no longer in effect, the Trust will cease using
the name "The Benchmark." (This undertaking by the Trust may be subject to
certain legal limitations.)
Administrator and Distributor
Under its Administration Agreement with the Trust, Goldman Sachs, subject to the
general supervision of the Trust's Board of Trustees, acts as the Trust's
Administrator. In this capacity, Goldman Sachs (1) provides supervision of
certain aspects of the Trust's non-investment advisory operations (the parties
giving recognition to the fact that certain of such operations are performed by
Northern pursuant to the Trust's agreements with Northern), (2) provides the
Trust, to the extent not provided pursuant to such agreements, with such
personnel as are reasonably necessary for the conduct of the Trust's affairs,
(3) arranges, to the extent not provided pursuant to such agreements, for the
preparation at the Trust's expense of its tax returns, reports to unitholders,
periodic updating of the Prospectus issued by the Trust, and reports filed with
the SEC and other regulatory authorities (including qualification under state
securities or Blue Sky laws of the Trust's units), and (4) provides the Trust,
to the extent not provided pursuant to such agreements, with adequate office
space and equipment and certain related services in Chicago.
B-38
<PAGE>
For the fiscal periods ended November 30 as indicated, Goldman Sachs received
fees under the Administration Agreement (after fee waivers) in the amount of:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Short Duration Portfolio (1) $180,895 $328,204 $ 56,888
U.S. Government Securities
Portfolio (2) 31,074 27,152 20,000
Short-Intermediate Bond
Portfolio (3) 122,062 104,003 76,027
U.S. Treasury Index Portfolio (3) 32,933 55,859 54,965
Bond Portfolio (3) 265,356 243,234 148,372
International Bond Portfolio (4) 32,075 17,569 N/A
</TABLE>
- --------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
Goldman Sachs has agreed in its Administration Agreement with the Trust that if
for the current fiscal year the sum of a Portfolio's expenses (including the
fees paid to Goldman Sachs as Administrator, but excluding Northern's investment
advisory fee, taxes, interest, brokerage and extraordinary expenses such as for
litigation) exceeds on an annualized basis .10% of the Portfolio's average net
assets, Goldman Sachs will reimburse the Portfolios (other than the Short
Duration Portfolio) in the amount of such excess in such year. In addition,
pursuant to an undertaking that commenced August 1, 1992, Goldman Sachs has
agreed that, if its administration fees (less expense reimbursements paid by
Goldman Sachs to the Trust and less certain marketing expenses paid by Goldman
Sachs) exceed a specified amount ($1 million for the Trust's first twelve
investment portfolios plus $50,000 for each additional portfolio) during the
current fiscal year, Goldman Sachs will waive a portion of its administration
fees during the following fiscal year. This undertaking may be terminated by
Goldman Sachs at any time without the consent of the Trust or the unitholders.
For the fiscal periods ended November 30 as indicated, the fees waived as a
result of this voluntary agreement by Goldman Sachs were:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
U.S. Government Securities
Portfolio (2) $ 46,611 $ 40,727 $ 30,476
Short-Intermediate Bond
Portfolio (3) 161,031 162,000 113,450
U.S. Treasury Index Portfolio (3) 49,400 83,790 83,322
Bond Portfolio (3) 232,678 221,000 158,861
International Bond Portfolio (4) 48,112 26,180 N/A
</TABLE>
B-39
<PAGE>
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
Goldman Sachs has voluntarily agreed to reimburse the Portfolios for certain
expenses in the event that such expenses, as defined, exceed on an annualized
basis .25% of the International Bond Portfolio's average daily net assets and
.10% of each other Portfolio's average daily net assets. The effect of these
reimbursements by Goldman Sachs for the fiscal periods ended November 30 as
indicated, were to reduce the expenses of each Portfolio by:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Short Duration Portfolio (1) $213,702 $422,251 $ 81,454
U.S. Government Securities
Portfolio (2) 72,798 67,523 66,541
Short-Intermediate Bond
Portfolio (3) 87,069 82,935 107,321
U.S. Treasury Index Portfolio (3) 76,730 72,034 91,017
Bond Portfolio (3) 112,995 156,721 157,635
International Bond Portfolio (4) 52,493 30,840 N/A
</TABLE>
- --------
(1) Commenced investment operations on June 2, 1993.
(2) Commenced investment operations on April 5, 1993.
(3) Commenced investment operations on January 11, 1993.
(4) Commenced investment operations on March 28, 1994.
Goldman Sachs has agreed with the Trust that if, in any fiscal year, the sum of
a Portfolio's expenses (including the fees payable to Goldman Sachs and
Northern, but excluding taxes, interest, brokerage and extraordinary expenses
such as litigation) exceeds the expense limitations applicable to such Portfolio
imposed by state securities administrators, as such limitations may be lowered
or raised from time to time, it will reimburse the Portfolio in the amount of
such excess to the extent required by such expense limitations. As of the date
of this Additional Statement the most restrictive expense limitation imposed by
state securities administrators of which the Trust is aware provides that
aggregate annual expenses (as defined) may not exceed 2 1/2% of the first
$30,000,000 of a Portfolio's average net assets, plus 2% of the next $70,000,000
of such assets plus 1 1/2% of such assets in excess of $100,000,000; provided
that under the Missouri expense limitation the aggregate annual expenses of
every type paid or incurred by the Portfolios or unitholders must be
substantially comparable with the aggregate annual operating
B-40
<PAGE>
and advisory expenses incurred by other investment companies with similar
objectives and operating policies.
Unless sooner terminated the Administration Agreement will continue in effect
with respect to a particular Portfolio until April 30, 1997, and thereafter for
successive 12-month periods, provided that the agreement is approved annually
(1) by the vote of a majority of the Trustees who are not parties to the
agreement or "interested persons" (as such term is defined by the 1940 Act) of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval, and (2) by the Trustees or by the vote of a majority of the
outstanding units of such Portfolio (as defined under "Organization" in the
Prospectus).
The Administration Agreement is terminable at any time without penalty by the
Trust (upon specified Trustee or unitholder action) on 60 days' written notice
to Goldman Sachs and by Goldman Sachs on 60 days' written notice to the Trust.
The Trust has entered into a Distribution Agreement under which Goldman Sachs,
as agent, sells units of each Portfolio on a continuous basis. Goldman Sachs
pays the cost of printing and distributing prospectuses to persons who are not
unitholders of the Trust (excluding preparation and typesetting expenses) and of
certain other distribution efforts. No compensation is payable by the Trust to
Goldman Sachs for such distribution services.
The Administration Agreement and the Distribution Agreement provide that Goldman
Sachs may render similar services to others so long as its services under such
Agreements are not impaired thereby. The Administration Agreement provides that
the Trust will indemnify Goldman Sachs against certain liabilities (including
liabilities under the Federal securities laws relating to untrue statements or
omissions of material fact and actions that are in accordance with the terms of
the Administration Agreement and Distribution Agreement) or, in lieu thereof,
contribute to resulting losses.
Unitholder Servicing Plan
As stated in the Portfolios' Prospectus, Institutions may enter into Servicing
Agreements with the Trust under which they provide (or arrange to have provided)
support services to their Customers or other investors who beneficially own such
units in consideration of the Portfolios' payment of not more than .10%, .15%
and .25% (on an annualized basis) of the average daily net asset value of the
Class B, C and D units, respectively, of the U.S. Government Securities,
Short-Intermediate Bond, U.S. Treasury Index, Bond and International Bond
Portfolios beneficially owned by such Customers or investors.
B-41
<PAGE>
For the fiscal periods ended November 30 as indicated, the aggregate amount of
the Unitholder Service Fee incurred by each class of each Portfolio then in
existence was as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
U.S. Government Securities Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (1) $ 97.59 $ 3.47
Short-Intermediate Bond Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (2) 16.96 0.30
U.S. Treasury Index Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (3) 129.80 0.03
Bond Portfolio
Class B N/A N/A
Class C(4) 2,292.16 N/A
Class D (2) 180.56 3.70
International Bond Portfolio
Class B N/A N/A
Class C N/A N/A
Class D (5) .48 N/A
</TABLE>
(1) Commenced operations on September 15, 1994.
(2) Commenced operations on September 14, 1994.
(3) Commenced operations on November 16, 1994.
(4) Commenced operations on July 3, 1995.
(5) Commenced operations on November 22, 1995.
Services provided by or arranged to be provided by Institutions under their
Service Agreements may include: (1) establishing and maintaining separate
account records of Customers or other investors; (2) providing Customers or
other investors with a service that invests their assets in units of certain
classes pursuant to specific or pre-authorized instructions, and assistance with
new account applications; (3) aggregating and processing purchase and redemption
requests for units of certain classes from Customers or other investors, and
placing purchase and redemption orders with the Transfer Agent; (4) issuing,
confirmations to Customers or other investors in accordance with applicable law;
(5) arranging for the timely transmission of funds representing the net purchase
price or redemption proceeds; (6) processing dividend payments on behalf of
Customers or other investors; (7) providing information periodically to
Customers or other investors showing their positions in units; (8) responding to
Customer or other investor inquiries (including requests for prospectuses), and
complaints relating to the services performed by the Institutions; (9) acting as
liaison with respect to all
B-42
<PAGE>
inquiries and complaints from Customers and other investors relating to errors
committed by the Trust or its agents, and other matters pertaining to the Trust;
(10) providing or arranging for another person to provide subaccounting with
respect to units of certain classes beneficially owned by Customers or other
investors; (11) if required by law, forwarding unitholder communications from
the Trust (such as proxy statements and proxies, unitholder reports, annual and
semi-annual financial statements and dividend, distribution and tax notices) to
Customers and other investors; (12) providing such office space, facilities and
personnel as may be required to perform its services under the Service
Agreements; (13) maintaining appropriate management reporting and statistical
information; (14) paying expenses related to the preparation of educational and
other explanatory materials in connection with the development of investor
services; (15) developing and monitoring investment programs; and (16) providing
such other similar services as the Trust may reasonably request to the extent
the Institutions are permitted to do so under applicable statutes, rules and
regulations.
The Trust's agreements with Institutions are governed by a Plan (called the
"Unitholder Servicing Plan"), which has been adopted by the Board of Trustees.
Pursuant to the Unitholder Servicing Plan, the Board of Trustees will review, at
least quarterly, a written report of the amounts expended under the Trust's
agreements with Institutions and the purposes for which the expenditures were
made. In addition, the arrangements with Institutions must be approved annually
by a majority of the Board of Trustees, including a majority of the Trustees who
are not "interested persons" of the Trust, as defined in the 1940 Act, and have
no direct or indirect financial interest in such arrangements.
The Board of Trustees has approved the arrangements with Institutions based on
information provided by the Trust's service contractors that there is a
reasonable likelihood that the arrangements will benefit the Portfolios and
their unitholders by affording the Portfolios greater flexibility in connection
with the servicing of the accounts of the beneficial owners of their units in an
efficient manner.
Counsel and Auditors
Drinker Biddle & Reath, with offices at 1345 Chestnut Street, Suite 1100,
Philadelphia, Pennsylvania 19107, serve as counsel to the Trust.
Ernst & Young LLP, independent auditors, 233 S. Wacker Drive, Chicago, Illinois
60606-6301, have been selected as auditors of the Trust. In addition to audit
services, Ernst & Young LLP reviews the Trust's Federal and state tax returns,
and provides
B-43
<PAGE>
consultation and assistance on accounting, internal control and related matters.
In-Kind Purchases
Payment for units of a Portfolio may, in the discretion of Northern, be made in
the form of securities that are permissible investments for the Portfolio as
described in the Prospectus. For further information about this form of payment,
contact Northern. In connection with an in-kind securities payment, a Portfolio
will require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by the Portfolio and that
the Portfolio receive satisfactory assurances that it will have good and
marketable title to the securities received by it; that the securities be in
proper form for transfer to the Portfolio; and that adequate information be
provided concerning the basis and other tax matters relating to the securities.
In addition, the Portfolios have represented to the Texas State Securities Board
that so long as units in a Portfolio are offered or sold in Texas any securities
that are accepted as payment for Portfolio units will be limited to securities
that are issued in transactions that involve a bona fide reorganization or
statutory merger, or will be limited to other acquisitions of portfolio
securities (except for municipal debt securities issued by state political
subdivisions or their agencies or instrumentalities) that: (a) meet the
investment objective and policies of the Portfolio; (b) are acquired for
investment and not for resale; (c) are liquid securities that are not restricted
as to transfer either by law or liquidity of market; and (d) have a value that
is readily ascertainable (and not established only by evaluation procedures) as
evidenced by a listing on the American Stock Exchange, New York Stock Exchange
or NASDAQ or as evidenced by their status as U.S. Government securities, bank
certificates of deposit, bankers' acceptances, corporate and other debt
securities that are actively traded, money market securities and other like
securities with a readily ascertainable market value.
PERFORMANCE INFORMATION
Each Portfolio that advertises an "average annual total return" for a class of
units computes such return by determining the average annual compounded rate of
return during specified periods that equates the initial amount invested to the
ending redeemable value of such investment according to the following formula:
B-44
<PAGE>
T = (ERV/P) to the 1/nth power - 1
Where: T = average annual total return;
ERV = ending redeemable value at the end of the applicable
period (or fractional portion thereof) of a
hypothetical $1,000 payment made at the beginning of
the 1, 5 or 10 year (or other) period;
P = hypothetical initial payment of $1,000; and
n = period covered by the computation,
expressed in years.
Each Portfolio that advertises an "aggregate total return" for a class of units
computes such return by determining the aggregate compounded rates of return
during specified periods that likewise equate the initial amount invested to the
ending redeemable value of such investment. The formula for calculating
aggregate total return is as follows:
T = [(ERV/P)] - 1
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per unit
existing on the reinvestment date and (2) all recurring fees charged to all
unitholder accounts are included. The ending redeemable value (variable "ERV" in
the formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.
B-45
<PAGE>
For the fiscal year ended November 30, 1995, the average annual total returns
and aggregate total returns for the Class A, Class B, Class C and Class D units
were as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
--------------------------- ----------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Short Duration Portfolio (1) 6.14% 4.60% 6.14% 11.91%
U.S. Government Securities
Portfolio
Class A (2) 11.18 5.01 11.13 13.86
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (3) 10.66 7.92 10.66 9.68
Short-Intermediate Bond
Portfolio
Class A (4) 11.58 6.26 11.58 19.16
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (5) 11.09 8.71 11.09 10.67
</TABLE>
- ----------
(1) Commenced operations on June 2, 1993.
(2) Commenced operations on April 5, 1993.
(3) Commenced operations on September 15, 1994.
(4) Commenced operations of January 11, 1993.
(5) Commenced operations on September 14, 1994.
B-46
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
--------------------------- ----------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury Index Portfolio
Class A (1) 16.95% 7.64% 16.95% 23.69%
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (3) 16.43 16.38 16.43 17.11
Bond Portfolio
Class A (1) 21.55 9.22 21.55 29.01
Class B N/A N/A N/A N/A
Class C (5) N/A N/A 5.92 5.92
Class D (2) 21.06 16.17 21.06 19.96
International Bond Portfolio
Class A (4) 18.20 13.10 18.20 22.96
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (6) N/A N/A (.78) (.78)
</TABLE>
- ----------
(1) Commenced operations of January 11, 1993.
(2) Commenced operations on September 14, 1994.
(3) Commenced operations on November 16, 1994.
(4) Commenced operations on March 28, 1994.
(5) Commenced operations on July 3, 1995.
(6) Commenced operations on November 22, 1995.
B-47
<PAGE>
During such period, Goldman Sachs reimbursed expenses to the Portfolios and
voluntarily agreed to reduce a portion of its administration fee for each
Portfolio pursuant to the undertaking described above under "Additional Trust
Information - Administrator and Distributor", and Northern waived a portion of
its investment advisory fees with respect to the Portfolios. In the absence of
such advisory and administration fee reductions and expense limitations, the
average annual total returns and aggregate total returns for Class A, Class B,
Class C and Class D units would have been as follows:
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
--------------------------- ----------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Short Duration Portfolio (1) 5.56% 4.12% 5.56% 10.61%
U.S. Government Securities
Portfolio
Class A (2) 10.38 4.23 10.38 11.64
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (3) 9.86 7.13 9.86 8.70
Short-Intermediate Bond
Portfolio
Class A (4) 10.97 6.12 10.97 17.14
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (5) 10.49 8.11 10.49 9.93
</TABLE>
(1) Commenced operations on June 2, 1993.
(2) Commenced operations on April 5, 1993.
(3) Commenced operations on September 15, 1994.
(4) Commenced operations of January 11, 1993.
(5) Commenced operations on September 14, 1994.
B-48
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return Aggregate Total Return
--------------------------- ----------------------
For the year Since For the year Since
ended commencement ended commencement
11/30/95 of operations 11/30/95 of operations
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury Index Portfolio
Class A (1) 16.23% 7.04% 16.23% 21.71%
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (3) 15.71 15.66 15.71 16.36
Bond Portfolio
Class A (1) 20.98 8.66 20.98 27.10
Class B N/A N/A N/A N/A
Class C (5) N/A N/A 5.72 5.72
Class D (2) 20.49 15.62 20.49 19.26
International Bond Portfolio
Class A (4) 17.61 12.52 17.61 21.92
Class B N/A N/A N/A N/A
Class C N/A N/A N/A N/A
Class D (6) N/A N/A (.79) (.79)
</TABLE>
- ----------
(1) Commenced operations of January 11, 1993.
(2) Commenced operations on September 14, 1994.
(3) Commenced operations on November 16, 1994.
(4) Commenced operations on March 28, 1994.
(5) Commenced operations on July 3, 1995.
(6) Commenced operations on November 22, 1995.
B-49
<PAGE>
The Portfolios' 30-day (or one month) standard yield described in the Prospectus
is calculated for each class of the Portfolios in accordance with the method
prescribed by the SEC for mutual funds:
Yield = 2[(a-b/cd + 1) to the 6th power - 1]
Where: a = dividends and interest earned by a
Portfolio during the period;
b = expenses accrued for the period (net of
reimbursements);
c = average daily number of units outstanding
during the period entitled to receive
dividends; and
d = net asset value per unit on the last day of
the period.
For the 30 day period ended November 30, 1995, the annualized yields for the
Class A, Class B, Class C and Class D units of the Portfolios were as follows:
30-Day Yield
------------
Short Duration Portfolio 5.63%
U.S. Government Securities
Portfolio
Class A 5.35
Class B N/A
Class C N/A
Class D 4.97
Short-Intermediate Bond
Portfolio
Class A 4.82
Class B N/A
Class C N/A
Class D 4.45
U.S. Treasury Index Portfolio
Class A 5.77
Class B N/A
Class C N/A
Class D 5.39
Bond Portfolio
Class A 4.97
Class B N/A
Class C 4.68
Class D 4.60
B-50
<PAGE>
International Bond Portfolio
Class A 5.88%
Class B N/A
Class C N/A
Class D N/A
The information set forth in the foregoing table reflects certain fee reductions
and expense limitations. See "Investment Adviser, Transfer Agent and Custodian"
and "Administrator and Distributor" under "Additional Trust Information." In the
absence of such fee reductions and expense limitations, the annualized 30-day
yields of each Portfolio with respect to Class A, Class B, Class C and Class D
units would have been as follows:
Short Duration Portfolio 5.09%
U.S. Government Securities
Portfolio
Class A 4.73
Class B N/A
Class C N/A
Class D 4.33
Short-Intermediate Bond Portfolio
Class A 4.31
Class B N/A
Class C N/A
Class D 3.89
U.S. Treasury Index Portfolio
Class A 4.92
Class B N/A
Class C N/A
Class D 4.56
Bond Portfolio
Class A 4.50
Class B N/A
Class C 4.14
Class D 4.06
International Bond Portfolio
Class A 5.36
Class B N/A
Class C N/A
Class D N/A
The performance of any investment is generally a function of portfolio quality
and maturity, type of investment and operating expenses.
Because of the different Servicing Fees and transfer agency fees payable with
respect to Class A, B, C and D units in a Portfolio, performance quotations for
units of Class B, C and D of the Portfolio will be lower than the quotations for
Class A units of the Portfolio, which will not bear any fees for unitholder
support services and will bear minimal transfer agency fees.
B-51
<PAGE>
TAXES
The following summarizes certain additional tax considerations generally
affecting the Portfolios and their unitholders that are not described in the
Portfolios' Prospectuses. No attempt is made to present a detailed explanation
of the tax treatment of the Portfolios or their unitholders, and the discussion
here and in the applicable Prospectus is not intended as a substitute for
careful tax planning. Potential investors should consult their tax advisers with
specific reference to their own tax situations.
General
Each Portfolio will elect to be taxed separately as a regulated investment
company under Part I of Subchapter M of Subtitle A, Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"). As a regulated investment
company, each Portfolio generally is exempt from Federal income tax on its net
investment income and realized capital gains which it distributes to
unitholders, provided that it distributes an amount equal to at least 90% of its
investment company taxable income (net investment income and the excess of net
short-term capital gain over net long-term capital loss), if any, for the year
(the "Distribution Requirement") and satisfies certain other requirements of the
Code that are described below.
In addition to satisfying the Distribution Requirement, each Portfolio must
derive with respect to a taxable year at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currencies,
or from other income derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement") and derive less than
30% of its gross income from the sale or other disposition of securities and
certain other investments held for less than three months (the "Short-Short
Test"). Interest (including original issue discount and "accrued market
discount") received by a Portfolio at maturity or on disposition of a security
held for less than three months will not be treated as gross income from the
sale or other disposition of such security within the meaning of this
requirement. However any other income which is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose.
In addition to the foregoing requirements, at the close of each quarter of its
taxable year, at least 50% of the value of each Portfolio's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which a
Portfolio has not invested more than 5% of the value of its total
B-52
<PAGE>
assets in securities of such issuer and as to which a Portfolio does not hold
more than 10% of the outstanding voting securities of such issuer) and no more
than 25% of the value of each Portfolio's total assets may be invested in the
securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which such Portfolio controls and which are engaged in the same or similar
trades or businesses.
Each Portfolio intends to distribute to unitholders any excess of net long-term
capital gain over net short-term capital loss ("net capital gain") for each
taxable year. Such gain is distributed as a capital gain dividend and is taxable
to unitholders as long-term capital gain, regardless of the length of time the
unitholder has held the units, whether such gain was recognized by the Portfolio
prior to the date on which a unitholder acquired units of the Portfolio and
whether the distribution was paid in cash or reinvested in units. In addition,
investors should be aware that any loss realized upon the sale, exchange or
redemption of units held for six months or less will be treated as a long-term
capital loss to the extent of the capital gain dividends the unitholder has
received with respect to such units. It is not expected that any distributions
will qualify for the dividends received deduction for corporations.
Ordinary income of individuals is taxable at a maximum nominal rate of 39.6%,
but because of limitations on itemized deductions otherwise allowable and the
phase-out of personal exemptions, the maximum effective marginal rate of tax for
some taxpayers may be higher. An individual's long-term capital gains are
taxable at a maximum nominal rate of 28%. Capital gains and ordinary income of
corporate taxpayers are both taxed at a nominal maximum rate of 35% (an
effective marginal rate of 39% applies in the case of corporations having
taxable income between $100,000 and $335,000, and an effective marginal rate of
38% applies in the case of corporations having taxable income between $15
million and $18,333,333).
If for any taxable year any Portfolio does not qualify as a regulated investment
company, all of its taxable income will be subject to tax at regular corporate
rates without any deduction for distributions to unitholders. In such event, all
distributions (whether or not derived from exempt-interest income) would be
taxable as ordinary income, to the extent of such Portfolio's current and
accumulated earnings and profits and would be eligible for the dividends
received deduction in the case of corporate unitholders.
Unitholders will be advised annually as to the Federal income tax consequences
of distributions made by the Portfolios each year.
B-53
<PAGE>
The Code imposes a non-deductible 4% excise tax on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Portfolio intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and capital
gain net income each calendar year to avoid liability for this excise tax.
The Trust will be required in certain cases to withhold and remit to the United
States Treasury 31% of taxable dividends or 31% of gross sale proceeds paid to
any unitholder (i) who has provided either an incorrect tax identification
number or no number at all, (ii) who is subject to backup withholding by the
Internal Revenue Service for failure to report the receipt of taxable interest
or dividend income properly, or (iii) who has failed to certify to the Trust to
do so, that he is not subject to backup withholding or that he is an "exempt
recipient."
Taxation of Certain Financial Instruments
Special rules govern the Federal income tax treatment of financial instruments
that may be held by the Portfolios. These rules may have a particular impact on
the amount of income or gain that a Portfolio must distribute to its respective
unitholders to comply with the Distribution Requirement, on the income or gain
qualifying under the Income Requirement and on its ability to comply with the
Short-Short Test described above.
Generally, futures contracts, options on futures contracts and certain foreign
currency contracts held by a Portfolio (collectively, the "Instruments") at the
close of its taxable year are treated for Federal income tax purposes as sold
for their fair market value on the last business day of such year, a process
known as "mark-to-market." Forty percent of any gain or loss resulting from such
constructive sales will be treated as short-term capital gain or loss and 60% of
such gain or loss will be treated as long-term capital gain or loss without
regard to the period a Portfolio has held the Instruments ("the 40%-60% rule").
The amount of any capital gain or loss actually realized by a Portfolio in a
subsequent sale or other disposition of those Instruments is adjusted to reflect
any capital gain or loss taken into account by the Portfolio in a prior year as
a result of the constructive sale of the Instruments. Losses with respect to
futures contracts to sell related options and certain foreign currency
contracts, which are regarded as parts of a "mixed straddle" because their
values fluctuate inversely to the values of specific securities held by the
Portfolios, are subject to certain loss deferral rules which limit the amount of
loss currently deductible on either part of the straddle to the amount thereof
which exceeds the unrecognized gain (if any) with respect to the other part of
the straddle, and to certain wash sales
B-54
<PAGE>
regulations. Under short sales rules, which are also applicable, the holding
period of the securities forming part of the straddle will (if they have not
been held for the long-term holding period) be deemed not to begin prior to
termination of the straddle. With respect to certain Instruments, deductions for
interest and carrying charges may not be allowed. Notwithstanding the rules
described above, with respect to futures contracts which are part of a "mixed
straddle" to sell related options and certain foreign currency contracts which
are properly identified as such, a Portfolio may make an election which will
exempt (in whole or in part) those identified futures contracts, options and
foreign currency contracts from the rules of Section 1256 of the Code including
"the 40%-60% rule" and the mark-to-market on gains and losses being treated for
Federal income tax purposes as sold on the last business day of each Portfolio's
taxable year, but gains and losses will be subject to such short sales, wash
sales and loss deferral rules and the requirement to capitalize interest and
carrying charges. Under Temporary Regulations, each Portfolio would be allowed
(in lieu of the foregoing) to elect either (1) to offset gains or losses from
portions which are part of a mixed straddle by separately identifying each mixed
straddle to which such treatment applies, or (2) to establish a mixed straddle
account for which gains and losses would be recognized and offset on a periodic
basis during the taxable year. Under either election, "the 40%-60% rule" will
apply to the net gain or loss attributable to the Instruments, but in the case
of a mixed straddle account election, not more than 50% of any net gain may be
treated as long-term and no more than 40% of any net loss may be treated as
short-term.
A foreign currency contract must meet the following conditions in order to be
subject to the mark-to-market rules described above: (1) the contract must
require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract depends;
(2) the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts. As
of the date of this Additional Statement, the Treasury Department has not issued
any such regulations. Other foreign currency contracts entered into by a
Portfolio may result in the creation of one or more straddles for Federal income
tax purposes, in which case certain loss deferral, short sales, and wash sales
rules and the requirement to capitalize interest and carrying charges may apply.
Some of the non-U.S. dollar denominated investments that the Portfolios may
make, such as foreign debt securities and foreign currency contracts, may be
subject to provisions of the Code which govern the Federal income tax treatment
of certain
B-55
<PAGE>
transactions denominated in terms of a currency other than the U.S. dollar or
determined by reference to the value of one or more currencies other than the
U.S. dollar. The types of transactions covered by these provisions include the
following: (1) the acquisition of, or becoming the obligor under, a bond or
other debt instrument (including, to the extent provided in Treasury
regulations, preferred stock); (2) the accruing of certain trade receivables and
payables; and (3) the entering into or acquisition of any forward contract,
futures contract, option and similar financial instrument. The disposition of a
currency other than the U.S. dollar by a U.S. taxpayer also is treated as a
transaction subject to the special currency rules. However, regulated futures
contracts and nonequity options are generally not subject to the special
currency rules if they are or would be treated as sold for their fair market
value at year-end under the mark-to-market rules, unless an election is made to
have such currency rules apply. With respect to transactions covered by the
special rules, foreign currency gain or loss is calculated separately from any
gain or loss on the underlying transaction and is normally taxable as ordinary
gain or loss. A taxpayer may elect to treat as capital gain or loss foreign
currency gain or loss arising from certain identified forward contracts, futures
contracts and options that are capital assets in the hands of the taxpayer and
which are not part of a straddle. In accordance with Treasury regulations,
certain transactions that are part of a "Section 988 hedging transaction" (as
defined in the Code and Treasury regulations) may be integrated and treated as a
single transaction or otherwise treated consistently for purposes of the Code.
"Section 988 hedging transactions" are not subject to the mark-to-market or loss
deferral rules under the Code. Gain or loss attributable to the foreign currency
component of transactions engaged in by the Portfolios which are not subject to
the special currency rules (such as foreign equity investments other than
certain preferred stocks) is treated as capital gain or loss and is not
segregated from the gain or loss on the underlying transaction.
Foreign Investors
Foreign unitholders generally will be subject to U.S. withholding tax at a rate
of 30% (or a lower treaty rate, if applicable) on distributions by a Portfolio
of net interest income, other ordinary income, and the excess, if any, of net
short-term capital gain over net long-term capital loss for the year. For this
purpose, foreign unitholders include individuals other than U.S. citizens,
residents and certain nonresident aliens, and foreign corporations,
partnerships, trusts and estates. A foreign unitholder generally will not be
subject to U.S. income or withholding tax in respect of proceeds from or gain on
the redemption of units or in respect of capital gain dividends, provided such
unitholder submits a statement, signed under penalties of perjury, attesting to
such unitholder's exempt
B-56
<PAGE>
status. Different tax consequences apply to a foreign unitholder engaged in a
U.S. trade or business. Foreign unitholders should consult their tax advisers
regarding the U.S. and foreign tax consequences of investing in a Portfolio.
Conclusion
The foregoing discussion is based on Federal tax laws and regulations which are
in effect on the date of this Additional Statement. Such laws and regulations
may be changed by legislative or administrative action. No attempt is made to
present a detailed explanation of the tax treatment of the Portfolio or its
unitholders, and the discussion here and in the Prospectus is not intended as a
substitute for careful tax planning. Unitholders are advised to consult their
tax advisers with specific reference to their own tax situation, including the
application of state and local taxes.
Although each Portfolio expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all Federal income taxes, depending
upon the extent of its activities in states and localities in which its offices
are maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, each Portfolio may be
subject to the tax laws of such states or localities.
DESCRIPTION OF UNITS
The Trust Agreement permits the Trust's Board of Trustees to issue an unlimited
number of full and fractional units of beneficial interest of one or more
separate series representing interests in one or more investment portfolios. The
Trust may hereafter create series in addition to the Trust's sixteen existing
series, which represent interests in the Trust's sixteen respective portfolios,
six of which are described in this Additional Statement. The Trust Agreement
further permits the Board of Trustees to classify or reclassify any unissued
units into additional series or subseries within a series. Pursuant to such
authority, the Trustees have authorized the issuance of an unlimited number of
units of beneficial interest in four separate subseries (sometimes referred to
as "classes") of units in each of its non-money market Portfolios: Class A, B, C
and D units (other than the Short Duration Portfolio). Under the terms of the
Trust Agreement, each unit of each Portfolio is without par value, represents an
equal proportionate interest in the particular Portfolio with each other unit of
its class in the same Portfolio and is entitled to such dividends and
distributions out of the income belonging to the Portfolio as are declared by
the Trustees. Upon any liquidation of a Portfolio, unitholders of each class of
a Portfolio are entitled to share
B-57
<PAGE>
pro rata in the net assets belonging to that class available for distribution.
Units do not have any preemptive or conversion rights. The right of redemption
is described under "Investing-Redemption of Units" in the Prospectus. In
addition, pursuant to the terms of the 1940 Act, the right of a unitholder to
redeem units and the date of payment by a Portfolio may be suspended for more
than seven days (a) for any period during which the New York Stock Exchange is
closed, other than the customary weekends or holidays, or trading in the markets
the Portfolio normally utilizes is closed or is restricted as determined by the
SEC, (b) during any emergency, as determined by the SEC, as a result of which it
is not reasonably practicable for the Portfolio to dispose of instruments owned
by it or fairly to determine the value of its net assets, or (c) for such other
period as the SEC may by order permit for the protection of the unitholders of
the Portfolio. The Trust may also suspend or postpone the recordation of the
transfer of its units upon the occurrence of any of the foregoing conditions. In
addition, units of each Portfolio are redeemable at the unilateral option of the
Trust if the Trustees determine in their sole discretion that failure to so
redeem may have material adverse consequences to the unitholders of the
Portfolio. Units when issued as described in the Prospectus are validly issued,
fully paid and nonassessable, except as stated below.
The proceeds received by each Portfolio for each issue or sale of its units, and
all net investment income, realized and unrealized gain and proceeds thereof,
subject only to the rights of creditors, will be specifically allocated to and
constitute the underlying assets of that Portfolio. The underlying assets of
each Portfolio will be segregated on the books of account, and will be charged
with the liabilities in respect to that Portfolio and with a share of the
general liabilities of the Trust. Expenses with respect to the Portfolios are
normally allocated in proportion to the net asset value of the respective
Portfolios except where allocations of direct expenses can otherwise be fairly
made.
Rule 18f-2 under the 1940 Act provides that any matter required by the
provisions of the 1940 Act or applicable state law, or otherwise, to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding units of
each investment portfolio affected by such matter. Rule 18f-2 further provides
that an investment portfolio shall be deemed to be affected by a matter unless
the interests of each investment portfolio in the matter are substantially
identical or the matter does not affect any interest of the investment
portfolio. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to an investment portfolio only if
B-58
<PAGE>
approved by a majority of the outstanding units of such investment portfolio.
However, the Rule also provides that the ratification of the appointment of
independent accountants, the approval of principal underwriting contracts and
the election of Trustees may be effectively acted upon by unitholders of the
Trust voting together in the aggregate without regard to a particular investment
portfolio. In addition, unitholders of each of the classes in a particular
investment portfolio have equal voting rights except that only units of a
particular class of an investment portfolio will be entitled to vote on matters
submitted to a vote of unitholders (if any) relating to unitholder servicing
expenses and transfer agency fees that are payable by that class.
As a general matter, the Trust does not hold annual or other meetings of
unitholders. This is because the Trust Agreement provides for unitholder voting
only for the election or removal of one or more Trustees, if a meeting is called
for that purpose, and for certain other designated matters. Each Trustee serves
until the next meeting of unitholders, if any, called for the purpose of
considering the election or reelection of such Trustee or of a successor to such
Trustee, and until the election and qualification of his successor, if any,
elected at such meeting, or until such Trustee sooner dies, resigns, retires or
is removed by the unitholders or two-thirds of the Trustees.
Under Massachusetts law, there is a possibility that unitholders of a business
trust could, under certain circumstances, be held personally liable as partners
for the obligations of the Trust. The Trust Agreement contains an express
disclaimer of unitholder (as well as Trustee and officer) liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each contract, undertaking or instrument entered into or executed by the Trust
or the Trustees. The Trust Agreement provides for indemnification out of Trust
property of any unitholder charged or held personally liable for the obligations
or liabilities of the Trust solely by reason of being or having been a
unitholder of the Trust and not because of such unitholder's acts or omissions
or for some other reason. The Trust Agreement also provides that the Trust
shall, upon proper and timely request, assume the defense of any charge made
against any unitholder as such for any obligation or liability of the Trust and
satisfy any judgment thereon. Thus, the risk of a unitholder incurring financial
loss on account of unitholder liability is limited to circumstances in which the
Trust itself would be unable to meet its obligations.
The Trust Agreement provides that each Trustee of the Trust will be liable for
his own wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Trustee ("disabling
conduct"), and for nothing else, and will not be liable for errors of judgment
or
B-59
<PAGE>
mistakes of fact or law. The Trust Agreement provides further that the Trust
will indemnify Trustees and officers of the Trust against liabilities and
expenses incurred in connection with litigation and other proceedings in which
they may be involved (or with which they may be threatened) by reason of their
positions with the Trust, except that no Trustee or officer will be indemnified
against any liability to the Trust or its unitholders to which he would
otherwise be subject by reason of disabling conduct.
As of March 1, 1996 substantially all of the Portfolios' outstanding units were
held of record by Northern for the benefit of its customers and the customers of
its affiliates and correspondent banks that have invested in the Portfolios. As
of the same date, the Trust's Trustees and officers owned beneficially less than
1% of the outstanding units of each Portfolio. Northern has advised the Trust
that the following persons (whose mailing address is: c/o The Northern Trust
Company, 50 South LaSalle, Chicago, IL 60675) beneficially owned five percent or
more of the outstanding units of the Portfolios as of March 1, 1996:
Number Percentage
of of
Units Units
----- -----
SHORT DURATION PORTFOLIO
Navistar International Corporation
Retirement Health Benefits Trust 1,288,162 28.3%
Case Hourly Employee Pension Plan 1,099,622 24.2
Illinois Masonic Medical Center
Restricted Investment Fund 414,197 9.1
Illinois Masonic Medical Center
Board Designated Fund 289,249 6.4
U.S. GOVERNMENT SECURITIES PORTFOLIO
Schlumberger Limited Master
Profit Sharing Trust 1,530,619 40.1
Electrical Insurance Trust Additional
Security Benefit Fund 523,073 13.7
Electrical Insurance Trust Supplemental
Unemployment Benefit Fund 451,200 11.8
Schlumberger Limit Master Pension Trust 336,346 8.8
Sheet Metal Workers Local 265
Health & Welfare Plan 234,658 6.2
SHORT-INTERMEDIATE BOND PORTFOLIO
MA Hanna Company 1,207,190 14.7
Rexene Corporation Savings Plan 649,432 7.9
White Springs Agricultural Chemicals,
Inc. Hourly Union Pension Plan 506,096 6.2
BOND PORTFOLIO
B-60
<PAGE>
The Northern Trust Company
Pension Plan 1,413,537 9.4
The Northern Trust Company
Thrift Incentive Plan 1,254,809 8.4
Purina Mills Inc. Administrative
Retirement Plan Trust 1,230,842 8.2
CPC International Retirement Plan 813,007 5.4
U.S. TREASURY INDEX PORTFOLIO
Liberty Healthcare System Inc.
Pension Plan 191,277 23.2
Purina Mills Inc. Master
Retirement Trust 134,731 16.4
Lebanon Valley Bank 58,572 7.1
The Accreditation Council for
Graduate Medical Education 56,514 6.9
Hubbell Incorporated Master
Defined Contribution Trust 43,549 5.3
INTERNATIONAL BOND PORTFOLIO
The Northern Trust Company
Pension Plan 814,110 54.3
Doe Run Resources Corporation
Retirement Plan 201,073 13.4
OTHER INFORMATION
The Prospectus and this Additional Statement do not contain all the information
included in the Registration Statement filed with the SEC under the Securities
Act of 1933 with respect to the securities offered by the Trust's Prospectus.
Certain portions of the Registration Statement have been omitted from the
Prospectus and this Additional Statement pursuant to the rules and regulations
of the SEC. The Registration Statement including the exhibits filed therewith
may be examined at the office of the SEC in Washington, D.C.
Statements contained in the Prospectus or in this Additional Statement as to the
contents of any contract or other documents referred to are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement of which the
Prospectus and this Additional Statement form a part, each such statement being
qualified in all respects by such reference.
Each Portfolio is responsible for the payment of its expenses. Such expenses
include, without limitation, the fees and expenses payable to Northern and
Goldman Sachs, brokerage fees and commissions, fees for the registration or
qualification of Portfolio units under Federal or state securities laws,
expenses
B-61
<PAGE>
of the organization of the Portfolio, taxes, interest, costs of liability
insurance, fidelity bonds, indemnification or contribution, any costs, expenses
or losses arising out of any liability of, or claim for damages or other relief
asserted against the Trust for violation of any law, legal, tax and auditing
fees and expenses, Servicing Fees, expenses of preparing and printing
prospectuses, statements of additional information, proxy materials, reports and
notices and the printing and distributing of the same to the Trust's unitholders
and regulatory authorities, compensation and expenses of its Trustees, expenses
of industry organizations such as the Investment Company Institute,
miscellaneous expenses and extraordinary expenses incurred by the Trust.
FINANCIAL STATEMENTS
The audited financial statements and related report of Ernst & Young LLP,
independent auditors, for the Short Duration Portfolio, U.S. Treasury Index
Portfolio, U.S. Government Securities Portfolio, Short Intermediate Bond
Portfolio, Bond Portfolio and International Bond Portfolio contained in the
Annual Report for the fiscal year ended November 30, 1995 are hereby
incorporated herein by reference. No other parts of the Annual Report, including
without limitation "Management's Discussion of Portfolio Performance," are
incorporated by reference herein. Copies of the Annual Report may be obtained by
writing to Goldman, Sachs & Co., Funds Group, 4900 Sears Tower, Chicago,
Illinois 60606, or by calling Goldman, Sachs toll-free at 800-621-2550.
B-62
<PAGE>
APPENDIX A
Description of Bond Ratings
The following summarizes the highest six ratings used by Standard & Poor's
Ratings Group, Inc., a division of McGraw Hill ("S&P") for corporate and
municipal debt:
AAA-Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in a small degree.
A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those in
higher rated categories.
BB and B-Debt rated BB and B is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligation. Debt rated BB has less
near-term vulnerability to default than other speculative issues. However,
it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions which could lead to inadequate capacity
to meet timely interest and principal payments. Debt rated B has a greater
vulnerability to default but currently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or
BB-rating.
To provide more detailed indications of credit quality, the ratings AA and lower
may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
1-A
<PAGE>
S&P may attach the rating "r" to highlight derivative, hybrid and certain other
obligations that S&P believes may experience high volatility or high variability
in expected returns due to non-credit risks.
The following summarizes the highest six ratings used by Moody's Investors
Service, Inc. ("Moody's") for corporate and municipal long-term debt:
Aaa-Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa-Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A-Bonds that are 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 sometime in
the future.
Baa-Bonds that are rated Baa are considered medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba and B-Bonds that possess one of these ratings provide questionable
protection of interest and principal. Ba indicates some speculative
elements. B indicates a general lack of characteristics of desirable
investment.
The foregoing ratings for corporate and municipal long-term debt are sometimes
presented in parenthesis preceded with a "con", indicating the bonds are rated
conditionally. Such parenthetical
2-A
<PAGE>
rating denotes the probable credit stature upon completion of construction or
elimination of the basis of the condition. The notation (P) when applied to
forward delivery bonds indicates that the rating is provisional pending delivery
of the bonds. The rating may be revised prior to delivery if changes occur in
the legal documents or the underlying credit quality of the bonds.
The following summarizes the highest six ratings used by Duff & Phelps Credit
Rating Co. ("D&P") for corporate and municipal long-term debt:
AAA-Debt rated AAA is of the highest credit quality. The risk factors are
considered to be negligible, being only slightly more than for risk-free
U.S. Treasury debt.
AA-Debt rated AA is of high credit quality. Protection factors are strong.
Risk is modest but may vary slightly from time to time because of economic
conditions.
A-Bonds that are rated A have protection factors which are average but
adequate. However risk factors are more variable and greater in periods of
economic stress.
BBB-Bonds that are rated BBB have below average protection factors but
such protection factors are still considered sufficient for prudent
investment. Considerable variability in risk during economic cycles.
BB and B-Bonds that are rated BB or B are below investment grade. Bonds
rated BB are deemed likely to meet obligations when due. Bonds rated B
possess the risk that the obligations will not be met when due.
To provide more detailed indications of credit quality, the ratings AA and lower
may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.
The following summarizes the highest six ratings used by Fitch Investors
Service, Inc. ("Fitch") for corporate and municipal bonds:
AAA-Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA-Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds
related in the "AAA" and
3-A
<PAGE>
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."
A-Bonds 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 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 an 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.
BB and B-Bonds considered to be speculative investments with respect to
the timely payment of principal and interest in accordance with the terms
of the obligation.
To provide more detailed indications of credit quality, the Fitch ratings "AA"
and lower may be modified by the addition of a plus (+) or minus (-) sign to
show relative standing within these major rating categories.
Description of Municipal Note Ratings
The following summarizes the two highest ratings by S&P for short-term municipal
notes:
SP-1-Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given
a "plus" (+) designation.
SP-2-Satisfactory capacity to pay principal and interest.
The following summarizes the two highest ratings used by Moody's for short-term
municipal notes and variable rate demand obligations:
MIG-1/VMIG-1. Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2/VMIG-2. Obligations bearing these designations are of high quality
with margins of protection ample although not as large as in the preceding
group.
4-A
<PAGE>
The two highest rating categories of D&P for short-term debt are D 1 and D 2.
D&P employs three designations, D 1+, D 1 and D 1-, within the highest rating
category. D 1+ indicates 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. D 1 indicates very high certainty of timely
payment. Liquidity factors are excellent and supported by good fundamental
protection factors. Risk factors are minor. D 1- indicates high certainty of
timely payment. Liquidity factors are strong and supported by good fundamental
protection factors. Risk factors are very small. D 2 indicates good certainty of
timely payment. Liquidity factors and company fundamentals are sound. Although
ongoing funding needs may enlarge total financing requirements, access to
capital markets is good. Risk factors are small.
D&P uses the fixed-income ratings described above under "Description of Bond
Ratings" for tax-exempt notes and other short-term obligations. Fitch uses the
short-term ratings described below under "Description of Commercial Paper
Ratings" for municipal notes.
Description of Commercial Paper Ratings
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted in A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory but the relative degree of safety is
not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers or related supporting institutions rated Prime-1 are considered to have
a superior capacity for repayment of short-term promissory obligations. Issuers
or related supporting institutions rated Prime-2 are considered to have strong
capacity for repayment of short-term promissory 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, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
The following summarizes the highest ratings used by Fitch for short-term
obligations:
F-1+ securities possess very strong credit quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for timely
payment.
5-A
<PAGE>
F-1 securities possess exceptionally strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly
less in degree than issues rated F-1+.
F-2 securities possess 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 the F-1+ and F-1 categories.
D&P uses the short-term ratings described above under "Description of Note
Ratings" for commercial paper.
6-A
<PAGE>
APPENDIX B
As stated in their Prospectus, the Portfolios may enter into certain futures
transactions and options for hedging purposes. Such transactions are described
in this Appendix.
I. Interest Rate Futures Contracts
Use of Interest Rate Futures Contracts. Bond prices are established in
both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within three business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, a Portfolio could use interest rate
futures contracts as a defense, or hedge, against anticipated interest rate
changes. As described below, this could include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
A Portfolio presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because of
the liquidity that is often available in the futures market, the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by a Portfolio, through using futures contracts.
Description of Interest Rate Futures Contracts. An interest rate futures
contract sale would create an obligation by a Portfolio, as seller, to deliver
the specific type of financial instrument called for in the contract at a
specific future time for a specified price. A futures contract purchase would
create an obligation by a Portfolio, as purchaser, to take delivery of the
specific type of financial instrument at a specific future time at a specific
price. The specific securities delivered or taken, respectively, at settlement
date, would not be determined until at or near that date. The determination
would be in accordance with the rules of the exchange on which the futures
contract sale or purchase was made.
Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases
1-B
<PAGE>
the contracts are closed out before the settlement date without the making or
taking of delivery of securities. Closing out a futures contract sale is
effected by a Portfolio's entering into a futures contract purchase for the same
aggregate amount of the specific type of financial instrument and the same
delivery date. If the price of the sale exceeds the price of the offsetting
purchase, a Portfolio is immediately paid the difference and thus realizes a
gain. If the offsetting purchase price exceeds the sale price, a Portfolio pays
the difference and realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by a Portfolio entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, a Portfolio
realizes a gain, and if the purchase price exceeds the offsetting sale price, a
Portfolio realizes a loss.
Interest rate futures contracts are traded in an auction environment on
the floors of several exchanges--principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange. A Portfolio would
deal only in standardized contracts on recognized exchanges. Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various financial
instruments including long-term United States Treasury Bonds and Notes;
Government National Mortgage Association (GNMA) modified pass-through mortgage
backed securities; three-month United States Treasury Bills; and ninety-day
commercial paper. A Portfolio may trade in any interest rate futures contracts
for which there exists a public market, including, without limitation, the
foregoing instruments.
II. Index Futures Contracts
General. A bond index assigns relative values to the bonds included in the
index which fluctuates with changes in the market values of the bonds included.
A Portfolio may sell index futures contracts in order to offset a decrease
in market value of its portfolio securities that might otherwise result from a
market decline. A Portfolio may do so either to hedge the value of its portfolio
as a whole, or to protect against declines, occurring prior to sales of
securities, in the value of the securities to be sold. Conversely, a Portfolio
may purchase index futures contracts in anticipation of purchases of securities.
A long futures position may be terminated without a corresponding purchase of
securities.
In addition, a Portfolio may utilize index futures contracts in
anticipation of changes in the composition of its portfolio holdings. For
example, in the event that a Portfolio expects to
2-B
<PAGE>
narrow the range of industry groups represented in its holdings it may, prior to
making purchases of the actual securities, establish a long futures position
based on a more restricted index, such as an index comprised of securities of a
particular industry group. A Portfolio may also sell futures contracts in
connection with this strategy, in order to protect against the possibility that
the value of the securities to be sold as part of the restructuring of the
portfolio will decline prior to the time of sale.
III. Futures Contracts on Foreign Currencies (International Bond
Portfolio)
A futures contract on foreign currency creates a binding obligation on one
party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of foreign currency, for an amount fixed in U.S.
dollars. Foreign currency futures may be used by a Portfolio to hedge against
exposure to fluctuations in exchange rates between the U.S. dollars and other
currencies arising from multinational transactions.
IV. Margin Payments
Unlike purchase or sales of portfolio securities, no price is paid or
received by a Portfolio upon the purchase or sale of a futures contract.
Initially, the Portfolio will be required to deposit with the broker or in a
segregated account with the Custodian or a sub-custodian an amount of cash or
cash equivalents, known as initial margin, based on the value of the contract.
The nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
the borrowing of funds by the customer to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Portfolio upon termination of the futures
contract assuming all contractual obligations have been satisfied. Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying instruments fluctuates making the
long and short positions in the futures contract more or less valuable, a
process known as marking-to-the-market. For example, when a particular Portfolio
has purchased a futures contract and the price of the contract has risen in
response to a rise in the underlying instruments, that position will have
increased in value and the Portfolio will be entitled to receive from the broker
a variation margin payment equal to that increase in value. Conversely, where
the Portfolio has purchased a futures contract and the price of the future
contract has declined in response to a decrease in the underlying instruments,
the position would be less valuable and the Portfolio would be required to make
a variation margin payment to the broker. At
3-B
<PAGE>
any time prior to expiration of the futures contract, the Portfolio's adviser
may elect to close the position by taking an opposite position, subject to the
availability of a secondary market, which will operate to terminate the
Portfolio's position in the futures contract. A final determination of variation
margin is then made, additional cash is required to be paid by or released to
the Portfolio, and the Portfolio realizes a loss or gain.
V. Risks of Transactions in Futures Contracts
There are several risks in connection with the use of futures by the
Portfolios as hedging devices. One risk arises because of the imperfect
correlation between movements in the price of the futures and movements in the
price of the instruments which are the subject of the hedge. The price of the
future may move more than or less than the price of the instruments being
hedged. If the price of the futures moves less than the price of the instruments
which are the subject of the hedge, the hedge will not be fully effective but,
if the price of the instruments being hedged has moved in an unfavorable
direction, the Portfolio would be in a better position than if it had not hedged
at all. If the price of the instruments being hedged has moved in a favorable
direction, this advantage will be partially offset by the loss on the futures.
If the price of the futures moves more than the price of the hedged instruments,
the Portfolio involved will experience either a loss or gain on the futures
which will not be completely offset by movements in the price of the instruments
which are the subject of the hedge. To compensate for the imperfect correlation
of movements in the price of instruments being hedged and movements in the price
of futures contracts, the Portfolio may buy or sell futures contracts in a
greater dollar amount than the dollar amount of instruments being hedged if the
volatility over a particular time period of the prices of such instruments has
been greater than the volatility over such time period of the futures, or if
otherwise deemed to be appropriate by Northern. Conversely, the Portfolios may
buy or sell fewer futures contracts if the volatility over a particular time
period of the prices of the instruments being hedged is less than the volatility
over such time period of the futures contract being used, or if otherwise deemed
to be appropriate by Northern. It is also possible that, where a Portfolio had
sold futures to hedge its portfolio against a decline in the market, the market
may advance and the value of instruments held in the Portfolio may decline. If
this occurred, the Portfolio would lose money on the futures and also experience
a decline in value in its portfolio securities.
Where futures are purchased to hedge against a possible increase in the
price of securities before a Portfolio is able to invest its cash (or cash
equivalents) in an orderly fashion, it is possible that the market may decline
instead; if the Portfolio
4-B
<PAGE>
then concludes not to invest its cash at that time because of concern as to
possible further market decline or for other reasons, the Portfolio will realize
a loss on the futures contract that is not offset by a reduction in the price of
the instruments that were to be purchased.
In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the instruments
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets. Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions. Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions. Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by Northern may still not result in a
successful hedging transaction over a short time frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the
Portfolios intend to purchase or sell futures only on exchanges or boards of
trade where there appear to be active secondary markets, there is no assurance
that a liquid secondary market on any exchange or board of trade will exist for
any particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, the Portfolios would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been
used to hedge portfolio securities, such securities will not be sold until the
futures contract can be terminated. In such circumstances, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities will in fact correlate with the price movements in
the futures contract and thus provide an offset on a futures contract.
5-B
<PAGE>
Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day. Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions. The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.
Successful use of futures by the Portfolios is also subject to Northern's
ability to predict correctly movements in the direction of the market. For
example, if a particular Portfolio has hedged against the possibility of a
decline in the market adversely affecting securities held by it and securities
prices increase instead, the Portfolio will lose part or all of the benefit to
the increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Portfolio has insufficient cash, it may have to sell securities to meet
daily variation margin requirements. Such sales of securities may be, but will
not necessarily be, at increased prices which reflect the rising market. The
Portfolios may have to sell securities at a time when they may be
disadvantageous to do so.
Futures purchased or sold by the International Bond Portfolio (and related
options) may be traded in foreign instruments. Participation in foreign futures
and foreign options transactions involves the execution and clearing of trades
on or subject to the rules of a foreign board of trade. Neither the National
Futures Association nor any domestic exchange regulates activities of any
foreign boards of trade, including the execution, delivery and clearing of
transaction, or has the power to compel enforcement of the rules of a foreign
board of trade or any applicable foreign law. This is true even if the exchange
is formally linked to a domestic market so that a position taken on the market
may be liquidated by a transaction on another market. Moreover, such laws or
regulations will vary depending on the foreign country in which the foreign
futures or foreign options transaction occurs. For these reasons, customers who
trade foreign futures of foreign options contracts may not be afforded certain
of the protective measures provided by the Commodity Exchange Act, the Commodity
Futures Trading Commission's ("CFTC") regulations and the rules of the National
Futures Association and any domestic exchange, including the right to use
reparations proceedings before the CFTC and arbitration proceedings provided by
the National Futures
6-B
<PAGE>
Association or any domestic futures exchange. In particular, the International
Bond Portfolio's investments in foreign futures or foreign options transactions
may not be provided the same protections in respect of transactions on United
States futures exchanges. In addition, the price of any foreign futures or
foreign options contract and, therefore the potential profit and loss thereon
may be affected by any variance in the foreign exchange rate between the time an
order is placed and the time it is liquidated, offset or exercised.
VI. Options on Futures Contracts
The Portfolios may purchase and write options on the futures contracts
described above. A futures option gives the holder, in return for the premium
paid, the right to buy (call) from or sell (put) to the writer of the option a
futures contract at a specified price at any time during the period of the
option. Upon exercise, the writer of, the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price. Like the buyer or seller of a futures contract, the holder, or writer, of
an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing an option of the same series,
at which time the person entering into the closing transaction will realize a
gain or loss. A Portfolio will be required to deposit initial margin and
variation margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those described
above. Net option premiums received will be included as initial margin deposits.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). See "Risks of Transactions
in Futures Contracts" above. In addition, the purchase or sale of an option also
entails the risk that changes in the value of the underlying futures contract
will not correspond to changes in the value of the option purchased. Depending
on the pricing of the option compared to either the futures contract upon which
it is based, or upon the price of the instruments being hedged, an option may or
may not be less risky than ownership of the futures contract or such
instruments. In general, the market prices of options can be expected to be more
volatile than the market prices on the underlying futures contract. Compared to
the purchase or sale of futures contracts, however, the purchase of call or put
options on futures contracts may frequently involve less potential risk to the
Portfolio because the maximum amount at risk is the premium paid for the options
(plus transaction costs). The writing of an option on a futures contract
involves risks similar to those risks relating to the sale of futures contracts.
7-B
<PAGE>
VII. Other Matters
Accounting for futures contracts will be in accordance with generally
accepted accounting principles.
8-B
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
MARKET VIEW
DIVERSIFIED ASSETS PORTFOLIO
GOVERNMENT PORTFOLIO
GOVERNMENT SELECT PORTFOLIO
During the early part of 1995, we witnessed a continuation of rising interest
rates, which had persisted since early 1994. As a consequence, we structured
the portfolios with short average maturities to provide responsiveness to this
environment. Rates topped out in February, when the Federal Reserve tightened
monetary policy for the last time in this rate cycle by increasing the target
federal funds rate from 5.5% to 6.0%. For the remainder of the fiscal year,
interest rates declined, at times at a surprisingly rapid rate. This change
necessitated lengthening the maturity profiles of the portfolios as the year
progressed.
A change in the direction of monetary policy was evident in July, 1995, as
the Federal Reserve eased rates slightly by moving the federal funds target
rate down to 5.75%. Expectations of further easing in monetary policy increased
as the year progressed. This prompted further rate declines and the development
of an inverted yield curve in the money market maturity spectrum. The
portfolios are now positioned to benefit from additional declines in interest
rates, which should result from moderate economic growth and tepid inflation.
We continue to seek opportunities to lengthen the portfolios' maturity profiles
further.
Mary Ann Flynn and Ed Kyritz, Portfolio Managers
TAX-EXEMPT PORTFOLIO
The driving force behind the portfolio's strong performance for fiscal year
1995 was our early prediction that interest rates would decline. In early 1995
we predicted that interest rates would decline or remain stable throughout the
year. This thinking was contrary to what most investors were forecasting at
that time, which was that rates would continue to increase.
After we made our interest rate projection, we tried to extend the portfolio
as long as we could. We had some difficulty extending early in the year, but as
we entered the second and third quarters of 1995, we were able to extend the
portfolio's maturity past the industry averages. When rates are stable or
declining, it is better to have a relatively longer maturity structure than the
peer group averages. This move had a significant impact on the portfolio's
performance.
Driven by supply and demand, the tax-exempt market is very cyclical. We had a
year of reduced supply and, consequently, very high demand. While this scenario
kept rates at low levels, the portfolio was able to consistently outperform its
peers.
During the next six to nine months, we expect to be in a stable or declining
interest rate environment. We will therefore continue to maintain a relatively
longer average maturity. We also will continue to evaluate economic and
political developments as they affect the tax-exempt market.
Brad Snyder, Portfolio Manager
Units of The Benchmark Funds are not bank deposits or obligations of, or
guaranteed, endorsed or otherwise supported by The Northern Trust Company, its
parent company, or its affiliates, and are not Federally insured or guaranteed
by the U.S. Government, Federal Deposit Insurance Corporation, Federal Reserve
Board, or any other governmental agency. Investment in the portfolios involves
investment risks, including possible loss of principal amount invested. The
Benchmark Money Market Portfolios seek to maintain a net asset value of $1.00
per unit, but there can be no assurance that they will be able to do so on a
continuous basis.
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------------
DIVERSIFIED ASSETS PORTFOLIO
BANK NOTES--7.1%
NationsBank, Georgia
<S> <C> <C> <C>
$ 63,000 6.000% 12/11/95 $ 63,000
NationsBank, Texas
63,000 6.000 12/11/95 63,000
PNC Bank N.A., Pennsylvania
60,000 5.650 09/18/96 59,987
- ---------------------------------------------------------------------------------------------------
TOTAL BANK NOTES $ 185,987
- ---------------------------------------------------------------------------------------------------
CERTIFICATES OF DEPOSITS--4.7%
Banque Nationale De Paris, London
$ 32,000 5.730% 12/29/95 $ 31,999
Industrial Bank of Japan, Ltd., New
York
5,500 6.070 02/08/96 5,497
Mitsubishi Bank, Ltd., London
20,000 5.950 02/20/96 20,000
Mitsubishi Bank, Ltd., New York
5,000 5.970 12/27/95 5,000
Monte Dei Paschi Di Siena, New York
60,000 5.810 02/21/96 60,001
- ---------------------------------------------------------------------------------------------------
TOTAL CERTIFICATES OF DEPOSIT $ 122,497
- ---------------------------------------------------------------------------------------------------
COMMERCIAL PAPER--64.9%
ASSET-BACKED SECURITIES--8.5%
Atlantic Asset Securitization Corp.
$ 2,000 5.865% 12/13/95 $ 1,996
Clipper Receivables Corp.
10,000 5.860 12/01/95 10,000
1,470 5.911 12/11/95 1,468
Cooperative Association of Tractor
Dealers, Inc.
3,400 5.783 02/20/96 3,356
5,600 5.812 02/23/96 5,526
9,700 5.805 02/29/96 9,561
3,500 5.809 03/19/96 3,440
1,500 5.810 03/20/96 1,474
2,000 5.750 05/01/96 1,953
Dynamic Funding Corp. (Fuji Bank IRC)
18,578 6.061 12/18/95 18,526
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------------
Eureka Securitization, Inc.
<S> <C> <C> <C>
$ 25,000 5.790% 02/22/96 $ 24,672
First Credit Corp.
10,000 5.761 12/12/95 9,983
15,000 5.738 12/15/95 14,967
Fleet Funding, Inc.
44,135 5.993 12/08/95 44,085
Jet Funding Corp. (Bank of Tokyo LOC)
10,000 6.114 01/31/96 9,897
Pooled Receivables Corp.
8,370 5.828 12/08/95 8,361
Stellar Capital Corp. (Bank of Tokyo
IRC)
3,000 5.989 02/16/96 2,962
Tri-Lateral Capital U.S.A., Inc.
7,892 6.090 02/14/96 7,793
18,000 6.091 02/15/96 17,772
22,348 6.093 02/21/96 22,043
----------
219,835
COMMUNICATIONS--6.6%
AT&T Corp.
56,000 5.790 04/18/96 54,787
43,000 5.600 05/13/96 41,931
GTE Corp.
34,900 5.815 12/07/95 34,866
4,300 5.829 12/08/95 4,295
GTE Finance Corp.
8,000 5.836 12/18/95 7,978
28,000 5.838 12/18/95 27,923
----------
171,780
CONSTRUCTION, INDUSTRIAL MACHINES AND COMPUTER
EQUIPMENT--3.5%
Caterpillar Financial Australia, Ltd.
23,700 5.771 12/04/95 23,689
Caterpillar Financial Services
19,300 5.951 12/01/95 19,300
International Business Machines
Credit Corp.
50,000 5.606 04/26/96 48,881
----------
91,870
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------------
DOMESTIC DEPOSITORY INSTITUTIONS--0.6%
Chemical Banking Corp.
<S> <C> <C> <C>
$ 17,000 5.753% 12/15/95 $ 16,963
ELECTRIC SERVICES--2.5%
Public Service Electric & Gas Co.
12,000 5.875 12/11/95 11,981
11,500 5.876 12/12/95 11,479
6,478 5.840 12/14/95 6,464
Vattenfall Treasury, Inc.
35,000 5.752 12/14/95 34,929
----------
64,853
ELECTRONIC AND OTHER ELECTRICAL COMPONENTS--1.4%
Whirlpool Corp.
26,000 5.822 12/20/95 25,920
Whirlpool Financial Corp.
11,200 5.821 01/30/96 11,093
----------
37,013
ENVIRONMENTAL CONTROL--0.8%
Browning Ferris Industries, Inc.
20,100 5.951 12/01/95 20,100
EXECUTIVE, LEGISLATIVE AND GENERAL GOVERNMENT--5.0%
City of New York, Series: 1994 H-7
51,505 5.850 12/05/95 51,505
City of New York, Series: A2 (Societe
Generale LOC)
15,000 5.875 03/12/96 15,000
Kingdom of Sweden
30,000 5.803 03/25/96 29,459
25,000 5.800 03/29/96 24,534
10,000 5.611 05/02/96 9,767
----------
130,265
FOOD AND KINDRED PRODUCTS--2.6%
Cadbury Schweppes Money Management,
PLC
20,000 5.809 12/01/95 20,000
Coca Cola Enterprises, Inc.
10,000 5.736 12/22/95 9,967
Quaker Oats Co.
40,000 5.824 02/13/96 39,528
----------
69,495
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------------
FOREIGN DEPOSITORY INSTITUTIONS--9.0%
ABN-AMRO North America Finance, Inc.
<S> <C> <C> <C>
$ 20,000 5.750% 12/21/95 $ 19,938
25,000 5.753 12/27/95 24,899
BEX America Finance, Inc.
22,000 5.804 04/01/96 21,580
Central Hispano North American
Capital Corp.
35,000 5.721 12/13/95 34,934
17,000 5.732 12/19/95 16,952
Galicia Funding Corp. (Bayerische
Vereinsbank LOC)
8,000 5.803 12/14/95 7,984
Nationwide Building Society
23,000 5.885 01/22/96 22,807
Spintab-Swedmortgage AB
23,500 5.782 03/20/96 23,092
Woolwich Building Society
19,000 5.762 12/11/95 18,970
44,000 5.804 04/02/96 43,152
----------
234,308
GENERAL MERCHANDISE STORES--2.1%
Sears Roebuck Acceptance Corp.
5,000 5.838 12/06/95 4,996
49,000 5.835 12/07/95 48,953
----------
53,949
NONDEPOSITORY BUSINESS CREDIT INSTITUTIONS--4.7%
ITT Corp.
39,000 5.904 12/01/95 39,000
ITT Hartford Group, Inc.
5,248 5.829 12/11/95 5,240
Spiegel Funding Corp. (Dresdner Bank
LOC)
14,760 5.809 12/11/95 14,736
64,000 5.832 12/11/95 63,897
----------
122,873
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- ---------------------------------------------------------------------------------------------------
DIVERSIFIED ASSETS PORTFOLIO--CONTINUED
NONDEPOSITORY PERSONAL CREDIT INSTITUTIONS--2.6%
Countrywide Funding Corp.
<S> <C> <C> <C>
$ 8,000 5.915% 12/12/95 $ 7,986
40,000 5.841 12/14/95 39,916
10,000 5.823 12/15/95 9,977
Household Finance Corp., Canada
10,000 5.833 12/04/95 9,995
----------
67,874
SECURITY AND COMMODITY BROKER/DEALERS--2.6%
Merrill Lynch & Co., Inc.
5,000 5.827 01/30/96 4,952
32,000 5.813 02/23/96 31,578
31,000 5.802 03/01/96 30,554
----------
67,084
TRANSPORTATION--12.4%
American Honda Finance Corp.
10,000 5.768 12/04/95 9,995
15,000 5.789 12/06/95 14,988
BMW US Capital Corp.
40,000 5.732 12/19/95 39,887
Ford Motor Credit Corp.
74,000 5.730 12/13/95 73,861
General Motors Acceptance Corp.
50,000 5.987 12/01/95 50,000
General Motors Acceptance Corp.,
Canada, Ltd.
10,000 5.826 02/09/96 9,888
25,000 5.826 02/27/96 24,649
25,000 5.826 02/28/96 24,645
10,000 5.827 02/29/96 9,856
Mitsubishi Motors Credit of America,
Inc.
(Mitsubishi Bank LOC), Series: A
29,000 5.952 12/05/95 28,981
Renault Credit International S.A.
38,000 5.805 12/27/95 37,843
----------
324,593
- ---------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER $1,692,855
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Interest Rate Maturity Date Amortized Cost
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE NOTES--1.4%
BankAmerica Corp.
$ 12,000 4.950% 03/18/96 $ 11,967
Beneficial Corp. FRN
25,000 5.920 02/01/96 25,000
- -----------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES $ 36,967
- -----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--16.4%
J.P. Morgan Securities, Inc., Dated
11/30/95, Repurchase Price $100,016
(Colld. by U.S. Government
Securities)
$100,000 5.900% 12/01/95 $ 100,000
J.P. Morgan Securities, Inc., Dated
11/30/95, Repurchase Price $28,310
(Colld. by U.S. Government
Securities)
28,305 5.950 12/01/95 28,305
SBC Capital Markets, Dated 11/30/95,
Repurchase Price $200,033 (Colld. by
U.S. Government Securities)
200,000 5.930 12/01/95 200,000
UBS Securities, Inc., Dated 11/30/95,
Repurchase Price $100,016 (Colld. by
U.S. Government Securities)
100,000 5.920 12/01/95 100,000
- -----------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $ 428,305
- -----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--94.5% $2,466,611
- -----------------------------------------------------------------------------------------------------
Other assets, less liabilities--5.5% 143,736
- -----------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $2,610,347
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
GOVERNMENT PORTFOLIO
U.S. GOVERNMENT AGENCIES--69.7%
FEDERAL FARM CREDIT BANK--3.5%
<S> <C> <C> <C>
$ 10,000 5.574% 01/02/96 $ 10,000
20,000 5.520 06/03/96 20,000
--------
30,000
FEDERAL HOME LOAN BANK DISCOUNT NOTES--14.0%
5,000 5.754 01/12/96 4,968
10,000 5.562 01/19/96 9,926
15,000 5.648 01/24/96 14,875
20,000 5.650 01/24/96 19,833
10,000 5.641 02/01/96 9,904
10,000 5.643 02/27/96 9,865
20,000 5.500 03/04/96 19,713
30,230 5.514 04/15/96 29,613
--------
118,697
FEDERAL HOME LOAN MORTGAGE CORPORATION
DISCOUNT NOTES--12.1%
13,015 5.656 12/07/95 13,003
10,994 5.733 12/08/95 10,982
10,000 5.597 12/13/95 9,982
10,000 5.680 12/29/95 9,956
10,000 5.632 01/22/96 9,920
40,000 5.649 01/22/96 39,678
9,500 5.658 01/24/96 9,420
--------
102,941
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES--32.0%
10,000 5.654 12/04/95 9,995
11,000 5.877 12/08/95 10,988
20,000 5.626 12/08/95 19,978
15,000 5.652 12/08/95 14,984
10,310 5.626 12/12/95 10,293
7,650 5.596 12/12/95 7,637
11,000 5.627 12/13/95 10,980
20,000 5.641 12/13/95 19,963
15,000 5.784 12/18/95 14,960
10,000 5.788 12/22/95 9,967
20,000 5.656 02/08/96 19,786
25,000 5.650 02/14/96 24,710
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 30,000 5.602% 02/16/96 $ 29,647
10,000 5.510 03/08/96 9,850
20,000 5.612 03/20/96 19,664
20,000 5.591 04/04/96 19,621
20,000 5.595 05/03/96 19,535
--------
272,558
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.2%
10,000 5.567 03/15/96 10,000
FEDERAL NATIONAL MORTGAGE ASSOCIATION FRN--1.2%
10,000 5.513 06/20/96 9,997
FEDERAL NATIONAL MORTGAGE ASSOCIATION
MEDIUM TERM NOTE--1.7%
15,000 5.523 07/02/96 15,001
OVERSEAS PRIVATE INVESTMENT CO. FRN--2.2%
18,800 5.800 12/06/95 18,800
STUDENT LOAN MARKETING ASSOCIATION FRN--1.8%
15,000 5.632 08/09/96 14,992
- -------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES $592,986
- -------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS--35.2%
J.P. Morgan Securities Inc., Dated
11/30/95, Repurchase Price $99,779
(Colld. by U.S. Government
Securities)
$19,763 5.950% 12/01/95 $ 19,763
80,000 5.900 12/01/95 80,000
SBC Capital Markets, Dated 11/30/95,
Repurchase Price $200,033 (Colld. by
U.S. Government Securities)
200,000 5.930 12/01/95 200,000
- -------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS $299,763
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--104.9% $892,749
- -------------------------------------------------------------------------------------------------------
Liabilities, less other assets--(4.9)% (42,085)
- -------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $850,664
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
GOVERNMENT SELECT PORTFOLIO
U.S. GOVERNMENT AGENCIES--99.4%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES--9.8%
<S> <C> <C> <C>
$ 1,900 5.607% 12/01/95 $ 1,900
5,000 5.654 12/01/95 5,000
10,000 5.661 12/08/95 9,989
5,000 5.707 12/21/95 4,984
10,000 5.657 02/09/96 9,890
15,000 5.627 02/09/96 14,838
9,250 5.547 03/22/96 9,093
12,000 5.495 05/16/96 11,702
--------
67,396
FEDERAL FARM CREDIT BANK--2.9%
10,000 5.574 01/02/96 10,000
10,000 5.520 06/03/96 10,000
--------
20,000
FEDERAL HOME LOAN BANK DISCOUNT NOTES--80.5%
48,110 5.801 12/01/95 48,110
10,000 5.632 12/05/95 9,995
9,255 5.645 12/05/95 9,250
200 5.647 12/05/95 200
10,000 5.678 12/05/95 9,995
3,145 5.566 12/08/95 3,143
20,000 5.655 12/11/95 19,970
10,000 5.634 12/12/95 9,984
13,960 5.654 12/12/95 13,937
7,500 5.771 12/12/95 7,488
5,000 5.716 12/13/95 4,991
20,000 5.596 12/15/95 19,958
7,000 5.621 12/15/95 6,985
15,000 5.704 12/18/95 14,961
22,000 5.634 12/22/95 21,929
15,000 5.581 12/26/95 14,944
10,000 5.616 12/26/95 9,962
10,000 5.717 12/26/95 9,962
10,000 5.609 12/27/95 9,960
15,000 5.649 01/12/96 14,902
10,000 5.672 01/12/96 9,935
10,000 5.754 01/12/96 9,934
10,000 5.562 01/19/96 9,926
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount/ Interest Maturity Amortized
Shares Rate Date Cost
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$15,000 5.649% 01/24/96 $ 14,875
5,000 5.651 01/24/96 4,958
15,000 5.624 01/25/96 14,873
10,000 5.636 02/01/96 9,903
20,000 5.641 02/02/96 19,805
2,045 5.618 02/05/96 2,024
10,000 5.649 02/05/96 9,898
20,000 5.634 02/08/96 19,786
15,000 5.646 02/08/96 14,839
10,000 5.628 02/15/96 9,883
12,500 5.641 02/22/96 12,340
20,000 5.541 03/07/96 19,706
12,055 5.555 03/07/96 11,877
5,000 5.607 03/25/96 4,912
15,000 5.619 03/27/96 14,734
15,000 5.509 04/09/96 14,708
30,000 5.508 04/18/96 29,376
9,350 5.511 04/22/96 9,148
24,250 5.491 05/17/96 23,641
--------
551,707
FEDERAL HOME LOAN BANK MEDIUM TERM NOTE--0.3%
2,000 4.830 01/29/96 1,997
STUDENT LOAN MARKETING ASSOCIATION FRN--1.5%
10,000 5.632 08/09/96 9,995
TENNESSEE VALLEY AUTHORITY DISCOUNT NOTES--4.4%
10,000 5.645 12/06/95 9,992
10,000 5.604 12/07/95 9,990
10,000 5.618 01/18/96 9,925
--------
29,907
- ---------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES $681,002
- ---------------------------------------------------------------------------------------------------
OTHER--0.7%
Dreyfus Treasury Prime Money Market
Fund
4,845 5.341% -- $ 4,845
- ---------------------------------------------------------------------------------------------------
TOTAL OTHER $ 4,845
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--100.1% $685,847
- ---------------------------------------------------------------------------------------------------
Liabilities, less other assets--(0.1)% (705)
- ---------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $685,142
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO
MUNICIPAL INVESTMENTS--95.5%
ALABAMA--1.0%
City of Greenville IDR VRDN, Series:
1992, Allied-Signal Project (Allied-
Signal, Inc. Gtd.)
<S> <C> <C> <C>
$ 1,350 3.850% 12/07/95 $ 1,350
Town of Columbia PCR VRDN, Series:
1995 A, Alabama Power Project
(Alabama Power Co. Gtd.)
1,000 3.800 12/01/95 1,000
Town of Columbia PCR VRDN, Series:
1995 C, Alabama Power Project
(Alabama Power Co. Gtd.)
3,300 4.000 12/01/95 3,300
Town of Mobile, PCR VRDN, Series:
1994 A, Alabama Power Project
(Alabama Power Co. Gtd.)
1,600 3.800 12/01/95 1,600
Town of Parrish PCR VRDN, Series:
1994 A, Alabama Power Project
(Alabama Power Co. Gtd.)
700 3.800 12/01/95 700
--------
7,950
ALASKA--1.5%
Alaska Housing Finance Corp. VRDN,
Series: 1994, Merrill
P-Floats PT-37 (FNMA Securities
Colld.)
7,000 4.100 12/07/95 7,000
City of Valdez, Alaska Marine
Terminal Revenue VRDN, Series: 1994
B, ARCO Transportation Project
(Atlantic Richfield Co. Gtd.)
5,000 3.750 12/07/95 5,000
--------
12,000
ARIZONA--0.6%
Maricopa County PCR CP, Series: 1985
C, Southern California Edison Palo
Verde Project (Southern California
Edison Co. Gtd.)
4,500 3.850 02/09/96 4,500
CALIFORNIA--18.4%
California Department of Water
Resources VRDN, Series SG-5, Central
Valley Project
5,000 3.700 12/07/95 5,000
California Housing Finance Authority
Revenue VRDN, Series: 1993 B,
Merrill P-Floats PA-58 (California
Housing Finance Agency Home Mortgage
Insured)
6,945 3.700 12/07/95 6,945
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
California Housing Finance Authority
Revenue VRDN, Series: 1993 B,
Merrill P-Floats PT-14 (California
Housing Finance Agency Home Mortgage
Insured)
<S> <C> <C> <C>
$ 4,000 3.700% 12/07/95 $ 4,000
California Pollution Control Finance
Authority VRDN, Series: 1984 A, (San
Diego Gas & Electric Co. Gtd.)
2,750 4.000 09/01/96 2,750
California School Cash Reserve
Program Authority TRAN,
Series: 1995 A
3,000 4.750 07/03/96 3,014
California Statewide Community
Development Authority TRAN, Series:
A (CA Statewide Communities Program
Pool Residual Fund Insured)
4,050 4.750 07/05/96 4,066
City of Chino TRAN
4,500 4.500 07/31/96 4,514
City of Huntington Beach TRAN
8,000 4.750 10/04/96 8,032
City of Irvine GO (Dai-Ichi Kangyo
LOC)
2,000 3.800 12/01/95 2,000
City of Los Angeles VRDN, Series:
BPT-129 (U.S. Government Securities
Colld.)
6,900 3.800 12/07/95 6,900
Irvine Ranch Water District VRDN,
Consolidated Refunding Series: 1985
B (Sumitomo Bank Ltd. LOC)
5,600 3.950 12/01/95 5,600
Irvine Ranch Water District VRDN,
Series: 1993 B, Districts 2, 102,
103, and 206 (Morgan Guaranty Trust
Co. LOC)
700 4.400 12/01/95 700
Irvine Ranch Water District VRDN,
Series: 1993 B, Districts 105, 140,
240, and 250 Program (Bank of
America NT & SA LOC)
100 3.850 12/01/95 100
Irvine Ranch Water District VRDN,
Series: 1993 B, Districts 140, 186,
188, and 240 Program (Industrial
Bank of Japan LOC)
4,420 3.950 12/01/95 4,420
Sacramento County Multifamily Housing
Revenue VRDN,
Series: B, (Dai-Ichi Kangyo Bank
LOC)
2,100 4.150 12/07/95 2,100
San Bernardino County TRAN, Series:
1995-96
(Banque Nationale De Paris LOC)
5,325 4.500 07/05/96 5,342
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO--CONTINUED
CALIFORNIA--CONTINUED
San Bernardino County TRAN, Series:
1995, Hesperia Community College
District
<S> <C> <C> <C>
$ 5,000 4.500% 08/30/96 $ 5,014
San Joaquin County TRAN
10,000 4.500 10/15/96 10,048
Santa Clara County TRAN
13,000 4.500 08/02/96 13,050
Sonoma County TRAN
15,000 4.250 11/01/96 15,053
State of California GO
5,000 11.000 03/01/96 5,074
State of California GO VRDN, Series:
1992, TOCR (MBIA Insured)
2,500 4.000 12/07/95 2,500
State of California PCR VRDN, Series:
1986 B, Southern California Edison
Project (Southern California Edison
Co. Gtd.)
800 3.850 12/01/95 800
State of California RAW VRDN, Series:
1994 C, (Westdeutsche, Landesbank
Girozentrale LOC)
18,000 3.870 12/07/95 18,000
12,500 5.750 04/25/96 12,551
--------
30,551
--------
147,573
COLORADO--3.3%
Broomfield IDR VRDN, Series: 1984,
Buckeye Investment Project (Bank of
America NT & SA LOC)
1,600 4.000 12/07/95 1,600
Cherry Creek GO VRDN, South Metro
District #1
(Dresdner Bank LOC)
3,810 3.750 12/07/95 3,810
City and County of Denver
Transportation VRDN, Series: 1991 B
(Sanwa Bank LOC)
8,000 4.100 12/07/95 8,000
Colorado Housing Finance Authority
Revenue TOB, Series: C, Housing
Revenue Bond Project (Bank of
America LOC)
2,755 4.000 03/01/96 2,755
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
Moffat County PCR VRDN, Series: 1984
(National Rural Utility Cooperative
Finance Gtd.)
<S> <C> <C> <C>
$ 6,800 3.650% 12/07/95 $ 6,800
Pitkin County IDA VRDN, Series: 1984
A, Aspen Skiing Co. Project (First
National Bank of Chicago LOC)
1,800 3.850 12/01/95 1,800
Regional Transportation District
VRDN, Series: A,
(Bank of Tokyo LOC)
1,525 3.050 12/07/95 1,525
--------
26,290
DISTRICT OF COLUMBIA--0.2%
District of Columbia VRDN, Series:
1985, American University Project
(National Westminster Bank LOC)
2,000 3.650 12/07/95 2,000
CONNECTICUT--0.6%
Connecticut State GO VRDN, Series:
BTP-171
4,710 3.950 02/20/96 4,710
DELAWARE--0.3%
State of Delaware GO VRDN, Series:
1994 A, BTP-73
2,570 3.900 12/07/95 2,570
FLORIDA--7.8%
Atlantic Beach VRDN, Series: 1994 B,
Fleet Landing Project (Barnett Banks
of Jacksonville LOC)
9,200 3.800 12/01/95 9,200
Broward County Housing Finance
Authority Revenue VRDN (PNC Bank
LOC)
8,000 3.750 12/01/95 8,000
Broward County School District GO
VRDN, Series: 1992, PW Municipal
Securities Trust Receipts, Series
PW-16
(U.S. Government Securities Colld.)
10,000 4.000 12/07/95 10,000
Dade County School District GO VRDN,
Series: 1994, BTP-66 (MBIA Insured)
5,535 3.900 12/07/95 5,535
Dade County Special Obligation
Revenue VRDN, Capital Acquisition,
Series: 1990 (Sanwa Bank LOC)
200 3.850 12/07/95 200
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Florida Department of Environment
Protection Revenue VRDN, Series:
1994 A, BTP-64 (MBIA Insured)
$ 7,585 3.950% 01/10/96 $ 7,585
Florida First Municipal Loan Council
CP, Pooled Loan Program (Sumitomo
Bank Ltd. LOC)
5,000 4.000 12/01/95 5,000
Florida State Board of Education
VRDN, Series: 1993 E, Eagle Trust,
Series: 940901
6,000 3.820 12/07/95 6,000
Jacksonville Electric Authority VRDN,
Series: SGA 17 Bear Stearns
Municipal Trust 1995
5,000 3.750 12/07/95 5,000
Jacksonville Health Facilities
Authority Revenue VRDN, Series:
1990, Baptist Health Project
(Barnett Banks of Jacksonville LOC)
3,800 3.900 12/01/95 3,800
Palm Beach County Housing Finance
Authority Revenue VRDN, Series: 1988
D (New England Mutual Gtd.)
2,200 3.900 12/07/95 2,200
--------
62,520
GEORGIA--4.3%
Burke County Development Authority
PCR VRDN, Series: 1995-3, Plant
Vogtle Project (Georgia Power Co.
Gtd.)
1,700 3.800 12/01/95 1,700
Dekalb County Development Authority
PCR VRDN, Series: 1987, General
Motors Project (General Motors Corp.
Gtd.)
6,300 3.850 12/07/95 6,300
Elbert County Development Authority
IDR VRDN, Series: 1992, Allied-
Signal Project (Allied-Signal, Inc.
Gtd.)
2,430 3.850 12/07/95 2,430
Fulton County Development Authority
IDR VRDN, General Motors Project
(General Motors Corp. Gtd.)
1,500 3.850 12/07/95 1,500
Fulton County Resident Elderly
Authority VRDN, St. Anne's Terrace
Project (NationsBank Georgia LOC)
2,500 3.750 12/07/95 2,500
State of Georgia GO VRDN, Series:
1992 C, BTP-79
1,500 3.850 12/07/95 1,500
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
State of Georgia GO VRDN, Series:
1993 F, JPMP-35
<S> <C> <C> <C>
$ 3,000 3.800% 12/07/95 $ 3,000
Marietta Georgia Housing Authority
Revenue Bond Falls at Bells Ferry
(U.S. Government Securities Colld.)
1,985 5.250 01/15/96 1,985
Metro Atlanta Rapid Transit Authority
Revenue VRDN, Series: A, BTP-58
(AMBAC Insured)
5,965 3.900 12/07/95 5,965
Monroe County Development Authority
PCR VRDN, Series: 1994, Scherer
Plant Project (Gulf Power Co. Gtd.)
2,200 4.000 12/01/95 2,200
Monroe County Development Authority
PCR VRDN, Series: 1995, Scherer
Plant Project (Georgia Power Co.
Gtd.)
5,600 4.000 12/01/95 5,600
--------
34,680
ILLINOIS--4.6%
City of Naperville IDR VRDN, General
Motors Project (General Motors Corp.
Gtd.)
1,380 3.850 12/07/95 1,380
Illinois Development Finance
Authority IDR VRDN, Series: 1993 A,
Olin Corp. Project (Credit Suisse
LOC)
9,490 3.750 12/01/95 9,490
Illinois Educational Facilities
Authority VRDN, Series: 1987, The
Art Institute of Chicago (Mitsubishi
Bank LOC)
6,055 4.000 12/07/95 6,055
Illinois Health Facilities Authority
VRDN, Series: E, Hospital Sisters
Service Project (MBIA Insured)
300 3.600 12/07/95 300
Illinois Health Facilities Authority
VRDN, Series: 1991, West Suburban
Medical Center Project (First
National Bank of Chicago LOC)
150 3.750 12/07/95 150
Illinois Health Facilities Authority
VRDN, Series: 1993, Resurrection
Health Care Project
5,000 3.850 12/01/95 5,000
Illinois Health Facilities Authority
VRDN, Series: 1994, Riverside Health
System Project (LaSalle National
Bank LOC)
1,100 3.750 12/07/95 1,100
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO--CONTINUED
ILLINOIS--CONTINUED
Illinois Health Facilities Authority
VRDN, Series: 1995, Healthcor
Project (Fuji Bank LOC)
<S> <C> <C> <C>
$ 5,950 4.050% 12/07/95 $ 5,950
Illinois Health Facilities Authority
Pooled Revenue VRDN,
Series: 1985 D (First National Bank
of Chicago LOC)
2,675 3.850 12/07/95 2,675
Illinois State Sales Tax Revenue
Bond, Series: B
1,000 7.625 06/15/96 1,028
Regional Transportation Authority
Revenue VRDN, Series: D (FGIC
Insured)
4,000 3.800 12/07/95 4,000
--------
37,128
INDIANA--0.3%
Fort Wayne Hospital Authority Revenue
VRDN, Series: D, Park View Hospital
Program (Fuji Bank LOC)
2,430 4.050 12/07/95 2,430
IOWA--0.5%
City of Le Claire Public Utility,
Series: 1986 A (U.S. Government
Securities Colld.)
2,210 4.125 09/01/96 2,212
City of Le Claire Public Utility,
Series: 1986 B (U.S. Government
Securities Colld.)
1,580 4.125 09/01/96 1,581
--------
3,793
KANSAS--1.6%
City of LaCygne Environmental Revenue
VRDN, Series: 1994 A, Kansas City
Power & Light Project
11,940 3.750 12/07/95 11,940
City of Topeka Sewer System Revenue
VRDN, Series: 1984 (MBIA Insured)
700 3.800 12/01/95 700
--------
12,640
KENTUCKY--0.9%
City of Danville Lease Revenue CP,
Municipal Pooled Lease Program (PNC
Bank LOC)
2,605 3.850 02/12/96 2,605
Kentucky Higher Education Student
Loan Corp. VRDN, Series: 1991 E
(Sumitomo Bank Ltd. LOC)
2,000 4.100 12/07/95 2,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
Pendleton County Revenue VRDN,
Series: 1987, Kentucky Association
of Counties-Self-Insurance Funding
(PNC Bank LOC)
<S> <C> <C> <C>
$ 3,000 4.000% 07/01/96 $ 3,000
--------
7,605
LOUISIANA--0.4%
Parish of East Baton Rouge PCR VRDN,
Series: 1993, Exxon Project (Exxon
Corp. Gtd.)
2,000 3.800 12/01/95 2,000
Parish of West Baton Rouge District #
3 PCR CP, Dow Chemical Project (Dow
Chemical Gtd.)
1,300 3.950 01/22/96 1,300
--------
3,300
MARYLAND--3.2%
Anne Arundel County Revenue Refunding
Bonds, Windgate Project (MGT Co.
LOC)
3,500 4.200 12/29/95 3,499
Baltimore County Multifamily Housing
Revenue VRDN, Series: 1991, Quail
Ridge Apartments Project (Sumitomo
Bank LOC)
2,200 4.100 12/07/95 2,200
Baltimore IDA VRDN, Series: 1986,
Capital Acquisition Program (Dai-
Ichi Kangyo Bank LOC)
2,000 3.900 12/07/95 2,000
Maryland State Community Development
Administration, Series: 1993, Single
Family Program, Merrill P-Floats PT-
12
8,000 3.650 12/01/95 8,000
Maryland State Community Development
Administration TOB, Series: 1984 B,
MD-28C
6,670 3.850 05/15/96 6,670
Montgomery County VRDN, Series: 1993
A, Single Family Housing Program,
Merrill P-Floats PA-40
2,000 3.800 05/15/96 2,000
Washington Suburban Sanitary District
VRDN, Series: 1994 G, Eagle Trust
1,000 3.820 12/07/95 1,000
--------
25,369
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MASSACHUSETTS--1.8%
Massachusetts Health & Education
Facilities Revenue VRDN, Series: P,
Merrill General Trust SG-27
$ 8,000 3.750% 12/07/95 $ 8,000
Massachusetts Municipal Electric Co.
Revenue VRDN, Series: 1994 B, BTP-67
(MBIA Insured)
5,760 3.850 12/07/95 5,760
--------
13,760
MICHIGAN--1.4%
Michigan State Strategic Fund PCR CP,
(Dow Chemical Gtd.)
1,500 3.950 01/22/96 1,500
Michigan State Strategic Fund IDR
VRDN, Allied-Signal Project (Allied-
Signal Inc., Gtd.)
6,100 3.800 12/07/95 6,100
Michigan State Strategic Fund Revenue
PCR VRDN, Series: 1995 C, Detroit
Edison Project (Barclays LOC)
1,000 3.650 12/01/95 1,000
Michigan State Strategic Fund Ltd. GO
Series: 1993 A, Consumer Power Co.
Project
2,300 3.700 12/07/95 2,300
--------
10,900
MINNESOTA--2.2%
Minnetonka Multifamily Housing
Revenue VRDN, Series: 1995, Cliffs
at Ridgedale Project (FNMA Colld.)
17,300 4.050 12/07/95 17,300
Rochester Health Care Facility
Revenue VRDN, Mayo Medical Center,
Merrill P-Floats PA-96
615 3.800 12/07/95 615
--------
17,915
MISSOURI--2.4%
Callaway County IDA Health System
VRDN, Series: 1995 (NationsBank
Tennessee LOC)
5,000 3.800 12/07/95 5,000
IDA of St. Louis County Housing
Revenue VRDN, South Point & Hunters
Ridge Project PT66 (Commerzbank LOC)
9,500 3.650 12/01/95 9,500
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
Missouri State Environmental
Improvement Authority Revenue VRDN,
Series: 1992, Kansas Power & Light
Project (K. C. Power & Light Gtd.)
<S> <C> <C> <C>
$ 400 3.750% 12/07/95 $ 400
Missouri State Health & Education
Facilities Revenue CP, SSM Health
Care Projects, Series: 1988 C
(Mitsubishi Bank LOC)
4,300 4.000 12/01/95 4,300
--------
19,200
MISSISSIPPI--0.3%
Mississippi Hospital Equipment
Authority Hospital Revenue VRDN,
Baptist Medical Center Project
(Sanwa Bank LOC)
2,600 4.100 12/01/95 2,600
NEVADA--0.5%
Nevada Housing Division Housing
Revenue Bond, Single Family Program,
Senior Series: A-3
4,365 3.900 04/01/96 4,365
NEW HAMPSHIRE--0.5%
New Hampshire Higher Education &
Health Revenue VRDN, Dartmouth
College, Trust SG-19
3,600 3.800 12/07/95 3,600
NEW YORK--10.2%
City of New York GO VRDN, Series:
1992 A, Citicorp TOB CR-14I (FSAC
Insured)
5,100 4.100 02/15/96 5,100
City of New York GO VRDN, Series:
1993 B (FGIC Insured)
3,400 4.000 12/01/95 3,400
City of New York GO VRDN, Series:
1994 C (Norinchukin Bank LOC)
2,100 4.050 12/01/95 2,100
City of New York GO VRDN, Series:
1994, H-3 (FSAC Insured)
2,000 3.850 03/13/96 2,000
City of New York GO VRDN, Series:
1994, H-4 (AMBAC Insured)
3,000 3.850 03/13/96 3,000
City of New York GO VRDN, Subseries:
B-2 (Dai-Ichi Kangyo Bank LOC)
3,700 4.050 12/01/95 3,700
City of New York GO VRDN, Subseries:
B-3 (Sanwa Bank LOC)
1,100 4.050 12/01/95 1,100
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
TAX-EXEMPT PORTFOLIO--CONTINUED
NEW YORK--CONTINUED
City of New York GO VRDN,
Subseries:1993 E-3
(MGT Co. LOC)
<S> <C> <C> <C>
$1,000 3.700% 12/01/95 $ 1,000
City of New York GO VRDN, Subseries:
1993 E-5
(Sumitomo Bank Ltd. LOC)
11,400 3.850 12/01/95 11,400
City of New York TRAN, Series: 1996 A
6,115 4.500 04/11/96 6,127
City of New York TRAN, Series: 1996 B
(Chemical Banking Corp. LOC)
10,000 4.750 06/28/96 10,045
County Of Nassau TRAN, Series: 1995-A
1,000 4.500 03/15/96 1,002
Marine Midland Premium Loan Trust
VRDN, Series: 1991 B (Hong Kong &
Shanghai Banking Corp. LOC)
1,813 3.950 12/07/95 1,813
New York City Trust Receipts TRAN,
Series: 1995-1
(Chemical Banking Corp. LOC)
16,400 4.100 06/28/96 16,400
New York State Energy Research &
Development Authority VRDN, Series:
A, Niagara Mohawk Power Project
(Toronto-Dominion Bank LOC)
3,000 3.950 12/01/95 3,000
New York State Environment Facilities
Corp. PCR VRDN,
Eagle Trust Series: 943204 (CGIC
Insured)
5,900 3.770 12/07/95 5,900
Port Authority of New York, Pooled
Puttable Floating Option VRDN,
Series: PPT2 (AK Housing Finance
Corp. Insured)
5,000 3.700 12/07/95 5,000
--------
82,087
NORTH CAROLINA--0.3%
North Carolina Medical Care
Commission Hospital Revenue VRDN,
Pooled Financing Project, Series: A
(Dai-Ichi Kangyo Bank LOC)
2,800 3.750 12/01/95 2,800
OHIO--1.6%
City of Greenville IDR VRDN, Revenue
Refunding,
Series: 1992, Allied-Signal Project
(Allied-Signal, Inc. Gtd.)
1,000 3.850 12/07/95 1,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
Ohio State Water Development
Authority PCR VRDN,
Series: B (General Motors Corp. LOC)
<S> <C> <C> <C>
$7,400 3.850% 12/07/95 $ 7,400
Red Roof Inns Mortgage Bond Trust
VRDN
(National City Bank LOC)
4,639 3.850 12/15/95 4,639
135 3.850 12/18/95 135
--------
4,774
--------
13,174
PENNSYLVANIA--1.9%
Allegheny County Hospital VRDN,
Presbyterian Health Center, Series:
C (MBIA Insured)
1,300 3.700 12/01/95 1,300
Allegheny County Hospital Development
Authority VRDN,
Health Facilities Authority Central
Blood Bank Project
(PNC Bank LOC)
300 3.850 12/07/95 300
Allegheny County Hospital Development
Authority VRDN, Series: 1994,
Harmarville Rehabilitation Project
(PNC Bank LOC)
1,000 3.850 12/07/95 1,000
Delaware Valley Regional Finance
Authority VRDN, Series: 1985 A-D
(Hong Kong & Shanghai Banking Corp.
LOC)
3,200 4.000 12/07/95 3,200
Delaware Valley Regional Finance
Authority Pooled Revenue VRDN,
Series: 1985 A-D (Midland Bank LOC)
1,000 4.000 12/07/95 1,000
City of Philadelphia IDR VRDN, Series
1988, Franklin Institute Project
(PNC Bank LOC)
2,300 3.850 12/07/95 2,300
City of Philadelphia TRAN, Series:
1995-96 A
6,000 4.500 06/27/96 6,018
--------
15,118
PUERTO RICO--0.5%
Puerto Rico Industrial Medical &
Environmental Pollution Control
Facilities Funding Authority Revenue
Bond, Series: A (Merck & Co. Gtd.)
4,240 4.000 12/01/96 4,240
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOUTH CAROLINA--2.4%
County of Lexington IDR VRDN,
Series: 1992, Allied-Signal Project
(Allied-Signal, Inc. Gtd.)
$ 700 3.850% 12/07/95 $ 700
County of Lexington Pollution Control
Finance Authority IDR VRDN, Series:
1992 A, Allied-Signal Project
(Allied-Signal, Inc. Gtd.)
1,880 3.850 12/07/95 1,880
South Carolina Public Service
Authority Revenue VRDN, Series:
1995, Lehman Trust Receipts FR/RI-1
(FGIC Insured)
6,700 3.800 12/07/95 6,700
South Carolina Public Service
Authority Revenue VRDN, Series: 1985
B, ML SG Muni Trust SG-32 (FGIC
Insured)
9,855 3.800 12/07/95 9,855
--------
19,135
TENNESSEE--2.7%
City of Clarksville Public Building
Authority Revenue VRDN, Series:
1995, Tennessee Muni Bond Fund
(NationsBank Florida LOC)
5,000 3.750 12/07/95 5,000
Hamilton County IDR VRDN, Series:
1995, Tennessee Aquarium Project
(NationsBank Tennessee LOC)
8,850 3.750 12/07/95 8,850
Lauderdale County School Board GO
BAN, Series: 1995
2,550 4.900 03/01/96 2,550
Metro Nashville Airport Authority
Revenue VRDN,
Series: 1995 B, American Airlines
Project
(Bayerische Landesbank LOC)
5,000 3.850 12/01/95 5,000
--------
21,400
TEXAS--8.5%
AMBAC Pooled Puttable Float Option
PP2 VRDN (AMBAC, FGIC, & MBIA
Insured)
9,860 3.850 12/07/95 9,860
Angelina & Neches River Authority
Solid Waste VRDN, Series: 1984 B,
TEEC, Inc. Project (Credit Suisse
LOC)
5,200 3.850 12/01/95 5,200
Bexar County Multifamily Housing
Finance Authority VRDN, Series: 1988
A, Creighton's Mill Development
Project (New England Mutual Gtd.)
2,500 3.900 12/07/95 2,500
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
Brazos River Harbor Navigation
District PCR CP, Series:1987 B, Dow
Chemical Series (Dow Chemical Gtd.)
<S> <C> <C> <C>
$ 1,500 3.900% 01/23/96 $ 1,500
Harris County Health Facilities
Development Corp. Revenue VRDN,
Series:1994, Methodist Hospital
Project
2,800 3.800 12/01/95 2,800
Harris County Toll Road Unlimited Tax
VRDN, Series: 1994 A, Citicorp Eagle
Trust Series: 954302
5,500 3.820 12/07/95 5,500
San Antonio Electric & Gas System CP,
Series: A
4,000 3.850 02/09/96 4,000
8,000 3.850 02/14/96 8,000
State of Texas TRAN, Series: A
24,000 4.750 08/30/96 24,121
Texas Turnpike Authority Dallas Toll
Revenue VRDN,
Series: 1990 BTP-60 ADP Class: B
(AMBAC Insured)
5,049 3.900 12/25/95 5,049
--------
68,530
UTAH--0.1%
Uintah County PCR Bond Public
Utility, Deseret General
Transmission Project (U.S.
Government Securities Colld.)
1,135 10.125 10/15/96 1,194
VIRGINIA--3.9%
City of Newport News Redevelopment &
Housing Authority VRDN, Indian Lake
Apartments Project, Merrill P-Floats
PT-65 (Commerzbank LOC)
8,155 3.650 12/01/95 8,155
City of Norfolk GO VRDN, Eagle Trust,
Series: 944601
9,000 3.820 12/07/95 9,000
City of Roanoke IDR VRDN, Series:
1994, Cooper Industries Project
(Cooper Industries Gtd.)
6,300 3.800 12/07/95 6,300
County of Loudoun IDA Residential
Care VRDN, Series: 1994 B, Falcons
Landing (Banque Paribas LOC)
6,400 3.850 12/01/95 6,400
County of Prince William Revenue
VRDN, Series: 1993, TOCR (FGIC
Insured)
1,605 3.800 12/07/95 1,605
--------
31,460
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Principal Interest Maturity Amortized
Amount Rate Date Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TAX-EXEMPT PORTFOLIO--CONTINUED
WASHINGTON--2.5%
Kent Economic Development Corp. IDR
VRDN, Associated Grocers Project
(Seattle-First National Bank LOC)
$ 4,200 4.692% 12/07/95 $ 4,200
State of Washington GO VRDN, Series
A, Citibank TOB
5,300 3.820 12/07/95 5,300
Washington Health Care Facilities
Authority Revenue VRDN, Series: 1993
(MBIA Insured)
2,400 3.700 12/07/95 2,400
Washington Public Power Supply System
Revenue VRDN, Series: 1990 B, BTP-85
(U.S. Government Securities Colld.)
3,256 3.900 12/07/95 3,256
Washington Public Power Supply System
Revenue VRDN, Series 1994 A BTP-61,
Nuclear Power Project # 2
(Washington Public Power Supply
System Project #1 & #2 Gtd.)
5,035 3.950 12/07/95 5,035
--------
20,191
WISCONSIN--1.7%
City of Milwaukee Redevelopment
Authority Revenue VRDN, Series:
1985, Kennedy II Associates Ltd.
Partnership Project (Bank of America
LOC)
1,600 3.900 12/20/95 1,600
City of Pleasant Prairie PCR VRDN,
Series: 1995 C, Wisconsin Electric
Power Project
6,500 3.750 12/07/95 6,500
Wisconsin Housing and Economic
Development Authority Homeownership
Revenue Bonds, Series: 1990 D
5,575 4.000 03/01/96 5,575
--------
13,675
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount/ Interest Maturity Amortized
Shares Rate Date Cost
- -------------------------------------------------------------------------------------------------------
WYOMING--0.6%
City of Green River PCR VRDN Allied-
Signal Project (Allied-Signal, Inc.
Gtd.)
<S> <C> <C> <C>
$ 1,000 3.850% 12/07/95 $ 1,000
Uinta County PCR VRDN, Series: 1993,
Chevron USA Inc. Project (Chevron
Oil Gtd.)
3,500 3.650 12/01/95 3,500
--------
4,500
- -------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL INVESTMENTS $766,902
- -------------------------------------------------------------------------------------------------------
</TABLE>
OTHER--0.6%
AIM Tax Free Money Market Fund
<TABLE>
<S> <C> <C> <C>
500 3.570% -- $ 500
Dreyfus Tax Exempt Cash Management
Fund
900 3.573 -- 900
Federated Tax Free Trust Money Market
Fund #15
2,434 3.660 -- 2,434
Federated Tax Free Trust Money Market
Fund #73
819 3.420 -- 819
Provident Muni Fund
421 3.390 -- 421
- ---------------------------------------------------------------------------------------------------------------
TOTAL OTHER $ 5,074
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--96.1% $771,976
- ---------------------------------------------------------------------------------------------------------------
Other assets, less liabilities--3.9% 31,754
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $803,730
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
INVESTMENT ABBREVIATIONS AND NOTES:
AMBAC --American Municipal Bond Assurance Corp.
BAN --Bond Anticipation Note
BTP --Bankers Trust Partnership
CGIC --Capital Guaranty Insurance Co.
Colld. --Collateralized
CP --Commercial Paper
FGIC --Financial Guaranty Insurance Corp.
FNMA --Federal National Mortgage Association
FRN --Floating Rate Note
FSAC --Financial Security Assurance Corp.
GO --General Obligation
Gtd. --Guaranteed
IDA --Industrial Development Authority
IDR --Industrial Development Revenue
IRC --Irrevocable Revolving Credit
JPMP --J.P. Morgan Partnership
LOC --Letter of Credit
MBIA --Municipal Bond Insurance Association
MGT --Morgan Guaranty Trust
ML SG --Merrill Lynch/Societe Generale
P-Floats --Puttable Floating Rate Security
PCR --Pollution Control Revenue
RAW --Revenue Anticipation Warrant
TOB --Tender Option Bond
TOCR --Tender Option Custodial Receipt
TRAN --Tax and Revenue Anticipation Note
VRDN --Variable Rate Demand Note
- --The percentage shown for each investment category reflects the value of
investments in that category as a percentage of net assets.
- --Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes, or, for floating rate securities, the
current reset rate, which is based upon current interest rate indices.
- --Maturity dates represent either the stated date on the security, the next
interest reset date for floating rate securities, or the prerefunded date for
those types of securities.
- --The amortized cost also represents cost for federal income tax purposes.
See accompanying notes to financial statements.
15
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1995
(Amounts in thousands, except net asset value per unit)
<TABLE>
<CAPTION>
Diversified Government
Assets Government Select Tax-Exempt
Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at
amortized cost $2,038,306 $592,986 $685,847 $771,976
Repurchase agreements, at cost 428,305 299,763 -- --
Cash 48,881 -- -- --
Receivables:
Interest 6,052 1,037 340 6,680
Fund units sold 673,549 50,606 16,337 58,356
Investment securities sold -- -- -- 10,870
Administrator -- 28 27 17
Other assets 37 8 5 15
- ------------------------------------------------------------------------------
TOTAL ASSETS 3,195,130 944,428 702,556 847,914
- ------------------------------------------------------------------------------
LIABILITIES:
Due to Custodian -- -- -- 1,390
Payable for:
Fund units redeemed 513,919 40,149 4,299 34,430
Investment securities purchased 58,648 49,563 10,000 5,840
Distributions to unitholders 11,315 3,750 2,953 2,232
Accrued expenses:
Advisory fees 510 174 54 156
Administration fees 144 77 67 73
Custodian fees 36 8 6 7
Transfer agent fees 49 5 10 9
Other liabilities 162 38 25 47
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 584,783 93,764 17,414 44,184
- ------------------------------------------------------------------------------
NET ASSETS $2,610,347 $850,664 $685,142 $803,730
- ------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS:
Paid-in capital $2,612,248 $851,102 $685,315 $803,691
Accumulated net realized gain
(loss) on investment transac-
tions (1,901) (438) (173) 39
- ------------------------------------------------------------------------------
NET ASSETS $2,610,347 $850,664 $685,142 $803,730
- ------------------------------------------------------------------------------
Total units outstanding (no par
value), unlimited units autho-
rized 2,612,248 851,102 685,315 803,691
- ------------------------------------------------------------------------------
Net asset value, offering and
redemption price per unit (net
assets/units outstanding) $1.00 $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Diversified Government
Assets Government Select Tax-Exempt
Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME $169,238 $45,327 $33,397 $26,869
- -----------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 7,081 1,939 1,423 1,687
Administration fees 1,929 895 752 828
Custodian fees 318 101 75 98
Transfer agent fees 110 32 25 32
Registration fees 14 14 1 --
Professional fees 119 26 26 29
Trustee fees 73 22 12 21
Other 75 55 25 66
- -----------------------------------------------------------------------------
TOTAL EXPENSES 9,719 3,084 2,339 2,761
Less: Voluntary waivers of in-
vestment advisory fees -- -- (854) --
Less: Expenses reimbursable by
Administrator -- (370) (347) (390)
- -----------------------------------------------------------------------------
Net expenses 9,719 2,714 1,138 2,371
- -----------------------------------------------------------------------------
NET INVESTMENT INCOME 159,519 42,613 32,259 24,498
Net realized gain (loss) on in-
vestment transactions (1,460) (828) (73) 48
- -----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RE-
SULTING FROM OPERATIONS $158,059 $41,785 $32,186 $24,546
- -----------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended November 30, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Diversified Assets Government Select
Portfolio Government Portfolio Portfolio Tax-Exempt Portfolio
-------------------------- ------------------------- ------------------------ ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM:
OPERATIONS:
Net investment
income $ 159,519 $ 116,513 $ 42,613 $ 32,931 $ 32,259 $ 15,868 $ 24,498 $ 25,174
Net realized
gain (loss) on
investment
transactions (1,460) (1,955) (828) (517) (73) (212) 48 27
- ----------------------------------------------------------------------------------------------------------------------------
Net increase in
net assets re-
sulting from
operations 158,059 114,558 41,785 32,414 32,186 15,656 24,546 25,201
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS:
Net investment
income (159,519) (116,513) (42,613) (32,931) (32,259) (15,868) (24,498) (25,174)
Net realized
gain on in-
vestment
transactions -- -- -- -- -- -- -- (27)
In excess of
net realized
gain on in-
vestment
transactions -- (5) -- (8) -- (3) -- (9)
- ----------------------------------------------------------------------------------------------------------------------------
Total distribu-
tions to
unitholders (159,519) (116,518) (42,613) (32,939) (32,259) (15,871) (24,498) (25,210)
- ----------------------------------------------------------------------------------------------------------------------------
UNIT TRANSAC-
TIONS
(AT $1.00 PER
UNIT):
Proceeds from
the sale of
units 43,084,716 33,080,284 10,203,042 8,096,549 3,588,011 1,418,799 5,729,794 5,280,315
Cost of units
redeemed (43,366,308) (33,386,732) (10,140,281) (8,373,913) (3,396,629) (1,311,373) (5,779,215) (5,619,135)
- ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets re-
sulting
from unit
transactions (281,592) (306,448) 62,761 (277,364) 191,382 107,426 (49,421) (338,820)
- ----------------------------------------------------------------------------------------------------------------------------
CAPITAL
CONTRIBUTIONS
RECEIVED FROM
NORTHERN TRUST
CORPORATION 1,519 -- 915 -- 115 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) (281,533) (308,408) 62,848 (277,889) 191,424 107,211 (49,373) (338,829)
Net assets--be-
ginning of year 2,891,880 3,200,288 787,816 1,065,705 493,718 386,507 853,103 1,191,932
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS--END
OF YEAR $ 2,610,347 $ 2,891,880 $ 850,664 $ 787,816 $ 685,142 $ 493,718 $ 803,730 $ 853,103
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
The Benchmark Funds
Money Market Portfolios
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Diversified Assets Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM IN-
VESTMENT OPERA-
TIONS:
Net investment
income 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06
- -----------------------------------------------------------------------------------------------------------------------------
Total income
from investment
operations 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS
FROM:
Net investment
income (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
- -----------------------------------------------------------------------------------------------------------------------------
Total distribu-
tions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total return
(a)(b) 5.78% 3.92% 3.00% 3.80% 6.19% 8.01% 8.98% 7.15% 6.30%
Ratios to aver-
age net assets:
Net expenses 0.34% 0.35% 0.34% 0.34% 0.35% 0.35% 0.37% 0.39% 0.41%
Net investment
income 5.63% 3.74% 3.00% 3.79% 6.18% 8.01% 8.98% 7.15% 6.30%
Ratios to aver-
age net assets
assuming no vol-
untary waiver of
advisory and ad-
ministration
fees and maximum
non-reimbursable
expenses:
Net expenses 0.34% 0.35% 0.35% 0.35% 0.36% 0.36% 0.37% 0.39% 0.41%
Net investment
income 5.63% 3.74% 2.99% 3.78% 6.17% 8.00% 8.98% 7.15% 6.30%
Net assets at
end of year (in
thousands) $2,610,347 $2,891,880 $3,200,288 $2,801,744 $2,784,485 $2,192,756 $1,871,713 $1,528,203 $1,533,941
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1986
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE,
BEGINNING OF
YEAR $1.00
INCOME FROM IN-
VESTMENT OPERA-
TIONS:
Net investment
income 0.07
- -----------------------------------------------------------------------------------------------------------------------------
Total income
from investment
operations 0.07
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS
FROM:
Net investment
income (0.07)
- -----------------------------------------------------------------------------------------------------------------------------
Total distribu-
tions to
unitholders (0.07)
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
END OF YEAR $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total return
(a)(b) 6.56%
Ratios to aver-
age net assets:
Net expenses 0.40%
Net investment
income 6.56%
Ratios to aver-
age net assets
assuming no vol-
untary waiver of
advisory and ad-
ministration
fees and maximum
non-reimbursable
expenses:
Net expenses 0.40%
Net investment
income 6.56%
Net assets at
end of year (in
thousands) $1,080,659
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the year.
(b) Total return for the year ended November 30, 1995 would have been 5.73%
absent the effect of a capital contribution equivalent to $.0005 per share
received from Northern Trust Corporation.
See accompanying notes to financial statements.
19
<PAGE>
The Benchmark Funds
Money Market Portfolios
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Government Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
Total income from in-
vestment operations 0.06 0.04 0.03 0.04 0.06 0.08 0.09 0.07 0.06 0.06
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.06)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.08) (0.09) (0.07) (0.06) (0.06)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (a)(b) 5.64% 3.78% 2.91% 3.91% 6.18% 7.89% 8.63% 6.83% 6.15% 5.94%
Ratios to average net
assets:
Net expenses 0.35% 0.34% 0.34% 0.34% 0.35% 0.37% 0.50% 0.54% 0.44% 0.40%
Net investment income 5.49% 3.60% 2.92% 3.71% 6.03% 7.88% 8.63% 6.83% 6.15% 5.94%
Ratios to average net
assets assuming no vol-
untary waiver of advi-
sory and administration
fees and maximum non-re-
imbursable expenses:
Net expenses 0.35% 0.35% 0.35% 0.40% 0.40% 0.46% 0.50% 0.55% 0.55% 0.62%
Net investment income 5.49% 3.59% 2.91% 3.65% 5.98% 7.79% 8.63% 6.82% 6.04% 5.72%
Net assets at end of
year (in thousands) $850,664 $787,816 $1,065,705 $1,163,905 $895,405 $971,720 $423,517 $335,301 $218,530 $160,542
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the year.
(b) Total return for the year ended November 30, 1995 would have been 5.53%
absent the effect of a capital contribution equivalent to $.0011 per share
received from Northern Trust Corporation.
See accompanying notes to financial statements.
20
<PAGE>
The Benchmark Funds
Money Market Portfolios
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Government Select Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 (a)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.06 0.04 0.03 0.04 0.06 0.01
- ---------------------------------------------------------------------------------------
Total income from
investment operations 0.06 0.04 0.03 0.04 0.06 0.01
- ---------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.06) (0.04) (0.03) (0.04) (0.06) (0.01)
- ---------------------------------------------------------------------------------------
Total distributions to
unitholders (0.06) (0.04) (0.03) (0.04) (0.06) (0.01)
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------
Total return (b)(c) 5.82% 3.84% 3.00% 3.71% 5.82% 0.50%
Ratios to average net
assets (d):
Net expenses 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%
Net investment income 5.67% 3.83% 2.99% 3.70% 5.78% 7.65%
Ratios to average to net
assets assuming no
voluntary waiver of
advisory and
administration fees and
maximum non-reimbursable
expenses (d):
Net expenses 0.35% 0.35% 0.35% 0.52% 0.60% 1.33%
Net investment income 5.52% 3.68% 2.84% 3.38% 5.38% 6.52%
Net assets at end of
period (in thousands) $685,142 $493,718 $386,507 $264,756 $160,750 $44,215
- ---------------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on November 7, 1990.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(c) Total return for the year ended November 30, 1995 would have been 5.80%
absent the effect of a capital contribution equivalent to $.0002 per share
received from Northern Trust Corporation.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
21
<PAGE>
The Benchmark Funds
Money Market Portfolios
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Tax-Exempt Portfolio
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.04 0.02 0.02 0.03 0.05 0.06 0.06 0.05 0.04 0.04
- ---------------------------------------------------------------------------------------------------------------------------------
Total income from in-
vestment operations 0.04 0.02 0.02 0.03 0.05 0.06 0.06 0.05 0.04 0.04
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.04) (0.02) (0.02) (0.03) (0.05) (0.06) (0.06) (0.05) (0.04) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to
unitholders (0.04) (0.02) (0.02) (0.03) (0.05) (0.06) (0.06) (0.05) (0.04) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total return (a) 3.71% 2.62% 2.27% 2.97% 4.57% 5.71% 6.04% 4.92% 4.00% 4.30%
Ratios to average net
assets:
Net expenses 0.35% 0.35% 0.34% 0.34% 0.35% 0.36% 0.49% 0.48% 0.45% 0.47%
Net investment income 3.63% 2.40% 2.27% 2.95% 4.57% 5.71% 6.03% 4.92% 4.00% 4.30%
Ratios to average net
assets assuming no vol-
untary waiver of advi-
sory and administration
fees and maximum non-re-
imbursable expenses:
Net expenses 0.35% 0.35% 0.35% 0.39% 0.40% 0.43% 0.49% 0.48% 0.46% 0.50%
Net investment income 3.63% 2.40% 2.26% 2.90% 4.52% 5.64% 6.03% 4.92% 3.99% 4.27%
Net assets at end of
year (in thousands) $803,730 $853,103 $1,191,932 $1,226,480 $872,405 $752,257 $545,215 $529,680 $410,772 $456,467
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Assumes investment at net asset value at the beginning of the year,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the end of the year.
See accompanying notes to financial statements.
22
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
1. ORGANIZATION
The Benchmark Funds (the "Trust") is a Massachusetts business trust registered
under the Investment Company Act of 1940 (as amended) as an open-end management
investment company. The Trust includes sixteen portfolios, each with its own
investment objective. The Northern Trust Company ("Northern") acts as the
Trust's investment adviser, transfer agent, and custodian. Goldman, Sachs & Co.
("Goldman Sachs") acts as the Trust's administrator and distributor. Presented
herein are the financial statements of the money market portfolios.
The Trust includes four diversified money market portfolios: Diversified
Assets Portfolio, Government Portfolio, Government Select Portfolio and Tax-
Exempt Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed:
(a) Investment Valuation
Investments are valued at amortized cost, which approximates market value.
Under the amortized cost method, investments purchased at a discount or premium
are valued by amortizing the difference between the original purchase price and
maturity value of the issue over the period to maturity.
(b) Repurchase Agreements
During the term of a repurchase agreement, the market value of the underlying
collateral, including accrued interest, is required to exceed the market value
of the repurchase agreement. The underlying collateral for all repurchase
agreements is held in a customer-only account of Northern, as custodian for the
Trust, at the Federal Reserve Bank of Chicago.
(c) Interest Income
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums.
(d) Federal Taxes
It is each portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
each year substantially all of its taxable income and tax-exempt income to its
unitholders. Therefore, no provision is made for federal taxes.
At November 30, 1995, the Trust's most recent tax year end, there were capital
loss carryforwards for U.S. federal tax purposes of approximately $1,901,000,
$438,000 and $173,000 for the Diversified Assets, Government and Government
Select Portfolios, respectively. These amounts are available to be carried
forward to offset future capital gains to the extent permitted by applicable
laws or regulations. These capital loss carryforwards expire in 2002.
(e) Expenses
Expenses arising in connection with a specific portfolio are allocated to that
portfolio. Expenses incurred which do not specifically relate to an individual
portfolio are allocated among the portfolios based on each portfolio's relative
net assets.
(f) Distributions
Each Portfolio's net investment income is declared daily as a dividend to
unitholders of record as of
3:00 p.m., Chicago time. Prior to March 1, 1994, short-term capital gains, if
any, were declared daily. Commencing March 1, 1994, net realized short-term
capital gains, if any, are declared and distributed at least annually.
Distributions of net investment income with respect to a calendar month
(including with respect to units redeemed at any time during the month) are
made as soon as practicable following the end of the month. Distributions are
made by the portfolios to Northern in cash. Northern has undertaken to credit
or arrange for the crediting of such distributions to each unitholder's account
with Northern, its affiliates or its correspondents.
23
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--CONTINUED
November 30, 1995
3. ADVISORY, TRANSFER AGENCY, CUSTODIAN AND OTHER AGREEMENTS
As compensation for the services rendered as investment adviser, including the
assumption by Northern of the expenses related thereto, Northern is entitled to
a fee, computed daily and payable monthly, at an annual rate of .25% of each
portfolio's average daily net assets.
Until further notice, Northern has voluntarily agreed to waive .15% of its
advisory fee for the Government Select Portfolio, reducing such fee to .10% per
annum. The effect of this waiver by Northern for the year ended November 30,
1995 was to reduce advisory fees by approximately $854,000.
As compensation for the services rendered as custodian and transfer agent,
including the assumption by Northern of the expenses related thereto, Northern
receives compensation based on a pre-determined schedule of charges approved by
the Board.
The Trust and Northern Trust Corporation (the "Corporation") entered into an
agreement (the "Put Agreement") dated May 19, 1994 which provided the Trust the
right to require the Corporation to purchase, and the Corporation the right to
require the Trust to sell, certain Federal Home Loan and Federal Farm Credit
Banks securities held by the Diversified Assets, Government and Government
Select Portfolios on or before June 19, 1995 (the "final purchase date"). The
purchase price under the Put Agreement was the greater of the amortized cost
value or market value on the date of purchase.
On May 25, 1995, pursuant to the Put Agreement, the Corporation notified the
Trust of its intent to exercise its right to require the Trust to sell these
securities, on the final purchase date. On June 19, 1995, the Corporation
purchased these securities at amortized cost, which exceeded market value by
approximately $1,519,000, $915,000 and $115,000 for the Diversified Assets,
Government and Government Select Portfolios, respectively. The Portfolios
recorded realized losses to the extent the purchase price exceeded market value
of the securities. The Portfolios received capital contributions from the
Corporation in connection with the Put Agreement, which served to offset such
losses. The net realized losses on the sale of these securities are not
deductible for federal income tax purposes. As a result, the Portfolios
reclassified an amount equal to the net realized losses on the sale of these
securities from "accumulated net realized gain (loss) on investment
transactions" to "paid-in capital." This reclassification had no effect on the
net assets of the Portfolios and was designed to present the Portfolios'
capital accounts on a tax basis.
4. ADMINISTRATION AND DISTRIBUTION AGREEMENTS
As compensation for the services rendered as administrator, and the assumption
by Goldman Sachs of expenses related thereto, Goldman Sachs is entitled to
receive from each portfolio a fee, computed daily and payable monthly, at an
annual rate of .25% of the first $100 million, .15% of the next $200 million,
.075% of the next $450 million and .05% of any excess over $750 million of the
average daily net assets of each portfolio. Goldman Sachs receives no
compensation under the Distribution Agreement.
Goldman Sachs has voluntarily agreed to waive a portion of its administration
fees in the event that overall administration fees earned during the prior
fiscal year exceeded certain specified levels. For the year ended November 30,
1995, there was no reduction in administration fees due to this waiver.
Furthermore, Goldman Sachs has agreed to reimburse the portfolios for certain
expenses in the event that such expenses, as defined, exceed, on an annualized
basis, .10% of each portfolio's average daily net assets. The effect of these
reimbursements by Goldman Sachs for the year ended November 30, 1995 was to
reduce the expenses of the Government, Government Select and Tax-Exempt
Portfolios by approximately $370,000, $347,000 and $390,000, respectively.
24
<PAGE>
- --------------------------------------------------------------------------------
5. BANK LOANS
The Trust maintains a $5,000,000 revolving bank credit line and a $15,000,000
conditional revolving credit line for liquidity and other purposes. Borrowings
under this arrangement bear interest at 1% above the Fed Funds rate and are
secured by pledged securities equal to or exceeding 120% of the outstanding
balance.
There were no borrowings under this arrangement during the year ended November
30, 1995.
25
<PAGE>
The Benchmark Funds
Money Market Portfolios
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Unitholders and Trustees of
The Benchmark Funds
Money Market Portfolios
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of the Diversified Assets, Government,
Government Select and Tax-Exempt Portfolios, comprising the Money Market
Portfolios of The Benchmark Funds, as of November 30, 1995, and the related
statements of operations for the year then ended and changes in net assets and
financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the investments owned at
November 30, 1995 by physical examination of the securities held by the
custodian and by correspondence with outside depositories and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Diversified Assets, Government, Government Select and Tax-Exempt Portfolios,
comprising the Money Market Portfolios of The Benchmark Funds, at November 30,
1995, the results of their operations and the changes in their net assets and
financial highlights for the periods indicated therein, in conformity with
generally accepted accounting principles.
[SIGNATURE LOGO ERNST & YOUNG LLP]
Chicago, Illinois
January 16, 1996
26
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
Trustees
William H. Springer, Chairman
Edward J. Condon, Jr.
John W. English
James J. Gavin, Jr.
William B. Jordan
Frederick T. Kelsey
Richard P. Strubel
Officers
Marcia L. Beck, President
Paul W. Klug, Jr., Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Pauline Taylor, Vice President
Scott M. Gilman, Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary
Independent Auditors
Ernst & Young LLP
233 S. Wacker Dr.
Chicago, IL 60606
Legal Counsel
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
This Annual Report is
authorized for distribution to
prospective investors only
when preceded or accompanied
by a Prospectus which contains
facts concerning the
objectives and policies,
management expenses and other
information.
The
Benchmark
Funds
Money
Market
Portfolios
Annual Report
November 30, 1995
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK BALANCED PORTFOLIO
The portfolio invested nearly all of its cash assets, and was able to post an
attractive 20.22% return, during fiscal year 1995. Although the portfolio
underperformed its composite index, its annual return is well above the
historical average return for a conservative balanced fund.
We attribute the portfolio's underperformance to its lack of technology
securities, relative to other balanced portfolios, and to our less-than-
aggressive stance on interest-rate-sensitive stocks--the top performers for
1995. But, by keeping cash reserves low, we were able to invest more assets in
stocks and bonds, keeping the portfolio's overall return healthy.
We manage the portfolio conservatively, and it is designed to provide a
reasonably stable return over the long term. Because of our conservative
stance, it is difficult for the portfolio to keep pace with the market during
very robust periods of stock and bond performance, as was the case in 1995. On
the other hand, during stock market downturns, the portfolio's structure should
give the portfolio a competitive advantage relative to many other balanced
funds.
During the next 12 months, we do not anticipate making any dramatic changes
to the portfolio's asset allocation. Within the equity portion of the
portfolio, we will continue to emphasize holdings with better-than-average
growth characteristics. Within the bond portion, we will continue to emphasize
very high-quality investments.
John Zielinski, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK
BALANCED PORTFOLIO VS. S&P 500
COMPOSITE STOCK PRICE INDEX, THE
LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX AND THE
COMPOSITE INDEX
[GRAPH APPEARS HERE]
CLASS A UNITS Balanced Portfolio S&P 500 Lehman Brothers Composite Index
-------------------------------------------------------------
7/1/93 $10,000 $10,000 $10,000 $10,000
11/30/93 10,312 10,372 10,195 10,290
11/30/94 9,821 10,485 10,009 10,299
11/30/95 11,807 14,365 11,462 12,974
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A S&P Lehman Composite
November 30, 1995: Units 500 Brothers Index*
- -------------------------------------------------------------------------
One Year: 20.22% 37.00% 14.51% 25.97%
- -------------------------------------------------------------------------
Since Commencement on 7/1/93: 7.11% 16.15& 5.81% 11.40%
- -------------------------------------------------------------------------
*The Composite Index consists of 55%, 40% and 5% of the S&P 500, The Lehman
Brothers Intermediate Government/Corporate Index and 91-Day Treasury Bills,
respectively.
Units of The Benchmark Funds are not bank deposits or obligations of, or
guaranteed, endorsed or otherwise supported by The Northern Trust Company, its
parent company or its affiliates, and are not federally insured or guaranteed
by the U.S. Government, Federal Deposit Insurance Corporation, Federal Reserve
Board, or any other governmental agency. Investment in the portfolios involves
investment risks, including possible loss of principal amount invested.
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK DIVERSIFIED GROWTH PORTFOLIO
While the portfolio's Class A units fiscal-year return of 24.55% is very
attractive on a historical basis, it nevertheless lagged behind the return on
the S&P 500 Index. This was due to a combination of factors, including the
portfolio's focus on quality growth stocks and the capitalization difference
between the portfolio and the Index.
During the period, quality growth stocks continued to lag behind those with
rapidly accelerating earnings. When earnings grow rapidly, the premium
investors are willing to pay for consistent quality growth is lessened, causing
these stocks to underperform. In addition, the S&P 500 Index consists mainly of
large-capitalization stocks, while the portfolio has a mid-capitalization bias
relative to the Index. Stocks of larger companies performed much better than
their smaller counterparts, particularly during the first half of the fiscal
year.
While the portfolio experienced significant stock turnover during the year,
its sector composition did not change much. The portfolio is designed to
closely align its sector weightings to the market's. We maintained a slight
underweighting in capital goods, and we reduced our slight overweighting in
technology to a market weight. This move contributed to the portfolio's
underperformance, as technology stocks soared during the period. However, we
suspect that this level of performance among technology stocks will not
continue into 1996, and we plan to maintain a market weighting in this sector.
Going forward, we will continue to search for stocks that exhibit the quality
growth characteristics that should make them good performers over time.
Bill Proskow, Portfolio Manager
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT IN BENCHMARK
DIVERSIFIED GROWTH PORTFOLIO VS. THE
S&P 500 COMPOSITE STOCK PRICE INDEX
[GRAPHS APPEAR HERE]
CLASS A UNITS Diversified Growth S&P 500
-------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 10,739 11,042
11/30/94 9,989 11,162
11/30/95 12,442 15,292
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------------
One Year: 24.55% 37.00%
- ----------------------------------------------------------------------
Since Commencement on 1/11/93: 7.86% 15.84%
- ----------------------------------------------------------------------
CLASS D UNITS Diversified Growth S&P 500
-------------------------------------------
9/14/94 $10,000 $10,000
11/30/94 9,482 9,738
11/30/95 11,776 13,341
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class D S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------------
One Year: 24.19% 37.00%
- ----------------------------------------------------------------------
Since Commencement on 9/14/94: 14.42% 26.80%
- ----------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
THE BENCHMARK EQUITY INDEX PORTFOLIO
The strength of the stock market itself was the overwhelming factor influencing
the portfolio's impressive return. The slight underperformance relative to the
S&P 500 Index mainly was due to expenses charged to the portfolio.
Additionally, a drag was created because we were not able to immediately invest
accruals, and we could not invest each day's net admissions until the following
morning.
Using a passive investment approach, we place substantially all of the
portfolio's assets into the securities that comprise the S&P 500 Index.
Portfolio sector weightings mimic those of the Index. When changes occur in the
Index, we alter the portfolio composition accordingly. Corporate mergers and
acquisitions accounted for 18 changes in the Index and, subsequently, our
portfolio during fiscal year 1995. Also, spinoffs resulted in three changes,
and decisions by the S&P to restructure certain industry sectors resulted in
another four. All of these changes, as well as major alterations in
capitalization among individual stocks, were reflected in the portfolio when
they occurred in the Index.
The portfolio is designed to provide returns that approximate those of the
large capitalization sectors of the equity market, as defined by the S&P 500.
It provides a cost-efficient, well-diversified way to gain exposure to that
market.
During the next 12 months, we will continue to follow a passive index
strategy designed to provide market returns.
Judy Bednar, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK EQUITY
INDEX PORTFOLIO VS. THE S&P 500
COMPOSITE STOCK PRICE INDEX
[GRAPHS APPEAR HERE]
CLASS A UNITS Short-Intermediate Merrill Lynch
-------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 11,009 11,042
11/30/94 11,105 11,162
11/30/95 15,169 15,292
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------------
One Year: 36.60% 37.00%
- ----------------------------------------------------------------------
Since Commencement on 1/11/93: 15.52% 15.84%
- ----------------------------------------------------------------------
CLASS C UNITS Equity Index S&P 500
-------------------------------------------
9/29/95 $10,000 $10,000
11/30/95 10,373 10,402
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class C S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------------
Since Commencement on 9/29/95: 3.73% 4.02%
- ----------------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
CLASS D UNITS Equity Index S&P 500
-------------------------------------------
9/14/94 $10,000 $10,000
11/30/94 9,735 9,738
11/30/95 13,259 13,341
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class D S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------------
One Year: 36.20% 37.00%
- ----------------------------------------------------------------------
Since Commencement on 9/29/95: 26.17% 26.80%
- ----------------------------------------------------------------------
3
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK FOCUSED GROWTH PORTFOLIO
While the Class A units of the portfolio posted a strong 28.38% return for the
fiscal year, it nevertheless underperformed the S&P 500 Index. This was due to
limited exposure to financial services companies early in the year, when we
felt that inflation and interest rates would move higher. When it became clear
that rates would continue declining, we increased the number of financial
companies in the portfolio.
In addition, while the portfolio owned a number of technology companies, we
misjudged the longevity of the upward move that these stocks enjoyed. We also
failed to participate fully in the semiconductor area, the sector that
experienced the greatest appreciation.
We currently are emphasizing the capital goods, services and healthcare
segments of the market. While we often attempt to attribute our results to
sector exposure, we ultimately try to select individual companies that will
prosper in the future due to what we believe are financial and operational
strengths. Consequently, when certain market sectors perform very well--as the
technology and financial areas did in fiscal 1995--companies producing just
average business results may nevertheless benefit from the "rising tide." As a
result, the portfolio's return may differ significantly from the market
averages for a limited period of time.
The growth stocks that pass our selection criteria tend to do best when
economic growth and interest rates are stable, which we feel will be the case
in 1996. We are therefore optimistic about our ability to produce good results
next year.
Tom Kirkenmeier, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK
FOCUSED GROWTH
PORTFOLIO VS. THE S&P 500
COMPOSITE STOCK PRICE INDEX
[GRAPHS APPEAR HERE]
Focused
Class A Units Growth Portfolio S&P 500
- ----------------------------------------------------------------------
7/1/93 $10,000 $10,000
11/30/93 10,433 10,372
11/30/94 9,791 10,485
11/30/95 12,570 14,365
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A S&P 500
November 30, 1995: Units Index
- -------------------------------------------------------------------
One Year: 28.38% 37.00%
- -------------------------------------------------------------------
Since Commencement on 7/1/93: 9.92% 16.15%
- -------------------------------------------------------------------
Focused
Class D Units Growth Portfolio S&P 500
- ----------------------------------------------------------------------
12/8/94 $10,000 $10,000
11/30/95 13,100 13,767
Past performance is not predictive of future performance
Average Annual Total Returns
For Period Ended Class D S&P 500
November 30, 1995: Units Index
- ----------------------------------------------------------------
Since Commencement on 12/8/94: 31.00% 37.67%
- ----------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
4
<PAGE>
- --------------------------------------------------------------------------------
THE BENCHMARK INTERNATIONAL GROWTH PORTFOLIO
The portfolio's heavy weighting in Japan and emerging global markets during the
fiscal year were key factors in its underperformance relative to its benchmark
index. Both areas experienced market declines, which hurt the portfolio's
performance. Furthermore, the portfolio was underweighted in investments in
Europe, where we saw a currency rally.
Despite the declining markets in Japan and the emerging countries during
1995, we feel the landscape should change positively in 1996. The Japanese
economy should start to turn around, since the government is making great
strides to resolve its financial crisis. As a result, the country's equity
market should be affected positively.
Investors lost confidence in emerging markets because of the Mexican crisis
in late 1994 and early 1995. The result was wholesale dumping of these stocks,
which led to portfolio underperformance. Going forward, we believe that
investors will return to these markets because they are now at low valuation
levels. In addition, they typically outperform in a low-interest-rate
environment.
Portfolio investors should keep in mind that there always will be volatility
in the stock markets of emerging countries. And, because of international
currency exposure, the portfolio will encounter currency volatility, which was
the case in 1995. Looking ahead, we will continue to emphasize countries rather
than economic sectors. Focal areas for the next 12 months include Japan, Europe
and the emerging markets.
Bob LaFleur, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK
INTERNATIONAL GROWTH PORTFOLIO VS.
THE MORGAN STANLEY EUROPE, AUSTRALIA
AND FAR EAST INDEX
-----------------------------------------------------------------------------
[GRAPHS APPEAR HERE]
International
Class A Units Growth Portfolio EAFE Index
- -------------------------------------------------------------------------
3/28/94 $10,000 $10,000
11/30/94 10,211 10,204
11/30/95 9,974 10,976
- -------------------------------------------------------------------------
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A EAFE
November 30, 1995: Units Index
- -----------------------------------------------------------
One Year: -2.32% 7.57%
- -----------------------------------------------------------
Since Commencement on 3/28/94: -0.15% 5.70%
- -------------------------------------------------------------------------
International
Class D Units Growth Portfolio EAFE Index
- -------------------------------------------------------------------------
11/16/94 $10,000 $10,000
11/30/94 9,749 9,823
11/30/95 9,478 10,567
- -------------------------------------------------------------------------
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class D EAFE
November 30, 1995: Units Index
- -------------------------------------------------------------
One Year: -2.78% 7.57%
- -------------------------------------------------------------
Since Commencement on 11/16/94: -5.02% 5.44%
- -------------------------------------------------------------------------
5
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK SMALL COMPANY INDEX PORTFOLIO
Small capitalization stocks, as measured by the Russell 2000 Index,
underperformed larger capitalization stocks, represented by the S&P 500 Index,
by 8.7% during the fiscal year. During the period December 1, 1994 through
November 30, 1995, the Russell 2000 was up 28.28%, while the S&P 500 increased
37.00%.
The portfolio's performance for the fiscal year was slightly less than that
of the Russell 2000 Index, due primarily to expenses charged to the portfolio.
In addition, certain securities were weighted slightly differently in the
portfolio than they were in the Index.
The major changes to the portfolio occurred in June, with the Russell 2000
Index reconstitution. Once a year, all eligible securities in the Index are re-
ranked according to market capitalization. This activity resulted in the
addition and deletion of about 400 stocks in the Index, which resulted in a
market capitalization turnover of 35%. These changes were incorporated into the
portfolio at the end of June, 1995.
At the end of fiscal year 1995, the Index included 1,950 companies. The
market capitalizations of these companies, adjusted for cross holdings, ranged
from $7.9 million to $1.6 billion. The average market capitalization of the
Index's companies was $275 million.
Going forward, we will continue to keep the portfolio aligned with the
Russell 2000 Index. Our ongoing objective is to closely approximate the Index's
return.
Susan French, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK
SMALL COMPANY PORTFOLIO VS.
THE RUSSELL 2000 SMALL STOCK INDEX
-----------------------------------------------------------------------------
[GRAPHS APPEAR HERE]
Small Company
Class A Units Portfolio Russell 2000
- ---------------------------------------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 11,409 11,515
11/30/94 11,233 11,363
11/30/95 14,352 14,576
- ---------------------------------------------------------------------------
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A Russell 2000
November 30, 1995: Units Index
- ---------------------------------------------------------------
One Year: 27.76% 28.28%
- ---------------------------------------------------------------
Since Commencement on 1/11/93: 13.33% 13.94%
- ---------------------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
Small Company
Class D Units Portfolio Russell 2000
- -----------------------------------------------------------------------------
12/11/94 $10,000 $10,000
11/30/95 13,050 13,263
- -----------------------------------------------------------------------------
Past performance is not predictive of future performance.
Average Annual Total Returns
For Period Ended Class D Russell 2000
November 30, 1995: Units Index
- ------------------------------------------------------------------
Since Commencement on 12/11/94: 30.50% 32.63%
- ------------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
6
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
7
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------
BALANCED PORTFOLIO
<C> <S> <C>
COMMON STOCKS--55.4%
BANKING--1.7%
8,200 Banc One Corp. $ 313
7,700 First USA, Inc. 353
-------
666
BROKERAGE SERVICES--0.5%
8,200 Schwab (Charles) Corp. 199
CHEMICALS AND ALLIED PRODUCTS--4.0%
4,500 Air Products and Chemicals, Inc. 250
5,400 IDEXX Laboratories, Inc.* 240
4,900 Merck & Co., Inc. 303
9,111 Morton International, Inc. 315
6,900 Praxair, Inc. 201
2,900 Procter & Gamble Co. 250
-------
1,559
COMMUNICATIONS--4.7%
7,200 AT&T Corp. 475
10,700 Ameritech Corp. 588
4,400 Reuters Holdings PLC ADR 248
9,600 SBC Communications, Inc. 518
-------
1,829
COMPUTERS AND OFFICE MACHINES--1.6%
4,100 Cisco Systems, Inc.* 345
3,000 Microsoft Corp.* 261
-------
606
COSMETICS AND PERSONAL CARE--1.2%
8,800 Gillette Co. 456
CREDIT INSTITUTIONS--1.0%
7,000 Green Tree Financial Corp. 198
12,150 Mercury Finance Co. 173
-------
371
ELECTRICAL SERVICES--1.9%
5,500 PowerGen PLC ADR 187
18,800 Wisconsin Energy 555
-------
742
ELECTRONICS AND OTHER ELECTRICAL EQUIPMENT--5.8%
5,600 ADC Telecommunications, Inc.* 255
5,000 Duracell International, Inc. 265
7,000 General Electric Co. 471
3,800 Intel Corp. 231
8,900 Linear Technology Corp. 403
6,750 Molex, Inc., Class A 211
9,800 Solectron Corp.* 416
-------
2,252
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------
<C> <S> <C>
FOOD AND BEVERAGES--2.0%
5,300 Philip Morris Cos., Inc. $ 465
7,800 Starbucks Corp.* 330
-------
795
GLASS, CLAY & STONE PRODUCTS--0.5%
7,800 Newell Co. 206
HEALTH SERVICES--2.3%
19,200 Health Management Associates, Inc.* 509
4,600 Johnson & Johnson Co. 398
-------
907
HEAVY CONSTRUCTION--1.0%
6,000 Fluor Corp. 390
INDUSTRIAL INSTRUMENTS--3.3%
2,900 Cordis Corp.* 307
3,700 Hewlett-Packard Co. 307
4,400 Medtronic, Inc. 241
3,700 Nellcor Puritan Bennett, Inc.* 213
3,400 Sundstrand Corp. 220
-------
1,288
INSURANCE SERVICES--3.3%
5,850 American International Group, Inc. 525
2,600 General Re Corp. 389
3,400 MBIA, Inc. 262
2,400 Mutual Risk Management, Ltd. 96
-------
1,272
METAL PRODUCTS--1.0%
8,900 Crown Cork & Seal Co., Inc.* 373
MORTGAGE AGENCIES--1.5%
5,200 Federal National Mortgage Association 569
PAPER PRODUCTS--1.4%
9,900 Bemis Co., Inc. 259
3,900 Kimberly-Clark Corp. 300
-------
559
PETROLEUM PRODUCTS--4.9%
5,900 Amoco Corp. 400
6,300 Exxon Corp. 487
5,200 Mobil Corp. 543
3,850 Royal Dutch Petroleum Co. ADR 494
-------
1,924
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/
Principal
Amount Description Value
- -----------------------------------------------------
<C> <S> <C>
PROFESSIONAL SERVICES--3.0%
3,100 Automatic Data Processing, Inc. $ 247
6,200 CUC International, Inc.* 236
6,400 Computer Sciences Corp.* 466
3,200 First Data Corp. 227
--------
1,176
RECREATION AND LEISURE SERVICES--1.9%
7,200 Carnival Corp., Class A 187
10,200 Harley-Davidson, Inc. 283
10,200 Mattel, Inc. 286
--------
756
RETAIL--5.1%
14,800 Albertson's, Inc. 455
12,500 Circuit City Stores, Inc. 363
5,400 Fastenal Co. 224
16,000 Staples, Inc.* 408
18,600 Walgreen Co. 542
--------
1,992
TEXTILES--0.6%
5,000 Cintas Corp. 230
TRANSPORTATION PARTS AND EQUIPMENT--0.5%
6,200 Danaher Corp. 191
TRANSPORTATION SERVICES--0.7%
11,000 Southwest Airlines Co. 275
- -----------------------------------------------------
TOTAL COMMON STOCKS
(Cost $17,675) $ 21,583
- -----------------------------------------------------
U.S. GOVERNMENT AGENCIES--2.9%
FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC TRUST
Class G, Series: 1991-37
$ 250 8.150%Due 08/25/05 $ 260
Class E, Series: 1992-200
500 6.250%Due 06/25/17 499
Class B, Series: 1993-253#
400 Principal OnlyDue 02/25/23 351
- -----------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $1,033) $ 1,110
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
- ---------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS--20.2%
U.S. TREASURY NOTES--18.2%
$ 1,095 6.750%Due 02/28/97 $ 1,113
1,100 5.375%Due 05/31/98 1,099
2,585 6.750%Due 05/31/99 2,686
1,300 6.875%Due 08/31/99 1,359
750 7.250%Due 05/15/04 823
-------
7,080
U.S. TREASURY BONDS--2.0%
185 9.375%Due 02/15/06 235
465 7.625%Due 02/15/25 553
-------
$ 788
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $7,722) $ 7,868
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--1.1%
DLJ Mortgage Acceptance Corp.
Class 2A1, Series: 1994-Q8
$ 441 7.250%Due 05/25/24 $ 443
- ---------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $429) $ 443
- ---------------------------------------------------------
ASSET-BACKED SECURITIES--4.7%
FINANCIAL--4.7%
Banc One Auto Trust
Class A2, Series: 1995-A
$ 500 6.650%Due 05/15/97 $ 502
Olympic Automobile Receivables Trust
700 5.950%Due 11/15/99 702
Premier Auto Trust
348 4.750%Due 02/02/00 345
Western Financial Grantor Trust
265 7.100%Due 01/01/00 268
- ---------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,811) $ 1,817
- ---------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Principal
Amount Description Value
- ------------------------------------------------------
<C> <S> <C>
BALANCED PORTFOLIO--CONTINUED
CORPORATE BONDS--5.7%
FINANCIAL--3.3%
Associates Corp. of North America
$ 600 7.950%Due 02/15/10 $ 670
Pitney Bowes Credit Corp.
500 8.550%Due 09/15/09 595
-------
1,265
FOREIGN--0.5%
Ferrovie Dello State (Italy)
165 9.125%Due 07/06/09 197
SUPRANATIONAL--1.9%
InterAmerican Development Bank
350 8.875%Due 06/01/09 440
250 8.400%Due 09/01/09 303
-------
743
- ------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $2,014) $ 2,205
- ------------------------------------------------------
FLOATING RATE BANK NOTES--2.6%
Bergen Bank
$ 180 6.000%Due 02/29/96 $ 140
Hong Kong & Shanghai Bank
140 6.250%Due 02/23/96 111
National Australia Bank
500 6.150%Due 04/15/96 425
National Westminster Bank
400 6.000%Due 02/29/96 335
- ------------------------------------------------------
TOTAL FLOATING RATE BANK NOTES
(Cost $999) $ 1,011
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Description Value
- -----------------------------------------------------------
<S> <C> <C>
EURODOLLAR TIME DEPOSIT--4.9%
Landesbank, Hessenthuringen Girozentrale
$ 1,887 5.938%Due 12/01/95 $ 1,887
- -----------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $1,887) $ 1,887
- -----------------------------------------------------------
TOTAL INVESTMENTS--97.5%
(Cost $33,570) $37,924
- -----------------------------------------------------------
Other assets, less liabilities--2.5% 973
- -----------------------------------------------------------
NET ASSETS--100.0% $38,897
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
#Principal only stripped securities represent the right to receive future
principal payments. The value of principal only stripped securities varies
inversely with changes in interest rates. At November 30, 1995, yield on this
security was approximately 6.00%.
*Non-income producing security.
The due date shown for Floating Rate Bank Notes represents the next interest
reset date.
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
DIVERSIFIED GROWTH PORTFOLIO
<C> <S> <C>
COMMON STOCKS--99.6%
BANKING--2.9%
64,400 Banc One Corp. $ 2,455
40,100 First USA, Inc. 1,839
--------
4,294
BROKERAGE SERVICES--0.8%
50,000 Schwab (Charles) Corp. 1,212
CHEMICALS AND ALLIED PRODUCTS--7.9%
53,800 Air Products and Chemicals, Inc. 2,986
43,300 IDEXX Laboratories, Inc.* 1,927
37,300 Merck & Co., Inc. 2,308
44,937 Morton International, Inc. 1,556
50,000 Praxair, Inc. 1,456
15,500 Procter & Gamble Co. 1,339
--------
11,572
COMMUNICATIONS--8.6%
63,400 AT&T Corp. 4,184
62,300 Ameritech Corp. 3,427
23,500 Reuters Holdings PLC ADR 1,325
67,000 SBC Communications, Inc. 3,618
--------
12,554
COMPUTERS AND OFFICE MACHINES--2.7%
29,500 Cisco Systems, Inc.* 2,482
17,500 Microsoft Corp.* 1,525
--------
4,007
COSMETICS AND PERSONAL CARE--1.6%
43,800 Gillette Co. 2,272
CREDIT INSTITUTIONS--1.6%
56,500 Green Tree Financial Corp. 1,596
48,000 Mercury Finance Co. 684
--------
2,280
ELECTRICAL SERVICES--3.3%
36,800 PowerGen PLC ADR 1,251
119,700 Wisconsin Energy 3,531
--------
4,782
ELECTRONICS AND OTHER ELECTRICAL EQUIP-
MENT--10.5%
44,700 ADC Telecommunications, Inc.* 2,034
46,900 Duracell International, Inc. 2,486
40,100 General Electric Co. 2,697
24,900 Intel Corp. 1,516
46,000 Linear Technology Corp. 2,081
48,500 Molex, Inc., Class A 1,516
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
<C> <S> <C>
75,800 Solectron Corp.* $ 3,222
--------
15,552
FOOD AND BEVERAGES--3.1%
23,000 Philip Morris Cos., Inc. 2,018
58,700 Starbucks Corp.* 2,480
--------
4,498
GLASS, CLAY AND STONE PRODUCTS--1.1%
59,700 Newell Co. 1,575
HEALTH SERVICES--3.9%
99,750 Health Management Associates, Inc.* 2,643
35,600 Johnson & Johnson Co. 3,084
--------
5,727
HEAVY CONSTRUCTION--2.9%
66,500 Fluor Corp. 4,322
INDUSTRIAL INSTRUMENTS--5.9%
22,800 Cordis Corp.* 2,417
18,800 Hewlett-Packard Co. 1,558
23,500 Medtronic, Inc. 1,289
29,700 Nellcor Puritan Bennett, Inc.* 1,708
26,500 Sundstrand Corp. 1,716
--------
8,688
INSURANCE SERVICES--4.9%
39,525 American International Group, Inc. 3,547
9,800 General Re Corp. 1,466
18,400 MBIA, Inc. 1,417
19,000 Mutual Risk Management, Ltd. 762
--------
7,192
METAL PRODUCTS--1.8%
64,600 Crown Cork & Seal Co., Inc.* 2,705
MORTGAGE AGENCIES--2.5%
33,500 Federal National Mortgage Association 3,668
PAPER PRODUCTS--2.5%
55,800 Bemis Co., Inc. 1,458
29,600 Kimberly-Clark Corp. 2,276
--------
3,734
PETROLEUM PRODUCTS--9.0%
30,200 Amoco Corp. 2,046
48,300 Exxon Corp. 3,737
35,150 Mobil Corp. 3,669
29,500 Royal Dutch Petroleum Co. ADR 3,787
--------
13,239
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
DIVERSIFIED GROWTH PORTFOLIO--CONTINUED
PROFESSIONAL SERVICES--6.7%
22,500 Automatic Data Processing, Inc. $ 1,792
48,800 CUC International, Inc.* 1,854
49,400 Computer Sciences Corp.* 3,594
36,100 First Data Corp. 2,563
--------
9,803
RECREATION AND LEISURE SERVICES--4.1%
44,100 Carnival Corp., Class A 1,147
80,000 Harley-Davidson, Inc. 2,220
93,700 Mattel, Inc. 2,624
--------
5,991
RETAIL--8.3%
30,500 Albertson's, Inc. 938
97,200 Circuit City Stores, Inc. 2,819
43,600 Fastenal Co. 1,809
132,700 Staples, Inc.* 3,384
110,800 Walgreen Co. 3,227
--------
12,177
</TABLE>
<TABLE>
<CAPTION>
Shares/
Principal
Amount Description Value
- ---------------------------------------------------------------
<C> <S> <C>
TEXTILES--0.9%
30,000 Cintas Corp. $ 1,380
TRANSPORTATION PARTS AND EQUIPMENT--1.0%
48,500 Danaher Corp. 1,491
TRANSPORTATION SERVICES--1.1%
66,500 Southwest Airlines Co. 1,663
- ---------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $120,742) $146,378
- ---------------------------------------------------------------
EURODOLLAR TIME DEPOSIT--0.3%
Landesbank,Hessenthuringen Girozentrale
$ 495 5.938%Due 12/01/95 $ 495
- ---------------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $495) $ 495
- ---------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(Cost $121,237) $146,873
- ---------------------------------------------------------------
Other assets, less liabilities--0.1% 79
- ---------------------------------------------------------------
NET ASSETS--100.0% $146,952
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------
<C> <S> <C>
EQUITY INDEX PORTFOLIO
COMMON STOCKS--97.6%
AGRICULTURE--0.1%
9,100 Pioneer Hi-Bred International, Inc. $ 521
APPAREL--0.1%
8,100 Liz Claiborne, Inc. 238
6,900 V. F. Corp. 359
--------
597
BANKING--6.4%
12,700 Ahmanson (H.F.) & Co. 340
42,663 Banc One Corp. 1,627
12,100 Bank of Boston Corp. 561
20,800 Bank of New York Co., Inc. 980
40,476 BankAmerica Corp. 2,575
8,500 Bankers Trust New York Corp. 551
10,500 Barnett Banks, Inc. 631
13,600 Boatmen's Bancshares, Inc. 527
18,900 Chase Manhattan Corp. 1,151
27,314 Chemical Banking Corp. 1,639
43,000 Citicorp 3,042
12,500 Comerica, Inc. 467
15,100 Corestates Financial Corp. 585
14,700 First Bank System, Inc. 759
9,700 First Chicago Corp. 674
8,700 First Fidelity Bancorp 638
8,200 First Interstate Bancorp 1,099
18,600 First Union Corp. 1,016
6,400 Golden West Financial Corp. 327
14,700 Great Western Financial Corp. 375
24,600 Keycorp 907
15,850 Mellon Bank Corp. 848
20,300 Morgan (J.P.) & Co., Inc. 1,594
16,750 NBD Bancorp, Inc. 643
15,900 National City Corp. 515
29,368 NationsBank Corp. 2,096
35,200 Norwest Corp. 1,162
24,900 PNC Bank Corp. 728
6,100 Republic New York Corp. 384
13,900 Shawmut National Corp. 521
12,400 Sun Trust Banks, Inc. 846
10,600 U.S. Bancorp 359
18,500 Wachovia Corp. 832
5,200 Wells Fargo & Co. 1,093
--------
32,092
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------------
<C> <S> <C>
BITUMINOUS COAL AND LIGNITE SURFACE MINING--0.1%
14,200 Houston Industries, Inc. $ 650
1,000 Nacco Industries, Inc. 57
--------
707
BROKERAGE AND FINANCIAL SERVICES--1.0%
52,800 American Express Co. 2,244
15,300 Fleet Financial Group, Inc. 639
19,000 Merrill Lynch & Co., Inc. 1,057
8,300 Morgan Stanley Group, Inc. 716
11,500 Salomon, Inc. 418
--------
5,074
CHEMICALS AND ALLIED PRODUCTS--11.5%
85,900 Abbott Laboratories 3,490
12,100 Air Products and Chemicals, Inc. 672
6,900 Allergan, Inc. 214
8,900 Alza Corp.* 205
33,500 American Home Products Corp. 3,057
28,600 Amgen, Inc.* 1,419
7,400 Avon Products, Inc. 537
30,000 Baxter International, Inc. 1,260
54,900 Bristol-Myers Squibb Co. 4,406
5,700 Clorox Co. 432
15,700 Colgate-Palmolive Co. 1,150
29,100 Dow Chemical Co. 2,062
60,100 Du Pont (E.I.) de Nemours & Co., Inc. 3,997
8,775 Eastman Chemical Co. 576
7,000 Ecolab, Inc. 201
4,000 FMC Corp. 296
2,800 Goodrich (B.F.) Co. 196
10,200 Grace (W.R.) & Co. 620
7,000 Great Lakes Chemical Corp. 498
12,100 Hercules, Inc. 664
12,000 International Flavors & Fragrances, Inc. 614
29,799 Lilly (Eli) & Co. 2,965
133,800 Merck & Co., Inc. 8,279
16,000 Morton International, Inc. 554
7,300 Nalco Chemical Co. 224
22,000 PPG Industries, Inc. 998
68,400 Pfizer, Inc. 3,967
54,520 Pharmacia & Upjohn, Inc. 1,956
15,000 Praxair, Inc. 437
74,400 Procter & Gamble Co. 6,426
7,300 Rohm & Haas Co. 440
40,300 Schering-Plough Corp. 2,312
9,200 Sherwin-Williams Co. 364
14,900 Union Carbide Corp. 590
14,600 Warner-Lambert Co. 1,303
--------
57,381
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------------
<C> <S> <C>
EQUITY INDEX PORTFOLIO--CONTINUED
COMMUNICATIONS--9.5%
171,700 AT&T Corp. $ 11,332
53,500 AirTouch Communications, Inc.* 1,558
20,400 Alltel Corp. 602
60,000 Ameritech Corp. 3,300
47,300 Bell Atlantic Corp. 2,980
107,500 Bellsouth Corp. 4,179
16,700 Capital Cities/ABC, Inc. 2,065
26,000 Comcast Corp. 513
105,000 GTE Corp. 4,476
73,400 MCI Communications Corp. 1,963
8,300 Mallinckrodt, Inc. 283
46,200 Nynex Corp. 2,293
46,400 Pacific Telesis Group 1,392
10,300 Providian Corp. 413
66,000 SBC Communications, Inc. 3,564
37,700 Sprint Corp. 1,508
9,600 Tellabs, Inc. 377
51,000 U.S. West, Inc. 1,594
51,000 U.S. West Media Group* 918
39,100 Viacom, Inc., Class B* 1,886
--------
47,196
COMPUTERS AND OFFICE MACHINES--4.0%
12,900 Amdahl Corp.* 123
13,100 Apple Computer, Inc. 499
7,800 Cabletron Systems, Inc.* 647
4,900 Ceridian Corp.* 206
29,400 Cisco Systems, Inc.* 2,473
28,600 Compaq Computer Corp.* 1,416
2,800 Cray Research, Inc.* 67
3,900 Data General Corp.* 47
15,900 Digital Equipment Corp.* 936
5,000 Intergraph Corp.* 86
61,600 International Business Machines Corp. 5,952
63,400 Microsoft Corp.* 5,524
16,400 Pitney Bowes, Inc. 734
17,200 Silicon Graphics, Inc.* 628
12,600 Tandem Computers, Inc.* 157
7,100 Tandy Corp. 338
18,500 Unisys Corp.* 120
--------
19,953
CONSTRUCTION--0.2%
12,300 Dover Corp. 478
19,700 Dresser Industries, Inc. 465
--------
943
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------------
<C> <S> <C>
COSMETICS AND PERSONAL CARE--0.5%
48,000 Gillette Co. $ 2,490
CREDIT INSTITUTIONS--0.5%
5,700 Beneficial Corp. 289
18,272 Dean Witter Discover & Co. 932
10,600 Household International, Inc. 663
16,100 MBNA Corp. 650
--------
2,534
ELECTRICAL SERVICES--3.4%
20,100 American Electric Power Co. 756
16,000 Baltimore Gas and Electric Co. 426
16,800 Carolina Power & Light Co. 552
20,700 Central and South West Corp. 556
16,910 Cinergy Corp. 499
25,400 Consolidated Edison Co. of New York, Inc. 733
15,900 Detroit Edison Co. 519
18,800 Dominion Resources, Inc. 745
22,200 Duke Power Co. 996
24,600 Entergy Corp. 686
20,000 FPL Group, Inc. 868
12,600 General Public Utilities Corp. 398
15,600 Niagara Mohawk Power Corp. 154
7,300 Northern States Power Co. 343
16,500 Ohio Edison Co. 375
17,100 PP&L Resources, Inc. 425
45,900 Pacific Gas & Electric Co. 1,262
30,800 PacifiCorp 604
24,000 Peco Energy Co. 696
26,500 Public Service Enterprise Group, Inc. 785
48,300 SCE Corp. 755
72,100 Southern Co. 1,649
24,400 Texas Utilities Co. 939
23,200 Unicom Corp. 742
11,100 Union Electric Co. 445
1,300 Zurn Industries, Inc. 32
--------
16,940
ELECTRONICS AND OTHER ELECTRICAL EQUIPMENT--6.8%
23,556 AMP, Inc. 945
11,200 Advanced Micro Devices, Inc.* 230
4,225 Andrew Corp.* 183
11,600 Cooper Industries, Inc. 423
12,400 DSC Communications Corp.* 491
24,300 Emerson Electric Co. 1,895
183,300 General Electric Co. 12,327
4,200 Harris Corp. 242
12,500 ITT Corp.* 1,533
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
<C> <S> <C>
89,100 Intel Corp. $ 5,424
11,600 Maytag Corp. 236
22,300 Micron Technology, Inc. 1,221
63,800 Motorola, Inc. 3,908
13,400 National Semiconductor Corp.* 286
5,200 National Service Industries, Inc. 169
27,500 Northern Telecom Ltd. 1,110
4,800 Raychem Corp. 250
8,300 Scientific-Atlanta, Inc. 132
70,700 TeleCommunications, Inc.* 1,308
20,300 Texas Instruments, Inc. 1,175
2,100 Thomas & Betts Corp. 154
8,000 Whirlpool Corp. 444
--------
34,086
FOOD AND BEVERAGES--9.2%
27,600 Anheuser-Busch Cos., Inc. 1,829
58,685 Archer-Daniels-Midland Co. 1,012
7,500 Brown-Forman, Inc. 286
15,800 CPC International, Inc. 1,086
27,000 Campbell Soup Co. 1,509
136,500 Coca Cola Co. 10,340
26,550 ConAgra, Inc. 1,059
4,200 Coors (Adolph) Co. 85
17,200 General Mills, Inc. 948
39,500 Heinz (H.J.) Co. 1,259
8,400 Hershey Foods Corp. 519
23,700 Kellogg Co. 1,810
2,500 Luby's Cafeterias, Inc. 55
75,200 McDonalds Corp. 3,356
85,200 PepsiCo, Inc. 4,707
90,900 Philip Morris Cos., Inc. 7,976
14,500 Quaker Oats Co. 504
11,300 Ralston Purina Group 723
51,900 Sara Lee Corp. 1,674
40,300 Seagram Co. Ltd. 1,471
21,100 UST, Inc. 688
17,300 Unilever N.V. ADR 2,299
11,300 Whitman Corp. 249
12,600 Wrigley (WM) Jr. Co. 594
--------
46,038
FURNITURE AND FIXTURES--0.1%
17,200 Masco Corp. 507
GENERAL BUILDING CONTRACTORS--0.2%
3,000 Centex Corp. 99
13,800 Honeywell, Inc. 657
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------
<S> <C> <C>
3,400 Kaufman & Broad Home Corp. $ 44
3,600 Morrison-Knudsen, Inc.* 22
2,900 Pulte Corp. 89
--------
911
GLASS, CLAY AND STONE PRODUCTS--0.2%
24,900 Corning, Inc. 750
17,100 Newell Co. 451
--------
1,201
HEALTH SERVICES--2.0%
10,600 Beverly Enterprises, Inc.* 123
47,997 Columbia/HCA Healthcare Corp. 2,478
4,700 Community Psychiatric Centers* 52
17,700 Humana, Inc. 496
69,800 Johnson & Johnson Co. 6,046
6,750 Manor Care, Inc. 220
7,500 St. Jude Medical, Inc.* 296
21,600 Tenet Healthcare Corp.* 386
--------
10,097
HEAVY CONSTRUCTION--0.3%
9,000 Fluor Corp. 585
4,300 Foster Wheeler Corp. 170
12,400 Halliburton Co. 538
--------
1,293
INDUSTRIAL INSTRUMENTS--3.0%
6,000 Bard (C.R.), Inc. 173
6,200 Bausch & Lomb, Inc. 224
7,100 Becton Dickinson & Co. 495
12,500 Biomet, Inc.* 231
17,500 Boston Scientific Corp.* 709
37,000 Eastman Kodak Co. 2,516
55,400 Hewlett-Packard Co. 4,591
4,400 Johnson Controls, Inc. 305
18,500 Loral Corp. 627
25,000 Medtronic, Inc. 1,372
4,900 Millipore Corp. 183
4,500 Perkin-Elmer Co. 162
4,900 Polaroid Corp. 226
26,400 Raytheon Co. 1,175
3,600 Tektronix, Inc. 194
6,200 United States Surgical Corp. 156
11,600 Xerox Corp. 1,591
--------
14,930
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<C> <S> <C>
EQUITY INDEX PORTFOLIO--CONTINUED
INSURANCE SERVICES--4.2%
12,300 Aetna Life & Casualty Co. $ 903
4,800 Alexander & Alexander Services, Inc. 105
48,565 Allstate Corp. 1,991
22,200 American General Corp. 752
51,275 American International Group, Inc. 4,602
9,400 Chubb Corp. 914
7,900 CIGNA Corp. 869
8,900 General Re Corp. 1,332
5,150 Jefferson-Pilot Corp. 366
11,200 Lincoln National Corp. 524
6,400 Loews Corp. 983
7,900 Marsh & McLennan Cos., Inc. 685
9,100 St. Paul Companies, Inc. 509
6,800 Safeco Corp. 483
7,750 Torchmark Corp. 329
7,400 Transamerica Corp. 567
34,558 Travelers Group, Inc. 2,056
7,900 UNUM Corp. 428
12,100 USF & G Corp. 209
3,700 USLIFE Corp. 107
18,800 United Healthcare Corp. 1,182
16,700 U.S. Healthcare, Inc. 760
--------
20,656
JEWELRY AND PRECIOUS METALS--0.0%
4,200 Jostens, Inc. 104
LEATHER PRODUCTS--0.0%
1,900 Brown Group, Inc. 27
5,400 Stride Rite Corp. 47
--------
74
LUMBER AND WOOD PRODUCTS--0.1%
11,700 Louisiana-Pacific Corp. 316
MACHINERY--1.4%
19,100 Applied Materials, Inc.* 929
15,300 Baker Hughes, Inc. 312
9,300 Black & Decker Corp. 348
3,200 Briggs & Stratton Corp. 133
10,400 Brunswick Corp. 222
21,500 Caterpillar, Inc. 1,320
3,700 Cincinnati Milacron, Inc. 97
4,400 Cummins Engine Co. 173
28,200 Deere & Co. 927
5,100 General Signal Corp. 164
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
<S> <C> <C>
3,700 Giddings & Lewis, Inc. $ 58
5,200 Harnischfeger Industries, Inc. 176
11,500 Ingersoll-Rand Co. 441
2,100 Outboard Marine Corp. 43
19,600 Tenneco, Inc. 941
3,400 Timken Co. 137
16,600 Tyco Laboratories, Inc. 521
4,400 Varity Corp.* 170
--------
7,112
MANUFACTURING--0.0%
3,000 Alberto-Culver Co., Class B 97
MERCHANDISE--GENERAL--0.2%
11,800 Alco Standard Corp. 513
4,400 Snap-On, Inc. 195
4,800 Stanley Works 243
--------
951
METAL MINING--0.8%
38,200 Barrick Gold Corp. 1,008
10,050 Cyprus/Amax Minerals Co. 276
12,200 Echo Bay Mines Ltd. 127
22,000 Freeport-McMoran Copper & Gold, Inc. 597
14,900 Homestake Mining Co. 246
12,900 Inco Ltd. 460
9,339 Newmont Mining Corp. 403
25,900 Placer Dome, Inc. 641
14,180 Santa Fe Pacific Gold Corp. 170
--------
3,928
METAL PRODUCTS--0.2%
3,300 Ball Corp. 94
3,300 Crane Co. 113
9,800 Crown Cork & Seal Co., Inc.* 410
5,900 McDermott International, Inc. 107
7,950 Parker-Hannifin Co. 292
--------
1,016
MORTGAGE AGENCIES--1.0%
19,600 Federal Home Loan Mortgage Corp. 1,509
29,500 Federal National Mortgage Association 3,230
--------
4,739
NATURAL GAS TRANSMISSION-0.9%
11,300 Coastal Corp. 376
5,500 Columbia Gas System, Inc.* 238
10,100 Consolidated Natural Gas Co. 448
2,200 Eastern Enterprises 72
27,300 Enron Corp. 1,024
7,400 Enserch Corp. 115
5,500 Nicor, Inc. 140
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<C> <S> <C>
13,400 Noram Energy Corp. $ 106
2,900 Oneok, Inc. 68
9,200 Pacific Enterprises* 246
16,200 Panhandle Eastern Corp. 460
3,800 Peoples Energy Corp. 116
9,300 Sonat, Inc. 300
11,000 Williams Company, Inc. 462
--------
4,171
OIL AND GAS--0.8%
13,700 Burlington Resources, Inc. 527
2,700 Helmerich & Payne, Inc. 73
3,600 Louisiana Land & Exploration Co. 140
34,400 Occidental Petroleum Corp. 761
11,200 Oryx Energy Co.* 147
9,100 Rowan Companies, Inc.* 68
9,800 Santa Fe Energy Resources, Inc.* 91
26,200 Schlumberger Ltd. ADR 1,664
5,700 Western Atlas, Inc.* 273
--------
3,744
PAPER PRODUCTS--2.2%
5,800 Avery Dennison Corp. 276
5,600 Bemis Co., Inc. 146
5,200 Boise Cascade Co. 194
10,500 Champion International Corp. 495
5,000 Federal Paper Board Co., Inc. 260
9,800 Georgia-Pacific Corp. 762
27,600 International Paper Co. 1,052
8,900 James River Corp. 280
17,400 Kimberly-Clark Corp. 1,338
5,800 Mead Corp. 331
45,500 Minnesota Mining & Manufacturing Co. 2,980
16,400 Scott Paper Co. 937
10,404 Stone Container Corp.* 162
6,100 Temple Inland, Inc. 277
7,600 Union Camp Corp. 373
10,950 Westvaco Corp. 300
22,000 Weyerhaeuser Co. 995
--------
11,158
PERSONAL SERVICES--0.4%
11,300 Block (H.& R.), Inc. 503
5,200 Hilton Hotels Corp. 336
13,600 Marriott International Corp. 507
11,250 Service Corp. International 457
6,000 Willamette Industries, Inc. 363
--------
2,166
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<S> <C> <C>
PETROLEUM PRODUCTS--7.4%
10,100 Amerada Hess Corp. $ 480
53,700 Amoco Corp. 3,638
6,900 Ashland Oil, Inc. 241
17,400 Atlantic Richfield Co. 1,886
70,600 Chevron Corp. 3,486
134,400 Exxon Corp. 10,399
5,600 Kerr-McGee Corp. 324
42,800 Mobil Corp. 4,467
5,000 Pennzoil Co. 198
28,400 Phillips Petroleum Co. 944
58,000 Royal Dutch Petroleum Co. ADR 7,446
8,200 Sun Co., Inc. 228
28,100 Texaco, Inc. 2,079
32,200 USX-Marathon Group 592
26,700 Unocal Corp. 718
--------
37,126
PRINTING AND PUBLISHING--1.3%
8,100 American Greetings Corp. 221
8,900 Deluxe Corp. 246
16,600 Donnelley (R.R.) & Sons Co. 637
10,500 Dow Jones & Co., Inc. 403
15,200 Gannett Co., Inc. 927
3,300 Harland (John H.) Co. 68
5,300 Knight-Ridder, Inc. 342
5,400 McGraw-Hill, Inc. 452
3,000 Meredith Corp. 118
10,800 Moore Corp. Ltd. 193
10,500 New York Times Co. 310
41,800 Time Warner, Inc. 1,672
12,100 Times Mirror Co. 393
7,000 Tribune Co. 451
--------
6,433
PROFESSIONAL SERVICES--2.1%
5,100 Autodesk, Inc. 180
15,600 Automatic Data Processing, Inc. 1,242
18,850 CUC International, Inc.* 716
26,000 Computer Associates International, Inc. 1,703
6,000 Computer Sciences Corp.* 437
23,800 First Data Corp. 1,690
8,400 Interpublic Group of Cos., Inc. 322
39,900 Novell, Inc.* 673
46,900 Oracle Systems Corp.* 2,128
8,500 Ryder System, Inc. 203
6,300 Safety-Kleen Corp. 90
2,500 Shared Medical Systems Corp. 108
10,300 Sun Microsystems, Inc.* 866
--------
10,358
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
<C> <S> <C>
EQUITY INDEX PORTFOLIO--CONTINUED
RECREATION AND LEISURE SERVICES--1.0%
5,100 Bally Entertainment Corp.* $ 62
56,400 Disney (Walt) Co. 3,391
7,900 Harcourt General, Inc. 318
11,100 Harrah's Entertainment, Inc.* 276
9,550 Hasbro, Inc. 291
4,000 King World Productions, Inc.* 159
24,016 Mattel, Inc. 672
--------
5,169
RESEARCH AND CONSULTING SERVICES--0.3%
18,300 Dun & Bradstreet Corp. 1,141
5,700 EG&G, Inc. 110
5,300 Ogden Corp. 113
--------
1,364
RETAIL--4.6%
27,500 Albertson's, Inc. 846
16,100 American Stores Co. 423
11,100 Charming Shoppes, Inc.* 26
10,500 Circuit City Stores, Inc. 305
17,100 Darden Restaurants* 199
7,800 Dayton-Hudson Corp. 566
12,200 Dillard Department Stores, Inc. 352
21,900 Federated Department Stores, Inc.* 638
15,600 Gap, Inc. 706
6,400 Giant Food, Inc. 206
4,100 Great Atlantic & Pacific Tea Co., Inc. 90
51,500 Home Depot, Inc. 2,285
49,700 K-Mart Corp. 385
13,300 Kroger Co.* 446
38,700 Limited, Inc. 692
2,200 Long Drug Stores Corp. 87
17,300 Lowe's Cos., Inc. 545
26,900 May Department Stores Co. 1,174
11,400 Melville Corp. 355
4,000 Mercantile Stores Co., Inc. 186
8,900 Nordstrom, Inc. 349
24,600 Penney (J.C.) Co., Inc. 1,153
6,700 Pep Boys-Manny Moe & Jack 178
21,103 Price/Costco, Inc.* 351
9,100 Rite Aid Corp. 284
5,800 Ryan's Family Steak Houses, Inc.* 43
42,200 Sears, Roebuck & Co. 1,662
4,500 Shoney's, Inc.* 48
7,800 TJX Companies, Inc. 130
29,900 Toys "R" Us, Inc.* 695
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------
<C> <S> <C>
248,600 Wal-Mart Stores, Inc. $ 5,966
26,600 Walgreen Co. 775
11,100 Wendy's International, Inc. 229
8,200 Winn-Dixie Stores, Inc. 526
14,300 Woolworth Corp.* 215
--------
23,116
RUBBER AND PLASTICS--0.7%
4,000 Armstrong World Industries, Inc. 240
9,100 Cooper Tire & Rubber Co. 224
16,500 Goodyear Tire & Rubber Co. 699
12,500 Monsanto Co. 1,431
6,900 Premark International, Inc. 352
17,100 Rubbermaid, Inc. 470
--------
3,416
SANITARY SERVICES--0.5%
23,000 Browning-Ferris Industries, Inc. 693
31,800 Laidlaw, Inc. 294
52,500 WMX Technologies, Inc. 1,549
--------
2,536
SERVICE INDUSTRY MACHINERY--0.2%
12,366 Pall Corp. 335
3,100 Trinova Corp. 95
42,400 Westinghouse Electric Corp. 716
--------
1,146
STEEL PRODUCTS--1.0%
24,400 Alcan Aluminum Ltd. 808
19,300 Aluminum Co. of America 1,129
11,500 Armco, Inc.* 66
4,600 Asarco, Inc. 163
12,000 Bethlehem Steel Corp.* 168
15,487 Engelhard Corp. 362
5,300 Inland Steel Industries, Inc. 138
9,500 Nucor Corp. 474
5,500 Owens Corning Fiberglass Corp.* 244
7,500 Phelps Dodge Corp. 509
6,900 Reynolds Metals Co. 398
8,800 USX-U.S. Steel Group 287
9,875 Worthington Industries, Inc. 194
--------
4,940
TEXTILES--0.1%
8,200 Fruit of the Loom, Inc.* 159
4,200 Russell Corp. 112
2,200 Springs Industries, Inc. 92
--------
363
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
<C> <S> <C>
TOBACCO PRODUCTS--0.2%
20,400 American Brands, Inc. $ 852
TRANSPORTATION PARTS AND EQUIPMENT--4.6%
30,600 Allied Signal, Inc. 1,446
37,100 Boeing Co. 2,704
41,400 Chrysler Corp. 2,148
11,000 Dana Corp. 322
8,400 Eaton Corp. 458
6,400 Echlin, Inc. 234
5,000 Fleetwood Enterprises, Inc. 120
116,200 Ford Motor Co. 3,283
6,800 General Dynamics Corp. 405
80,900 General Motors Corp. 3,924
12,700 Illinois Tool Works, Inc. 805
21,654 Lockheed Martin Corp. 1,589
12,200 McDonnell Douglas Corp. 1,087
8,120 Navistar International Corp.* 88
5,300 Northrop Gruman Co. 326
4,160 PACCAR, Inc. 182
23,500 Rockwell International Corp. 1,152
7,000 TRW, Inc. 524
6,000 Teledyne, Inc. 145
9,200 Textron, Inc. 705
13,300 United Technologies Corp. 1,247
--------
22,894
TRANSPORTATION SERVICES--1.7%
8,300 AMR Corp.* 636
15,365 Burlington Northern Santa Fe Corp. 1,239
11,400 CSX Corp. 999
8,500 Conrail, Inc. 594
4,700 Consolidated Freightways, Inc. 123
5,500 Delta Air Lines, Inc. 427
10,100 Dial Corp. 273
6,100 Federal Express Corp.* 456
14,200 Norfolk Southern Corp. 1,118
4,500 Pittston Co. 137
4,200 Roadway Services, Inc. 211
15,500 Southwest Airlines Co. 387
6,700 USAir Group* 90
22,200 Union Pacific Corp. 1,504
2,900 Yellow Corp.* 35
--------
8,229
WHOLESALE--0.6%
4,100 Fleming Cos., Inc. 95
13,250 Genuine Parts Co. 535
5,500 Grainger (W.W.), Inc. 368
</TABLE>
<TABLE>
<CAPTION>
Shares/
Principal
Amount Description Value
- ----------------------------------------------------------------
<C> <S> <C>
3,500 Handleman Co. $ 22
15,500 Nike, Inc. 899
3,200 Potlatch Corp. 129
8,500 Reebok International Ltd. 221
5,400 Sigma-Aldrich, Corp. 266
7,400 Supervalue, Inc. 239
19,700 Sysco Corp. 603
--------
3,377
- ----------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $392,637) $487,042
- ----------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--0.2%
U.S. Treasury Bills #
$ 960 5.660%Due 12/21/95 $ 949
- ----------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $949) $ 949
- ----------------------------------------------------------------
EURODOLLAR TIME DEPOSIT--2.1%
Landesbank, Hessenthuringen Girozentrale
$10,723 5.938%Due 12/01/95 $ 10,723
- ----------------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $10,723) $ 10,723
- ----------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(Cost $404,309) $498,714
- ----------------------------------------------------------------
Other assets, less liabilities--0.1% 249
- ----------------------------------------------------------------
NET ASSETS--100.0% $498,963
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
OPEN FUTURES CONTRACTS:
<TABLE>
<CAPTION>
Number of Contract Unrealized
Type Contracts Amount Position Expiration Gain (Loss)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S&P 500 36 $10,931 Long 12/15/95 482
S&P 500 2 613 Long 03/15/96 (1)
---
481
- --------------------------------------------------------------------------------------
</TABLE>
#Security pledged to cover margin requirements for open futures contracts.
*Non-income producing security.
See accompanying notes to financial statements.
19
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
<C> <S> <C>
FOCUSED GROWTH PORTFOLIO
COMMON STOCKS--98.2%
BANKING--2.7%
50,800 First USA, Inc. $ 2,330
CHEMICALS AND ALLIED PRODUCTS--8.5%
44,300 Air Products and Chemicals, Inc. 2,459
30,900 IDEXX Laboratories, Inc.* 1,375
33,228 Morton International, Inc. 1,150
27,100 Procter & Gamble Co. 2,341
-------
7,325
COMPUTERS AND OFFICE MACHINES--2.5%
17,000 Cisco Systems, Inc.* 1,430
8,300 Microsoft Corp.* 723
-------
2,153
CREDIT INSTITUTIONS--3.6%
56,200 GreenTree Financial, Corp. 1,588
110,350 Mercury Finance Co. 1,572
-------
3,160
ELECTRONICS AND OTHER ELECTRICAL EQUIPMENT--
15.2%
52,300 General Electric Co. 3,517
13,600 Intel Corp. 828
52,800 Linear Technology Corp. 2,389
50,000 Molex, Inc., Class A 1,563
33,000 Polygram N.V. ADR 1,980
66,500 Solectron Corp.* 2,826
-------
13,103
FOOD AND BEVERAGES--4.5%
24,300 Philip Morris Cos., Inc. 2,132
42,000 Starbucks Corp.* 1,775
-------
3,907
HEALTH SERVICES--7.9%
120,000 Health Management Associates, Inc.* 3,180
42,300 Johnson & Johnson Co. 3,664
-------
6,844
HEAVY CONSTRUCTION--2.3%
30,300 Fluor Corp. 1,969
INDUSTRIAL INSTRUMENTS--7.5%
16,400 Cordis Corp.* 1,738
20,000 Hewlett-Packard Co. 1,657
21,900 Nellcor Puritan Bennett, Inc.* 1,259
42,000 Raytheon Co. 1,869
-------
6,523
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
<C> <S> <C>
INSURANCE SERVICES--6.8%
40,000 American International Group, Inc. $ 3,590
30,000 MBIA, Inc. 2,310
-------
5,900
METAL PRODUCTS--2.4%
50,000 Crown Cork & Seal Co., Inc.* 2,094
PETROLEUM PRODUCTS--1.7%
47,700 Repsol S.A. ADR 1,509
PROFESSIONAL SERVICES--11.5%
39,000 CUC International, Inc.* 1,482
37,500 Computer Sciences Corp.* 2,728
34,001 First Data Corp. 2,414
7,497 Interpublic Group of Cos., Inc. 288
37,000 Oracle Systems Corp.* 1,679
16,500 Sun Microsystems, Inc.* 1,388
-------
9,979
RECREATION AND LEISURE SERVICES--7.0%
47,000 Carnival Corp., Class A 1,222
84,500 Harley-Davidson, Inc. 2,345
90,500 Mattel, Inc. 2,534
-------
6,101
RETAIL--9.7%
55,100 Circuit City Stores, Inc. 1,598
96,900 Staples, Inc.* 2,471
30,600 Viking Office Products, Inc.* 1,408
100,000 Walgreen Co. 2,913
-------
8,390
TEXTILES--1.1%
20,000 Cintas Corp. 920
TRANSPORTATION PARTS AND EQUIPMENT--1.5%
25,100 General Motors Corp., Class E 1,268
TRANSPORTATION SERVICES--1.8%
61,100 Southwest Airlines Co. 1,528
- ---------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $70,254) $85,003
- ---------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
- ----------------------------------------------------------------
<C> <S> <C>
EURODOLLAR TIME DEPOSIT--3.4%
Landesbank, Hessenthuringen Girozentrale
$ 2,959 5.938% Due 12/01/95 $ 2,959
- ----------------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $2,959) $ 2,959
- ----------------------------------------------------------------
TOTAL INVESTMENTS--101.6%
(Cost $73,213) $87,962
- ----------------------------------------------------------------
Liabilities, less other assets--(1.6)% (1,374)
- ----------------------------------------------------------------
NET ASSETS--100.0% $86,588
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
*Non-income producing security.
See accompanying notes to financial statements.
21
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------------------
INTERNATIONAL GROWTH PORTFOLIO
<C> <S> <C>
COMMON STOCKS--96.8%
AUSTRALIA--2.2%
960,000 Foster's Brewing Group Ltd. $ 1,585
325,000 News Corp. Ltd. 1,706
--------
3,291
BRAZIL--1.0%
30,000 Telebras ADR 1,440
CHILE--0.6%
12,000 Cia Telecomunicacion Chile ADR 866
CHINA--1.6%
45,000 Jilin Chemical Industrial Co. Ltd. ADR* 861
4,000,000 Qingling Motors Co.* 988
2,000,000 Shanghai Petrochemical Co. Ltd. 562
--------
2,411
CZECH REPUBLIC--0.6%
110,000 Czechoslovakia & Slovak Investment Corp. 880
12,000 Czechoslovakia & Slovak Investment Corp. Warrants * 18
--------
898
FRANCE--7.0%
15,000 Alcatel Alsthom 1,253
25,000 AXA 1,499
20,000 Christian Dior S.A. 1,932
25,000 Cie Generale des Eaux 2,438
35,000 Credit Commercial de France 1,649
25,000 Lefarge-Coppee 1,592
--------
10,363
GERMANY--4.3%
30,000 Adidas A.G.* 1,601
900 Allianz Holding A.G. 1,739
4,500 Mannesmann A.G. 1,450
40,000 Merck K.G.A.A.* 1,640
--------
6,430
HONG KONG--6.4%
300,000 Cheung Kong Holdings Ltd. 1,707
1,500,000 First Pacific Co. Ltd. 1,629
300,000 Guoco Group Ltd. 1,423
100,000 HSBC Holdings PLC 1,474
300,000 Hutchison Whampoa Ltd. 1,695
400,000 New World Development Co. Ltd. 1,670
750 New World Infrastructure Ltd. 1
--------
9,599
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
<C> <S> <C>
INDIA--0.4%
150,000 The India Fund, Class A* $ 574
INDONESIA--0.0%
47,056 Indah Kiat Pulp & Paper Co. 34
IRELAND--1.2%
500,000 Irish Life PLC 1,862
ITALY--2.7%
80,000 Assicurazioni Generali 1,823
20,000 Luxottica Group S.p.A. ADR 1,065
700,000 Telecom Italia Mobile S.p.A.* 1,129
--------
4,017
JAPAN--29.6%
7,000 Autobacs Seven Co. Ltd. 565
75,000 Canon Inc. 1,322
30,000 CSK Corp. 931
20,000 Daiichi Corp. 410
20,000 Fanuc Ltd. 853
100,000 Fijitsu Ltd. 1,182
120,000 Hitachi Ltd. 1,217
22,000 Hitachi Software Engineering Co. 527
150,000 Hitachi Zosen Corp. 771
7,000 I-O Data Device, Inc. 521
35,000 Ishiguro Homa Corp. 596
150,000 Itochu Corp. 997
10,000 Japan Associated Finance Co. 980
500 JGC Corp. 5
20,000 JUSCO Ltd. 481
20,000 Kato Denki 512
300,000 Kawasaki Steel Corp. 1,067
215,000 Mitsubishi Chemical Corp. 1,050
125,000 Mitsubishi Heavy Industries Ltd. 999
325,000 Mitsui O.S.K. Lines Ltd.* 954
80,000 NEC Corp. 1,024
110,000 New OJI Paper Co. Ltd. 1,013
15,000 Nichiha Corp. 269
15,000 Nichiei Co. Ltd. 962
105,000 Nikko Securities Co. Ltd. 1,158
14,000 Nintendo Corp. Ltd 1,109
300,000 Nippon Steel & Co.* 1,034
178 Nippon Telegraph & Telephone Corp. 1,457
150,000 Nissan Motor Co. Ltd. 1,107
85,000 Nomura Securities Co. Ltd. 1,674
160,000 NSK Ltd. 1,130
35,000 Omron Corp. 783
17,000 Rohm Co. 1,040
55,000 Sankyo Co. Ltd. 1,230
</TABLE>
See accompanying notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------------------
<C> <S> <C>
10,000 Sanyo Shimpan Finance Co. Ltd. $ 737
12,000 Shimamura Co. Ltd. 455
350,000 Showa Denko K.K.* 1,065
15,000 Sony Corp. 798
25,000 Sony Music Entertainment, Inc. 1,120
190,000 Sumitomo Chemical Co. 947
95,000 Sumitomo Electric Industries 1,113
150,000 Sumitomo Marine & Fire Insurance 1,163
15,000 TDK Corp. 762
20,000 Tokyo Electron Ltd. 855
160,000 Toray Industries, Inc. 1,043
160,000 Toshiba Corp. 1,155
45,000 Toyo Industries, Inc. 886
50,000 Uny Co. Ltd. 980
--------
44,009
MALAYSIA--3.9%
175,000 Edaran Otomobil Nasional Berhad 1,256
119,500 Genting Berhad 1,032
500,000 Land & General Holdings Berhad,
Class A 996
225,000 Malayan Banking Berhad 1,783
100,000 Telekom Malaysia Berhad 745
--------
5,812
MEXICO--1.3%
200,000 Fomentico Economico Mexicano, S.A. de C.V., Class B 463
40,000 Grupo Televisa S.A. GDR 865
20,000 Panamerican Beverages, Inc., Class A 645
--------
1,973
NETHERLANDS--1.9%
15,000 Internationale Nederlanden Group N.V. 983
45,000 Philips Electronics N.V. 1,772
--------
2,755
NORWAY--1.2%
140,000 Saga Petroleum S.A., Class A 1,792
PHILIPPINES--0.8%
700,000 Ayala Land, Inc., Class B 802
100,000 San Miguel Corp., Class B 321
--------
1,123
SINGAPORE--2.5%
120,000 Development Bank of Singapore Ltd. 1,404
275,000 Keppel Corp. Ltd. 2,261
--------
3,665
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------
<C> <S> <C>
SOUTH KOREA--0.9%
703 Daewoo Corp.* $ 9
40,000 L.G. Chemical Ltd. GDR* 870
20,000 Pohang Iron & Steel Co. Ltd. ADR 490
62 Samsung Electronics Co. Ltd.* 11
--------
1,380
SPAIN--4.6%
45,000 Banco Santander S.A. 2,103
30,000 Empresa Nacional de Electricidad S.A. 1,614
175,000 Iberdrola S.A. 1,479
40,000 Telefonica de Espana ADR 1,660
--------
6,856
SWEDEN--1.0%
40,000 Pharmacia & Upjohn, Inc.* 1,435
SWITZERLAND--5.3%
1,500 BBC Brown Boveri A.G. 1,725
2,600 Ciba-Geigy A.G. 2,322
23,000 CS Holding A.G. 2,185
225 Roche Holding A.G.-Genussshein 1,702
--------
7,934
TAIWAN--2.3%
462,849 Acer, Inc.* 990
450,000 Hon Hai Precision Industries 1,022
250,000 Silicone Precision Industries Co.* 622
325,000 United Microelectronics Corp., Ltd. 762
110 Yung Shin Pharmaceutical Industries 1
--------
3,397
THAILAND--2.1%
325,000 Industrial Finance Corp. of Thailand 1,014
80,000 Italian - Thai Development PLC 744
375,000 Krung Thai Bank Co. Ltd. 1,379
--------
3,137
UNITED KINGDOM--11.4%
300,000 Cable & Wireless PLC 2,083
115,000 Carlton Communications PLC 1,716
175,000 Great Universal Stores PLC 1,647
80,000 Glaxo Wellcome PLC ADR 2,140
170,000 Guinness PLC 1,201
300,000 Kingfisher PLC 2,375
375,000 Rank Organisation PLC 2,372
25,000 Reuters Holdings PLC ADR 1,409
55,000 Vodaphone Group PLC ADR 1,987
--------
16,930
- -----------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $142,719) $143,983
- -----------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
23
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares/
Principal
Amount Description Value
- ---------------------------------------------------------------
INTERNATIONAL GROWTH PORTFOLIO--CONTINUED
<C> <S> <C>
PREFERRED STOCKS--0.7%
2,000,000 Brasmotor S.A. (Brazil) $ 420
75,000 Usiminas Siderburg Minas ADR (Brazil)* 656
- ---------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $1,303) $ 1,076
- ---------------------------------------------------------------
EURODOLLAR TIME DEPOSIT--2.4%
Landesbank, Hessenthuringen Girozentrale
$ 3,575 5.938% Due 12/01/95 $ 3,575
- ---------------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $3,575) $ 3,575
- ---------------------------------------------------------------
TOTAL INVESTMENTS--99.9%
(Cost $147,597) $148,634
- ---------------------------------------------------------------
Other assets, less liabilities--0.1% 90
- ---------------------------------------------------------------
NET ASSETS--100.0% $148,724
- ---------------------------------------------------------------
- ---------------------------------------------------------------
</TABLE>
*Non-income producing security.
At November 30, 1995, the Portfolio's investments, excluding time deposits,
were diversified as follows:
<TABLE>
<CAPTION>
Industry/Sector
- --------------------------
<S> <C>
Basic Industry 20.3%
Capital Goods 6.1
Consumer Goods 12.0
Energy 3.4
Financial Services 20.7
Services 17.5
Technology 10.4
Other 9.6
- --------------------------
TOTAL 100.0%
- --------------------------
</TABLE>
See accompanying notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO
<C> <S> <C>
COMMON STOCKS--97.6%
AGRICULTURE--0.3%
1,100 Alamo Group, Inc. $ 19
3,000 Barefoot, Inc. 35
900 DeKalb Genetics Corp. 41
1,700 Delta & Pine Ltd. Co 65
5,500 Dimon, Inc. 95
1,600 Tejon Ranch Co. 23
-------
278
APPAREL--0.5%
3,000 Converse, Inc.* 12
900 Donnkenny, Inc.* 30
600 Fossil, Inc.* 6
4,500 Hartmarx Corp.* 20
3,750 Kellwood Co. 73
1,200 Kenneth Cole Productions, Inc.* 26
2,500 Nautica Enterprises, Inc.* 89
1,000 Norton McNaughton, Inc.* 14
2,000 Oshkosh B' Gosh, Inc. 31
1,300 Oxford Industries, Inc. 24
1,200 St. John Knits, Inc. 56
1,600 Starter Corp.* 11
700 Syms Corp.* 5
1,450 Unitog Co. 36
-------
433
BANKING--9.9%
2,400 Albank Financial Corp. 71
1,600 Amcore Financial, Inc. 35
1,900 American Federal Bank 29
900 Amfed Financial Corp. 29
1,000 Anchor Bancorp, Inc. 36
2,375 Associated Banc-Corp. 94
750 BSB Bancorp, Inc. 26
661 BT Financial Corp. 24
2,900 BancorpSouth, Inc. 65
600 Bank of New Hampshire Corp. 24
1,068 Bank of Granite Corp. 30
1,764 Bankers Corp. 30
700 Bankers First Corp. 19
1,200 Banknorth Group, Inc. 41
1,100 Bay Ridge Bancorp, Inc.* 24
1,200 Bay View Capital Corp. 34
1,600 Bell Bancorp, Inc. 52
900 Boston Bancorp 33
1,000 Brenton Banks, Inc. 20
2,000 Brooklyn Bancorp, Inc.* 81
1,000 CBT Corp. 22
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------
<C> <S> <C>
3,200 CCB Financial Corp. $ 160
2,956 CNB Bancshares, Inc. 78
900 CPB, Inc. 29
2,000 CSF Holdings, Inc.* 79
1,600 California Bancshares, Inc. 43
8,580 California Federal Bank* 131
2,300 Center Financial Corp.* 42
3,900 Centura Banks, Inc. 133
6,900 Charter One Financial, Inc. 221
1,150 Chittenden Corp. 33
900 Citfed Bancorp, Inc. 31
2,100 Citizens Bancorp 71
500 Citizens Bancshares, Inc 22
1,900 Citizens Banking Corp. 61
5,800 City National Corp. 80
3,300 Coast Savings Financial, Inc.* 99
1,400 Cole Taylor Financial Group, Inc. 37
3,100 Collective Bancorp, Inc. 82
1,900 Colonial BancGroup, Inc. 56
2,900 Comdata Holdings Corp.* 70
1,875 Commerce Bancorp, Inc. 42
2,300 Commercial Federal Corp. 84
700 Commonwealth Savings Bank 16
1,200 Community First Bankshares, Inc. 25
1,690 Cullen/Frost Bankers, Inc. 86
1,700 Downey Financial Corp. 39
745 F & M Bancorp, Maryland 22
800 F & M Bancorp, Wisconsin 22
2,955 F & M National Corp. 54
1,485 FNB Corp. 29
600 Farmers Capital Bank Corp. 23
1,825 Fidelity National Corp. 29
1,246 Financial Trust Corp.* 39
1,600 First Citizens Bancshares, Inc. 86
2,100 First Commercial Bancshares, Inc. 39
3,647 First Commercial Corp. 118
4,000 First Commonwealth Financial Corp. 69
1,700 First Federal Financial Corp.* 26
1,100 First Federal Savings Bank 40
2,157 First Financial Bancorp 75
900 First Financial Bancshares, Inc. 27
4,500 First Financial Corp. 101
900 First Financial Holdings, Inc. 18
866 First Indiana Corp. 23
900 First Merchants Corp. 24
3,154 First Michigan Bank Corp. 90
1,900 First Midwest Bancorp, Inc. 56
2,900 First National Bancorp 88
700 First United Bancshares, Inc. 30
</TABLE>
See accompanying notes to financial statements.
25
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
BANKING--Continued
1,488 First Western Bancorp, Inc. $ 40
1,500 FirstBank of Illinois Co. 45
2,725 FirstBank Puerto Rico 51
1,950 Firstier Financial, Inc. 89
4,500 Firstmerit Corp. 128
2,050 Fort Wayne National Corp. 65
4,145 Fulton Financial Corp. 92
6,176 Glendale Federal Bank FSB* 100
2,800 Great Financial Corp. 65
2,300 Greater New York Savings Bank* 27
1,100 Hancock Holding Co. 41
1,060 Harleysville National Corp. 30
500 Harris Savings Bank 10
2,400 Hawkeye Bancorp 63
900 Heritage Financial Services, Inc. 18
4,297 Home Financial Corp. 64
1,000 Homeland Bankshares Corp. 29
1,765 Hubco, Inc. 35
2,100 IBS Financial Corp. 35
1,300 ISB Financial Corp., LA* 20
1,671 Imperial Bancorp* 39
1,620 Imperial Credit Industries, Inc.* 27
700 Intercontinental Bank 21
69 Investors Financial Services Corp., Class A* 1
600 Irwin Financial Corp. 24
2,700 Jefferson Bancshares, Inc. 63
4,166 Keystone Financial, Inc. 130
1,800 Leader Financial Corp. 68
1,000 Liberty Bancorp, Inc., Oklahoma 38
2,000 Life Bancorp, Inc. 31
4,100 Long Island Bancorp, Inc. 106
1,500 Loyola Capital Corp. 56
1,300 MLF Bancorp, Inc. 30
1,300 Magna Bancorp, Inc. 39
5,900 Magna Group, Inc. 143
2,250 Mark Twain Bancshares, Inc. 85
600 Maryland Federal Bancorp, Inc. 18
600 Merchants New York Bancorp. 20
500 Metrobank 14
900 Michigan Financial Corp. 25
3,027 Mid-Am, Inc. 51
1,167 Mid-America Bancorp 21
1,100 N.S. Bancorp, Inc.* 43
1,432 NBB Bancorp, Inc. 24
700 National Bancorp of Alaska, Inc. 45
600 National City Bancshares, Inc. 28
3,250 National Commerce Bancorp 84
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------
<C> <S> <C>
1,173 National Penn Bancshares, Inc. $ 30
2,151 New York Bancorp, Inc. 44
4,200 North Fork Bancorp, Inc. 98
900 Northeast Bancorp, Inc.* 0
829 North Side Savings Bank 24
1,100 Omega Financial Corp. 35
2,495 ONBANCorp, Inc. 83
2,280 One Valley Bancorp of West Virginia, Inc. 73
800 Park National Corp. 37
1,500 Peoples Bank of Bridgeport, CT 32
3,000 Peoples Heritage Financial Group, Inc. 63
1,400 Pikeville National Corp. 29
600 Pinnacle Banc Group, Inc. 19
7,350 Premier Bancorp, Inc. 174
1,500 Provident Bancorp, Inc. 65
1,075 Provident Bankshares Corp. 33
1,000 Queen City Bancorp. 40
2,200 RCSB Financial, Inc. 53
500 RS Financial Corp. 20
1,800 Reliance Bancorp, Inc. 26
3,038 Republic Bancorp, Inc. 35
1,480 Resource Bancshares Mortgage Group, Inc.* 21
3,700 Riggs National Corp.* 52
1,400 River Forest Bancorp 33
5,314 Roosevelt Financial Group, Inc. 90
2,000 S & T Bancorp, Inc. 51
1,600 Security Capital Corp. 94
1,400 SFFed Corp. 44
1,600 Silicon Valley Bancshares* 36
7,562 Sovereign Bancorp, Inc. 79
1,100 St. Francis Capital Corp.* 26
3,271 St. Paul Bancorp, Inc. 82
3,300 Standard Financial, Inc.* 47
700 Student Loan Corp. 25
600 Suffolk Bancorp 22
400 Sumitomo Bank of California 9
5,890 Summit Bancorp 171
1,875 Susquehanna Bancshares, Inc. 54
1,600 T.R. Financial Corp.* 40
640 Tompkins County Trust Co. 19
2,800 Trust Co. of Jersey City 38
3,168 Trustco Bank Corp. 70
4,300 Trustmark Corp. 80
1,600 U.S. Trust Corp. 76
2,180 UMB Financial Corp. 96
2,600 UST Corp. 39
2,100 United Bankshares, Inc. 64
2,200 United Carolina Bancshares Corp. 83
300 United Counties Bancorp. 68
</TABLE>
See accompanying notes to financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
<C> <S> <C>
1,000 USBancorp, Inc. $ 31
4,728 Valley National Bancorp. 116
800 Vermont Financial Services Corp. 25
1,000 Victoria Bankshares, Inc. 33
850 Webster Financial Corp. 22
1,300 Wesbanco, Inc. 36
1,300 Westamerica Bancorp. 54
1,637 Westcorp, Inc. 32
2,575 Whitney Holding Corp. 79
3,100 Zions Bancorp. 219
-------
9,387
BITUMINOUS COAL AND LIGNITE SURFACE MINING--0.1%
1,500 Addington Resources, Inc.* 22
1,200 Ashland Coal, Inc. 26
1,300 Nacco Industries, Inc. 74
-------
122
BROKERAGE AND FINANCIAL SERVICES--1.3%
2,200 Alex Brown, Inc. 101
2,400 Allied Capital Commercial Corp. 45
400 American Financial Enterprises, Inc. 9
3,700 Amresco, Inc. 45
1,225 BHC Financial, Inc. 23
643 BOK Financial Corp.* 13
1,700 CMAC Investment Corp. 79
4,200 Crawford & Co., Class B 67
4,800 Crimmi Mae, Inc. 41
200 General Acceptance Corp.* 6
1,800 Insignia Financial Group, Inc., Class A* 54
1,400 Inter-Regional Financial Group, Inc. 55
600 Investment Technology Group, Inc.* 5
800 Jefferies Group, Inc. 34
2,200 Legg Mason, Inc. 65
1,640 McDonald & Co. Investments, Inc. 29
3,200 Mego Financial Corp.* 22
2,725 Morgan Keegan, Inc. 34
2,800 Olympic Financial Ltd.* 57
3,800 Penncorp Financial Group, Inc. 105
3,050 Phoenix Duff & Phelps Corp. 21
3,200 Pioneer Group, Inc. 85
3,100 Piper Jaffray Cos., Inc. 40
2,457 Quick & Reilly Group, Inc. 62
2,300 Raymond James Financial, Inc. 52
2,400 SEI Corp. 52
300 Value Line, Inc. 10
1,202 Waterhouse Investor Services, Inc. 24
500 Winthrop Resource Corp.* 8
-------
1,243
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------------
<C> <S> <C>
CHEMICALS AND ALLIED PRODUCTS--3.6%
900 Advanced Magnetics, Inc.* $ 23
4,300 Alliance Pharmaceutical Corp.* 52
2,400 Alpharma, Inc., Class A* 52
3,400 Amylin Pharmaceuticals, Inc.* 24
900 Aphton Corp.* 10
962 Biocraft Laboratories, Inc. 14
1,100 Bush Boake Allen, Inc.* 34
5,100 Calgon Carbon Corp. 60
4,000 Carter-Wallace, Inc. 46
2,500 Cellpro, Inc.* 31
4,900 Cephalon, Inc.* 136
1,500 Chemed Corp. 58
1,700 Collagen Corp. 31
1,374 Copley Pharmaceutical, Inc.* 20
2,400 Cygnus, Inc.* 38
2,300 Cytec Industries, Inc.* 147
3,700 Dexter Corp. 90
1,900 Diagnostic Products Corp. 68
2,300 Dura Pharmaceuticals, Inc.* 67
1,700 Duramed Pharmaceuticals, Inc.* 28
2,200 Epitope, Inc.* 26
4,400 First Mississippi Corp. 112
2,500 Fuller (H.B.) Co. 80
4,500 Geon Co. 111
2,100 Great American Management & Investment, Inc.* 92
1,300 Guardsman Products, Inc. 17
1,200 Helene Curtis Industries, Inc. 35
2,200 Herbalife International, Inc. 16
4,347 ICN Pharmaceuticals, Inc. 88
4,400 ICOS Corp.* 31
1,300 IGI, Inc.* 14
2,300 Immulogic Pharmaceutical Corp.* 29
4,600 Interneuron Pharmaceuticals, Inc.* 82
3,400 Isis Pharmaceuticals, Inc.* 39
800 Kronos, Inc.* 35
6,000 Lawter International, Inc. 65
1,200 Learonal, Inc. 34
1,050 Lesco, Inc. 15
1,281 Life Technologies, Inc. 32
3,375 Lilly Industrial, Inc. 44
400 MacDermid, Inc. 23
1,400 Matrix Pharmaceutical, Inc.* 22
1,700 McWhorter Technologies, Inc.* 26
2,000 Medco Research, Inc.* 21
1,700 Medimmune, Inc.* 22
3,900 Mineral Technologies, Inc. 146
3,700 Mississippi Chemical Corp. 83
</TABLE>
See accompanying notes to financial statements.
27
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
CHEMICALS AND ALLIED PRODUCTS--CONTINUED
2,800 NBTY, Inc.* $ 16
700 NCH Corp. 38
3,500 Nexagen Pharmaceuticals, Inc.* 42
2,600 Noven Pharmaceuticals, Inc.* 26
2,200 OM Group, Inc. 67
900 PDT, Inc.* 40
999 Penwest Ltd. 26
900 Petrolite Corp. 23
1,900 Pharmaceutical Marketing Services, Inc.* 26
3,000 Pharmaceutical Resources, Inc.* 24
1,600 Pratt & Lambert United, Inc. 56
1,000 Purepac, Inc.* 7
2,700 Regeneron Pharmaceuticals, Inc.* 30
3,300 Rexene Corp.* 32
2,000 Roberts Pharmaceutical Corp.* 34
3,300 Scotts Co.* 66
2,800 Sepracor, Inc.* 45
4,100 Sequus Pharmaceuticals, Inc.* 51
3,000 Somatogen, Inc.* 42
1,200 Stepan Co. 19
6,800 Sterling Chemicals, Inc.* 57
1,300 Synalloy Corp. 26
600 Systemix, Inc.* 9
1,700 Techne Corp.* 40
1,788 Tetra Tech, Inc.* 42
2,300 Tetra Technologies, Inc.* 38
4,200 Uniroyal Chemical Corp.* 34
2,600 Vertex Pharmaceuticals, Inc.* 54
1,165 WD-40 Co. 47
-------
3,426
COMMUNICATIONS--3.5%
1,700 Ackerley Communications, Inc. 26
300 Adelphia Communications Corp.* 2
2,700 American Mobile Satellite Corp.* 75
600 American Paging, Inc.* 4
1,400 American Telecasting, Inc.* 20
2,700 ANTEC Corp.* 39
2,100 Applied Digital Access, Inc.* 26
1,600 Applied Innovation, Inc.* 14
4,400 Aspect Telecommunications Corp.* 150
1,400 BET Holdings, Inc.* 33
2,800 Black Box Corp.* 47
2,122 Block Drug Co., Inc. 83
1,100 Brite Voice Systems, Inc.* 18
2,300 Broadband Technologies, Inc.* 40
4,070 CAI Wireless Systems, Inc.* 35
3,500 C-TEC Corp.* 102
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
<C> <S> <C>
500 CFW Communications Co. $ 9
1,700 Cable Design Technologies Corp.* 74
900 Cellstar Corp.* 24
1,800 Cellular Communications International, Inc.* 62
1,440 Cellular Technical Services, Inc.* 31
7,600 Century Communications Corp., Class A* 65
2,200 CIDCO, Inc.* 58
1,800 Citicasters, Inc. 58
2,100 Commnet Cellular, Inc.* 57
1,200 DSP Communications, Inc.* 53
800 Digital Link Corp.* 14
1,400 EIS International, Inc.* 22
1,100 EZ Communications, Inc., Class A* 18
1,200 Emmis Broadcasting Corp., Class A* 32
2,100 Evergreen Media Corp., Class A* 51
7,400 Executone Information Systems, Inc.* 20
500 Firefox Communications, Inc.* 11
7,100 Geotek Communications, Inc.* 51
600 Heartland Wireless Communications, Inc.* 17
1,500 Heftel Broadcasting Corp., Class A* 22
2,500 Heritage Media Corp.* 65
900 Hickory Tech Corp. 28
600 IPC Information Systems, Inc.* 9
1,000 Incomnet, Inc.* 5
800 Intercel, Inc.* 13
5,233 International Cabletel, Inc.* 135
1,100 Jacor Communications, Inc.* 19
3,378 Jones Intercable, Inc., Class A* 44
2,200 Level One Communications, Inc.* 46
4,100 Lincoln Telecommunications Co. 80
1,200 Mastec, Inc.* 12
900 Metrocall, Inc.* 22
2,957 Metromedia International Group, Inc.* 53
800 Microdyne Corp.* 17
1,400 Millicom, Inc.* 0
350 Millicom American Sattellite Corp.* 0
1,600 NumereX Corp.* 11
1,100 Ortel Corp.* 13
300 Outlet Communications, Class A* 14
1,800 P-COM, Inc.* 32
900 Palmer Wireless, Inc.* 19
1,800 Pairgain Technologies, Inc.* 91
4,600 Paxson Communications Corp.* 67
1,200 People's Choice TV Corp.* 26
1,500 Plantronics, Inc.* 53
900 Premisys Communications, Inc.* 87
3,800 President Casinos, Inc.* 9
1,000 ProNet, Inc.* 31
2,500 Racotek, Inc.* 14
5,250 Renaissance Communications Corp.* 114
</TABLE>
See accompanying notes to financial statements.
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------------
<C> <S> <C>
700 SFX Broadcasting, Inc., Class A* $ 20
1,600 Silver King Communications, Inc.* 56
2,400 Starsight Telecast, Inc.* 10
900 T-Netix, Inc.* 9
2,800 TCA Cable TV, Inc. 79
2,800 Telular Corp.* 31
700 Transaction Network Services, Inc.* 17
1,500 Transmedia Network, Inc. 15
3,300 True North Communications, Inc. 68
2,300 U.S. Long Distance Corp.* 30
7,300 United International Holdings, Inc., Class A* 102
800 United Television, Inc. 70
900 United Video Satellite Group, Inc.* 26
4,800 Valuevision International, Inc.* 27
1,000 WavePhore, Inc.* 16
3,100 Wescott Communications, Inc.* 44
3,700 Westwood One, Inc.* 52
1,600 Young Broadcasting Corp.* 40
-------
3,304
COMPUTERS AND OFFICE MACHINES--6.3%
2,700 Actel Corp.* 36
500 Active Voice Corp.* 14
800 Amtrol, Inc. 13
2,300 Apertus Technologies, Inc.* 23
900 Applix, Inc.* 37
5,700 AST Research, Inc.* 52
2,700 Atari Corp.* 4
2,000 Atria Software, Inc.* 84
4,200 Auspex Systems, Inc.* 62
4,200 Autotote Corp.* 12
4,500 Avid Technology, Inc.* 178
3,366 BancTec, Inc.* 65
900 Boca Research, Inc.* 26
4,900 Borland International, Inc.* 86
3,400 C-Cube Microsystems, Inc.* 341
2,400 Caere Corp.* 22
864 Cambrex Corp. 32
1,500 Cambridge Technology Partners, Inc.* 74
375 Champion Industries, Inc. 8
3,100 Chips & Technologies, Inc.* 33
2,300 Chronimed, Inc.* 35
4,000 Computer Network Technology Corp.* 25
3,500 Comverse Technology, Inc.* 79
3,675 Concord EFS, Inc.* 141
9,200 Conner Peripherals, Inc.* 208
3,500 Copytele, Inc.* 34
4,300 Cray Research, Inc.* 103
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------
<C> <S> <C>
1,290 DH Technology, Inc.* $ 30
1,400 DSP Group, Inc.* 17
6,600 Data General Corp.* 80
1,400 Davidson & Associates, Inc.* 35
600 Day Runner, Inc.* 17
1,000 Dialogic Corp.* 32
2,100 Digi International, Inc.* 49
850 DiMark, Inc.* 12
3,100 Dynatech Corp.* 46
1,000 Emulex Corp.* 13
1,000 Encad, Inc.* 19
1,400 EPIC Design Technology, Inc.* 30
1,500 Evans & Sutherland Computer Corp.* 36
3,900 Exabyte Corp.* 49
1,100 Excalibur Technologies Corp.* 25
800 Expert Software, Inc.* 14
2,700 FTP Software, Inc.* 82
2,800 Filenet Corp.* 120
868 Franklin Electric Co., Inc. 27
1,100 General Binding Corp. 24
2,100 Global Village Communication* 48
1,400 Hyperion Software Corp.* 62
4,800 Information Resources, Inc.* 58
1,000 Integrated Systems, Inc.* 39
5,000 Intelligent Electronics, Inc. 33
6,900 Intergraph Corp.* 119
3,800 International Rectifier Corp.* 189
1,400 Interpool, Inc.* 24
3,300 Iomega Corp.* 141
1,800 Itron, Inc.* 51
1,200 Key Tronic Corp.* 13
2,184 Logicon, Inc. 61
6,200 Macromedia, Inc.* 288
600 MapInfo Corp.* 12
9,100 Maxtor Corp.* 58
1,900 Mercury Interactive Corp.* 44
2,000 Microcom, Inc.* 50
1,300 Micron Electronics, Inc.* 19
500 Micros Systems, Inc.* 21
800 Microtec Research, Inc.* 11
700 Microtest, Inc.* 11
1,500 MicroTouch Systems, Inc.* 23
4,600 Miller (Herman), Inc. 146
2,300 Mylex Corp.* 44
2,400 National Computer Systems, Inc. 50
4,400 Netmanage, Inc.* 100
3,500 Network General Corp.* 147
1,300 Norand Corp.* 19
3,800 Nu-Kote Holding, Inc.* 75
</TABLE>
See accompanying notes to financial statements.
29
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
COMPUTERS AND OFFICE MACHINES--CONTINUED
1,500 Optical Data Systems, Inc.* $ 31
3,000 PHH Corp. 137
2,100 Phoenix Technologies Ltd.* 26
1,200 Planar Systems, Inc.* 19
5,198 Platinum Technology, Inc.* 87
600 Printronix, Inc.* 11
1,100 Proxima Corp.* 20
2,500 Radius, Inc.* 5
8,100 S3, Inc.* 153
2,800 Santa Cruz Operation, Inc.* 17
5,900 Sequent Computer Systems, Inc.* 94
2,300 Standard Microsystems Corp.* 47
3,600 Stratus Computer, Inc.* 120
1,600 SubMicron Systems, Inc.* 16
1,200 Sylvan Learning Systems, Inc.* 29
1,200 Synetic, Inc.* 32
1,100 3D Systems Corp.* 22
6,000 Tech Data Corp.* 101
3,000 Triad Systems Corp.* 17
1,800 Trident Microsystems, Inc.* 63
2,400 Tseng Laboratories, Inc.* 23
1,400 Wall Data, Inc.* 22
5,100 Wang Labs, Inc.* 91
1,400 Wonderware Corp.* 37
700 XcelleNet, Inc.* 13
500 Xpedite Systems, Inc.* 7
1,000 Xylogics, Inc.* 71
1,600 Zebra Technologies Corp.* 107
-------
5,958
CREDIT INSTITUTIONS--0.5%
4,300 Ampal-American Israel Corp.* 24
1,900 Astoria Financial Corp. 83
955 First Financial Corp., Indiana 29
1,600 JSB Financial, Inc. 52
1,725 Money (The) Store, Inc. 82
2,000 National Auto Credit, Inc.* 34
2,700 North American Mortgage Co. 61
750 Regional Acceptance Corp.* 6
2,400 Ryland Group, Inc. 30
3,300 World Acceptance Corp.* 40
-------
441
ELECTRICAL SERVICES--2.3%
2,600 Black Hills Corp. 64
2,600 Central Hudson Gas & Electric Corp. 79
3,400 Central Louisiana Electric Co., Inc. 87
5,700 Central Maine Power Co. 77
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
<C> <S> <C>
2,100 Central Vermont Public Service Corp. $ 28
2,300 CILCORP, Inc. 95
13,575 Citizens Utilities Co., Series B* 170
1,600 Commonwealth Energy Systems Cos. 72
3,600 Eastern Utilities Associates 83
1,400 Electroglas, Inc.* 83
2,600 Empire District Electric Co. 50
872 Green Mountain Power Corp. 24
5,100 IES Industries, Inc. 142
1,700 Interstate Power Co. 53
1,900 Madison Gas & Electric Co. 63
1,389 Northwestern Public Service Co. 37
2,400 Orange & Rockland Utilities, Inc. 85
2,000 Otter Tail Power Co. 70
9,100 Public Service Co. of New Mexico* 160
6,300 Sierra Pacific Resources 146
2,100 Sithe Energies, Inc.* 13
2,400 Southern Indiana Gas & Electric Co. 80
700 St. Joseph Light & Power Co. 22
1,900 TNP Enterprises, Inc. 35
24,200 Tucson Electric Power Co.* 73
2,100 United Illuminating Co. 78
4,900 WPS Resources Corp. 156
1,850 Yankee Energy System, Inc. 43
2,200 Zurn Industries, Inc. 54
-------
2,222
ELECTRONICS AND OTHER ELECTRICAL EQUIPMENT--
5.3%
900 Acme Electric Corp.* 8
1,100 ADFlex Solutions, Inc.* 31
1,100 Alpha Industries, Inc.* 16
1,400 Altron, Inc.* 41
1,350 American Superconductor Corp.* 17
5,300 Ametek, Inc. 93
4,000 Applied Magnetics Corp.* 62
2,900 Associated Group, Inc.* 52
800 Asyst Technologies, Inc.* 36
3,000 Augat, Inc. 52
4,400 BMC Industries, Inc. 74
3,120 Baldor Electric Co. 71
4,100 Belden, Inc. 111
3,400 Boston Technology, Inc.* 49
2,600 Brooktree Corp.* 34
2,200 Burr-Brown Corp.* 63
1,700 C-COR Electronics, Inc.* 44
563 CTS Corp. 20
3,200 California Microwave, Inc.* 70
700 Charter Power Systems, Inc. 17
2,500 Checkpoint Systems, Inc. 77
800 Cherry Corp., Class B* 8
</TABLE>
See accompanying notes to financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------
<C> <S> <C>
900 Cincinnati Microwave, Inc.* $ 6
600 Coherent Communications Systems Corp.* 9
800 Cohu, Inc. 23
2,400 Colonial Data Technologies Corp.* 38
1,200 Communications Systems, Inc. 20
2,600 Compression Labs, Inc.* 19
3,900 Computer Products, Inc.* 49
4,600 Credence Systems Corp.* 137
1,600 Cree Research, Inc.* 30
4,200 Cyrix Corp.* 142
3,900 Dallas Semiconductor Corp. 84
2,400 Digital Microwave Corp.* 29
1,500 Electro Scientific Industries, Inc.* 43
500 Eltron International, Inc.* 19
1,400 Energy Conversion Devices, Inc.* 24
1,100 Esterline Technologies Corp.* 24
1,600 Exar Corp.* 34
1,100 Exide Electronics Group, Inc.* 17
1,400 FORE Systems, Inc.* 82
900 GTI Corp.* 14
3,600 General DataComm Industries, Inc.* 71
2,600 Genus, Inc.* 21
5,600 Griffon Corp.* 48
1,400 HADCO Corp.* 42
2,010 Harman International Industries, Inc. 88
1,200 Harmon Industries, Inc. 21
1,400 Holophane Corp.* 43
900 Hutchinson Technologies, Inc.* 45
1,500 ITI Technologies, Inc.* 38
1,600 Integrated Circuit Systems, Inc.* 23
2,100 Integrated Silicon Solution, Inc.* 50
1,100 Inter-Tel, Inc.* 18
7,900 Interdigital Communications Corp.* 67
2,046 Intermagnetics General Corp.* 46
3,600 International Family Entertainment, Inc.* 67
2,700 Intervoice, Inc.* 59
1,164 Joslyn Corp. 39
3,300 Juno Lighting, Inc. 52
3,250 Lattice Semiconductor Corp.* 105
2,200 Littelfuse, Inc.* 74
3,200 Lojack Corp.* 30
5,000 LTX Corp.* 62
3,500 Magnetek, Inc.* 29
1,400 Mattson Technology, Inc.* 32
600 Merix Corp.* 22
5,550 Methode Electronics, Inc., Class A 81
900 Micrel, Inc.* 15
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------
<C> <S> <C>
2,100 Micro Linear Corp.* $ 24
1,000 National Presto Industries, Inc. 42
2,640 Oak Industries, Inc.* 64
3,780 Octel Communications Corp.* 124
1,200 Opti, Inc.* 12
700 Orbit Semiconductor, Inc.* 6
1,700 PSC, Inc.* 18
500 Panda Project (The), Inc.* 16
1,598 Park Electrochemical Corp.* 49
6,100 Picturetel Corp.* 238
3,937 Pioneer Standard Electronics, Inc. 58
1,700 Pittway Corp. 109
2,000 PriCellular Corp.* 26
2,000 Quickturn Design Systems, Inc.* 21
1,598 Recoton Corp.* 28
1,600 Rival Co. 34
1,900 Robotic Vision Systems, Inc.* 50
400 SDL, Inc.* 9
1,400 Sammina Corp.* 72
1,050 Semitool, Inc.* 17
3,800 Sierra Semiconductor Corp.* 70
1,800 Siliconix, Inc.* 70
1,200 Spectrian Corp.* 28
1,400 Standard Motor Products, Inc. 21
1,100 Summa Four, Inc.* 17
2,600 Symetricon, Inc. 39
1,100 Tekelec* 17
1,800 Thomas Industries, Inc. 37
2,300 3DO Co.* 26
1,200 Three-Five Systems, Inc.* 26
4,900 Top Source Technologies, Inc.* 40
1,700 Ultratech Stepper, Inc.* 64
1,800 Unitrode Corp.* 52
2,400 Vitesse Semiconductor Corp.* 27
3,000 Windmere Corp. 18
1,800 Woodhead Industries, Inc. 28
2,200 Wyle Electronics 87
3,847 Zenith Electronics Corp.* 30
3,650 Zilog, Inc.* 127
-------
5,018
FOOD AND BEVERAGES--1.5%
600 Alico, Inc. 13
6,600 Applebee's International, Inc. 183
1,100 Au Bon Pain Co., Inc.* 10
675 Bridgford Foods Corp. 6
5,400 Calgene, Inc.* 28
2,000 Canandaigua Wine Company, Inc.* 72
4,800 Chiquita Brands International, Inc. 64
800 Coca-Cola Bottling Co. 27
</TABLE>
See accompanying notes to financial statements.
31
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
FOOD AND BEVERAGES--CONTINUED
6,600 Coors (Adolph) Co., Class B $ 134
2,000 Dreyer's Grand Ice Cream, Inc. 66
2,200 FoodBrands America, Inc.* 26
800 GoodMark Foods, Inc. 15
1,800 Hometown Buffet, Inc.* 20
4,300 Hudson Foods, Inc. 69
2,200 International Dairy Queen, Inc.* 49
3,500 Interstate Bakeries Corp. 78
1,200 J & J Snack Foods Corp.* 15
2,900 Lance, Inc. 48
1,200 Landry's Seafood Restaurants, Inc.* 19
3,600 Luby's Cafeterias, Inc. 79
2,100 Michael Foods, Inc. 24
1,500 Midwest Grain Products, Inc.* 18
800 Mondavi (Robert) Corp., Class A* 26
4,200 Morrison Restaurants, Inc. 70
600 Papa Johns International, Inc.* 26
2,700 Riviana Foods, Inc. 34
600 Rock Bottom Restaurants, Inc.* 9
6,000 Shoney's, Inc.* 65
2,200 Smithfield Foods, Inc.* 68
550 Thorn Apple Valley, Inc. 9
5,020 Triarc Cos., Inc., Class A* 53
2,850 WLR Foods, Inc. 47
-------
1,470
FOOD AND MANUFACTURING--0.6%
1,500 Cheesecake Factory, Inc.* 34
198 Farmer Bros. Co. 28
10,200 Flowers Industries, Inc., Class A 131
700 Performance Food Group Co.* 17
5,400 Ralcorp Holding, Inc.* 128
1,300 Sanderson Farms, Inc. 14
4,000 Savannah Foods & Industries, Inc. 50
100 Seaboard Corp. 25
4,400 Smucker (J.M.) Co. 92
2,572 Tootsie Roll Industries, Inc. 90
-------
609
FURNITURE AND FIXTURES--0.4%
2,500 Bassett Furniture Industries, Inc. 56
1,000 Chromcraft Revington, Inc.* 24
2,600 Ethan Allen Interiors, Inc.* 57
1,100 Falcon Building Products, Inc.* 10
1,000 Falcon Products, Inc. 14
3,000 Kimball International, Inc. 78
2,200 La-Z-Boy Chair Co. 70
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
1,233 Ladd Furniture, Inc. $ 16
3,000 O'Sullivan Industries Holdings, Inc.* 19
2,600 Triangle Pacific Corp.* 41
-------
385
GENERAL BUILDING CONTRACTORS--0.7%
2,000 ABT Building Products Corp.* 30
3,000 AMCOL International Co. 44
1,200 Beazer Homes USA, Inc.* 23
1,200 Blount, Inc. 36
12,900 Catellus Development Corp.* 76
1,000 Continental Homes Holding Corp. 18
1,400 Corrpro Cos., Inc.* 8
1,813 Horton (D.R.) Inc.* 18
3,300 Eagle Hardware & Garden, Inc.* 25
2,800 Hovnanian Enterprises, Inc., Class A* 19
5,100 Kaufman & Broad Home Corp. 66
5,400 Morrison-Knudsen, Inc.* 32
800 NCI Building Systems, Inc.* 18
2,900 Pulte Corp. 89
1,600 Schuler Homes, Inc.* 14
4,600 Standard Pacific Corp. 26
3,300 Toll Brothers, Inc.* 60
1,979 U.S. Home Corp.* 51
2,600 Webb (Del E.) Corp. 53
-------
706
GLASS, CLAY AND STONE PRODUCTS--0.4%
500 Ameron, Inc. 18
2,200 Centex Construction Products, Inc.* 31
750 Donnelly Corp. 11
1,300 Florida Rock Industries, Inc. 34
2,600 Gentex Corp.* 57
1,800 Giant Cement Holding, Inc.* 19
2,900 Medusa Corp. 72
1,400 Mikasa, Inc.* 19
1,200 Photronics, Inc.* 38
700 Puerto Rican Cement Co. 23
3,100 Southdown, Inc.* 59
-------
381
HEALTH SERVICES--5.0%
1,200 Access Health Marketing, Inc.* 39
200 American HomePatient, Inc.* 6
2,700 American Medical Response, Inc.* 77
1,700 Apogee, Inc. 17
6,581 Apria Healthcare Group, Inc.* 199
1,000 Arbor Health Care Co.* 18
4,100 Athena Neurosciences, Inc.* 38
600 Barr Labs, Inc.* 14
2,952 Benson Eyecare Corp.* 25
</TABLE>
See accompanying notes to financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------
<C> <S> <C>
1,000 Bio-Rad Labs, Inc.* $ 41
3,000 Champion Healthcare Corp.* 16
4,300 Charter Medical Corp.* 78
2,400 Coastal Physician Group, Inc.* 34
2,850 Community Health Systems, Inc.* 98
6,600 Community Psychiatric Centers* 73
3,500 COR Therapeutics, Inc.* 39
7,100 Coram Healthcare Corp.* 39
3,500 Cytel Corp.* 15
2,800 Daig Corp.* 60
3,275 Enzo Biochem, Inc.* 64
1,300 Fusion Systems Corp.* 41
1,100 Gelman Sciences, Inc.* 26
2,200 Genesis Health Ventures, Inc.* 72
3,485 Grancare, Inc.* 53
1,900 Gulf South Medical Supply, Inc.* 46
3,600 Haemonetics Corp.* 64
1,400 Health Management Systems, Inc.* 50
1,500 Health Management, Inc.* 20
421 Healthdyne Technologies, Inc.* 5
900 Healthwise America, Inc.* 28
7,192 Horizon Healthcare Corp.* 156
1,500 Human Genome Sciences, Inc.* 41
3,600 Hydron Technologies, Inc. 8
1,400 I-STAT Corp.* 49
5,900 IDEXX Laboratories, Inc.* 263
1,050 INBRAND Corp.* 18
900 Incyte Pharmaceuticals, Inc.* 16
1,800 Inphynet Medical Management, Inc.* 33
3,000 Integrated Health Services, Inc. 66
2,600 Kinetic Concepts, Inc. 30
400 Labone, Inc. 6
1,500 Landauer, Inc. 29
2,458 Ligand Pharmaceuticals, Inc.* 21
4,700 Linecare Holdings* 126
2,400 Living Centers of America, Inc.* 75
1,400 MMI Cos., Inc. 33
3,700 Mariner Health Group, Inc.* 49
3,100 Maxicare Health Plans, Inc.* 68
1,200 MedPartners/Mullikin, Inc.* 34
1,600 Multicare Cos., Inc.* 33
1,200 Neurogen Corp.* 25
3,000 North American Biologicals, Inc.* 29
11,600 NovaCare, Inc.* 68
10,500 OIS Optical Imaging Systems, Inc.* 32
3,600 Omnicare, Inc. 136
6,900 Ornda HealthCorp* 135
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------
<C> <S> <C>
1,600 PHP Healthcare Corp.* $ 44
1,500 Pacific Physician Services, Inc.* 25
7,525 Phycor, Inc.* 337
1,500 Physician Reliance Network, Inc.* 53
2,700 Physician Sales & Service, Inc.* 51
1,200 Physicians Health Services, Inc.* 51
2,800 Quantum Health Resources, Inc.* 26
2,100 Regency Health Services, Inc.* 23
1,700 Renal Treatment Centers, Inc.* 69
600 RES-CARE, Inc.* 10
2,700 Resound Corp.* 21
1,100 Rexall Sundown, Inc.* 21
1,400 Right Choice Managed Care, Inc., Class A* 18
1,300 RoTech Medical Corp.* 38
1,000 Rural/Metro Corp.* 25
1,300 Safeskin Corp.* 25
3,100 Sofamor/Danek Group, Inc.* 71
6,180 Sun Healthcare Group, Inc.* 76
800 Target Therapeutics, Inc.* 63
1,300 TheraTx, Inc.* 18
1,000 UniHolding Corp.* 4
5,700 Unilab Corp.* 16
1,000 United American Healthcare Corp.* 11
1,600 Universal Health Realty Income Trust 27
2,500 Universal Health Services, Inc.* 103
2,500 Uromed Corp.* 25
400 Vitalink Pharmacy Services, Inc.* 8
5,925 Vivra, Inc.* 135
2,100 Vivus, Inc.* 55
6,654 Watson Pharmaceuticals, Inc.* 314
1,000 Wellcare Management Group, Inc.* 21
-------
4,758
HEAVY CONSTRUCTION--0.4%
1,900 Apogee Enterprises, Inc. 28
1,300 Granite Construction, Inc. 36
2,500 Greenfield Industries, Inc. 77
3,616 Instituform Technologies, Inc.* 42
1,691 Kasler Holding Co.* 10
3,500 Lennar Corp. 77
2,100 Lone Star Industries, Inc.* 52
2,300 NVR, Inc.* 22
7,800 Presley Cos.* 11
1,300 Redman Industries, Inc.* 36
1,600 Stimsonite Corp.* 14
-------
405
INDUSTRIAL INSTRUMENTS--3.7%
2,200 ATS Medical, Inc.* 20
3,900 Acuson Corp.* 46
</TABLE>
See accompanying notes to financial statements.
33
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
INDUSTRIAL INSTRUMENTS--CONTINUED
2,900 ADAC Laboratories $ 37
2,400 Advanced Technology Laboratories, Inc.* 52
2,200 ALANTEC Corp.* 90
4,500 Allen Group, Inc. 119
3,800 Amsco International, Inc.* 64
1,400 Analogic Corp. 29
4,800 Ballard Medical Products 82
5,500 Biocontrol Technology, Inc.* 19
2,200 CNS, Inc. 34
1,400 Circon Corp.* 31
3,300 Cognex Corp.* 200
1,900 Coherent, Inc.* 80
1,300 CONMED Corp.* 41
1,300 Crosscom Corp.* 16
584 Cubic Corp. 14
1,900 Daniel Industries, Inc. 25
2,400 Datascope Corp.* 61
1,200 Dionex Corp.* 68
1,900 EP Technologies, Inc.* 24
2,500 Electronics for Imaging, Inc.* 215
1,500 Empi, Inc.* 28
2,400 Fisher Scientific International, Inc. 78
900 Fluke (John) Manufacturing Co., Inc.* 31
1,400 Fresenius USA, Inc.* 24
3,500 Genrad, Inc.* 31
3,400 Gilead Sciences, Inc.* 89
675 Hach Co. 11
1,900 Heart Technology, Inc.* 52
3,100 IMO Industries, Inc.* 22
1,500 InControl, Inc.* 18
2,500 Input/Output, Inc.* 115
3,800 Invacare Corp. 102
3,200 Isolyser Company, Inc.* 52
600 Lunar Corp.* 26
800 MTS Systems Corp. 28
5,600 Mascotech, Inc. 61
1,200 Maxxim Medical, Inc.* 19
2,300 Measurex Corp. 64
1,800 MediSense, Inc.* 46
3,564 Mentor Corp. 74
1,000 Mine Safety Appliances Co. 44
4,948 Nellcor Puritan Bennett, Inc.* 285
1,400 Ostex International, Inc.* 26
1,700 Research Industries Corp.* 47
2,500 Respironics, Inc.* 48
4,800 SCI Systems, Inc.* 161
2,300 Staar Surgical Co.* 27
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<C> <S> <C>
1,200 Starrett (L.S.) Co. $ 28
3,000 Sunrise Medical, Inc.* 52
1,000 Tech-Sym Corp.* 30
2,650 TECNOL Medical Products, Inc.* 46
1,600 Theratech, Inc.* 30
2,900 Thermedics, Inc.* 63
3,000 Trimble Navigation Ltd.* 61
1,700 Utah Medical Products, Inc.* 25
3,600 Ventritex, Inc.* 78
1,000 Vital Signs, Inc. 20
1,296 Watkins-Johnson Co. 59
2,400 X-Rite, Inc. 36
-------
3,504
INSURANCE SERVICES--4.4%
2,200 Acceptance Insurance Cos., Inc.* 32
2,500 Acordia, Inc. 70
3,500 Alfa Corp. 39
1,050 Allied Group, Inc. 37
1,524 American Annuity Group, Inc.* 17
3,400 American Bankers Insurance Group, Inc. 123
1,450 American Heritage Life Investment Corp. 29
1,400 American Travelers Corp.* 35
200 Amerco Life, Inc.* 4
1,800 Amvestors Financial Corp. 21
2,700 Argonaut Group, Inc. 90
1,350 Avemco Corp. 23
2,300 Baldwin & Lyons, Inc. 36
1,900 Berkley (W.R.) Corp. 86
1,900 Blanch (E.W.) Holdings, Inc. 41
1,600 Capital Guaranty Corp. 35
2,100 Capital RE Corp. 63
850 Capital Transamerica Corp. 17
800 Capitol American Financial Corp. 16
1,200 Citizens Corp. 22
1,700 Citizens, Inc.* 15
4,400 Commerce Group, Inc. 93
6,900 Coventry Corp.* 135
900 Crop Growers Corp.* 12
2,700 Danielson Holding Corp.* 19
1,000 Delphi Financial Group, Inc.* 20
600 EMC Insurance Group, Inc. 7
2,200 Enhance Financial Services Group, Inc. 53
2,100 Executive Risk, Inc. 55
3,900 Financial Security Assurance International 102
1,700 First American Financial Corp. 39
1,600 Foremost Corp. of America 78
2,275 Fremont General Corp. 78
1,440 Frontier Insurance Group, Inc. 48
1,200 Fund American Enterprises Holdings, Inc.* 83
</TABLE>
See accompanying notes to financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
<C> <S> <C>
3,385 Gainsco, Inc. $ 35
2,100 Gallagher (Arthur J.) & Co. 69
900 Gryphon Holdings, Inc.* 16
2,200 Guaranty National Corp. 32
1,200 HCC Insurance Holdings, Inc.* 40
1,100 Harleysville Group, Inc. 32
2,700 Hilb, Rogal & Hamilton Co. 38
2,200 Home Beneficial Corp. 54
2,600 Home Holdings, Inc.* 0
5,000 Horace Mann Educators Corp. 145
1,700 Independent Insurance Group, Inc. 46
2,500 Integon Corp. 43
3,800 John Alden Financial Corp. 78
600 Kansas City Life Insurance Co. 31
1,600 Lawyers Title Corp. 27
2,300 Liberty Corp. 76
500 Liberty Financial Cos., Inc. 15
3,000 Life Partners Group, Inc. 37
1,600 Life Reinsurance Corp. 34
2,800 Life USA Holding, Inc.* 24
1,429 MAIC Holdings, Inc.* 45
700 Markel Corp.* 51
2,600 NAC RE Corp. 86
2,500 National RE Holdings Corp. 82
400 National Western Life Insurance Co.* 21
1,000 Navigators Group, Inc.* 19
1,000 Nymagic, Inc. 17
2,090 Orion Capital Corp. 87
850 Poe & Brown, Inc. 21
4,200 Presidential Life Corp. 42
2,500 Protective Life Corp. 73
1,200 PXRE Corp. 29
1,065 RLI Corp. 26
2,600 Reinsurance Group of America, Inc. 80
7,300 Reliance Group Holdings, Inc. 65
700 SCOR U.S. Corp. 11
800 Seafield Capital Corp. 28
1,500 Security Connecticut Corp. 38
2,100 Selective Insurance Group, Inc. 80
1,900 Sierra Health Services, Inc.* 62
700 State Auto Financial Corp. 16
1,700 Takecare, Inc. 0
2,790 Statesman Group, Inc.* 0
1,050 Stewart Information Services Corp. 23
1,300 Transnational Re Corp., Class A 34
1,100 Trenwick Group, Inc. 56
5,700 20th Century Industries 104
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
<C> <S> <C>
4,220 United Cos. Financial Corp. $ 139
900 United Fire & Casualty Co. 33
1,300 United Insurance Cos., Inc.* 23
400 United Wisconsin Services, Inc. 9
2,000 Vesta Insurance Group, Inc. 90
1,800 Washington National Corp. 45
5,700 Western National Corp. 81
2,000 Zenith National Insurance Corp. 44
-------
4,205
JEWELRY AND PRECIOUS METALS--0.2%
914 Lifetime Hoan Corp.* 8
1,700 Oneida Ltd. 30
1,000 Syratech Corp.* 21
2,000 Tiffany & Co. 103
-------
162
LEATHER PRODUCTS--0.2%
3,000 Brown Group, Inc. 42
3,400 Justin Industries, Inc. 37
1,400 Timberland Co.* 27
2,925 Wolverine World Wide, Inc. 92
-------
198
LUMBER AND WOOD PRODUCTS--0.4%
1,500 Fibreboard Corp.* 33
4,100 Oakwood Homes Corp. 168
2,200 Ply-Gem Industries, Inc. 40
2,400 Pope & Talbot, Inc. 35
1,400 Republic Group, Inc. 18
2,600 TJ International, Inc. 46
-------
340
MACHINERY--2.6%
1,100 Acme-Cleveland Corp. 25
800 Ag-Chem Equipment Co., Inc.* 23
1,600 Allied Products Corp. 33
1,300 Astec Industries, Inc.* 14
1,300 Avondale Industries, Inc.* 20
2,300 Borg-Warner Security Corp.* 27
1,400 Brenco, Inc. 15
3,100 CMI Corp.* 16
1,800 Cascade Corp. 26
900 Central Sprinkler Corp.* 30
900 DT Industries, Inc. 12
3,500 Donaldson Co., Inc. 87
1,400 Dovatron International, Inc.* 46
2,900 Duriron Co., Inc. 83
3,200 FSI International, Inc.* 65
3,400 Figgie International Holdings, Inc.* 40
2,600 Flow International Corp.* 22
</TABLE>
See accompanying notes to financial statements.
35
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
MACHINERY--CONTINUED
2,800 Fruehauf Trailer Corp.* $ 5
1,050 Gasonics International Corp.* 19
5,200 Giddings & Lewis, Inc. 82
700 Gleason Corp. 23
4,000 Global Industrial Technologies, Inc.* 71
1,175 Gorman-Rupp Co. 18
3,200 Goulds Pumps, Inc. 76
1,465 Graco, Inc. 53
1,300 Helix Technology Corp. 44
2,200 ICC Technologies, Inc.* 27
3,350 IDEX Corp. 138
2,500 Indentix, Inc. 25
2,000 Integrated Process Equipment Corp.* 62
2,100 Ionics, Inc.* 91
2,400 JLG Industries, Inc.* 68
2,037 Jason, Inc.* 15
2,500 Kaydon Corp. 74
3,100 Kulicke & Soffa Industries, Inc.* 88
800 Lindsay Manufacturing Co.* 28
1,200 Lufkin Industries, Inc. 24
1,400 Manitowoc Co., Inc. 41
5,700 Marine Drilling Co., Inc.* 23
3,550 Mohawk Industries, Inc.* 63
2,000 Molten Metal Technology, Inc.* 74
1,200 Morningstar Group, Inc.* 10
1,700 Osmonics, Inc.* 31
3,600 Outboard Marine Corp. 74
799 Pilgrims Pride Corp. 5
986 Raymond Corp.* 20
3,000 Regal-Beloit Corp. 66
2,300 Rexel, Inc.* 31
674 Robbins & Myers, Inc. 22
2,200 Roper Industries, Inc. 78
2,000 SPX Corp. 32
5,500 Smith International, Inc.* 93
500 Special Devices, Inc.* 8
3,000 Specialty Equipment Cos., Inc.* 31
1,350 Thermo Fibertek, Inc.* 27
1,000 Thermo Power Corp.* 14
665 Thermo Process Systems, Inc.* 9
2,300 Toro Co. 73
800 Tractor Supply Co.* 16
3,000 Varco International, Inc.* 27
-------
2,483
MANUFACTURING--GENERAL--0.7%
2,100 American Safety Razor Co.* 18
1,500 Blyth Industries, Inc.* 84
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
960 Brady (W.H.) Co. $ 74
400 Culbro Corp.* 20
700 Duracraft Corp.* 16
4,300 First Alert, Inc.* 46
2,000 Hunt Manufacturing Co. 30
1,700 Insilico Corp.* 56
1,500 Matthews International Corp., Class A 29
1,053 Oil-Dri Corp. of America 16
2,000 Paragon Trade Brands, Inc.* 42
800 Pillowtex Corp. 10
2,200 Samsonite Corp.* 22
800 Seattle Filmworks, Inc.* 15
700 Simpson Manufacturing Co.* 11
450 Simula, Inc.* 9
1,000 Thermolase Corp.* 25
3,000 Toy Biz, Inc.* 67
1,700 Tracor, Inc.* 26
700 Tremont Corp.* 12
700 Trigen Energy Corp. 13
1,900 U.S. Can Corp.* 24
1,100 Ultralife Batteries, Inc.* 24
900 Wireless Telecom Group, Inc. 16
-------
705
MERCHANDISE--GENERAL--0.3%
2,600 Amerisource Corp.* 75
3,100 Church & Dwight Co., Inc. 57
2,200 Cross (A.T.) Co. 35
2,300 Libbey, Inc. 52
4,300 Playtex Products, Inc.* 31
-------
250
METAL MINING--0.4%
2,100 Cleveland Cliffs, Inc. 82
2,800 Coeur D'Alene Mines Corp. 51
1,000 FMC Gold Co. 4
3,717 Firstmiss Gold, Inc.* 73
7,300 Hecla Mining Co.* 53
2,000 HS Resources, Inc.* 27
2,600 Stillwater Mining Co. 45
34,000 Sunshine Mining Co.* 55
-------
390
METAL PRODUCTS--1.2%
1,400 Alltrista Corp.* 26
8,700 Amax Gold, Inc.* 55
600 American Buildings Co.* 14
2,700 Aptargroup, Inc. 97
600 Barnes Group, Inc. 23
1,050 Butler Manufacturing Co. 36
</TABLE>
See accompanying notes to financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------------
<C> <S> <C>
2,300 CasTech Aluminum Group, Inc.* $ 35
1,800 Chase Brass Industries, Inc.* 22
900 Citation Corp.* 15
2,600 Clarcor, Inc. 57
1,000 Easco, Inc. 7
1,000 Greenbriar Cos., Inc. 11
498 International Aluminum Corp. 14
2,700 Irvine Sensors Corp.* 16
7,900 Magma Copper Co.* 168
2,700 Material Sciences Corp.* 36
500 Miller Industries, Inc.* 11
1,200 NN Ball & Roller, Inc. 27
2,300 Nortek, Inc.* 22
100 Penn Engineering & Manufacturing Corp. 8
2,400 Quanex Corp. 47
864 SPS Technologies, Inc.* 39
914 Varlen Corp. 24
3,600 Watts Industries, Inc., Class A 74
1,500 Whittaker Corp.* 27
2,400 Wolverine Tube, Inc.* 81
5,000 Wyman-Gordon Co.* 75
2,900 Zero Corp. 46
-------
1,113
MINING, QUARRYING OF NONMETALLIC MINERAL--0.1%
2,300 Dravo Corp.* 28
2,600 Zeigler Coal Holding Co. 29
-------
57
MISCELLANEOUS INVESTING INSTITUTIONS--1.5%
1,800 Apartment Investment & Management Co., Class A* 34
1,900 BRE Properties, Inc. 63
3,000 Burnham Pacific Properties, Inc. 31
5,900 CWM Mortgage Holdings, Inc. 89
4,050 Capstead Mortgage Corp. 92
2,700 Champion Enterprises, Inc.* 81
1,619 Chemical Financial Corp. 66
3,200 Crescent Real Estate Equities, Inc.* 108
3,500 Deposit Guaranty Corp. 163
878 Goodwill Participation Securities 4
4,600 IRT Property Co. 43
3,200 Koger Equity, Inc.* 30
3,200 LTC Properties, Inc. 48
935 MAF Bancorp, Inc. 24
2,000 MGI Properties, Inc. 31
4,200 MVR, Inc.* 1
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
<C> <S> <C>
4,300 Merry Land & Investment Co., Inc. $ 95
3,300 Nationwide Health Properties, Inc. 131
1,000 PEC Israel Economic Corp.* 21
1,175 Peoples First Corp. 26
5,100 RPS Realty Trust 22
3,600 Resource Mortgage Capital, Inc. 72
6,800 Rockefeller Center Properties, Inc. 52
700 Seacor Holdings, Inc.* 16
1,600 Smith, (Charles E.) Residential Realty, Inc. 37
2,000 Trans Financial Bancorp, Inc. 34
1,600 Vallicorp Holdings, Inc. 22
-------
1,436
NATURAL GAS TRANSMISSION--1.9%
2,750 Atmos Energy Corp. 57
2,400 Bay State Gas Co. 65
1,550 Cascade Natural Gas Corp. 25
1,500 Colonial Gas Co. 32
1,600 Connecticut Energy Corp. 32
1,800 Connecticut Natural Gas Corp. 42
3,100 Eastern Enterprises 101
1,800 Energen Corp. 42
3,500 Indiana Energy, Inc. 83
2,951 KN Energy, Inc. 86
4,400 Kelly Oil and Gas Corp.* 5
3,100 Laclede Gas Co. 65
1,400 NUI Corp. 23
3,200 New Jersey Resources Corp. 89
1,100 North Carolina Natural Gas Corp. 25
2,600 Northwest Natural Gas Co. 87
4,100 Oneok, Inc. 96
4,276 Piedmont Natural Gas Co. 100
3,300 Primark Corp.* 91
3,350 Public Service Co. of North Carolina, Inc. 55
1,920 South Jersey Industries, Inc. 41
2,080 Southeastern Michigan Gas Enterprises, Inc. 37
1,090 Southern Union Co.* 26
4,200 Southwest Gas Corp. 76
4,500 Southwestern Energy Co. 59
1,705 Tejas Gas Corp.* 84
6,000 UGI Corp. 125
1,900 United Cities Gas Co. 32
4,300 Washington Energy Co. 79
3,000 Wicor, Inc. 92
-------
1,852
</TABLE>
See accompanying notes to financial statements.
37
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
OIL AND GAS--2.6%
1,000 Aquila Gas Pipeline Corp. $ 12
4,740 Barrett Resources Corp.* 117
1,100 Belden & Blake Corp.* 18
4,400 Benton Oil & Gas Co.* 65
2,800 Berry Petroleum Co. 30
6,043 BJ Services Co.* 149
3,300 Box Energy Corp.* 29
2,300 Brown (Tom), Inc.* 29
4,100 Cabot Oil & Gas Corp. 58
800 Cairn Energy USA, Inc.* 10
3,400 Calmat Co. 59
2,000 Capsure Holdings Corp.* 28
4,100 Coda Energy, Inc.* 31
2,400 Cross Timbers Oil Co. 41
2,700 Destec Energy, Inc.* 38
3,900 Devon Energy Corp. 94
1,600 Energy Ventures, Inc.* 34
1,000 Flores & Rucks, Inc.* 13
5,300 Global Natural Resources, Inc.* 52
4,300 Helmerich & Payne, Inc. 117
499 Hondo Oil & Gas Co.* 8
1,700 KCS Energy, Inc. 23
4,350 MDU Resources Group, Inc. 88
11,500 Mesa, Inc.* 37
14,400 Nabors Industries, Inc.* 142
11,050 Noble Drilling Corp.* 80
1,400 Nuevo Energy Co.* 31
4,300 Oceaneering International, Inc.* 42
6,500 Parker & Parsley Petroleum Co. 122
9,900 Parker Drilling Co.* 51
2,400 Phoenix Resource Cos., Inc. 41
2,700 Plains Resources, Inc.* 20
2,400 Pool Energy Services Co.* 22
4,200 Pride Petroleum Services, Inc.* 41
1,400 Production Operators Corp. 43
11,000 Reading & Bates Corp.* 144
15,600 Rowan Cos., Inc.* 117
6,100 Seagull Energy Corp.* 111
4,600 Snyder Oil Corp. 53
1,700 Tide West Oil, Inc.* 23
3,400 Tuboscope Vetco International Corp.* 20
1,700 USX-Delhi Group 17
2,000 Vintage Petroleum, Inc. 41
4,800 Wainoco Oil Corp.* 14
2,900 Western Gas Resources, Inc. 47
1,599 Wiser Oil Co. 20
-------
2,422
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------
<C> <S> <C>
ORDNANCE AND ACCESSORIES--0.2%
2,500 Alliant Techsystems, Inc.* $ 128
1,700 Sturm Ruger & Co., Inc. 50
-------
178
OTHER SERVICES--0.3%
1,050 Guest Supply, Inc.* 23
800 Horsehead Resource Development, Inc. 4
1,200 McGrath Rentcorp 22
4,700 Omega Environmental, Inc.* 19
700 Prins Recycling Corp. 6
1,100 Quick Response Services, Inc.* 28
700 Summit Care Corp.* 16
650 Thermo Remediation, Inc. 9
2,900 United Waste Systems, Inc.* 116
600 Vallen Corp.* 13
400 Wackenhut Corrections Corp.* 11
-------
267
PAPER PRODUCTS--0.6%
4,100 Chesapeake Corp. 121
8,200 Gaylord Container Corp.* 76
2,500 Greif Bros. Corp. 65
1,240 Mosinee Paper Corp. 30
1,100 Nashua Corp.* 17
3,237 Paxar Corp.* 42
4,600 Rock-Tenn Co. 74
1,200 Sealright Co. 13
2,700 Shorewood Packaging Corp.* 38
2,000 Universal Forest Products, Inc. 18
4,100 Wausau Paper Mills Co. 113
-------
607
PERSONAL SERVICES--0.5%
1,500 Angelica Corp. 34
2,500 CPI Corp. 52
1,500 Catalina Marketing Corp.* 87
1,600 Craig (Jenny), Inc.* 15
800 Equity Corporation International 16
3,650 G & K Services, Inc. 85
1,773 Marcus Corp. 41
2,700 Rio Hotel & Casino, Inc.* 34
1,133 Sholodge, Inc.* 11
3,600 Unifirst Corp. 57
-------
432
PETROLEUM PRODUCTS--0.7%
3,700 Camco International, Inc. 87
1,200 Crown Central Petroleum Corp.* 17
1,100 Dual Drilling Co.* 11
1,600 Elcor Corp. 33
</TABLE>
See accompanying notes to financial statements.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
578 Holly Corp. $ 13
1,400 Louis Dreyfus Natural Gas Corp.* 19
2,500 Newfield Exploration, Inc.* 74
1,890 Newpark Resources, Inc.* 34
1,600 Quaker Chemical Corp. 26
5,600 Quaker State Corp. 76
2,300 Royal Gold, Inc.* 18
1,000 RPC, Inc.* 8
1,600 Seitel, Inc.* 40
1,600 Stone Energy Corp.* 22
1,400 Tatham Offshore, Inc.* 1
4,400 Tesoro Petroleum Corp.* 37
1,900 Texas Meridian Resources, Corp.* 24
4,710 United Meridian Corp.* 78
-------
618
PRINTING AND PUBLISHING--2.0%
1,800 American Business Information, Inc.* 33
2,150 American Business Products, Inc. 50
7,400 American Media, Inc., Class A 32
3,600 Banta Corp. 157
2,600 Bowne & Co., Inc. 52
3,700 CCH, Inc. 202
1,500 CSS Industries, Inc.* 31
1,000 Cadmus Communications Corp. 28
1,100 Devon Group, Inc.* 42
750 Edmark Corp.* 31
3,000 Ennis Business Forms, Inc. 38
2,600 Express Scripts, Inc.* 107
1,200 Franklin Electronic Publishers, Inc.* 49
2,900 Gibson Greetings, Inc.* 44
1,100 Graphic Industries, Inc. 11
5,400 Harland (John H.) Co. 111
1,400 Harte-Hanks Communications, Inc. 47
3,200 Houghton Mifflin Co. 129
2,700 McClatchy Newspapers, Inc., Class A 56
5,700 Meredith Corp. 224
1,054 Merrill Corp. 18
2,750 Nelson (Thomas), Inc. 45
2,600 New England Business Service, Inc. 59
2,800 Playboy Enterprises, Inc.* 23
794 Plenum Publishing Corp. 29
825 Pulitzer Publishing Co. 38
2,300 Standard Register Co. 48
7,300 Topps, Inc.* 37
3,900 Valassis Communications, Inc.* 60
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------
<C> <S> <C>
200 Waverly, Inc.* $ 8
3,000 Western Publishing Group, Inc.* 27
2,400 Wiley (John) & Sons, Inc. 78
-------
1,944
PROFESSIONAL SERVICES--6.8%
1,160 ABM Industries, Inc. 33
900 ADR Information Services, Inc. 31
800 AccuStaff, Inc.* 24
3,000 Acxiom Corp.* 86
3,425 Advo, Inc. 91
1,400 Affiliated Computer Services, Inc.* 45
6,800 Allwaste, Inc.* 29
700 Alternative Resources Corp.* 21
400 American List Corp. 11
4,600 American Management Systems, Inc.* 137
3,300 AmeriData Technologies, Inc.* 35
1,287 Analysts International Corp. 39
2,600 Artisoft, Inc.* 24
1,000 Aspen Technologies, Inc.* 30
3,800 BBN Corp.* 143
2,800 BE Aerospace, Inc.* 26
4,300 BWIP Holding, Inc. 66
3,000 Banyan Systems, Inc.* 37
2,700 Bisys Group, Inc.* 76
1,371 Boole & Babbage, Inc.* 51
1,500 Broadway & Seymour, Inc.* 28
2,000 CDI Corp.* 37
900 Career Horizons, Inc.* 26
6,800 Cheyenne Software, Inc.* 158
900 ClinTrials Research, Inc.* 16
600 Computer Language Research, Inc. 7
1,400 Computer Horizons Corp.* 49
1,600 Computer Task Group, Inc. 31
7,300 Computervision Corp.* 91
3,400 Continuum Co., Inc.* 136
2,000 Control Data Systems, Inc.* 34
6,000 Corrections Corp. of America* 186
700 CyCare Systems, Inc.* 20
1,100 Dial Page, Inc.* 17
1,284 Electro Rent Corp.* 26
1,000 EmCare Holdings, Inc. 23
1,400 Fair Isaac & Co. 39
3,400 Franklin Quest Co.* 64
1,500 GMIS, Inc.* 20
2,200 General Magic, Inc.* 23
3,200 Gerber Scientific, Inc. 54
700 Global Industries Ltd.* 19
200 Grey Advertising, Inc. 38
</TABLE>
See accompanying notes to financial statements.
39
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
PROFESSIONAL SERVICES--CONTINUED
1,200 Gupta Corp.* $ 8
300 HCIA, Inc.* 14
1,300 Henry (Jack) & Associates, Inc. 31
2,100 Hogan Systems, Inc.* 19
400 ITT Educational Services, Inc.* 8
1,200 Infocus Systems* 41
1,200 Inso Corp.* 49
1,000 Integrated Silicon Systems, Inc.* 31
2,100 Interim Services, Inc.* 67
1,300 International Imaging Materials, Inc.* 33
875 International Shipholding Corp. 17
2,700 Intersolv, Inc.* 29
2,875 Keane, Inc.* 79
4,200 Kenetech Corp.* 13
3,600 Kinder Care Learning Centers, Inc.* 44
2,200 Knowledge/Sterling, Inc.* 0
2,500 Landmark Graphics Corp.* 50
2,300 Landstar Systems, Inc.* 59
1,100 Learning (The) Co.* 67
3,000 MDC Corp. 20
2,400 MacNeal-Schwendler Corp. 38
1,200 Manugistics Group, Inc.* 21
1,700 Marcam Corp.* 29
3,100 McAfee Associates, Inc.* 148
1,300 Medic Computer Systems, Inc.* 83
2,100 Metricom, Inc.* 33
1,500 Minnesota Educational Computing Corp.* 50
807 Monro Muffler Brake, Inc.* 12
3,700 National Data Corp. 90
2,500 National Health Investors, Inc. 77
600 National Instruments Corp.* 11
1,100 NETCOM On-Line Communication Services, Inc.* 80
2,000 Network Computing Devices, Inc.* 17
3,200 Network Equipment Technologies, Inc.* 106
1,800 Network Peripherals, Inc.* 24
1,000 Norrell Corp. 28
800 Oak Technology, Inc.* 38
500 Open Environment Corp.* 5
600 Orthodontic Centers of America, Inc.* 19
800 PHAMIS, Inc.* 21
2,400 Physician Computer Network, Inc.* 16
1,000 Pinkertons, Inc.* 20
2,300 Platinum Software Corp.* 16
4,850 Players International, Inc.* 64
3,200 Pre-Paid Legal Services, Inc.* 27
2,000 Progress Software Corp.* 64
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
2,300 Protein Design Labs, Inc.* $ 43
3,400 Quarterdeck Corp.* 109
2,000 Quintiles Transnational Corp.* 81
1,800 Rational Software Corp.* 32
500 Remedy Corp.* 31
4,700 Robert Half International, Inc.* 189
7,000 Rollins Truck Leasing Corp. 70
400 Roto-Rooter, Inc. 13
1,400 Security Dynamics Technologies, Inc.* 69
1,400 Shiva Corp.* 104
3,300 Sierra On-Line, Inc.* 112
800 Softdesk, Inc.* 18
3,100 Softkey International, Inc.* 105
1,100 Software Artistry, Inc.* 20
6,500 Sotheby's Holdings, Inc., Class A 90
3,000 Spectrum Holobyte, Inc. 26
3,500 Stac, Inc.* 42
3,900 Steris Corp.* 158
4,300 Structural Dynamics Research Corp.* 88
1,800 Syquest Technology, Inc.* 19
4,000 System Software Associates, Inc. 144
2,300 Systems & Computer Technology Corp.* 43
1,400 Systemsoft Corp.* 19
1,200 TCSI Corp.* 21
400 TGV Software, Inc.* 3
2,800 Telxon Corp. 65
1,650 Thermotrex Corp.* 72
2,500 Tivoli Systems, Inc.* 74
500 U.S. Delivery Systems, Inc.* 12
4,000 Verifone, Inc.* 117
1,000 Veritas Software Corp.* 36
2,800 Viewlogic Systems, Inc.* 30
1,500 VISX Corp.* 52
800 Volt Information Sciences, Inc.* 22
1,297 Wackenhut Corp. 22
9,194 Weatherford Enterra, Inc.* 233
900 Wind River Systems* 26
6,000 Work Recovery, Inc.* 5
2,100 Xircom, Inc.* 26
-------
6,434
REAL ESTATE--4.8%
3,300 American Health Properties, Inc. 66
700 AMLI Residential Properties 13
1,900 Associated Estates Realty Corp. 37
4,300 Avalon Properties, Inc. 84
1,200 Avatar Holdings, Inc.* 44
2,100 Bay Apartment Communities, Inc. 46
2,700 Beacon Properties Corp. 55
</TABLE>
See accompanying notes to financial statements.
40
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------
<C> <S> <C>
4,500 Berkshire Realty, Inc. $ 42
1,500 Bradley Real Estate Trust 21
3,600 CBL & Associates Properties, Inc. 74
2,200 CRI Liquidating REIT, Inc. 8
2,400 Cali Realty Corp. 47
2,600 Camden Property Trust 54
2,300 Carr Realty Corp. 49
1,600 Centerpoint Properties Corp. 36
1,000 Chateau Properties, Inc. 22
1,600 Chelsea GCA Realty, Inc. 45
500 Christiana Cos., Inc.* 12
2,200 Colonial Property Trust* 54
2,000 Columbus Realty Trust 38
2,000 Commercial Net Lease Realty, Inc. 26
3,900 Cousins Properties, Inc. 72
3,800 Crown American Realty Trust 25
9,600 DeBartolo Realty Corp. 124
2,900 Developers Diversified Realty Corp. 82
3,400 Doubletree Corp.* 72
3,600 Duke Realty Investments, Inc. 100
1,800 Equity Inns, Inc. 21
1,100 Essex Property Trust, Inc. 20
2,900 Evans Withycombe Residential, Inc. 55
1,900 Excel Realty Trust, Inc. 37
2,100 Factory Stores America, Inc. 36
5,500 Federal Realty Investment Trust 121
1,400 FelCor Suite Hotel, Inc. 41
3,000 First Industrial Realty Trust, Inc. 62
3,200 First Union Real Estate Investments 22
700 Forest City Enterprises, Inc. 24
1,900 Gables Residential Trust 42
3,700 General Growth Properties, Inc. 69
3,700 Glimcher Realty Trust 65
3,208 HGI Realty, Inc. 71
2,100 Haagen Alexander Properties, Inc. 24
2,100 Health Care REIT, Inc. 38
2,300 Healthcare Realty Trust 48
2,500 Highwoods Properties, Inc. 66
2,100 Irvine Apartment Communities, Inc. 38
1,400 JDN Realty Corp. 29
1,900 JP Realty, Inc. 38
1,800 Kranzco Realty Trust 26
3,800 Liberty Property Trust 74
1,300 Macerich Co. 26
4,300 Manufactured Home Communities, Inc. 75
1,300 Mark Centers Trust 13
1,000 Maxxam, Inc.* 38
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<C> <S> <C>
3,000 Mid-America Apartment Communities, Inc. $ 68
2,500 Mills Corp. 46
1,900 National Golf Properties, Inc. 42
2,900 Oasis Residential, Inc. 61
800 PRI Automation, Inc.* 33
2,600 Paragon Group, Inc. 44
1,300 Pennsylvania REIT 25
2,600 Post Properties, Inc. 79
4,800 Price Enterprises, Inc.* 74
1,400 Price REIT, Inc. 40
1,600 Prime Residential, Inc. 27
5,000 Public Storage, Inc. 90
4,300 RFS Hotel Investors, Inc. 65
2,200 ROC Communities, Inc. 49
1,600 Real Estate Investment Trust of California 28
3,500 Realty Income Corp. 68
1,200 Regency Realty Corp.* 20
2,100 Saul Centers, Inc. 29
2,400 Shurguard Storage Centers, Inc. 62
3,325 South West Property Trust, Inc. 42
5,000 Spieker Properties, Inc. 123
1,000 Storage Trust Realty 20
2,900 Storage USA, Inc. 88
4,300 Summit Property, Inc. 82
1,700 Sun Communities, Inc. 43
1,000 Tanger Factory Outlet Centers, Inc. 23
5,500 Taubman Centers, Inc. 52
2,100 Thornburg Mortgage Asset Corp. 31
2,700 Town & Country Trust 33
1,900 Trinet Corporate Realty Trust 51
1,900 Tucker Properties Corp. 17
9,000 United Dominion Realty Trust 127
2,400 Urban Shopping Centers, Inc. 49
1,800 Walden Residential Properties, Inc. 32
5,000 Washington Real Estate Investment Trust 79
1,400 Weeks Corp. 32
2,900 Wellsford Residential Property Trust 61
3,000 Western Investment Real Estate Trust 32
-------
4,534
RECREATIONAL SERVICES--1.6%
500 AMC Entertainment, Inc.* 11
2,400 American Classic Voyages Co. 26
400 American Filtrona Corp. 15
500 Ameristar Casinos, Inc.* 3
900 Anchor Gaming* 18
1,817 Anthony Industries, Inc. 41
2,100 Argosy Gaming Corp.* 18
2,900 Authentic Fitness Corp. 61
6,800 Aztar Corp.* 60
</TABLE>
See accompanying notes to financial statements.
41
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
RECREATIONAL SERVICES--CONTINUED
7,100 Bally Entertainment Corp.* $ 86
300 Bally's Grand, Inc.* 4
1,700 Carmike Cinemas, Inc.* 42
1,850 Casino America, Inc.* 11
3,200 Casino Magic Corp.* 14
400 Churchill Downs, Inc. 14
1,900 Cobra Golf, Inc.* 52
8,700 Discovery Zone, Inc.* 29
1,000 GC Cos., Inc.* 34
3,800 Grand Casinos, Inc.* 140
900 Harvey's Casino Resorts 14
2,000 Hollywood Casino Corp., Class A* 11
2,700 Hollywood Park, Inc.* 28
5,100 Ideon Group, Inc. 41
767 Johnson Worldwide Associates, Inc. * 18
3,100 Lydall, Inc.* 81
700 Movie Gallery, Inc.* 24
1,200 Primadonna Resorts, Inc.* 21
5,400 Prime Hospitality Corp.* 52
1,250 Regal Cinemas, Inc.* 54
5,400 Savoy Pictures Entertainment, Inc.* 32
2,300 Scientific Games Holdings Corp.* 77
2,700 Showboat, Inc. 73
1,350 Shuffle Master, Inc.* 18
1,700 Skyline Corp. 32
800 Sodak Gaming, Inc.* 16
800 Speedway Motorsports, Inc.* 23
3,500 Sports & Recreation, Inc.* 25
2,800 Station Casinos, Inc.* 42
6,200 Tyco Toys, Inc.* 34
3,200 WMS Industries, Inc.* 59
900 White River Corp.* 31
-------
1,485
RESEARCH AND CONSULTING SERVICES--1.1%
5,500 Advance Tissue Science, Inc.* 49
1,200 Agouron Pharmaceuticals, Inc.* 36
3,300 Air & Water Technologies Corp.* 18
2,500 Alliance Entertainment Corp.* 24
5,000 Applied Bioscience International, Inc.* 32
7,500 Aura Systems, Inc.* 42
7,600 Bio-Technology General Corp.* 28
4,500 Columbia Laboratories, Inc.* 32
5,100 Cytogen Corp.* 27
2,900 Dames & Moore, Inc. 38
1,500 GRC International, Inc.* 45
3,100 Jacobs Engineering Group, Inc.* 75
4,800 Liposome Technology, Inc.* 80
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------
<C> <S> <C>
1,300 Mercer International, Inc.* $ 28
2,300 Mycogen Corp.* 30
1,000 NFO Research, Inc.* 25
1,100 NeoPath, Inc.* 21
1,100 Northfield Laboratories, Inc.* 18
3,900 OHM Corp.* 32
1,980 Organogenesis, Inc.* 37
6,300 Scios-Nova, Inc.* 24
1,900 Spacelabs Medical, Inc.* 50
1,700 Stone & Webster, Inc. 63
2,900 Summit Technology, Inc.* 138
6,200 U.S. Bioscience, Inc.* 23
-------
1,015
RETAIL--5.4%
1,300 Aaron Rents, Inc. 23
570 Alexander's, Inc.* 35
500 American Eagle Outfitters, Inc.* 5
5,100 Americredit Corp.* 66
4,100 AnnTaylor Stores, Inc.* 52
4,312 Apple South, Inc. 91
2,600 Arbor Drugs, Inc. 51
1,500 Baby Superstores, Inc.* 84
2,000 Baker (J.), Inc. 13
5,600 Best Products Corp., Inc.* 35
2,400 Big B, Inc. 24
1,400 Blair Corp. 44
6,400 Bombay Company, Inc.* 43
900 Bon-Ton Stores, Inc.* 5
1,800 Books-a-Million, Inc.* 26
5,600 Borders Group, Inc.* 99
300 Buckle, Inc.* 5
4,800 Buffets, Inc.* 64
2,800 Burlington Coat Factory Warehouse* 32
400 CDW Computer Centers, Inc.* 21
3,200 CKE Restaurants, Inc. 56
8,400 CML Group, Inc. 51
3,000 Caldor Corp.* 12
2,900 Carson Pirie Scott & Co.* 58
5,100 Cash America International, Inc. 28
4,200 Cato Corp. 30
600 Central Tractor Farm & Country, Inc.* 6
16,600 Charming Shoppes, Inc.* 38
7,800 Checkers Drive-In Restaurants, Inc.* 11
1,400 Chic by H.I.S., Inc.* 8
3,700 Circle K Corp.* 88
2,200 Claire's Stores, Inc. 43
4,500 CompUSA, Inc.* 167
1,300 Consolidated Products, Inc.* 21
268 Dart Group Corp. 25
</TABLE>
See accompanying notes to financial statements.
42
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------
<C> <S> <C>
983 Delchamps, Inc. $ 17
2,750 Designs, Inc.* 22
800 Dollar Tree Stores, Inc.* 22
2,800 Dress Barn, Inc.* 26
3,400 Duty Free International, Inc. 46
2,900 Edison Brothers Stores, Inc.* 5
1,300 Fabri-Centers of America, Inc., Class A* 19
1,300 Fabri-Centers of America, Inc., Class B* 15
6,800 Family Dollar Stores, Inc. 105
2,600 Fay's, Inc. 18
8,500 Fedders Corp. 45
7,800 Fingerhut Cos., Inc. 98
1,000 First Team Sports, Inc.* 16
5,468 Flagstar Cos., Inc.* 23
7,000 Foodmaker, Inc.* 37
2,100 Friedmans, Inc., Class A* 49
3,599 General Host Corp.* 17
1,307 Genovese Drug Stores, Inc., Class A 16
2,400 Good Guys, Inc.* 25
1,150 Goody's Family Clothing, Inc.* 13
4,200 Gymboree Corp.* 99
1,200 Haggar Corp. 22
3,800 Hancock Fabrics, Inc. 37
7,900 Hanover Direct, Inc.* 13
1,746 Haverty Furniture Cos., Inc. 25
5,600 Hechinger Co. 25
1,677 Hills Stores Co.* 20
3,200 Hollywood Entertainment Corp.* 52
8,200 Home Shopping Network, Inc.* 77
1,600 IHOP Corp.* 41
1,200 Ingles Markets, Inc. 13
8,900 Interco, Inc.* 75
1,600 Just For Feet, Inc.* 55
3,000 Lands' End, Inc. 44
1,900 Lechters, Inc.* 13
5,300 Levitz Furniture, Inc.* 17
900 Lillian Vernon Corp. 13
2,400 Long Drug Stores, Corp. 95
4,600 Mac Frugal's Bargains Close-Outs, Inc.* 60
1,575 Men's (The) Warehouse, Inc.* 45
4,700 Meyer (Fred), Inc.* 109
3,100 Michael's Stores, Inc.* 51
6,200 Musicland Stores Corp.* 40
2,000 National Media Corp.* 36
1,682 Natures Sunshine Products, Inc. 38
2,900 Neiman Marcus Group, Inc. 61
2,900 NPC International, Inc.* 23
600 O'Reilly Automotive, Inc.* 18
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- ------------------------------------------------------------
<C> <S> <C>
7,100 Payless Cashways, Inc.* $ 30
1,900 Penn Traffic Co.* 25
1,100 Petco Animal Supplies, Inc.* 30
3,700 Petrie Stores Corp.* 11
4,500 Petroleum Heat & Power, Inc. 36
7,035 Pier I Imports, Inc. 77
1,400 Proffitt's, Inc.* 38
600 Quality Food Centers, Inc.* 12
1,200 Regis Corp.* 28
1,400 Renters Choice, Inc.* 23
4,300 Ross Stores, Inc. 82
9,500 Ryan's Family Steak Houses, Inc.* 70
2,050 Sbarro, Inc. 46
18,400 Service Merchandise Co., Inc.* 113
3,000 Shopko Stores, Inc. 34
1,900 Showbiz Pizza Time, Inc.* 24
3,900 Sizzler International, Inc.* 15
3,500 Smith's Food & Drug Centers, Inc., Class B 84
2,100 Sonic Corp.* 46
1,600 Sportmart, Inc.* 12
2,600 Sports Authority, Inc.* 55
2,900 Stanhome, Inc. 86
1,550 Stein Mart, Inc.* 19
1,420 Strawbridge & Clothier, Class A 31
7,600 Stride Rite Corp. 67
2,500 Sun Television & Appliance, Inc. 14
11,200 Sunglass Hut International, Inc.* 235
3,900 Systemed, Inc.* 23
2,900 TCBY Enterprises, Inc. 12
900 Today's Man, Inc.* 4
400 Trak Auto Corp.* 6
1,050 Uno Restaurant Corp.* 7
700 Urban Outfitters, Inc.* 16
1,300 Valmont Industries, Inc. 33
2,100 Value City Department Stores, Inc.* 14
3,100 Venture Stores, Inc.* 11
1,700 Vicorp Restaurants, Inc.* 19
5,000 Waban, Inc.* 93
400 West Marine, Inc.* 13
2,500 Whole Foods Market, Inc.* 36
3,300 Williams-Sonoma, Inc.* 66
5,600 Zale Corp.* 93
-------
5,100
RUBBER AND PLASTICS--0.6%
2,000 ACX Technologies, Inc.* 33
700 AEP Industries, Inc. 16
798 Blessings Corp. 8
2,100 Carlisle Cos., Inc. 90
2,700 Foamex International, Inc.* 19
</TABLE>
See accompanying notes to financial statements.
43
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ----------------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
RUBBER AND PLASTICS--CONTINUED
1,600 Furon Co. $ 29
900 Liqui-Box Corp. 26
2,295 Myers Industries, Inc.* 37
2,000 O'Sullivan Corp. 21
1,500 Park Ohio Industries, Inc.* 19
1,200 Rogers Corp.* 29
3,800 Sola International, Inc.* 104
4,200 Spartech Corp. 28
1,600 Tredegar Industries, Inc. 51
900 Tuscarora, Inc. 22
2,200 West Co., Inc. 53
-------
585
SANITARY SERVICES--0.5%
4,700 Allied Waste Industries, Inc.* 35
1,800 Centennial Cellular Corp.* 34
5,700 International Technology Corp.* 15
3,900 Mid-American Waste Systems, Inc.* 16
2,700 Republic Waste Industries, Inc.* 66
10,700 Rollins Environmental Services, Inc.* 32
2,500 Sanifill, Inc.* 84
300 Sevenson Environmental Services, Inc. 5
8,758 USA Waste Services, Inc.* 184
1,700 Western Waste Industries, Inc.* 31
-------
502
SERVICE INDUSTRY MACHINERY--0.3%
2,000 Applied Power, Inc. 65
2,750 Commercial Intertech Corp. 49
867 Kysor Industrial Corp. 20
1,600 Scotsman Industries, Inc. 26
1,500 Tennant Co. 37
3,250 United States Filter Corp.* 71
1,050 Wynn's International, Inc. 30
-------
298
SOCIAL SERVICES--0.3%
700 Advantage Health Corp.* 23
1,200 Apollo Group, Inc., Class A 37
547 Berlitz International, Inc.* 9
1,000 Children's Discovery Centers of America, Inc.* 8
2,300 DeVry, Inc.* 61
4,100 Forum Group, Inc.* 31
5,200 National Education Corp.* 41
2,818 Omega Healthcare Investors, Inc. 69
-------
279
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------
<C> <S> <C>
STEEL PRODUCTS--1.7%
3,500 AK Steel Holding Corp. $ 121
2,000 Acme Metals, Inc.* 30
1,500 Amcast Industrial Corp. 28
12,400 Armco, Inc.* 71
4,300 Birmingham Steel Corp. 64
2,900 Brush Wellman, Inc. 51
2,700 Carpenter Technology Corp. 117
1,000 Chaparral Steel Co. 10
1,800 Commonwealth Aluminum Corp. 31
400 Curtiss Wright Corp. 19
2,200 Geneva Steel Co.* 16
500 Gibraltar Steel Corp.* 6
2,500 Handy & Harman 39
1,700 Hayes Wheels International, Inc. 45
900 Huntco, Inc., Class A 16
1,800 IMCO Recycling, Inc. 41
3,300 Intermet Corp.* 40
3,200 J & L Specialty Steel, Inc. 53
1,400 Kaiser Aluminum Corp.* 20
3,200 Lone Star Technologies, Inc. 28
2,600 Lukens, Inc. 80
3,000 Mueller Industries, Inc.* 69
3,700 National Steel Corp., Class B* 47
3,600 Northwestern Steel & Wire Co.* 30
3,000 Oregon Steel Mills, Inc. 41
3,550 Precision Castparts Corp. 128
1,200 Reliance Steel & Aluminum Co. 22
1,900 Rouge Steel Co. 41
600 Schnitzer Steel Industries, Inc. 18
900 Shiloh Industries, Inc.* 10
2,200 Standex International Corp. 80
1,250 Steel Technologies, Inc. 11
1,400 Texas Industries, Inc. 72
3,900 UNR Industries, Inc. 35
1,000 WCI Steel, Inc.* 4
4,100 WHX Corp.* 45
6,700 Weirton Steel Corp.* 29
-------
1,608
TEXTILES--0.7%
3,800 Albany International Corp. 81
11,200 Burlington Industries, Inc.* 150
4,300 Cone Mills Corp.* 48
700 Congoleum Corp., Class A* 7
</TABLE>
See accompanying notes to financial statements.
44
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------
<C> <S> <C>
1,100 Crown Crafts, Inc. $ 13
3,000 Delta Woodside Industries, Inc. 19
800 Fab Industries, Inc. 24
1,582 Fieldcrest Cannon, Inc.* 32
2,100 Galey & Lord, Inc.* 22
1,998 Guilford Mills, Inc. 46
3,200 Interface, Inc. 52
4,200 Phillips-Van Heusen 44
1,000 Quiksilver, Inc.* 31
4,400 Ruddick Corp. 47
5,300 Tultex Corp.* 25
3,400 West Point Stevens, Inc.* 61
-------
702
TRANSPORTATION PARTS AND EQUIPMENT--2.2%
2,900 AAR Corp. 53
1,400 ABC Rail Products Corp.* 31
2,400 APS Holding Corp. 44
5,630 America West Airlines, Inc.* 101
5,250 Arctco, Inc. 74
1,700 Armor All Products Corp. 32
3,900 Arvin Industries, Inc. 69
3,300 Aviall, Inc. 28
4,000 Borg Warner Automotive, Inc. 118
2,300 Breed Technologies, Inc. 47
800 Cannondale Corp.* 11
10,700 Collins & Aikman Corp.* 68
1,200 Copart, Inc.* 29
1,700 Detroit Diesel Corp.* 31
1,300 Eaton Vance Corp. 37
3,600 Envirosource, Inc.* 11
1,600 Excel Industries, Inc. 20
2,800 Exide Corp. 128
6,000 Federal-Mogul Corp. 115
4,600 Gencorp, Inc. 54
2,400 Huffy Corp. 25
1,700 Johnstown America Industries, Inc.* 9
1,100 MK Rail Corp.* 5
2,400 Masland Corp. 35
4,800 Mesa Airlines, Inc.* 43
2,500 OEA, Inc. 68
3,500 Orbital Sciences Corp.* 6
1,395 Oshkosh Truck Corp. 21
2,004 Pacific Scientific Co. 51
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- --------------------------------------------------------------
<C> <S> <C>
7,200 Roadmaster, Inc.* $ 21
3,200 Rohr, Inc.* 47
1,400 Sequa Corp.* 41
2,900 Simpson Industries, Inc. 27
1,600 Smith (A.O.) Corp. 38
1,850 Spartan Motors, Inc.* 20
3,025 Standard Products Co. 49
2,900 Stant Corp. 27
900 TFC Enterprise, Inc.* 6
3,100 Teleflex, Inc. 138
2,500 Thiokol Corp. 85
889 Thor Industries, Inc. 15
2,925 Titan Wheel International, Inc. 50
2,800 Tower Air, Inc. 20
3,900 Wabash National Corp. 109
1,500 Walbro Corp. 29
2,500 Winnebago Industries, Inc. 19
-------
2,105
TRANSPORTATION SERVICES--2.0%
2,600 Air Express International Corp. 61
3,100 Airborne Freight Corp. 87
2,400 Alaska Air Group, Inc.* 44
3,600 American Freightways, Inc.* 49
6,000 American President Co. 150
600 Amtran, Inc.* 8
3,500 Arnold Industries, Inc. 65
700 Celadon Group, Inc.* 6
3,675 Comair Holdings, Inc. 119
2,400 Continental Airlines, Inc., Class B* 94
600 Covenant Transportation, Inc., Class A* 8
2,100 Expeditors International of Washington, Inc. 54
1,389 First Source Corp. 32
600 Florida East Coast Industries, Inc. 41
2,552 Fritz Cos., Inc.* 99
1,453 Frozen Food Express Industries, Inc. 13
8,900 Greyhound Lines, Inc.* 37
2,200 Harper Group, Inc. 38
1,316 Heartland Express, Inc.* 40
2,300 Hornbeck Offshore Services, Inc.* 41
4,100 Hunt (J.B.) Transportation Services, Inc. 67
5,000 Kirby Corp.* 89
400 Knight Transportation, Inc.* 6
1,600 M.S. Carriers, Inc.* 31
200 Midland Co. 10
4,900 OMI Corp.* 30
3,500 Offshore Logistics, Inc.* 42
</TABLE>
See accompanying notes to financial statements.
45
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands, except shares)
<TABLE>
<CAPTION>
Shares Description Value
- ---------------------------------------------------------------
SMALL COMPANY INDEX PORTFOLIO--
CONTINUED
<C> <S> <C>
TRANSPORTATION SERVICES--CONTINUED
800 Old Dominion Freight Line, Inc.* $ 8
4,300 Overseas Shipholding Group, Inc. 86
800 Oxford Resources Corp., Class A* 20
1,200 Railtex, Inc.* 24
1,300 Skywest, Inc. 18
2,100 Swift Transportation Co., Inc.* 35
3,850 TNT Freightways Corp. 76
400 U.S. Xpress Enterprises, Inc., Class A* 3
10,700 USAir Group, Inc.* 143
800 USA Truck, Inc.* 9
700 Union Switch & Signal, Inc.* 5
2,500 Werner Enterprises, Inc. 53
2,800 Worldcorp, Inc.* 28
3,800 Yellow Corp.* 46
-------
1,915
WATER SUPPLY--0.3%
1,200 Aquarion Co. 28
1,063 California Water Service Co. 35
1,200 Consumers Water Co. 21
1,100 E'Town Corp. 32
1,294 IWC Resources Corp. 26
1,000 Pennsylvania Enterprises, Inc.* 37
1,800 Philadelphia Suburban Corp. 35
1,600 St. Mary Land & Exploration Co. 22
400 SJW Corp. 14
1,360 Southern California Water Co. 26
4,252 United Water Resources, Inc. 52
-------
328
WHOLESALE--2.2%
4,085 Arch Communications Group, Inc.* 103
1,400 Bearings, Inc. 54
1,167 Bell Industries, Inc.* 27
1,400 Bindley Western Industries, Inc. 25
1,650 BMC West Corp.* 20
800 Boise Cascade Office Products Corp. 29
1,100 Business Records Holding Co. 42
3,700 Caraustar Industries, Inc. 73
3,500 Casey's General Stores, Inc. 81
1,725 Castle (A. M.) & Co. 42
1,700 Cellular Communications of Puerto Rico, Inc.* 45
2,066 Commercial Metals Co. 49
2,100 Compucom Systems, Inc.* 17
600 Daisytek International Corp.* 18
900 Discount Auto Parts, Inc.* 25
3,100 Egghead, Inc.* 25
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------
<C> <S> <C>
2,700 Ekco Group, Inc. $ 16
3,038 Foxmeyer Corp.* 79
1,162 Getty Petroleum Corp. 17
5,600 Handleman Co. 35
700 Hughes Supply, Inc. 18
3,200 Immunex Corp.* 53
1,700 Insurance Auto Auctions, Inc.* 19
2,900 International Multifoods Corp. 68
1,800 JP Foodservice, Inc.* 28
3,200 Kaman Corp. 37
1,750 Kent Electronics Corp.* 95
1,400 Lawson Products, Inc. 33
2,600 Marshall Industries* 92
2,509 Maybelline, Inc. 68
4,500 Merisel, Inc.* 21
2,550 Microage, Inc.* 22
1,900 Nash-Finch Co. 36
5,000 Owens & Minor, Inc. 65
2,000 Patterson Dental Co.* 51
1,200 Peak (The) Technologies Group* 33
1,300 Rex Stores Corp.* 23
4,522 Richfood Holdings, Inc. 127
1,700 Russ Berrie & Co., Inc. 23
2,475 Rykoff-Sexton, Inc. 47
1,893 Safeguard Scientifics, Inc.* 94
600 Safety 1st, Inc.* 12
2,300 Sciclone Pharmaceuticals, Inc.* 12
1,800 Smart & Final, Inc. 35
1,125 Standard Commercial Corp.* 13
950 Sullivan Dental Products, Inc.* 9
1,900 Super Food Services, Inc. 24
4,500 TBC Corp.* 31
2,000 Tejas Power Corp.* 16
600 Thompson PBE, Inc.* 9
2,100 Univar Corp. 26
1,600 VWR Corp.* 19
-------
2,081
- -------------------------------------------------
TOTAL COMMON STOCKS
(Cost $80,793) $92,680
- -------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Description Value
- --------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATION--0.1%
U.S. Treasury Bill #
$ 90 5.640% Due 12/21/95 $ 89
- --------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATION
(Cost $90) $ 89
- --------------------------------------------------------------
EURODOLLAR TIME DEPOSIT--2.1%
Landesbank, Hessenthuringen Girozentrale
$1,998 5.938% Due 12/01/95 $ 1,998
- --------------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $1,998) $ 1,998
- --------------------------------------------------------------
TOTAL INVESTMENTS--99.8%
(Cost $82,881) $94,767
- --------------------------------------------------------------
Other assets, less liabilities--0.2% 176
- --------------------------------------------------------------
NET ASSETS--100.0% $94,943
- --------------------------------------------------------------
- --------------------------------------------------------------
</TABLE>
OPEN FUTURES CONTRACTS:
<TABLE>
<CAPTION>
Number of Contract Unrealized
Type Contracts Amount Position Expiration Loss
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RUSSELL 2000 12 $1,856 Long 12/15/95 $30
- ---------------------------------------------------------------------------------
</TABLE>
#Security pledged to cover margin requirements for open futures contracts.
*Non-income producing security.
NOTE TO STATEMENTS OF INVESTMENTS
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of net assets.
See accompanying notes to financial statements.
47
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1995
(Amounts in thousands, except net asset value per unit)
<TABLE>
<CAPTION>
Small
Diversified Equity Focused International Company
Balanced Growth Index Growth Growth Index
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in
securities, at cost $33,570 $121,237 $404,309 $73,213 $147,597 $82,881
- -------------------------------------------------------------------------------------------
Investments in
securities, at value $37,924 $146,873 $498,714 $87,962 $148,634 $94,767
Cash 8 2 12 3 373 3
Receivables:
Dividends and interest 167 215 1,278 45 128 92
Foreign tax reclaims -- -- -- -- 145 --
Fund units sold 807 4 633 20 175 5
Investment securities
sold -- -- -- 1,294 1,938 91
Administrator 7 7 15 7 -- 10
Deferred organization
costs, net 25 28 28 44 48 27
Other assets 6 7 24 2 9 5
- -------------------------------------------------------------------------------------------
TOTAL ASSETS 38,944 147,136 500,704 89,377 151,450 95,000
- -------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Fund units redeemed 14 93 658 102 168 29
Investment securities
purchased -- -- 963 2,613 2,433 --
Accrued expenses:
Advisory fees 15 66 40 56 97 15
Administration fees 3 12 40 7 12 8
Custodian fees 5 4 10 3 3 --
Transfer agent fees -- 1 4 1 1 1
Other liabilities 10 8 26 7 12 4
- -------------------------------------------------------------------------------------------
TOTAL LIABILITIES 47 184 1,741 2,789 2,726 57
- -------------------------------------------------------------------------------------------
NET ASSETS $38,897 $146,952 $498,963 $86,588 $148,724 $94,943
- -------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS:
Paid-in capital $35,074 $117,694 $391,426 $70,218 $150,907 $77,084
Accumulated
undistributed net
investment income 48 1,735 416 320 2,579 724
Accumulated net realized
gain (loss) on
investments, futures
and foreign currency
transactions (579) 1,887 12,235 1,301 (5,836) 5,279
Net unrealized
appreciation on
investments and futures 4,354 25,636 94,886 14,749 1,037 11,856
Net unrealized gain on
translation of other
assets and liabilities
denominated in foreign
currencies -- -- -- -- 37 --
- -------------------------------------------------------------------------------------------
NET ASSETS $38,897 $146,952 $498,963 $86,588 $148,724 $94,943
- -------------------------------------------------------------------------------------------
Total units outstanding
(no par value),
unlimited units
authorized:
Class A 3,519 12,030 34,621 6,871 15,049 7,310
Class C -- -- 1,329 -- -- --
Class D -- 18 59 39 2 3
- -------------------------------------------------------------------------------------------
Net asset value,
offering and redemption
price per unit:
Class A $11.05 $12.20 $13.86 $12.53 $9.88 $12.98
Class C -- -- $13.86 -- -- --
Class D -- $12.16 $13.83 $12.48 $9.83 $12.95
- -------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
48
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
Small
Diversified Equity Focused International Company
Balanced Growth Index Growth Growth Index
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 349 $ 2,695 $ 9,510 $ 888 $ 2,686(a) $ 1,340
Interest 1,089 140 1,001 155 671 69
- --------------------------------------------------------------------------------------------
TOTAL INCOME 1,438 2,835 10,511 1,043 3,357 1,409
- --------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 290 1,229 1,140 837 1,475 344
Administration fees 90 331 610 190 322 215
Custodian fees 26 34 127 26 160 66
Transfer agent fees 3 16 41 8 15 8
Registration fees 27 30 26 28 20 22
Professional fees 3 -- -- 1 1 1
Trustee fees 2 5 8 2 3 2
Amortization of deferred
organization costs 9 13 13 17 14 13
Other 14 59 75 14 22 26
- --------------------------------------------------------------------------------------------
TOTAL EXPENSES 464 1,717 2,040 1,123 2,032 697
Less: Voluntary waivers
of investment advisory
and administration fees (163) (561) (990) (342) (469) (301)
Less: Expenses
reimbursable by
Administrator (80) (100) (195) (87) -- (117)
- --------------------------------------------------------------------------------------------
Net expenses 221 1,056 855 694 1,563 279
- --------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,217 1,779 9,656 349 1,794 1,130
Net realized gains
(losses) on:
Investment transactions 587 3,960 10,473 5,691 (5,847) 5,796
Futures transactions -- -- 3,516 -- -- 117
Foreign currency
transactions -- -- -- -- 932 --
Net change in unrealized
appreciation
(depreciation) on:
Investments and futures 4,957 27,492 94,961 13,082 754 13,771
Forward foreign
currency contracts -- -- -- -- (62) --
Net change in unrealized
gains (losses) on
translation of other
assets and liabilities
denominated in foreign
currencies (5) 364 -- (24) 35 --
- --------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $6,756 $33,595 $118,606 $19,098 $(2,394) $20,814
- --------------------------------------------------------------------------------------------
</TABLE>
(a) Net of $307 in non-reclaimable foreign withholding taxes.
See accompanying notes to financial statements.
49
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended November 30, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Balanced Diversified Growth
Portfolio Portfolio
1995 1994 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 1,217 $ 607 $ 1,779 $ 1,424
Net realized gains (losses) on:
Investments and futures transactions 587 (1,166) 3,960 (2,073)
Foreign currency transactions -- -- -- --
Net change in unrealized appreciation
(depreciation) on:
Investments and futures 4,957 (796) 27,492 (11,888)
Forward foreign currency contracts -- -- -- --
Net change in unrealized gains
(losses) on translations of other
assets and liabilities denominated
in foreign currencies (5) 12 364 (214)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 6,756 (1,343) 33,595 (12,751)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A UNITHOLDERS
FROM:
Net investment income (1,221) (561) (1,361) (123)
Net realized gain on investment and
futures transactions -- (38) -- (369)
- -------------------------------------------------------------------------------
Total distributions to Class A
unitholders (1,221) (599) (1,361) (492)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS C UNITHOLDERS
FROM:
Net investment income -- -- -- --
- -------------------------------------------------------------------------------
Total distributions to Class C
unitholders -- -- -- --
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS D UNITHOLDERS
FROM:
Net investment income -- -- (1) --
- -------------------------------------------------------------------------------
Total distributions to Class D
unitholders -- -- (1) --
- -------------------------------------------------------------------------------
CLASS A UNIT TRANSACTIONS:
Proceeds from the sale of units 10,695 19,277 32,849 40,884
Reinvested distributions 1,179 583 1,264 473
Cost of units redeemed (9,974) (2,384) (84,547) (62,207)
- -------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from Class A unit
transactions 1,900 17,476 (50,434) (20,850)
- -------------------------------------------------------------------------------
CLASS C UNIT TRANSACTIONS:
Proceeds from the sale of units -- -- -- --
Reinvested distributions -- -- -- --
Cost of units redeemed -- -- -- --
- -------------------------------------------------------------------------------
Net increase in net assets resulting
from Class C unit transactions -- -- -- --
- -------------------------------------------------------------------------------
CLASS D UNIT TRANSACTIONS:
Proceeds from the sale of units -- -- 185 43
Reinvested distributions -- -- -- --
Cost of units redeemed -- -- (35) --
- -------------------------------------------------------------------------------
Net increase in net assets resulting
from Class D unit transactions -- -- 150 43
- -------------------------------------------------------------------------------
Net increase (decrease) 7,435 15,534 (18,051) (34,050)
Net assets--beginning of period 31,462 15,928 165,003 199,053
- -------------------------------------------------------------------------------
NET ASSETS--END OF PERIOD $38,897 $31,462 $ 146,952 $ 165,003
- -------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME: $48 $52 $1,735 $1,318
- -------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
See accompanying notes to financial statements.
50
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Index Focused Growth International Small Company
Portfolio Portfolio Growth Portfolio Index Portfolio
1995 1994 1995 1994 1995 1994(a) 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 9,656 $ 6,961 $ 349 $ 118 $ 1,794 $ 612 $ 1,130 $ 937
13,989 3,705 5,691 (4,168) (5,847) 521 5,913 3,285
-- -- -- -- 932 (75) -- --
94,961 (10,435) 13,082 654 754 283 13,771 (5,911)
-- -- -- -- (62) 62 -- --
-- -- (24) 38 35 2 -- --
- -------------------------------------------------------------------------------
118,606 231 19,098 (3,358) (2,394) 1,405 20,814 (1,689)
- -------------------------------------------------------------------------------
(9,464) (6,787) (147) (2) (684) -- (1,027) (335)
(5,459) (207) -- -- (510) -- (3,919) (1,031)
- -------------------------------------------------------------------------------
(14,923) (6,994) (147) (2) (1,194) -- (4,946) (1,366)
- -------------------------------------------------------------------------------
(93) -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
(93) -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
(6) -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
(6) -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
216,653 162,056 27,342 34,744 63,136 151,164 17,266 52,014
13,649 6,438 100 2 962 -- 4,615 1,277
(135,290) (99,196) (18,063) (5,684) (45,016) (19,359) (19,967) (27,879)
- -------------------------------------------------------------------------------
95,012 69,298 9,379 29,062 19,082 131,805 1,914 25,412
- -------------------------------------------------------------------------------
18,118 -- -- -- -- -- -- --
94 -- -- -- -- -- -- --
(427) -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
17,785 -- -- -- -- -- -- --
- -------------------------------------------------------------------------------
762 3 459 -- 24 2 43 --
6 -- -- -- -- -- -- --
(6) -- (2) -- (6) -- (2) --
- -------------------------------------------------------------------------------
762 3 457 -- 18 2 41 --
- -------------------------------------------------------------------------------
217,143 62,538 28,787 25,702 15,512 133,212 17,823 22,357
281,820 219,282 57,801 32,099 133,212 -- 77,120 54,763
- -------------------------------------------------------------------------------
$ 498,963 $281,820 $86,588 $57,801 $148,724 $133,212 $ 94,943 $ 77,120
- -------------------------------------------------------------------------------
$416 $323 $320 $118 $2,579 $537 $724 $621
- -------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Balanced Portfolio
<TABLE>
<CAPTION>
Class A
---------------------------
1995 1994 1993 (a)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.50 $ 10.22 $ 10.00
Income from investment operations:
Net investment income 0.34 0.24 0.09
Net realized and unrealized gain (loss) on
investments 1.55 (0.72) 0.22
- ---------------------------------------------------------------------------
Total income (loss) from investment operations 1.89 (0.48) 0.31
- ---------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.34) (0.22) (0.09)
Net realized gain on investments -- (0.02) --
- ---------------------------------------------------------------------------
Total distributions to unitholders (0.34) (0.24) (0.09)
- ---------------------------------------------------------------------------
Net increase (decrease) 1.55 (0.72) 0.22
- ---------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.05 $ 9.50 $ 10.22
- ---------------------------------------------------------------------------
Total return (b) 20.22% (4.76)% 3.12%
Ratio to average net assets of: (c)
Expenses, net of waivers and reimbursements 0.61% 0.61% 0.61%
Expenses, before waivers and reimbursements 1.28% 1.50% 1.62%
Net investment income, net of waivers and
reimbursements 3.36% 2.56% 2.20%
Net investment income, before waivers and
reimbursements 2.69% 1.68% 1.19%
Portfolio turnover rate 93.39% 75.69% 35.03%
Net assets at end of period (in thousands) $38,897 $31,462 $15,928
- ---------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on July 1, 1993.
(b) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(c) Annualized for periods less than a full year.
See accompanying notes to financial statements.
52
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Diversified Growth Portfolio
<TABLE>
<CAPTION>
Class A Class D
----------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.88 $ 10.65 $ 10.00 $ 9.88 $10.41
Income from investment opera-
tions:
Net investment income 0.15 0.09 0.09 0.11 0.01
Net realized and unrealized
gain (loss) on investments 2.26 (0.83) 0.65 2.25 (0.54)
- --------------------------------------------------------------------------------
Total income (loss) from in-
vestment operations 2.41 (0.74) 0.74 2.36 (0.53)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (0.09) (0.01) (0.09) (0.08) --
Net realized gain on invest-
ments -- (0.02) -- -- --
- --------------------------------------------------------------------------------
Total distributions to
unitholders (0.09) (0.03) (0.09) (0.08) --
- --------------------------------------------------------------------------------
Net increase (decrease) 2.32 (0.77) 0.65 2.28 (0.53)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.20 $ 9.88 $ 10.65 $12.16 $ 9.88
- --------------------------------------------------------------------------------
Total return (c) 24.55% (6.98)% 7.39% 24.19% (5.18)%
Ratio to average net assets
of: (d)
Expenses, net of waivers and
reimbursements 0.69% 0.67% 0.71% 1.08% 1.05%
Expenses, before waivers and
reimbursements 1.12% 1.08% 1.13% 1.51% 1.46%
Net investment income, net of
waivers and
reimbursements 1.16% 0.77% 1.04% 0.73% 0.94%
Net investment income, before
waivers and reimbursments 0.73% 0.35% 0.62% 0.30% 0.53%
Portfolio turnover rate 81.65% 78.94% 140.88% 81.65% 78.94%
Net assets at end of period
(in thousands) $146,731 $164,963 $199,053 $ 221 $ 40
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on September 14, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
53
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Equity Index Portfolio
<TABLE>
<CAPTION>
Class A Class C Class D
---------------------------- -------- ----------------
1995 1994 1993 (a) 1995 (b) 1995 1994 (c)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 10.60 $ 10.78 $ 10.00 $ 13.43 $10.60 $10.96
Income from investment
operations:
Net investment income 0.30 0.27 0.22 0.05 0.25 0.02
Net realized and
unrealized gain (loss)
on investments and
futures 3.47 (0.18) 0.78 0.45 3.47 (0.31)
- -----------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.77 0.09 1.00 0.50 3.72 (0.29)
- -----------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (0.30) (0.27) (0.22) (0.07) (0.28) (0.07)
Net realized gain on
investments (0.21) -- -- -- (0.21) --
- -----------------------------------------------------------------------------------
Total distributions to
unitholders (0.51) (0.27) (0.22) (0.07) (0.49) (0.07)
- -----------------------------------------------------------------------------------
Net increase (decrease) 3.26 (0.18) 0.78 0.43 3.23 (0.36)
- -----------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 13.86 $ 10.60 $ 10.78 $ 13.86 $13.83 $10.60
- -----------------------------------------------------------------------------------
Total return (d) 36.60% 0.87% 10.09% 3.73% 36.20% (2.65)%
Ratio to average net as-
sets of: (e)
Expenses, net of
waivers and
reimbursements 0.22% 0.23% 0.21% 0.46% 0.61% 0.60%
Expenses, before
waivers and
reimbursements 0.54% 0.59% 0.66% 0.78% 0.93% 0.96%
Net investment income,
net of waivers and re-
imbursements 2.54% 2.62% 2.62% 2.29% 2.07% 2.67%
Net investment income,
before waivers and
reimbursements 2.22% 2.25% 2.17% 1.97% 1.75% 2.31%
Portfolio turnover rate 15.27% 71.98% 2.06% 15.27% 15.27% 71.98%
Net assets at end of pe-
riod (in thousands) $479,763 $281,817 $219,282 $18,390 $ 810 $ 3
- -----------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class C units were issued on September 29, 1995.
(c) Class D units were issued on September 14, 1994.
(d) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(e) Annualized for periods less than a full year.
See accompanying notes to financial statements.
54
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Focused Growth Portfolio
<TABLE>
<CAPTION>
Class A Class D
---------------------------- --------
1995 1994 1993 (a) 1995 (b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.79 $ 10.43 $ 10.00 $ 9.55
Income from investment operations:
Net investment income 0.05 0.02 0.01 0.02
Net realized and unrealized gain
(loss) on investments 2.71 (0.66) 0.43 2.93
- -------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.76 (0.64) 0.44 2.95
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.02) -- (0.01) (0.02)
Net realized gain on investments -- -- -- --
- -------------------------------------------------------------------------------
Total distributions to unitholders (0.02) -- (0.01) (0.02)
- -------------------------------------------------------------------------------
Net increase (decrease) 2.74 (0.64) 0.43 2.93
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.53 $ 9.79 $ 10.43 $12.48
- -------------------------------------------------------------------------------
Total return (c) 28.38% (6.15)% 4.33% 31.00%
Ratio to average net assets of: (d)
Expenses, net of waivers and reim-
bursements 0.91% 0.91% 0.91% 1.30%
Expenses, before waivers and reim-
bursements 1.47% 1.55% 1.88% 1.86%
Net investment income (loss), net of
waivers and reimbursements 0.46% 0.24% 0.14% (0.11)%
Net investment loss, before waivers
and reimbursements (0.10)% (0.39)% (0.83)% (0.67)%
Portfolio turnover rate 85.93% 74.28% 27.48% 85.93%
Net assets at end of period (in thou-
sands) $86,099 $57,801 $32,099 $ 489
- -------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on July 1, 1993.
(b) Class D units were issued on December 8, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
55
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
International Growth Portfolio
<TABLE>
<CAPTION>
Class A Class D
------------------- -----------------
1995 1994(a) 1995 1994(b)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.21 $ 10.00 $ 10.21 $10.47
Income from investment operations:
Net investment income 0.12 0.05 0.19 --
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (0.36) 0.16 (0.48) (0.26)
- ------------------------------------------------------------------------------
Total income (loss) from investment
operations (0.24) 0.21 (0.29) (0.26)
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.05) -- (0.05) --
Net realized gain on investments and
foreign currency transactions (0.04) -- (0.04) --
- ------------------------------------------------------------------------------
Total distributions to unitholders (0.09) -- (0.09) --
- ------------------------------------------------------------------------------
Net increase (decrease) (0.33) 0.21 (0.38) (0.26)
- ------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.88 $ 10.21 $ 9.83 $10.21
- ------------------------------------------------------------------------------
Total return (c) (2.32)% 2.11% (2.78)% (2.51)%
Ratio to average net assets of: (d)
Expenses, net of waivers and reim-
bursements 1.06% 1.04% 1.45% 1.35%
Expenses, before waivers and reim-
bursements 1.38% 1.47% 1.77% 1.78%
Net investment income, net of waivers
and reimbursements 1.22% 0.76% 2.01% --
Net investment income (loss), before
waivers and reimbursements 0.90% 0.33% 1.69% (0.43)%
Portfolio turnover rate 215.31% 77.79% 215.31% 77.79%
Net assets at end of period (in thou-
sands) $148,704 $133,212 $ 20 --
- ------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
(b) Class D units were issued on November 16, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
56
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
Small Company Index Portfolio
<TABLE>
<CAPTION>
Class A Class D
-------------------------- --------
1993
1995 1994 (a) 1995 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.86 $ 11.29 $ 10.00 $10.60
Income from investment operations:
Net investment income 0.16 0.14 0.11 0.18
Net realized and unrealized gain (loss)
on investments and futures 2.67 (0.30) 1.29 2.87
- --------------------------------------------------------------------------------
Total income (loss) from investment opera-
tions 2.83 (0.16) 1.40 3.05
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (0.15) (0.02) (0.11) (0.14)
Net realized gain on investments and
futures (0.56) (0.25) -- (0.56)
- --------------------------------------------------------------------------------
Total distributions to unitholders (0.71) (0.27) (0.11) (0.70)
- --------------------------------------------------------------------------------
Net increase (decrease) 2.12 (0.43) 1.29 2.35
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.98 $ 10.86 $ 11.29 $12.95
- --------------------------------------------------------------------------------
Total return (c) 27.76% (1.54)% 14.09% 30.50%
Ratio to average net assets of: (d)
Expenses, net of waivers and reimburse-
ments 0.32% 0.33% 0.31% 0.71%
Expenses, before waivers and reimburse-
ments 0.81% 0.86% 1.02% 1.20%
Net investment income, net of waivers and
reimbursements 1.31% 1.27% 1.25% 0.90%
Net investment income, before waivers and
reimbursements 0.82% 0.74% 0.54% 0.41%
Portfolio turnover rate 38.46% 98.43% 26.31% 38.46%
Net assets at end of period (in thousands) $94,899 $77,120 $54,763 $ 44
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on December 11, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
57
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
1. ORGANIZATION
The Benchmark Funds (the "Trust") is a Massachusetts business trust registered
under the Investment Company Act of 1940 (as amended) as an open-end management
investment company. The Trust includes sixteen portfolios, each with its own
investment objective. The Northern Trust Company ("Northern") acts as the
Trust's investment adviser, transfer agent, and custodian. Goldman, Sachs & Co.
("Goldman Sachs") acts as the Trust's administrator and distributor. Presented
herein are the financial statements of the equity portfolios.
The International Growth Portfolio commenced investment operations on March
28, 1994. All other equity portfolios commenced investment operations during
the fiscal year ended November 30, 1993.
Each of the equity portfolios has four separate classes: Class A, B, C and D.
Each class is distinguished by the level of administrative support and transfer
agent service provided. As of November 30, 1995, Class A, Class C and Class D
units are outstanding.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed:
(a) Investment Valuation
Investments held by a portfolio are valued at the last quoted sale price on the
exchange on which such securities are primarily traded, or if any securities
are not traded on a valuation date, at the last quoted bid price. Securities
which are traded in the over-the-counter markets are valued at the last quoted
bid price. Financial futures are marked to market on a daily basis. Any
securities, including restricted securities, for which current quotations are
not readily available are valued at fair value as determined in good faith by
Northern under the supervision of the Board of Trustees ("Board"). Short-term
investments are valued at amortized cost which Northern has determined,
pursuant to Board authorization, approximates market value.
(b) Repurchase Agreements
During the term of a repurchase agreement, the market value of the underlying
collateral, including accrued interest, is required to exceed the market value
of the repurchase agreement. The underlying collateral for all repurchase
agreements is held in a customer-only account of Northern, as custodian for the
Trust, at the Federal Reserve Bank of Chicago.
(c) Foreign Currency Translations
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and dividend income are translated into U.S.
dollars using the spot market rate of exchange prevailing on the respective
dates of such transactions.
The gains or losses on investments resulting from changes in foreign exchange
rates are included with net realized and unrealized gain (loss) on investments.
(d) Investment Transactions and Investment Income
Investment transactions are recorded on the trade date. Realized gains and
losses on investment transactions are calculated on the identified-cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis and includes amortization of discounts and
premiums. Dividends from foreign securities are recorded on the ex-date, or as
soon as the information is available.
(e) Forward Foreign Currency Exchange Contracts
The International Growth Portfolio is authorized to enter into forward foreign
currency exchange contracts for the purchase of a specific foreign currency at
a fixed price on a future date as a hedge or cross-hedge against either
specific transactions or portfolio positions. The objective of the Portfolio's
foreign currency hedging transactions is to reduce the risk that the U.S.
dollar value of the Portfolio's foreign currency denominated securities will
58
<PAGE>
- --------------------------------------------------------------------------------
decline in value due to changes in foreign currency exchange rates. All forward
foreign currency contracts are "marked-to-market" daily at the applicable
exchange rates and any resulting unrealized gains or losses are recorded in the
financial statements. The portfolio records realized gains or losses when the
forward contract is offset by entry into a closing transaction or extinguished
by delivery of the currency. Risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
The contractual amounts of forward foreign currency exchange contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered. At November 30, 1995, there
were no contracts outstanding.
(f) Federal Taxes
It is each portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
each year substantially all of its taxable income and capital gains to its
unitholders. Therefore, no provision is made for federal taxes.
At November 30, 1995, the Trust's most recent tax year end, the following
portfolios had approximately the following amounts of capital loss
carryforwards for U.S. federal tax purposes:
<TABLE>
<CAPTION>
Amount Years of Expiration
- --------------------------------------------------------
(in thousands)
<S> <C> <C>
Balanced $ 571 2002 to 2003
International Growth 3,282 2003
- --------------------------------------------------------
</TABLE>
These amounts are available to be carried forward to offset future capital
gains to the extent permitted by applicable laws or regulations.
(g) Deferred Organization Costs
Organization related costs are being amortized on a straight-line basis over
five years.
(h) Expenses
Expenses arising in connection with a specific portfolio are allocated to that
portfolio. Certain expenses arising in connection with a class of units are
allocated to that class of units. Expenses incurred which do not specifically
relate to an individual portfolio are allocated among the portfolios based on
each portfolio's relative net assets.
(i) Distributions
Dividends from net investment income are declared and paid as follows:
<TABLE>
<CAPTION>
Declared Paid
- -----------------------------------------
<S> <C> <C>
Balanced Quarterly Quarterly
Diversified Growth Annually Annually
Equity Index Quarterly Quarterly
Focused Growth Annually Annually
International Growth Annually Annually
Small Company Index Annually Annually
- -----------------------------------------
</TABLE>
Each portfolio's net realized capital gains are distributed at least annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations.
59
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--CONTINUED
November 30, 1995
Such amounts may differ from income and capital gains recorded in accordance
with generally accepted accounting principles.
Distributions of short-term and long-term capital gains were declared and paid
December 26, 1995 to unitholders of record on December 21, 1995, as follows:
<TABLE>
<CAPTION>
Short-Term Long-Term
Capital Capital
Gain Gain Total
- --------------------------------------------------
<S> <C> <C> <C>
Balanced -- -- --
Diversified Growth -- $0.1623 $0.1623
Equity Index $0.0532 0.3792 0.4324
Focused Growth -- 0.1897 0.1897
International Growth -- -- --
Small Company Index 0.3661 0.4441 0.8102
- --------------------------------------------------
</TABLE>
(j) Reclassifications
The International Growth Portfolio reclassified approximately $932,000 from
net realized gain on foreign currency transactions to accumulated undistributed
net investment income. This reclassification had no impact on the net asset
value of the Portfolio and is designed to present the Portfolio's capital
accounts on a tax basis. Certain reclassifications have been made to amounts
recorded at November 30, 1994 to conform to the current financial statement
presentation.
3. ADVISORY, TRANSFER AGENCY AND CUSTODIAN AGREEMENTS
The Trust has an investment advisory agreement with Northern whereby each
portfolio pays Northern a fee, computed daily and payable monthly, based on a
specified percentage of its average daily net assets. For the current fiscal
year, Northern voluntarily agreed to waive a portion of the advisory fee for
each portfolio. The annual advisory fees and waiver rates, expressed as a
percentage of average daily net assets, and the amount of fees waived by
Northern for the year ended November 30, 1995, are as follows:
<TABLE>
<CAPTION>
Net Advisory
Advisory Less: Advisory Fees
Fee Waiver Fee Waived
- -------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced .80% .30% .50% $109,000
Diversified Growth .80 .25 .55 384,000
Equity Index .30 .20 .10 760,000
Focused Growth 1.10 .30 .80 228,000
International Growth 1.00 .20 .80 295,000
Small Company Index .40 .20 .20 172,000
- -------------------------------------------------------
</TABLE>
As compensation for the services rendered as transfer agent, including the
assumption by Northern of the expenses related thereto, Northern receives a
fee, computed daily and payable monthly, at an annual rate of .01%, .05%, .10%
and .15% of the average daily net asset value of the outstanding Class A, B, C
and D units, respectively, of the portfolios.
As compensation for the services rendered as custodian, including the
assumption by Northern of the expenses related thereto, Northern receives
compensation based on a pre-determined schedule of charges approved by the
Board.
60
<PAGE>
- --------------------------------------------------------------------------------
4. ADMINISTRATION AND DISTRIBUTION AGREEMENTS
The Trust has an administration agreement with Goldman Sachs whereby each
portfolio pays the Administrator a fee, computed daily and payable monthly,
based on the average net assets of each portfolio at the rates set forth below:
<TABLE>
<CAPTION>
Average net assets Rate
- ---------------------------------------
<S> <C>
For the first $100,000,000 .250%
For the next $200,000,000 .150
For the next $450,000,000 .075
For net assets over $750,000,000 .050
- ---------------------------------------
</TABLE>
For the current fiscal year, Goldman Sachs voluntarily agreed to limit
administration fees to .10% of average daily net assets for each portfolio. In
addition, Goldman Sachs agreed to waive a portion of its administrative fees
should overall administration fees earned during the preceding year exceed
certain specified levels. Furthermore, Goldman Sachs has agreed to reimburse
each portfolio for certain expenses in the event that such expenses, as
defined, exceed on an annualized basis .10% of its average daily net assets.
A summary of the administration fees waived and expense reimbursements for the
year ended November 30, 1995 were as follows:
<TABLE>
<CAPTION>
Administration Expense
Fees Waived Reimbursements
- ---------------------------------------------------
<S> <C> <C>
Balanced $ 54,000 $ 80,000
Diversified Growth 177,000 100,000
Equity Index 230,000 195,000
Focused Growth 114,000 87,000
International Growth 174,000 --
Small Company Index 129,000 117,000
- ---------------------------------------------------
</TABLE>
Goldman Sachs receives no compensation under the distribution agreement.
5. UNITHOLDER SERVICING PLAN
The Trust has adopted a Unitholder Servicing Plan pursuant to which the Trust
may enter into agreements with institutions or other financial intermediaries
under which they will render certain unitholder administrative support services
for their customers or other investors who beneficially own Class B, C and D
units. As compensation under the Unitholder Servicing Plan, the institution or
other financial intermediary receives a fee at an annual rate of up to .10%,
.15% and .25% of the average daily net asset value of the outstanding Class B,
C and D units, respectively. These fees are included in other expenses on the
Statements of Operations.
6. FUTURES CONTRACTS
Each portfolio may invest in long futures contracts to maintain liquidity or
short futures contracts for hedging purposes. The portfolios bear the market
risk arising from changes in the value of these financial instruments. At the
time a portfolio enters into a futures contract it is required to make a margin
deposit with the custodian of a specified amount of cash or eligible
securities. Subsequently, as the market price of the futures contract
fluctuates, gains or losses are recorded and payments are made, on a daily
basis, between the portfolio and the broker. The Statements of Operations
reflects gains and losses as realized for closed futures contracts and as
unrealized for open contracts.
At November 30, 1995, the Equity Index and Small Company Index Portfolios had
entered into long exchange traded futures contracts. The aggregate market value
of investments pledged to cover margin requirements for open positions at
November 30, 1995 was approximately $949,000 and $89,000 for the Equity Index
and Small Company Index Portfolios, respectively.
61
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--CONTINUED
November 30, 1995
7. INVESTMENT TRANSACTIONS
Investment transactions for the year ended November 30, 1995 (excluding short-
term investments and futures contracts) were as follows:
<TABLE>
<CAPTION>
Proceeds
from sales Proceeds
and from sales
Purchases maturities and
of U.S. Purchases of U.S. maturities
Government of other Government of other
Obligations securities Obligations securities
- -------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balanced $13,024 $ 19,545 $12,683 $ 18,345
Diversified Growth -- 124,267 -- 174,287
Equity Index -- 160,428 -- 55,930
Focused Growth -- 74,515 -- 62,897
International Growth -- 315,827 -- 290,266
Small Company
Index -- 32,808 -- 38,127
- -------------------------------------------------------------------
</TABLE>
On November 30, 1995, the composition of unrealized appreciation
(depreciation) of investment securities (including the effects of foreign
currency translation) and the aggregate cost of investments for federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
Cost for
Federal
Income
Net Tax
Appreciation Depreciation Appreciation purposes
- ---------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balanced $ 4,498 $ 144 $ 4,354 $ 33,570
Diversified Growth 26,523 941 25,582 121,291
Equity Index 102,818 9,252 93,566 405,629
Focused Growth 15,756 1,007 14,749 73,213
International Growth 7,598 7,164 434 148,200
Small Company
Index 19,882 8,026 11,856 82,881
- ---------------------------------------------------------------------
</TABLE>
8. BANK LOANS
The Trust maintains a $5,000,000 revolving bank credit line and a $15,000,000
conditional revolving credit line for liquidity and other purposes. Borrowings
under this arrangement bear interest at 1% above the Fed Funds rate and are
secured by pledged securities equal to or exceeding 120% of the outstanding
balance.
Interest expense for the year ended November 30, 1995 was approximately
$41,300, $49,500 and $12,700, for the Diversified Growth, Equity Index and
Small Company Index Portfolios, respectively. This amount is included in other
expenses on the statement of operations.
As of November 30, 1995, there were no outstanding borrowings.
9. UNIT TRANSACTIONS
Transactions in Class A units for the year ended November 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Net
Reinvested increase
Sales distributions Redemptions (decrease)
- -----------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balanced 1,054 114 959 209
Diversified Growth 3,123 128 7,920 (4,669)
Equity Index 17,925 1,174 11,059 8,040
Focused Growth 2,560 10 1,605 965
International Growth 6,479 97 4,573 2,003
Small Company
Index 1,491 451 1,736 206
- -----------------------------------------------------------------
</TABLE>
62
<PAGE>
- --------------------------------------------------------------------------------
Transactions in Class A units for the period ended November 30, 1994 were as
follows:
<TABLE>
<CAPTION>
Net
Reinvested increase
Sales distributions Redemptions (decrease)
- -----------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Balanced 1,934 59 241 1,752
Diversified Growth 3,887 44 5,930 (1,999)
Equity Index 14,882 596 9,237 6,241
Focused Growth 3,393 -- 566 2,827
International Growth 14,615 -- 1,569 13,046
Small Company Index 4,339 114 2,198 2,255
- -----------------------------------------------------------------
</TABLE>
Transactions in the Class C units (in thousands) for the year ended November
30, 1995, were sales of 1,353 units; reinvested distributions of 7 units, and
redemptions of 31 units, resulting in a net unit increase of 1,329 units, for
the Equity Index Portfolio.
Transactions in Class D units for the period ended November 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Reinvested Net
Sales distributions Redemptions increase
- -------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Diversified Growth 17 -- 3 14
Equity Index 58 1 1 58
Focused Growth 39 -- -- 39
Small Company Index 3 -- -- 3
- -------------------------------------------------------------
</TABLE>
Transactions in Class D units for the period ended November 30, 1994 were as
follows:
<TABLE>
<CAPTION>
Reinvested Net
Sales distributions Redemptions increase
- --------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Diversified Growth 4 -- -- 4
Equity Index 1 -- -- 1
International Growth 2 -- -- 2
- --------------------------------------------------------------
</TABLE>
63
<PAGE>
The Benchmark Funds
Equity Portfolios
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Unitholders and Trustees of
The Benchmark Funds
Equity Portfolios
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of the Balanced, Diversified Growth,
Equity Index, Focused Growth, International Growth and Small Company Index
Portfolios, comprising the Equity Portfolios of The Benchmark Funds, as of
November 30, 1995, and the related statements of operations for the year then
ended, and changes in net assets and financial highlights for the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the investments owned at
November 30, 1995 by physical examination of the securities held by the
custodian and by correspondence with outside depositories and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Balanced, Diversified Growth, Equity Index, Focused Growth, International
Growth and Small Company Index Portfolio, comprising the Equity Portfolios of
The Benchmark Funds, at November 30, 1995, the results of their operations and
the changes in their net assets and financial highlights for the periods
indicated therein, in conformity with generally accepted accounting principles.
[SIGNATURE LOGO ERNST & YOUNG LLP]
Chicago, Illinois
January 16, 1996
64
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
Trustees
William H. Springer, Chairman
Edward J. Condon, Jr.
John W. English
James J. Gavin, Jr.
William B. Jordan
Frederick T. Kelsey
Richard P. Strubel
Officers
Marcia L. Beck, President
Paul W. Klug, Jr., Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Pauline Taylor, Vice President
Scott M. Gilman, Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary
Auditors
Ernst & Young LLP
233 S. Wacker Dr.
Chicago, IL 60606
Legal Counsel
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
This Annual Report is
authorized for distribution to
prospective investors only
when preceded or accompanied
by a Prospectus which contains
facts concerning the
objectives and policies,
management, expenses and other
information.
The
Benchmark
Funds
Equity
Portfolios
Annual Report
November 30, 1995
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK BOND PORTFOLIO
The precipitous decline in interest rates over the past year led to outstanding
portfolio returns. Slower economic growth in early 1995 caught most investors
off guard and set the stage for a strong rally. Low inflation and the federal
government's move toward fiscal responsibility continued to propel the market
throughout the year.
Intermediate maturities saw the largest decline in yield, with decreases over
2%. The corporate bond sector was the period's best-performing sector, while
the mortgage-backed securities sector suffered due to an increase in prepayment
fears.
The portfolio had a strong year relative to its benchmark index. Our
securities selection, which emphasized positively convex putable corporates and
deep discount CMOs, overcame a cautious interest rate posture, which hurt the
portfolio early in the period. An overweighting in corporates added to
performance at the sector level, while our yield curve positioning detracted
from results.
Looking forward, the portfolio is in a normal interest rate posture. We
believe the slow-growth, low-inflation, fiscally-improving environment will
remain for the near term, and this should continue to support bonds. Our yield
curve posture is close to neutral, though we overweighted long maturities at
the expense of 10-year maturities. We may shift to a position that will benefit
from yield curve steepening when it appears that Federal Reserve easing is
imminent. We recently reduced our non-Treasury exposure, but the portfolio
remains underweighted in Treasuries. Insurance company surplus notes, perpetual
floaters and holdover putable positions are our favorite corporate positions.
Mortgages are historically attractive, and we may add pass-through exposure.
Mark Wirth, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK BOND
PORTFOLIO VS. THE LEHMAN BROTHERS
GOVERNMENT/CORPORATE BOND INDEX
- --------------------------------------------------------------------------------
-.- Bond Portfolio
- -.- - Lehman Brothers Government/Corporate Index
- --------------------------------------------------------------------------------
[GRAPHS APPEAR HERE]
Lehman Brothers
Bond Portfolio Government/Corporate Index
--------------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 11,061 11,052
11/30/94 10,614 10,640
11/30/95 12,901 12,586
Past performance is not predictive of future performance.
Lehman Brothers
Average Annual Total Returns Government/
For Periods Ended Class A Corporate
November 30, 1995: Units Bond Index
- ----------------------------------------------------------------------
One Year: 21.55% 18.29%
- ----------------------------------------------------------------------
Since Commencement on 1/11/93: 9.22% 8.29%
- ----------------------------------------------------------------------
Bond Portfolio Lehman Brothers
---------------------------------------------
7/3/95 $10,000 $10,000
11/30/95 10,592 10,491
Past performance is not predictive of future performance.
Lehman Brothers
Average Annual Total Returns Government/
For Period Ended Class C Corporate
November 30, 1995: Units Bond Index
- -----------------------------------------------------------------------
Since Commencement on 7/3/95: 5.92% 4.91%
- -----------------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
Bond Portfolio Lehman Brothers
---------------------------------------------
9/14/94 $10,000 $10,000
11/30/94 9,909 9,919
11/30/95 11,996 11,733
Past performance is not predictive of future performance.
Lehman Brothers
Average Annual Total Returns Government/
For Periods Ended Class D Corporate
November 30, 1995: Units Bond Index
- -----------------------------------------------------------------------
One Year: 21.06% 18.29%
- -----------------------------------------------------------------------
Since Commencement on 9/14/94: 16.17% 13.80%
- -----------------------------------------------------------------------
Units of The Benchmark Funds are not bank deposits or obligations of, or
guaranteed, endorsed or otherwise supported by The Northern Trust Company, its
parent company or its affiliates, and are not federally insured or guaranteed
by the U.S. Government, Federal Deposit Insurance Corporation, Federal Reserve
Board, or any other governmental agency. Investment in the portfolios involves
investment risks, including possible loss of principal amount invested.
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK INTERNATIONAL BOND PORTFOLIO
The weak global economy and muted inflationary pressures created a dramatic
bond market rally worldwide, resulting in a healthy 18.20% return for the Class
A units of the portfolio for the year ended November 30, 1995. This
performance, though, lagged slightly behind that of the portfolio's benchmark
index. This was due to the portfolio's defensive interest rate posture at the
beginning of the fiscal year and overweight position in U.S. dollars, which
hurt its performance during the first six months of 1995.
The portfolio generally benefits from declining interest rates, a scenario we
witnessed in 1995. In addition, since the portfolio is invested primarily in
non-dollar currencies, it typically performs well when the U.S. dollar weakens.
On the other hand, when the U.S. dollar is strong versus most global
currencies, the portfolio's performance may suffer.
In mid-year, we increased the portfolio's interest-rate sensitivity to align
it more closely with its benchmark index, and we reduced the U.S. dollar's
underweighting with respect to German currency. Additionally, we increased the
underweighting in Japan.
Going forward, we will emphasize the U.S. dollar block markets (United
States, Canada and Australia) at the expense of the Japanese market. We also
plan to invest in higher yielding European markets.
Mike Lannan, Portfolio Manager
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT IN BENCHMARK
INTERNATIONAL BOND PORTFOLIO VS. THE
J.P.MORGAN NON-U.S. GOVERNMENT BOND
INDEX
- --------------------------------------------------------------------------------
-.- International Bond Portfolio
- -.- - J.P. Morgan Non-U.S. Government Bond Index
- --------------------------------------------------------------------------------
[GRAPHS APPEAR HERE]
International Bond J.P. Morgan
------------------------------------------
3/28/94 $10,000 $10,000
11/30/94 10,403 10,521
11/30/95 12,296 12,589
Past performance is not predictive of future performance.
J.P. Morgan
Average Annual Total Returns Non-U.S.
For Periods Ended Class A Government
November 30, 1995: Units Bond Index
- ---------------------------------------------------------------------
One Year: 18.20% 19.66%
- ---------------------------------------------------------------------
Since Commencement on 3/28/94: 13.10% 14.69%
- ---------------------------------------------------------------------
Diversified Grow. S&P 500
------------------------------------------
11/22/95 $10,000 $10,000
11/30/95 9,922 9,912
Past performance is not predictive of future performance.
J.P. Morgan
Average Annual Total Returns Non-U.S.
For Periods Ended Class D Government
November 30, 1995: Units Bond Index
- ---------------------------------------------------------------------
Since Commencement on 11/22/95: (0.78)% (0.88)%
- ---------------------------------------------------------------------
Average Annual Total Returns are not annualized for periods less than one year.
2
<PAGE>
- --------------------------------------------------------------------------------
THE BENCHMARK SHORT DURATION PORTFOLIO
The dramatic decline in short-term interest rates had a great impact on the
portfolio during the fiscal year ended November 30, 1995. The Lehman Brothers
Short (1-3) Investment Grade Debt Index, with an average maturity significantly
longer than what may be maintained by the portfolio, continued to outperform
the portfolio during fiscal year 1995. The portfolio performed nearly as well
as the 3 month LIBOR Index, and outperformed the 90-Day Treasury Bill Index,
primarily because of the portfolio's positions in two-year Treasuries and
asset-backed floating-rate securities. These investments provided the portfolio
with a longer duration, which helped its performance as interest rates
declined, as well as a yield advantage.
We maintained a buy-and-hold strategy throughout the period. The portfolio's
composition did not change much throughout the course of the fiscal year, but
compared to the previous fiscal year its duration and average maturity were
longer. This was due to a much more favorable interest-rate environment during
fiscal year 1995.
In our efforts to maintain portfolio liquidity, we employed a barbell
maturity structure whereby we focused on the two-year section of the yield
curve and LIBOR floating-rate notes. This strategy allowed us to maintain an
average life of around half a year.
Looking ahead to the next 12 months, we plan to maintain the same strategies.
We believe the portfolio will continue to perform well as interest rates remain
relatively low. We feel that the portfolio remains an attractive alternative
for investors who want to keep their money in a short-term strategy for more
than three to six months.
Jerry Pearson, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK SHORT
DURATION PORTFOLIO, THE LEHMAN
BROTHERS SHORT (1-3) INVESTMENT GRADE
DEBT INDEX AND THE 3 MONTH LIBOR
INDEX
[GRAPH APPEARS HERE]
CLASS A UNITS Short Duration Lehman Brothers 3 Month LIBOR
- -----------------------------------------------------------------
6/2/93 $10,000 $10,000 $10,000
11/30/93 10,173 10,362 10,164
11/30/94 10,543 10,518 10,620
11/30/95 11,191 11,714 11,285
Past performance is not predictive of future performance.
Average Annual Total Returns
For Periods Ended Class A Lehman 3 Month
November 30, 1995: Units Brothers LIBOR
- ------------------------------------------------------------------------
One Year: 6.14% 11.37% 6.26%
- ------------------------------------------------------------------------
Since Commencement on 6/2/93: 4.60% 6.54% 4.96%
- ------------------------------------------------------------------------
3
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK SHORT-INTERMEDIATE BOND PORTFOLIO
The precipitous decline in interest rates over the past year led to outstanding
portfolio returns. Slower economic growth in early 1995 caught most investors
off guard and set the stage for a strong rally. Low inflation and the federal
government's move toward fiscal responsibility continued to propel the market
throughout the year.
Intermediate maturities saw the largest decline in yield, with decreases over
2%. The corporate bond sector was the period's best-performing sector, while
the mortgage-backed securities sector suffered due to an increase in prepayment
fears.
The portfolio's performance lagged behind that of its benchmark somewhat, due
to a defensive interest rate posture early in the year. In June, 1995 we
adopted a more neutral interest rate posture, which moved the portfolio's
duration in line with its benchmark. The portfolio was marginally overweighted
in non-Treasuries for the period, which added to the portfolio's relative
performance.
Looking forward, the portfolio is in a normal posture with respect to
interest rates. We believe the slow-growth, low inflation, fiscally improving
environment will remain for the near term, and this should continue to support
bonds. Our yield curve exposure is positioned to benefit from an expected
steepening in short- to intermediate-term securities. We continue to maintain a
slight overweighting in non-Treasuries, emphasizing mortgage-backed and asset-
backed securities with stable average life.
Mark Wirth, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK SHORT-
INTERMEDIATE BOND PORTFOLIO VS. THE
MERRILL LYNCH 1-5
CORPORATE/GOVERNMENT INDEX
- -----------------------------------------------------------------------------
-.- Short-Intermediate Bond Portfolio
- -.- - Merrill Lynch 1-5 Corporate/Government Index
- -----------------------------------------------------------------------------
[GRAPHS APPEAR HERE]
Short-Intermediate Merrill Lynch 1-5
- ----------------------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 10,590 10,612
11/30/94 10,679 10,567
11/30/95 11,916 11,861
- ----------------------------------------------------------
Past Performance is not predictive of future performance.
Merrill Lynch
Average Annual Total Returns 1-5 Corporate/
For Periods Ended Class A Government
November 30, 1995: Units Bond Index
- ----------------------------------------------------------------------
One Year: 11.58% 12.24%
- ----------------------------------------------------------------------
Since Commencement on 1/11/93: 6.26% 6.09%
- ----------------------------------------------------------------------
Short-Intermediate Merrill Lynch 1-5
- ----------------------------------------------------------
9/14/94 $10,000 $10,000
11/30/94 9,962 9,928
11/30/95 11,067 11,143
- ----------------------------------------------------------
Past Performance is not predictive of future performance.
Merrill Lynch
Average Annual Total Returns 1-5 Corporate/
For Periods Ended Class D Government
November 30, 1995: Units Bond Index
- ----------------------------------------------------------------------
One Year: 11.09% 12.24%
- ----------------------------------------------------------------------
Since Commencement on 9/14/94: 8.71% 9.34%
- ----------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
THE BENCHMARK U.S. GOVERNMENT SECURITIES PORTFOLIO
While the portfolio is limited to investing in U.S. Treasury and government
agency securities, we usually emphasize Treasuries because the incremental
yield advantage of agencies typically does not compensate investors for the
liquidity foregone relative to Treasuries.
In particular, any additional yield obtained in government portfolios this
year was inconsequential when coupled with the relative price gains or losses
caused by being on the correct side of the interest rate forecast. Throughout
the fiscal year ended November 30, 1995, rates declined between 2.0% and 2.25%
in the two- to five-year sector of the market. This dramatic decline caused
most bond portfolios to show overall returns that are more traditionally
associated with equity products.
The portfolio's slight underperformance relative to its benchmark index was
due primarily to its shorter duration during the first quarter of 1995. With
less interest rate sensitivity than the index, the portfolio did not benefit as
much when rates declined. However, as the year progressed, we gradually
increased the portfolio's duration to a neutral stance in the middle of the
year and to a longer posture toward the end of the year. This greater interest
rate sensitivity helped the portfolio's performance late in the fiscal year.
Going forward, we plan to maintain the portfolio's modestly long duration, as
we believe that a slowing economy and good news on the U.S. budget front may
cause the Federal Reserve to lower short-term rates in early 1996. We will
continue to monitor the agency/Treasury relative value tradeoff and add agency
exposure where appropriate in order to add incremental yield.
Steve Schafer, Portfolio Manager
COMPARISON OF CHANGE IN VALUE OF
$10,000 INVESTMENT IN BENCHMARK
U.S. GOVERNMENT SECURITIES PORTFOLIO
VS. THE MERRILL LYNCH 1-5 GOVERNMENT
INDEX
[GRAPHS APPEAR HERE]
U.S. Government Merrill Lynch 1-5
CLASS A UNITS Securities Portfolio Government Index
--------------------------------------------------
4/5/93 $10,000 $10,000
11/30/93 10,300 10,345
11/30/94 10,241 10,293
11/30/95 11,386 11,537
Past performance is not predictive of future performance.
Average Annual Total Returns Merrill Lynch
For Periods Ended Class A 1-5 Government
November 30, 1995: Units Index
- ---------------------------------------------------------------------
One Year: 11.18% 12.08%
- ---------------------------------------------------------------------
Since Commencement on 4/5/93: 5.01% 5.53%
- ---------------------------------------------------------------------
CLASS D UNITS U.S. Government Merrill Lynch 1-5
Securities Portfolio Government Index
--------------------------------------------------
9/15/94 $10,000 $10,000
11/30/94 9,911 9,913
11/30/95 10,968 11,110
Past performance is not predictive of future performance.
Average Annual Total Returns Merrill Lynch
For Periods Ended Class D 1-5 Government
November 30, 1995: Units Index
- -----------------------------------------------------------------------
One Year: 10.66% 12.08%
- -----------------------------------------------------------------------
Since Commencement on 9/15/94: 7.92% 9.09%
- -----------------------------------------------------------------------
5
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
THE BENCHMARK U.S. TREASURY INDEX PORTFOLIO
The Treasury market showed considerable strength during fiscal year 1995. As
interest rates declined throughout the period, yields on Treasury securities
fell and prices increased.
In addition to the favorable interest rate environment, the Treasury market
was positively influenced by weak inflation and a slow economy. Later in the
year, optimism over a balanced budget contributed to the Treasury market's
performance.
As it is designed to do, the U.S. Treasury Index Portfolio performed in line
with the Lehman Brothers Treasury Bond Index during the period from December 1,
1994, to November 30, 1995. We will continue to invest in securities
represented by the Index in our effort to provide returns that closely
approximate those of the Index.
Richard Steck, Portfolio Manager
COMPARISON OF CHANGE IN VALUE
OF $10,000 INVESTMENT IN BENCHMARK
U.S. TREASURY INDEX PORTFOLIO VS. THE
LEHMAN BROTHERS TREASURY BOND INDEX
[GRAPHS APPEAR HERE]
U.S. Treasury Lehman Brothers
CLASS A UNITS Index Portfolio Treasury Bond Index
--------------------------------------------------
1/11/93 $10,000 $10,000
11/30/93 10,994 11,019
11/30/94 10,576 10,625
11/30/95 12,369 12,473
Past performance is not predictive of future performance.
Average Annual Total Returns Lehman Brothers
For Periods Ended Class A U.S. Treasury
November 30, 1995: Units Bond Index
- -------------------------------------------------------------------------
One Year: 16.95% 17.40%
- -------------------------------------------------------------------------
Since Commencement on 1/11/93: 7.64% 7.95%
- -------------------------------------------------------------------------
U.S. Treasury Lehman Brothers
CLASS D UNITS Index Portfolio Treasury Bond Index
--------------------------------------------------
11/16/94 $10,000 $10,000
11/30/94 10,090 10,100
11/30/95 11,712 11,821
Past performance is not predictive of future performance.
Average Annual Total Returns Lehman Brothers
For Periods Ended Class D U.S. Treasury
November 30, 1995: Units Bond Index
- ---------------------------------------------------------------------
One Year: 16.43% 17.40%
- ---------------------------------------------------------------------
Since Commencement on 11/16/94: 16.38% 17.48%
- ---------------------------------------------------------------------
6
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Description
- -----------------------------------------
Principal Maturity
Amount Rate Date Value
- -----------------------------------------
BOND PORTFOLIO
<C> <C> <S> <C>
ASSET-BACKED SECURITIES--0.9%
AUTOMOTIVE--0.8%
General Motors
Acceptance Corp.
Class A, Series:
1993-B
$ 2,252 4.000% 09/15/98 $ 2,224
HOME EQUITY LOANS--0.1%
U.S. Home Equity
Loan, Class A,
Series: 1991-2
236 8.500% 04/15/21 240
- -----------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $2,488) $ 2,464
- -----------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--
4.8%
Capstead Securities
Corp.
Class XII-B, Series:
1992-XII
$ 64 8.325% 11/25/05 $ 64
Delta Funding Corp.,
Interest Only
Stripped Security,
Class A-4, Series:
1991-1*
7,557 -- 01/01/06 410
DLJ Mortgage
Acceptance Corp.
7,760 7.250% 05/25/24 7,789
DLJ Mortgage
Acceptance Corp.,
Adjustable Rate,
Interest Only
Stripped Security*
26,842 -- 11/25/25 2,776
GE Capital Mortgage
Services Inc.
Class A-13, Series:
1994-4
4,637 4.583% 01/25/24 2,782
- -----------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (Cost $13,526) $ 13,821
- -----------------------------------------
CORPORATE AND GOVERNMENT BONDS--7.9%
FINANCIAL--1.8%
General Motors
Acceptance Corp.
$ 4,285 8.875% 06/01/10 $ 5,182
FOREIGN GOVERNMENT BONDS--1.9%
Ferrovie Dello Stato
(Italy)
4,540 9.125% 07/06/09 5,417
SUPRA-NATIONAL--4.2%
African Development
Bank
4,200 6.875% 10/15/15 4,183
International
American Development
Bank
200 8.875% 06/01/09 251
6,400 8.400% 09/01/09 7,751
--------
12,185
- -----------------------------------------
TOTAL CORPORATE AND GOVERNMENT
BONDS (Cost $21,475) $ 22,784
- -----------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Description
- ----------------------------------------
Principal Maturity
Amount Rate Date Value
- ----------------------------------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--
22.5%
COLLATERALIZED MORTGAGE OBLIGATIONS--
22.5%
FEDERAL HOME LOAN MORTGAGE CORP.
MULTICLASS--0.0%
Class 1392-S,
Series: 1392
$ 1,915 3.438% 09/15/18 $ 63
FEDERAL HOME LOAN MORTGAGE
CORP. MULTICLASS
INTEREST ONLY STRIPPED SECU-
RITIES*--0.1%
Class 204-E,
Series: 204
-- -- 05/15/23 440
FEDERAL HOME LOAN MORTGAGE
CORP. MULTICLASS
PRINCIPAL ONLY STRIPPED SE-
CURITIES*--5.7%
Class B, Series:
G011
912 -- 04/25/23 597
Class D, Series:
1571
13,511 -- 08/15/23 8,882
Class PD, Series:
1750-C
10,756 -- 03/15/24 7,136
--------
16,615
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REMIC TRUST--5.6%
Class SA, Series:
1991-127
795 11.257% 09/25/98 834
Class 3-D, Series:
1990-3
2,031 8.500% 07/25/18 2,069
Class C, Series:
1991-140
1,692 8.500% 05/25/20 1,696
Class G, Series:
1992-73
7,500 7.500% 04/25/21 7,674
Class SB, Series:
1994-59
6,364 2.484% 03/25/24 3,877
--------
16,150
FEDERAL NATIONAL MORTGAGE AS-
SOCIATION REMIC TRUST
INTEREST ONLY STRIPPED SECU-
RITIES*--0.1%
Class S, Series: G-
12
-- -- 05/25/21 579
FEDERAL NATIONAL MORTGAGE AS-
SOCIATION REMIC TRUST PRIN-
CIPAL ONLY STRIPPED SECURI-
TIES*--11.0%
Class B, Series:
1993-161
7,873 -- 10/25/18 7,285
Class C, Series:
1989-16
263 -- 03/25/19 259
Class D, Series:
1993-132
2,194 -- 10/25/22 1,552
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Description
- -------------------------------------------------
Principal Maturity
Amount Rate Date Value
- -------------------------------------------------
<C> <C> <S> <C>
BOND PORTFOLIO--CONTINUED
FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC TRUST
PRINCIPAL ONLY STRIPPED SECURITIES*--CONTINUED
Class B, Series:
1993-146
$ 7,780 -- 05/25/23 $ 7,288
Class B, Series:
1993-253
8,575 -- 02/25/23 7,518
Class G, Series:
1994-9
3,126 -- 11/25/23 2,902
Class C, Series:
1994-25
6,612 -- 11/25/23 4,742
--------
31,546
- -------------------------------------------------
MORTGAGE-BACKED SECURITY--
0.0%
FEDERAL HOME LOAN MORTGAGE
CORP.
$ 2 6.500% 06/01/04 $ 2
- -------------------------------------------------
TOTAL U.S. GOVERNMENT AGEN-
CIES
(Cost $56,397) $65,395
- -------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--39.8%
U.S. TREASURY NOTES--20.1%
$ 1,825 7.375% 05/15/96 $ 1,840
11,485 7.625% 05/31/96 11,603
4,495 7.875% 07/31/96 4,565
7,000 7.250% 11/15/96 7,116
7,310 6.750% 02/28/97 7,428
6,600 6.750% 05/31/99 6,859
18,145 6.875% 08/31/99 18,970
--------
58,381
U.S. TREASURY BONDS--19.7%
5,090 9.375% 02/15/06 6,468
1,000 8.000% 11/15/21 1,221
27,500 7.125% 02/15/23 30,611
15,845 7.625% 02/15/25 18,848
--------
57,148
- -------------------------------------------------
TOTAL U.S. GOVERNMENT OBLI-
GATIONS
(Cost $111,376) $115,529
- -------------------------------------------------
FLOATING RATE BANK NOTES--
12.6%
Bergen Bank
$ 8,745 6.000% 02/29/96 $ 6,798
Hong Kong and
Shanghai Bank
7,515 6.250% 02/23/96 5,952
</TABLE>
<TABLE>
<CAPTION>
Description
- ---------------------------------------
Principal Maturity
Amount Rate Date Value
- ---------------------------------------
<C> <C> <S> <C>
Lloyds Bank PLC
$11,450 6.250% 06/13/96 $ 9,504
National Australia
Bank
3,150 6.150% 04/15/96 2,678
National
Westminster Bank
13,800 6.000% 02/29/96 11,558
- ---------------------------------------
TOTAL FLOATING RATE BANK
NOTES
(Cost $37,081) $ 36,490
- ---------------------------------------
EURODOLLAR TIME DEPOSIT--
10.3%
Landesbank,
Hessenthuringen
Girozentrale
$30,023 5.938% 12/01/95 $ 30,023
- ---------------------------------------
TOTAL EURODOLLAR TIME DE-
POSIT
(Cost $30,023) $ 30,023
- ---------------------------------------
TOTAL INVESTMENTS--98.8%
(Cost $272,366) $286,506
- ---------------------------------------
Other assets, less
liabilities--1.2% 3,619
- ---------------------------------------
NET ASSETS--100.0% $290,125
- ---------------------------------------
- ---------------------------------------
</TABLE>
*At November 30, 1995, yields on these securities ranged from approximately
5.00% to 15.00%. Refer to notes to statements of investments for a discussion
of stripped securities.
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- ------------------------------------------------
Principal Amount/ Maturity
Local Currency Rate Date Value
- ------------------------------------------------
INTERNATIONAL BOND PORTFOLIO
<C> <C> <S> <C>
DEBT OBLIGATIONS--96.1%
AUSTRALIAN DOLLAR--6.2%
Commonwealth of
Australia
1,580 10.000% 10/15/02 $ 1,297
Province of
Queensland--Treasury
950 8.000% 05/14/97 713
-------
2,010
BELGIAN FRANC--1.9%
Kingdom of Belgium
16,000 10.000% 08/02/00 637
BRITISH POUND STERLING--10.0%
Abbey National PLC
825 6.000% 08/10/99 1,215
Treasury of United
Kingdom
1,295 8.000% 06/10/03 2,050
-------
3,265
CANADIAN DOLLAR--8.2%
Dominion of Canada
1,075 7.500% 12/01/03 810
Province of Ontario
1,050 7.250% 09/27/05 749
Province of Quebec
1,325 10.250% 10/15/01 1,105
-------
2,664
DANISH KRONE--5.7%
Kingdom of Denmark
10,100 8.000% 03/15/06 1,876
FRENCH FRANC--9.2%
Electricite de
France
6,200 8.600% 04/09/04 1,369
Republic of France
3,000 8.500% 03/12/97 622
4,600 8.250% 02/27/04 1,007
-------
2,998
GERMAN MARK--18.2%
Federal Republic of
Germany
3,025 7.500% 11/11/04 2,274
</TABLE>
<TABLE>
<CAPTION>
Description
- ------------------------------------------------
Principal Amount/ Maturity
Local Currency Rate Date Value
- ------------------------------------------------
<C> <C> <S> <C>
LKB Global Bond
1,500 6.000% 05/10/99 $ 1,079
Republic of Austria
1,670 8.000% 01/30/02 1,280
Republic of Finland
1,920 5.500% 02/09/01 1,331
-------
5,964
ITALIAN LIRA--9.4%
Republic of Italy
1,415,000 8.500% 04/01/99 830
3,870,000 8.500% 08/01/99 2,248
-------
3,078
JAPANESE YEN--15.9%
Asian Development
Bank
90,000 5.000% 02/05/03 1,018
European Bank for
Reconstruction and
Development
95,000 5.875% 11/26/99 1,098
International Bank
for
Reconstruction and
Development
100,000 4.500% 03/20/03 1,117
Japan Development
Bank
160,000 6.500% 09/20/01 1,957
-------
5,190
NETHERLANDS GUILDER--3.6%
Kingdom of the
Netherlands
1,675 8.500% 03/15/01 1,183
SPANISH PESETA--4.1%
Kingdom of Spain
35,000 11.450% 08/30/98 296
120,000 11.300% 01/15/02 1,030
-------
1,326
SWEDISH KRONA--3.7%
Kingdom of Sweden
7,400 10.250% 05/05/03 1,222
- ------------------------------------------------
TOTAL DEBT OBLIGATIONS
(Cost $28,825) $31,413
- ------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
<TABLE>
<CAPTION>
Description
- ---------------------------------------
Principal Maturity
Amount Rate Date Value
- ---------------------------------------
INTERNATIONAL BOND PORTFOLIO--CONTINUED
<C> <C> <S> <C>
EURODOLLAR TIME DEPOSIT--
0.2%
UNITED STATES DOLLAR
Landesbank,
Hessenthuringen
Girozentrale
$ 58 5.938% 12/01/95 $ 58
- ---------------------------------------
TOTAL EURODOLLAR TIME DE-
POSIT
(Cost $58) $ 58
- ---------------------------------------
TOTAL INVESTMENTS--96.3%
(Cost $28,883) $31,471
- ---------------------------------------
Other assets, less liabili-
ties--3.7% 1,211
- ---------------------------------------
NET ASSETS--100.0% $32,682
- ---------------------------------------
- ---------------------------------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- --------------------------------------
Principal Maturity
Amount Rate Date Value
- --------------------------------------
<C> <C> <S> <C>
SHORT DURATION PORTFOLIO
ASSET-BACKED SECURITIES--10.9%
Bristol Oaks L.P.
Receivables Master
Trust, Series: 94-
1A
$1,944 6.464% 07/10/99 $ 1,944
Wachovia Credit
Card Master Trust,
Series: 95-1A
3,000 6.045% 03/15/03 2,994
- --------------------------------------
TOTAL ASSET-BACKED SECURITIES
(Cost $4,942) $ 4,938
- --------------------------------------
BANKERS ACCEPTANCES--4.4%
NationsBank,
Georgia
$1,000 6.000% 12/11/95 $ 1,000
NationsBank, Texas
1,000 6.000% 12/11/95 1,000
- --------------------------------------
TOTAL BANKERS ACCEPTANCES
(Cost $2,000) $ 2,000
- --------------------------------------
COMMERCIAL PAPER--80.5%
American Honda
Finance Corp.
$ 500 5.789% 12/06/95 $ 499
American Telephone
& Telegraph Co.
1,000 5.790% 04/18/96 978
BMW U.S. Capital
Corp.
1,000 5.732% 12/19/95 997
Caterpillar
Financial
Australia Ltd.
1,000 5.771% 12/04/95 999
Central Hispano
North American
Capital Corp.
1,000 5.732% 12/19/95 997
Coca Cola
Enterprises, Inc.
1,000 5.736% 12/22/95 996
Cooperative
Association of
Tractor Dealers
625 5.868% 01/18/96 620
Copley Financing
Corp.
1,000 5.841% 12/21/95 997
Countrywide
Funding Corp.
593 5.915% 12/12/95 592
1,000 5.841% 12/14/95 998
CSW Credit, Inc.
1,000 5.778% 02/14/96 988
Equitable of Iowa
Cos.
1,000 5.875% 12/01/95 1,000
1,000 5.858% 12/27/95 996
</TABLE>
<TABLE>
<CAPTION>
Description
- --------------------------------------
Principal Maturity
Amount Rate Date Value
- --------------------------------------
<C> <C> <S> <C>
Falcon Asset
Securitization
Corp.
$ 300 5.817% 12/05/95 $ 300
Ford Motor Credit
Corp.
1,000 5.730% 12/13/95 998
GTE Finance Corp.
2,000 5.838% 12/18/95 1,994
ITT Corp.
2,000 5.904% 12/01/95 2,000
Kellogg Co.
1,000 5.778% 12/29/95 995
Merrill Lynch &
Co.
1,000 5.827% 01/30/96 990
1,000 5.802% 03/01/96 985
Nationwide Rural
Utilities
Cooperative
Finance Corp.
400 5.770% 12/20/95 399
Orix America, Inc.
480 5.877% 12/15/95 479
PacifiCorp
556 5.813% 12/01/95 556
Philip Morris
Cos., Inc.
810 5.811% 12/11/95 809
Quaker Oats Co.
1,000 5.916% 12/14/95 998
Renault Credit
International
1,000 5.805% 12/27/95 996
Sears Roebuck
Acceptance Corp.
1,000 5.835% 12/07/95 999
Spiegel Funding
Corp.
2,000 5.832% 12/11/95 1,996
Spintab
AB/Swedmortgage
1,000 5.827% 04/17/96 978
Kingdom of Sweden
825 5.803% 03/25/96 810
Thames Asset
Global
Securitization No.
1, Inc.
657 5.862% 12/12/95 656
Tri-Lateral
Capital (USA),
Inc.
572 6.167% 01/31/96 566
1,000 6.091% 02/15/96 988
1,000 6.093% 02/21/96 987
U.S. West
Communications,
Inc.
900 5.824% 12/13/95 898
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- ---------------------------------------------------------
Principal Maturity
Amount Rate Date Value
- ---------------------------------------------------------
SHORT DURATION PORTFOLIO--CONTINUED
<C> <C> <S> <C>
COMMERCIAL PAPER--CONTINUED
WCP Funding Inc.
$ 1,500 5.757% 12/06/95 $ 1,499
Whirlpool
Financial Corp.
1,117 5.822% 12/20/95 1,113
Woolwich Building
Society
1,000 5.804% 04/02/96 981
- ---------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $36,631) $36,627
- ---------------------------------------------------------
DOMESTIC TIME DEPOSITS--6.6%
Dai-Ichi Kangyo
Bank, New York
$ 1,000 5.890% 12/18/95 $ 1,000
Mitsubishi Bank
Ltd, New York
1,000 5.910% 12/29/95 1,000
Monte Dei Paschi
di Siena, New York
1,000 5.800% 02/21/96 1,000
- ---------------------------------------------------------
TOTAL DOMESTIC TIME DEPOSIT
(Cost $3,000) $ 3,000
- ---------------------------------------------------------
EURODOLLAR TIME DEPOSITS--2.5%
Bank of Tokyo,
London
$ 1,000 5.880% 12/29/95 $ 1,000
Midland Bank PLC,
Grand Cayman
128 5.937% 12/01/95 128
- ---------------------------------------------------------
TOTAL EURODOLLAR TIME DEPOSITS
(Cost $1,128) $ 1,128
- ---------------------------------------------------------
FLOATING RATE NOTES--10.9%
General Motors
Acceptance Corp.
$ 3,000 5.950% 11/07/97 $ 2,974
International
Lease Finance
Corp.
2,000 6.138% 07/15/99 2,000
- ---------------------------------------------------------
TOTAL FLOATING RATE NOTES
(Cost $4,996) $ 4,974
- ---------------------------------------------------------
U.S. GOVERNMENT OBLIGATION--11.1%
U.S. TREASURY NOTE--11.1%
$ 5,000 5.875% 08/15/98 $ 5,057
- ---------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATION
(Cost $5,044) $ 5,057
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Description
- -----------------------------------------------------------
Principal Maturity
Amount Rate Date Value
- -----------------------------------------------------------
<C> <C> <S> <C>
REPURCHASE AGREEMENTS--44.0%
SBC Capital Markets, Dated 11/30/95,
Repurchase Price $10,002
(Colld. by U.S. Government
Securities)
$10,000 5.930% 12/01/95 $10,000
UBS Securities, Inc., Dated 11/30/95,
Repurchase Price $10,002
(Colld. by U.S. Government
Securities)
10,000 5.920% 12/01/95 10,000
- -----------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $20,000) $20,000
- -----------------------------------------------------------
TOTAL INVESTMENTS--170.9%
(Cost $77,741) $77,724
- -----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Liabilities, less other assets--(70.9)% (32,251)
- --------------------------------------------------------------------------------------------------
NET ASSETS--100.0% $45,473
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
COMMERCIAL PAPER INDUSTRY CONCENTRATIONS:
<TABLE>
<CAPTION>
Percentage
Industry of Net Assets
- --------------------------------------------------------------------------
<S> <C>
Asset-Backed Securities 11.8%
Communications 8.5
Construction and Industrial Machines and Computer Equipment 2.2
Electronic and Other Electric Components 2.4
Executive, Legislative and General Government 1.8
Food and Kindred Products 9.8
Foreign Depository Institutions 5.4
Gas and Combined Utilities 1.2
General Merchandise Stores 2.2
Holding and Other Investment Companies 4.3
Insurance Carriers 11.0
Nondepository Business Credit Institutions 4.4
Nondepository Personal Credit Institutions 3.5
Security and Commodity Broker/Dealers 4.3
Transportation Equipment 7.7
- --------------------------------------------------------------------------
Total 80.5%
- --------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- --------------------------------------
Principal Maturity
Amount Rate Date Value
- --------------------------------------
SHORT-INTERMEDIATE BOND PORTFOLIO
ASSET-BACKED SECURITIES--11.6%
AUTOMOTIVE--11.6%
<C> <C> <S> <C>
General Motors
Acceptance Corp.
Grantor Trust
$ 188 5.550% 05/15/97 $ 188
477 4.750% 08/15/97 474
Olympic Automobile
Receivables Trust
4,000 5.950% 11/15/99 4,014
4,163 7.875% 07/15/01 4,292
Premier Auto Trust
4,974 4.750% 02/02/00 4,924
Western Financial
Automobile Loan
Trust
193 6.750% 01/01/97 193
1,638 4.700% 01/01/98 1,621
2,648 7.100% 01/01/00 2,680
- --------------------------------------
TOTAL ASSET-BACKED SECURI-
TIES
(Cost $18,367) $18,386
- --------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATION--2.1%
DLJ Mortgage
Acceptance Corp.
$3,337 7.250% 05/25/24 $ 3,349
- --------------------------------------
TOTAL COLLATERALIZED MORT-
GAGE
OBLIGATION (Cost $3,275) $ 3,349
- --------------------------------------
CORPORATE OBLIGATIONS--7.0%
BROKERAGE SERVICES--1.3%
Salomon Brothers
Inc. Medium Term
Notes
$2,000 5.700% 02/11/98 $ 1,969
FINANCIAL--5.7%
Associates Corp.
of North America
1,795 4.750% 08/01/96 1,782
Greyhound
Financial Corp.
3,590 8.250% 03/11/97 3,686
Transamerica
Financial Group,
Inc.
3,565 8.550% 06/15/96 3,613
-------
9,081
- --------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $11,050) $11,050
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Description
- ------------------------------------------------
Principal Maturity
Amount Rate Date Value
- ------------------------------------------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--10.2%
COLLATERALIZED MORTGAGE OBLIGATIONS--10.2%
FEDERAL HOME LOAN MORTGAGE ASSOCIA-
TION
REMIC TRUST PRINCIPAL ONLY*--3.7%
Class BA, Series: 1571
$6,660 -- 04/15/19 $5,992
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REMIC TRUST PRINCIPAL ONLY*--6.5%
Class A, Series: 1195-11
6,000 -- 01/25/24 4,309
Class B, Series: 1993-161
1,968 -- 10/25/18 1,821
Class B, Series: 1993-146
1,300 -- 05/25/23 1,218
Class G, Series: 1994-9
3,126 -- 11/25/23 2,902
---------
10,250
- ------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $14,429) $16,242
- ------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--63.8%
U.S. TREASURY NOTES--63.8%
$4,845 7.375% 05/15/96 $4,886
1,750 7.250% 08/31/96 1,772
7,325 7.250% 11/15/96 7,446
9,565 6.750% 02/28/97 9,719
12,000 5.125% 03/31/98 11,929
8,000 5.375% 05/31/98 7,991
2,000 5.125% 11/30/98 1,983
42,600 6.750% 05/31/99 44,272
10,675 6.875% 08/31/99 11,160
- ------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $99,589) $101,158
- ------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- ---------------------------------------
Principal Maturity
Amount Rate Date Value
- ---------------------------------------
<C> <C> <S> <C>
EURODOLLAR TIME DEPOSIT--
4.8%
Landesbank,
Hessenthuringen
Girozentrale
$7,663 5.938% 12/01/95 $ 7,663
- ---------------------------------------
TOTAL EURODOLLAR TIME DE-
POSIT
(Cost $7,663) $ 7,663
- ---------------------------------------
TOTAL INVESTMENTS--99.5%
(Cost $154,373) $157,848
- ---------------------------------------
Other assets, less
liabilities--0.5% 843
- ---------------------------------------
NET ASSETS--100.0% $158,691
- ---------------------------------------
- ---------------------------------------
</TABLE>
*At November 30, 1995, the yields on these securities ranged from 5.00% to
8.00%. Refer to notes to statements of investments for a discussion of stripped
securities.
See accompanying notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- ----------------------------------------------
Principal Maturity
Amount Rate Date Value
- ----------------------------------------------
U.S. GOVERNMENT SECURITIES PORTFOLIO
U.S. GOVERNMENT AGENCIES--11.7%
COLLATERALIZED MORTGAGE OBLIGATIONS--6.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION--2.5%
<C> <C> <S> <C>
Class F, Series: 1230
$ 700 6.500% 05/15/04 $ 700
Class F, Series: 1520
750 5.650% 09/15/04 742
------
1,442
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REMIC TRUST--3.8%
Class 14-F, Series: 1988-
14
452 9.200% 12/25/17 468
Class E, Series: 1992-200
1,000 6.250% 06/25/17 997
Class A, Series: 1995-11*
925 Principal Only 01/25/24 664
------
2,129
MORTGAGE-BACKED SECURITIES--1.8%
FEDERAL HOME LOAN MORTGAGE ASSOCIATION--1.7%
Pool #410092
924 6.997% 11/01/24 941
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--0.1%
Pool #155756
13 8.500% 06/15/01 14
Pool #688
20 10.000% 12/20/01 21
Pool #183678
18 8.500% 05/15/02 19
------
54
AGENCY OBLIGATIONS--3.6%
FEDERAL HOME LOAN MORTGAGE CORPORATION--0.9%
500 7.130% 06/30/05 509
TENNESSEE VALLEY AUTHORITY NOTE--2.7%
1,500 6.235% 07/15/45 1,540
------
2,049
- ----------------------------------------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost $6,455) $6,615
- ----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Description
- ------------------------------------------------------
Principal Maturity
Amount Rate Date Value
- ------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--83.5%
U.S. TREASURY NOTES--83.5%
<C> <C> <S> <C>
$14,150 6.750% 02/28/97 $14,378
10,000 7.250% 02/15/98 10,373
2,800 7.000% 04/15/99 2,929
3,000 6.750% 05/31/99 3,118
15,000 7.500% 10/31/99 16,029
250 7.500% 11/15/01 274
- ------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $46,711) $47,101
- ------------------------------------------------------
SHORT TERM INVESTMENT--3.6%
Federal Home Loan Bank
Discount Note
$2,015 5.790% 12/01/95 $ 2,015
- ------------------------------------------------------
TOTAL SHORT TERM INVESTMENT
(Cost $2,015) $ 2,015
- ------------------------------------------------------
TOTAL INVESTMENTS--98.8%
(Cost $55,181) $55,731
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Other assets, less liabilities--1.2% 665
- ------------------------------------------------------------------------------
NET ASSETS--100.0% $56,396
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
*The yield on this security was 7.93% at November 30, 1995. Refer to notes to
statements of investments for a discussion of stripped securities.
See accompanying notes to financial statements.
15
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF INVESTMENTS
November 30, 1995
(All amounts in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description
- --------------------------------------
Principal Maturity
Amount Rate Date Value
- --------------------------------------
U.S. TREASURY INDEX PORTFOLIO
<C> <C> <S> <C>
U.S. GOVERNMENT OBLIGA-
TIONS--97.1%
U.S. TREASURY NOTES--58.7%
$1,800 6.875% 03/31/97 $ 1,834
1,400 5.500% 07/31/97 1,403
1,115 9.250% 08/15/98 1,221
1,500 5.000% 01/31/99 1,479
1,600 5.250% 02/28/99 1,602
200 7.875% 11/15/99 217
1,700 6.375% 01/15/00 1,752
1,000 6.250% 02/15/03 1,033
-------
10,541
U.S. TREASURY BONDS--33.2%
435 13.875% 05/15/11 701
660 14.000% 11/15/11 1,083
590 13.250% 05/15/14 974
535 7.250% 05/15/16 598
900 8.125% 05/15/21 1,111
1,500 6.250% 08/15/23 1,500
-------
5,967
U.S. TREASURY INTEREST ONLY STRIPPED
SECURITIES*--5.2%
530 -- 05/15/97 491
475 -- 08/15/97 434
-------
925
- --------------------------------------
TOTAL U.S. GOVERNMENT OBLI-
GATIONS
(Cost $16,637) $17,433
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Description
- --------------------------------------
Principal Maturity
Amount Rate Date Value
- --------------------------------------
<C> <C> <S> <C>
SHORT TERM INVESTMENT--1.6%
Federal Home Loan
Bank Discount Note
$ 290 5.790% 12/01/95 $ 290
- --------------------------------------
TOTAL SHORT TERM INVESTMENT
(Cost $290) $ 290
- --------------------------------------
TOTAL INVESTMENTS--98.7%
(Cost $16,927) $17,723
- --------------------------------------
Other assets, less liabili-
ties--1.3% 237
- --------------------------------------
NET ASSETS--100.0% $17,960
- --------------------------------------
- --------------------------------------
</TABLE>
*At November 30, 1995, the yield on these securities was approximately 5.56%.
Refer to notes to statements of investments for a discussion of stripped
securities.
See accompanying notes to financial statements.
16
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
NOTES TO STATEMENTS OF INVESTMENTS
November 30, 1995
- --The percentage shown for each investment category reflects the value of
investments in that category as a percentage of net assets.
- --Interest rates represent either the stated coupon rate, annualized yield on
date of purchase for discounted notes or, for floating rate securities, the
current reset rate.
- --Stripped securities represent the right to receive either future interest
payments (interest only stripped securities) or principal payments (principal
only stripped securities). The value of variable rate interest only stripped
securities varies directly with changes in interest rates, while the value of
fixed rate interest only stripped securities and the value of principal only
stripped securities varies inversely with changes in interest rates.
17
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1995
(Amounts in thousands, except net asset value per unit)
<TABLE>
<CAPTION>
Short- U.S. U.S.
International Short Intermediate Government Treasury
Bond Bond Duration Bond Securities Index
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securi-
ties, at cost $272,366 $28,883 $57,741 $154,373 $55,181 $16,927
Repurchase agreements,
at cost -- -- 20,000 -- -- --
- ----------------------------------------------------------------------------------------------
Investments in securi-
ties, at value $286,506 $31,471 $57,724 $157,848 $55,731 $17,723
Repurchase agreements,
at value -- -- 20,000 -- -- --
Cash 229 100 -- 2 3 6
Receivables:
Interest 3,013 1,014 234 903 651 227
Foreign tax reclaims -- 62 -- -- -- --
Fund units sold 679 -- -- 15 -- --
Administrator 9 4 18 7 6 6
Deferred organization
costs, net 29 54 49 29 31 28
Other assets 6 11 10 4 1 1
- ----------------------------------------------------------------------------------------------
TOTAL ASSETS 290,471 32,716 78,035 158,808 56,423 17,991
- ----------------------------------------------------------------------------------------------
LIABILITIES:
Payable for:
Fund units redeemed 243 -- 31,500 46 -- 17
Investment securities
purchased -- -- 978 -- -- --
Distributions to
unitholders -- -- 36 -- -- --
Accrued expenses:
Advisory fees 59 19 10 33 11 2
Administration fees 24 3 16 13 4 2
Custodian fees 3 4 11 3 4 3
Transfer agent fees 3 -- 1 1 1 --
Other liabilities 14 8 10 21 7 7
- ----------------------------------------------------------------------------------------------
TOTAL LIABILITIES 346 34 32,562 117 27 31
- ----------------------------------------------------------------------------------------------
NET ASSETS $290,125 $32,682 $45,473 $158,691 $56,396 $17,960
- ----------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS:
Paid-in capital $281,258 $30,112 $46,066 $155,142 $56,031 $18,233
Accumulated undistrib-
uted net investment in-
come -- 36 35 206 75 21
Accumulated net realized
gain (loss) on
investments and foreign
currency transactions (5,273) (43) (611) (132) (260) (1,090)
Net unrealized apprecia-
tion (depreciation) on
investments 14,140 2,588 (17) 3,475 550 796
Net unrealized loss on
translation of other
assets and liabilities
denominated in foreign
currencies -- (11) -- -- -- --
- ----------------------------------------------------------------------------------------------
NET ASSETS $290,125 $32,682 $45,473 $158,691 $56,396 $17,960
- ----------------------------------------------------------------------------------------------
Total units outstanding
(no par value), unlim-
ited units authorized
Class A 13,661 1,503 4,554 7,655 2,805 851
Class C 177 -- -- -- -- --
Class D 6 1 -- 1 3 14
- ----------------------------------------------------------------------------------------------
Net asset value, offer-
ing and redemption price
per unit
Class A $ 20.96 $ 21.74 $ 9.99 $ 20.73 $ 20.08 $ 20.78
Class C $ 20.96 -- -- -- -- --
Class D $ 20.94 $ 21.74 -- $ 20.71 $ 20.04 $ 20.75
- ----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
Short- U.S. U.S.
International Short Intermediate Government Treasury
Bond Bond Duration Bond Securities Index
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME: $16,703 $2,206(a) $4,377 $ 6,712 $1,800 $1,760
- ---------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees 1,592 289 290 732 187 131
Administration fees 499 80 181 283 78 82
Custodian fees 35 47 48 25 24 23
Transfer agent fees 28 3 1 12 3 3
Registration fees 30 18 27 27 19 25
Professional fees 16 1 -- 5 4 3
Trustee fees 7 2 -- 3 2 2
Amortization of deferred
organization costs 13 16 20 13 13 13
Other 15 17 9 15 11 11
- ---------------------------------------------------------------------------------------------
TOTAL EXPENSES 2,235 473 576 1,115 341 293
Less: Voluntary waivers
of investment advisory
and administration fees (1,163) (112) (181) (588) (156) (131)
Less: Expenses reimburs-
able by Administrator (113) (53) (214) (87) (73) (77)
- ---------------------------------------------------------------------------------------------
Net expenses 959 308 181 440 112 85
- ---------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 15,744 1,898 4,196 6,272 1,688 1,675
Net realized gain (loss)
on:
Investments transac-
tions 1,622 708 (41) 735 60 823
Foreign currency trans-
actions -- 23 -- -- -- --
Net change in unrealized
appreciation on
investments 34,676 2,711 161 6,055 1,548 3,234
Net change in unrealized
loss on translation of
other assets and lia-
bilities denominated in
foreign currencies -- (11) -- -- -- --
- ---------------------------------------------------------------------------------------------
NET INCREASE IN NET AS-
SETS RESULTING FROM
OPERATIONS $52,042 $5,329 $4,316 $13,062 $3,296 $5,732
- ---------------------------------------------------------------------------------------------
</TABLE>
(a) Net of $24 in non-reclaimable foreign withholding taxes.
See accompanying notes to financial statements.
19
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended November 30, 1995 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Bond International
Portfolio Bond Portfolio
------------------- ----------------
1994
1995 1994 1995 (a)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income $ 15,744 $ 17,760 $ 1,898 $ 1,030
Net realized gain (loss) on:
Investments 1,622 (7,342) 708 45
Foreign currency transactions -- -- 23 33
Net change in unrealized appreciation
(depreciation) on investments 34,676 (20,257) 2,711 (123)
Net change in unrealized loss on
translations of other assets and
liabilities denominated in foreign
currencies -- -- (11) --
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 52,042 (9,839) 5,329 985
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A UNITHOLDERS
FROM:
Net investment income (15,211) (18,190) (2,605) (1,139)
Net realized gain on investment
transactions -- (1,813) -- --
Return of capital (347) (147) -- --
- ------------------------------------------------------------------------------
Total distributions to Class A
unitholders (15,558) (20,150) (2,605) (1,139)
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS C UNITHOLDERS
FROM:
Net investment income (82) -- -- --
Return of capital (2) -- -- --
- ------------------------------------------------------------------------------
Total distributions to Class C
unitholders (84) -- -- --
- ------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS D UNITHOLDERS
FROM:
Net investment income (4) -- -- --
- ------------------------------------------------------------------------------
Total distributions to Class D
unitholders (4) -- -- --
- ------------------------------------------------------------------------------
CLASS A UNIT TRANSACTIONS:
Proceeds from the sale of units 65,433 140,320 6,142 27,325
Reinvested distributions 13,688 18,951 2,073 1,009
Cost of units redeemed (86,462) (117,004) (5,213) (1,233)
- ------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from Class A unit
transactions (7,341) 42,267 3,002 27,101
- ------------------------------------------------------------------------------
CLASS C UNIT TRANSACTIONS:
Proceeds from the sale of units 4,059 -- -- --
Reinvested distributions 84 -- -- --
Cost of units redeemed (574) -- -- --
- ------------------------------------------------------------------------------
Net increase in net assets resulting
from Class C unit transactions 3,569 -- -- --
- ------------------------------------------------------------------------------
CLASS D UNIT TRANSACTIONS:
Proceeds from the sale of units 100 16 9 --
Reinvested distributions 4 -- -- --
Cost of units redeemed (9) -- -- --
- ------------------------------------------------------------------------------
Net increase in net assets resulting
from Class D unit transactions 95 16 9 --
- ------------------------------------------------------------------------------
Net increase (decrease) 32,719 12,294 5,735 26,947
Net assets--beginning of period 257,406 245,112 26,947 --
- ------------------------------------------------------------------------------
NET ASSETS--END OF PERIOD $290,125 $ 257,406 $32,682 $26,947
- ------------------------------------------------------------------------------
UNDISTRIBUTED NET INVESTMENT INCOME: $ -- $ -- $ 36 $ 36
- ------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
See accompanying notes to financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Short Duration Short-Intermediate U.S. Government U.S. Treasury
Portfolio Bond Portfolio Securities Portfolio Index Portfolio
- -------------------- -------------------- ---------------------- ------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 4,196 $ 6,043 $ 6,272 $ 5,035 $ 1,688 $ 1,254 $ 1,675 $ 3,128
(41) (570) 735 (820) 60 (294) 823 (1,913)
-- -- -- -- -- -- -- --
161 (61) 6,055 (3,349) 1,548 (1,070) 3,234 (3,810)
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
4,316 5,412 13,062 866 3,296 (110) 5,732 (2,595)
- ---------------------------------------------------------------------------------------
(4,196) (6,008) (6,177) (5,036) (1,644) (1,251) (1,700) (3,160)
-- (86) -- -- -- -- -- (1,248)
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
(4,196) (6,094) (6,177) (5,036) (1,644) (1,251) (1,700) (4,408)
- ---------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
-- -- (1) -- (2) -- (4) --
- ---------------------------------------------------------------------------------------
-- -- (1) -- (2) -- (4) --
- ---------------------------------------------------------------------------------------
48,728 55,756 84,233 28,699 58,790 16,317 14,609 4,736
3,722 5,376 5,697 4,611 1,508 1,165 1,392 3,934
(96,900) (157,412) (34,345) (40,481) (30,910) (23,308) (39,656) (35,818)
- ---------------------------------------------------------------------------------------
(44,450) (96,280) 55,585 (7,171) 29,388 (5,826) (23,655) (27,148)
- ---------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
-- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------
-- -- 12 1 55 14 281 --
-- -- -- -- 2 -- 4 --
-- -- -- -- (5) -- (3) --
- ---------------------------------------------------------------------------------------
-- -- 12 1 52 14 282 --
- ---------------------------------------------------------------------------------------
(44,330) (96,962) 62,481 (11,340) 31,090 (7,173) (19,345) (34,151)
89,803 186,765 96,210 107,550 25,306 32,479 37,305 71,456
- ---------------------------------------------------------------------------------------
$ 45,473 $ 89,803 $ 158,691 $ 96,210 $ 56,396 $ 25,306 $ 17,960 $ 37,305
- ---------------------------------------------------------------------------------------
$ 35 $ 35 $ 206 $ 112 $ 75 $ 33 $ 21 $ 50
- ---------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
Bond Portfolio
-------------------------------------------------------- -----------------------
Class A Class C Class D
----------------------------- -------- ----------------
1995 1994 1993 (a) 1995 (b) 1995 1994 (c)
- ------------------------- -------- -------- -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 18.29 $ 20.70 $ 20.00 $20.21 $18.29 $18.77
Income from investment
operations:
Net investment income 1.17 1.42 1.42 0.47 1.08 0.28
Net realized and
unrealized gain (loss)
on investments 2.66 (2.21) 0.66 0.74 2.66 (0.48)
- -----------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.83 (0.79) 2.08 1.21 3.74 (0.20)
- -----------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income (1.14) (1.46) (1.38) (0.45) (1.09) (0.28)
Net realized gain on in-
vestments -- (0.15) -- -- -- --
Return of capital (0.02) (0.01) -- (0.01) -- --
- -----------------------------------------------------------------------------------------------------------
Total distributions to
unitholders (1.16) (1.62) (1.38) (0.46) (1.09) (0.28)
- -----------------------------------------------------------------------------------------------------------
Net increase (decrease) 2.67 (2.41) 0.70 0.75 2.65 (0.48)
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 20.96 $ 18.29 $ 20.70 $20.96 $20.94 $18.29
- -----------------------------------------------------------------------------------------------------------
Total return (d) 21.55% (4.04)% 10.61% 5.92% 21.06% (0.91)%
Ratio to average net as-
sets of: (e)
Expenses, net of waivers
and reimbursements 0.36% 0.36% 0.36% 0.60% 0.75% 0.75%
Expenses, before waivers
and reimbursements 0.84% 0.87% 0.92% 1.08% 1.23% 1.26%
Net investment income,
net of waivers and re-
imbursements 5.94% 7.31% 7.84% 5.59% 5.48% 6.31%
Net investment income,
before waivers and re-
imbursements 5.46% 6.80% 7.28% 5.11% 5.00% 5.80%
Portfolio turnover rate 74.19% 103.09% 89.06% 74.19% 74.19% 103.09%
Net assets at end of pe-
riod (in thousands) $286,301 $257,391 $245,112 $3,704 $ 120 $ 15
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class C units were issued on July 3, 1995.
(c) Class D units were issued on September 14, 1994.
(d) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(e) Annualized for periods less than a full year.
See accompanying notes to financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
International Bond
Portfolio Short Duration Portfolio
--------------------------- ----------------------------
Class A Class D Class A
----------------- -------- ----------------------------
1995 1994 (a) 1995 (b) 1995 1994 1993 (c)
- ------------------------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD $ 19.93 $ 20.00 $22.17 $ 9.97 $ 10.03 $ 10.00
Income from investment
operations:
Net investment income 1.26 0.79 0.02 0.59 0.40 0.14
Net realized and
unrealized gain (loss)
on investments and
foreign currency
transactions 2.28 0.01 (0.08) 0.01 (0.05) 0.03
- ------------------------------------------------------------------------------------
Total income (loss) from
investment operations 3.54 0.80 (0.06) 0.60 0.35 0.17
- ------------------------------------------------------------------------------------
DISTRIBUTIONS TO
UNITHOLDERS FROM:
Net investment income
(d) (1.73) (0.87) (0.37) (0.58) (0.40) (0.14)
Net realized gain on
investments -- -- -- -- (0.01) --
- ------------------------------------------------------------------------------------
Total distributions to
unitholders (1.73) (0.87) (0.37) (0.58) (0.41) (0.14)
- ------------------------------------------------------------------------------------
Net increase (decrease) 1.81 (0.07) (0.43) 0.02 (0.06) 0.03
- ------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 21.74 $ 19.93 $21.74 $ 9.99 $ 9.97 $ 10.03
- ------------------------------------------------------------------------------------
Total return (e) 18.20% 4.03% (0.78)% 6.14% 3.64% 1.73%
Ratio to average net as-
sets of: (f)
Expenses, net of waiv-
ers and reimbursements 0.96% 0.96% 1.35% 0.25% 0.25% 0.32%
Expenses, before waiv-
ers and reimbursements 1.47% 1.49% 1.86% 0.80% 0.77% 0.50%
Net investment income,
net of waivers and re-
imbursements 5.92% 5.93% 3.26% 5.80% 3.93% 3.00%
Net investment income,
before waivers and re-
imbursements 5.41% 5.40% 2.75% 5.25% 3.41% 2.82%
Portfolio turnover rate 54.46% 88.65% 54.46% 1,272.21% 1,364.00% 434.32%
Net assets at end of pe-
riod (in thousands) $32,673 $26,947 $ 9 $ 45,473 $ 89,803 $186,765
- ------------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on March 28, 1994.
(b) Class D units were issued on November 22, 1995.
(c) Commenced investment operations on June 2, 1993.
(d) For the International Bond Portfolio, distributions to unitholders from net
investment income include amounts relating to foreign currency transactions
which are treated as ordinary income for Federal income tax purposes.
(e) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(f) Annualized for periods less than a full year.
See accompanying notes to financial statements.
23
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
Short-Intermediate Bond Portfolio
---------------------------------------------
Class A Class D
--------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 19.53 $ 20.33 $ 20.00 $19.53 $19.80
Income from investment opera-
tions:
Net investment income 1.02 0.97 0.85 0.94 0.23
Net realized and unrealized
gain (loss) on investments 1.19 (0.80) 0.31 1.18 (0.27)
- -------------------------------------------------------------------------------
Total income (loss) from in-
vestment operations 2.21 0.17 1.16 2.12 (0.04)
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (1.01) (0.97) (0.83) (0.94) (0.23)
- -------------------------------------------------------------------------------
Total distributions to
unitholders (1.01) (0.97) (0.83) (0.94) (0.23)
- -------------------------------------------------------------------------------
Net increase (decrease) 1.20 (0.80) 0.33 1.18 (0.27)
- -------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 20.73 $ 19.53 $ 20.33 $20.71 $19.53
- -------------------------------------------------------------------------------
Total return (c) 11.58% 0.84% 5.90% 11.09% (0.38)%
Ratio to average net assets of:
(d)
Expenses, net of waivers and
reimbursements 0.36% 0.36% 0.36% 0.75% 0.75%
Expenses, before waivers and
reimbursements 0.91% 0.95% 1.00% 1.30% 1.34%
Net investment income, net of
waivers and reimbursements 5.14% 4.84% 4.79% 4.85% 4.42%
Net investment income, before
waivers and reimbursements 4.59% 4.25% 4.15% 4.30% 3.83%
Portfolio turnover rate 54.68% 48.67% 19.48% 54.68% 48.67%
Net assets at end of period (in
thousands) $158,678 $96,209 $107,550 $ 13 $ 1
- -------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on September 14, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. Government Securities Portfolio
-------------------------------------------
Class A Class D
-------------------------- ---------------
1993
1995 1994 (a) 1995 1994(b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PE-
RIOD $ 19.05 $ 20.07 $ 20.00 $19.05 $19.43
Income from investment operations:
Net investment income 1.05 0.91 0.55 0.96 0.22
Net realized and unrealized gain
(loss) on
investments 1.02 (1.02) 0.05 1.00 (0.38)
- --------------------------------------------------------------------------------
Total income (loss) from investment
operations 2.07 (0.11) 0.60 1.96 (0.16)
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS FROM:
Net investment income (1.04) (0.91) (0.53) (0.97) (0.22)
- --------------------------------------------------------------------------------
Total distributions to unitholders (1.04) (0.91) (0.53) (0.97) (0.22)
- --------------------------------------------------------------------------------
Net increase (decrease) 1.03 (1.02) 0.07 0.99 (0.38)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 20.08 $ 19.05 $ 20.07 $20.04 $19.05
- --------------------------------------------------------------------------------
Total return (c) 11.18% (0.57)% 3.00% 10.66% (.89)%
Ratio to average net assets of: (d)
Expenses, net of waivers and reim-
bursements 0.36% 0.36% 0.43% 0.75% 0.75%
Expenses, before waivers and
reimbursements 1.09% 1.12% 1.18% 1.48% 1.51%
Net investment income, net of
waivers and reimbursements 5.43% 4.62% 4.18% 5.08% 4.65%
Net investment income, before
waivers and reimbursements 4.70% 3.86% 3.43% 4.35% 3.89%
Portfolio turnover rate 141.14% 45.55% 20.59% 141.14% 45.55%
Net assets at end of period (in
thousands) $56,329 $25,293 $32,479 $ 67 $ 13
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on April 5, 1993.
(b) Class D units were issued on September 15, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
25
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
For the Years Ended November 30,
<TABLE>
<CAPTION>
U.S. Treasury Index Portfolio
---------------------------------------------
Class A Class D
--------------------------- ----------------
1995 1994 1993 (a) 1995 1994 (b)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PE-
RIOD $ 18.77 $ 21.05 $ 20.00 $18.77 $18.80
Income from investment opera-
tions:
Net investment income 1.11 1.15 0.95 1.00 0.09
Net realized and unrealized gain
(loss) on investments 2.01 (1.93) 1.02 2.03 (0.03)
- --------------------------------------------------------------------------------
Total income (loss) from invest-
ment operations 3.12 (0.78) 1.97 3.03 0.06
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO UNITHOLDERS
FROM:
Net investment income (1.11) (1.14) (0.92) (1.05) (0.09)
Net realized gain on investments -- (0.36) -- -- --
- --------------------------------------------------------------------------------
Total distributions to
unitholders (1.11) (1.50) (0.92) (1.05) (0.09)
- --------------------------------------------------------------------------------
Net increase (decrease) 2.01 (2.28) 1.05 1.98 (0.03)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 20.78 $ 18.77 $ 21.05 $20.75 $18.77
- --------------------------------------------------------------------------------
Total return (c) 16.95% (3.80)% 9.94% 16.43% 0.58%
Ratio to average net assets of:
(d)
Expenses, net of waivers and re-
imbursements 0.26% 0.26% 0.26% 0.65% 0.65%
Expenses, before waivers and re-
imbursements 0.89% 0.79% 0.83% 1.28% 1.18%
Net investment income, net of
waivers and reimbursements 5.09% 5.60% 5.11% 5.41% 6.05%
Net investment income, before
waivers and reimbursements 4.46% 5.07% 4.54% 4.78% 5.52%
Portfolio turnover rate 80.36% 52.80% 77.75% 80.36% 52.80%
Net assets at end of period (in
thousands) $17,674 $37,305 $71,456 $ 286 $ --
- --------------------------------------------------------------------------------
</TABLE>
(a) Commenced investment operations on January 11, 1993.
(b) Class D units were issued on September 16, 1994.
(c) Assumes investment at net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and a complete redemption
of the investment at the net asset value at the end of the period. Total
return is not annualized for periods less than one year.
(d) Annualized for periods less than a full year.
See accompanying notes to financial statements.
26
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
1. ORGANIZATION
The Benchmark Funds (the "Trust") is a Massachusetts business trust registered
under the Investment Company Act of 1940 (as amended) as an open-end management
investment company. The Trust includes sixteen portfolios, each with its own
investment objective. The Northern Trust Company ("Northern") acts as the
Trust's investment adviser, transfer agent, and custodian. Goldman, Sachs & Co.
("Goldman Sachs") acts as the Trust's administrator and distributor. Presented
herein are the financial statements of the fixed income portfolios.
The International Bond Portfolio commenced investment operations on March 28,
1994. All other fixed income portfolios commenced investment operations during
the fiscal year ended November 30, 1993.
The Bond, International Bond, Short-Intermediate Bond, U.S. Government
Securities, and U.S. Treasury Index Portfolios have four separate unit classes:
Class A, B, C and D. Each class is distinguished by the level of administrative
support and transfer agent service provided. As of November 30, 1995, Class A,
Class C and Class D units are outstanding.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed:
(a) Investment Valuation
Investments held by a portfolio are valued at the last quoted sale price on the
exchange on which such securities are primarily traded, or if any securities
are not traded on a valuation date, at the last quoted bid price. Securities
which are traded in the over-the-counter markets are valued at the last quoted
bid price. Any securities, including restricted securities, for which current
quotations are not readily available are valued at fair value as determined in
good faith by Northern under the supervision of the Board of Trustees
("Board"). Short-term investments are valued at amortized cost which Northern
has determined, pursuant to Board authorization, approximates market value.
(b) Repurchase Agreements
During the term of a repurchase agreement, the market value of the underlying
collateral, including accrued interest, is required to exceed the market value
of the repurchase agreement. The underlying collateral for all repurchase
agreements is held in a customer-only account of Northern, as custodian for the
Trust, at the Federal Reserve Bank of Chicago.
(c) Foreign Currency Translations
Values of investments denominated in foreign currencies are converted into U.S.
dollars using the spot market rate of exchange at the time of valuation.
Purchases and sales of investments and interest income are translated into U.S.
dollars using the spot market rate of exchange prevailing on the respective
dates of such transactions.
The gains or losses on investments resulting from changes in foreign exchange
rates are included with net realized and unrealized gain (loss) on investments.
(d) Investment Transactions and Investment Income
Investment transactions are recorded on the trade date. Realized gains and
losses on investment transactions are calculated on the identified-cost basis.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums.
(e) Forward Foreign Currency Exchange Contracts
The International Bond Portfolio is authorized to enter into forward foreign
currency exchange contracts for the purchase of a specific foreign currency at
a fixed price on a future date as a hedge or cross-hedge against either
specific transactions or portfolio positions. The objective of the Portfolio's
foreign currency hedging transactions is to reduce the risk that the U.S.
dollar value of the
27
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--CONTINUED
November 30, 1995
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Portfolio's foreign currency denominated securities will decline in value due
to changes in foreign currency exchange rates. All forward foreign currency
contracts are "marked-to-market" daily at the applicable translation rates and
any resulting unrealized gains or losses are recorded in the financial
statements. The portfolio records realized gains or losses when the forward
contract is offset by entry into a closing transaction or extinguished by
delivery of the currency. Risks may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.
The contractual amounts of forward foreign currency exchange contracts do not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaningful only when all
related and offsetting transactions are considered. At November 30, 1995, there
were no contracts outstanding.
(f) Federal Taxes
It is each portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
each year substantially all of its taxable income and capital gains to its
unitholders. Therefore, no provision is made for federal taxes.
At November 30, 1995, the Trust's most recent tax year end, the portfolios had
approximately the following amounts of capital loss carryforwards for U.S.
federal tax purposes:
<TABLE>
<CAPTION>
Amount Year(s) of Expiration
- ----------------------------------------------------------------
(in thousands)
<S> <C> <C>
Bond $5,273 2002 to 2003
International Bond 39 2002
Short Duration 610 2002 to 2003
Short-Intermediate Bond 26 2001 to 2002
U.S. Government Securities 248 2001 to 2003
U.S. Treasury Index 1,068 2002
- ----------------------------------------------------------------
</TABLE>
These amounts are available to be carried forward to offset future capital
gains to the extent permitted by applicable laws or regulations.
(g) Deferred Organization Costs
Organization related costs are being amortized on a straight-line basis over
five years.
(h) Expenses
Expenses arising in connection with a specific portfolio are allocated to that
portfolio. Certain expenses arising in connection with a class of units are
allocated to that class of units. Expenses incurred which do not specifically
relate to an individual portfolio are allocated among the portfolios based on
each portfolio's relative net assets.
(i) Distributions
Dividends from net investment income are declared and paid as follows:
<TABLE>
<CAPTION>
Declared Paid
- -----------------------------------------------
<S> <C> <C>
Bond Monthly Monthly
International Bond Quarterly Quarterly
Short Duration Daily Monthly
Short-Intermediate Bond Monthly Monthly
U.S. Government Securities Monthly Monthly
U.S. Treasury Index Monthly Monthly
- -----------------------------------------------
</TABLE>
Each portfolio's net realized capital gains are distributed at least annually.
Income dividends and capital gains distributions are determined in accordance
with income tax regulations. Such amounts may differ from income and capital
gains recorded in accordance with generally accepted accounting principles.
(j) Reclassifications
The Bond Portfolio reclassified approximately $447,000 from accumulated net
realized gain (loss) on investment transactions to accumulated undistributed
net investment income. The International Bond Portfolio reclassified
approximately $684,000 from accumulated net realized
28
<PAGE>
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
gain (loss) on investment transactions, and $23,000 from net realized gain on
foreign currency transactions, to accumulated undistributed net investment
income. These reclassifications have no impact on the net asset value of the
Portfolios and are designed to present the Portfolios' capital accounts on a
tax basis. Certain reclassifications have been made to amounts recorded at
November 30, 1994 to conform to the current financial statement presentation.
3. ADVISORY, TRANSFER AGENCY AND CUSTODIAN AGREEMENTS
The Trust has an investment advisory agreement with Northern whereby each
portfolio pays Northern a fee, computed daily and payable monthly, based on a
specified percentage of its average daily net assets. For the current fiscal
year, Northern voluntarily agreed to waive a portion of the advisory fee for
each portfolio. The annual advisory fees and waiver rates, expressed as a
percentage of average daily net assets, and the amount of fees waived by
Northern for the year ended November 30, 1995, are as follows:
<TABLE>
<CAPTION>
Net Advisory
Advisory Less: Advisory Fees
Fee Waiver Fee Waived
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
Bond .60% .35% .25% $929,000
International Bond .90 .20 .70 64,000
Short Duration .40 .25 .15 181,000
Short-Intermediate Bond .60 .35 .25 427,000
U.S. Government
Securities .60 .35 .25 109,000
U.S. Treasury Index .40 .25 .15 82,000
- ----------------------------------------------------------
</TABLE>
As compensation for the services rendered as transfer agent, including the
assumption by Northern of the expenses related thereto, Northern receives a
fee, computed daily and payable monthly, at an annual rate of .01%, .05%, .10%,
and .15% of the average daily net asset value of the outstanding Class A, B, C
and D units, respectively, for the Bond, International Bond, Short-Intermediate
Bond, U.S. Government Securities and U.S. Treasury Index Portfolios.
As compensation for the services rendered as custodian for the portfolios, and
for the services rendered as transfer agent for the Short Duration Portfolio,
including the assumption by Northern of the expenses related thereto, Northern
receives compensation based on a pre-determined schedule of charges approved by
the Board.
4. ADMINISTRATION AND DISTRIBUTION AGREEMENTS
The Trust has an administration agreement with Goldman
Sachs whereby each portfolio pays the Administrator a fee, computed daily and
payable monthly, based on the average net assets of each portfolio at the rates
set forth below:
<TABLE>
<CAPTION>
Average net assets Rate
- ---------------------------------------
<S> <C>
For the first $100,000,000 .250%
For the next $200,000,000 .150
For the next $450,000,000 .075
For net assets over $750,000,000 .050
- ---------------------------------------
</TABLE>
For the current fiscal year, Goldman Sachs voluntarily agreed to limit
administration fees to .10% of average daily net assets for the Bond,
International Bond, Short-Intermediate Bond, U.S. Government Securities and
U.S. Treasury Index Portfolios. In addition, Goldman Sachs agreed to waive a
portion of its administrative fees should overall administration fees earned
during the preceding year exceed certain specified levels. Furthermore, Goldman
Sachs has agreed to reimburse each portfolio for certain expenses in the event
that such expenses, as defined, exceed on an annualized basis .10% of its
average daily net assets.
A summary of the administration fees waived and expense reimbursements for the
year ended November 30, 1995 are as follows:
<TABLE>
<CAPTION>
Administration Expense
Fees Waived Reimbursements
- ---------------------------------------------------------
<S> <C> <C>
Bond $234,000 $113,000
International Bond 48,000 53,000
Short Duration -- 214,000
Short-Intermediate Bond 161,000 87,000
U.S. Government Securities 47,000 73,000
U.S. Treasury Index 49,000 77,000
- ---------------------------------------------------------
</TABLE>
29
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS--CONTINUED
November 30, 1995
4. ADMINISTRATION AND DISTRIBUTION AGREEMENTS (continued)
Goldman Sachs receives no compensation under the distribution agreement.
5. UNITHOLDER SERVICING PLAN
The Trust has adopted a Unitholder Servicing Plan pursuant to which the Trust
may enter into agreements with institutions or other financial intermediaries
under which they will render certain unitholder administrative support services
for their customers or other investors who beneficially own Class B, C and D
units. As compensation under the Unitholder Servicing Plan, the institution or
other financial intermediary receives a fee at an annual rate of up to .10%,
.15% and .25% of the average daily net asset value of the outstanding Class B,
C and D units, respectively. These fees are included in other expenses on the
Statements of Operations.
6. INVESTMENT TRANSACTIONS
Investment transactions for the year ended November 30, 1995 (excluding short-
term investments) were as follows:
<TABLE>
<CAPTION>
Proceeds
from sales Proceeds
and from sales
Purchases maturities and
of U.S. Purchases of U.S. maturities
Government of other Government of other
Obligations securities Obligations securities
- -----------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond $145,997 $28,407 $127,830 $53,562
International
Bond 1,770 17,405 1,841 14,667
Short
Duration 53,966 106,029 52,357 102,115
Short-Intermediate Bond 90,283 17,137 28,658 29,730
U.S.
Government Securities 68,902 608 42,163 --
U.S. Treasury
Index 25,644 -- 48,538 --
- -----------------------------------------------------------------------
</TABLE>
On November 30, 1995, the composition of unrealized appreciation
(depreciation) of investment securities based on the aggregate cost of
investments for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Cost for
Federal
Net Income
Appreciation Tax
Appreciation Depreciation (Depreciation) purposes
- -------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond $15,888 $1,748 $14,140 $272,366
International Bond 2,624 40 2,584 28,887
Short Duration 19 36 (17) 77,741
Short-Intermediate
Bond 3,640 265 3,375 154,473
U.S.
Government Securities 563 15 548 55,183
U.S. Treasury
Index 811 15 796 16,927
- -------------------------------------------------------------------------
</TABLE>
7. BANK LOANS
The Trust maintains a $5,000,000 revolving bank credit line and a $15,000,000
conditional revolving credit line for liquidity and other purposes. Borrowings
under this arrangement bear interest at 1% above the Fed Funds rate and are
secured by pledged securities equal to or exceeding 120% of the outstanding
balance.
There were no borrowings under this arrangement during the year ended November
30, 1995.
30
<PAGE>
- --------------------------------------------------------------------------------
8. UNIT TRANSACTIONS
Transactions in Class A units for the year ended November 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Net
Reinvested increase
Sales distributions Redemptions (decrease)
- ----------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond 3,353 696 4,459 (410)
International
Bond 297 97 243 151
Short Duration 4,868 388 9,707 (4,451)
Short-
Intermediate
Bond 4,158 285 1,714 2,729
U.S.
Government
Securities 2,965 77 1,564 1,478
U.S. Treasury
Index 748 70 1,953 (1,135)
- ----------------------------------------------------------
</TABLE>
Transactions in Class A units for the year ended November 30, 1994 were as
follows:
<TABLE>
<CAPTION>
Net
Reinvested increase
Sales distributions Redemptions (decrease)
- ----------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond 6,964 973 5,706 2,231
International
Bond 1,363 51 62 1,352
Short Duration 5,569 537 15,730 (9,624)
Short-
Intermediate
Bond 1,433 232 2,029 (364)
U.S.
Government
Securities 829 60 1,180 (291)
U.S. Treasury
Index 238 196 1,843 (1,409)
- ----------------------------------------------------------
</TABLE>
Transactions in Class C units (in thousands) for the period ended November 30,
1995, were sales of 201 units; reinvested distributions of 4 units, and
redemptions of 28 units, resulting in a net unit increase of 177 units, for the
Bond Portfolio.
Transactions in Class D units for the period ended November 30, 1995 were as
follows:
<TABLE>
<CAPTION>
Reinvested Net
Sales distributions Redemptions increase
- ------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond 5 -- -- 5
International Bond 1 -- -- 1
U.S.
Government
Securities 3 -- 1 2
U.S. Treasury
Index 13 -- -- 13
- ------------------------------------------------------------
</TABLE>
Transactions in Class D units for the period ended November 30, 1994 were as
follows:
<TABLE>
<CAPTION>
Reinvested Net
Sales distributions Redemptions increase
- -------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
Bond 1 -- -- 1
Short-
Intermediate
Bond 1 -- -- 1
U.S.
Government
Securities 1 -- -- 1
U.S. Treasury
Index 1 -- -- 1
- -------------------------------------------------------
</TABLE>
31
<PAGE>
The Benchmark Funds
Fixed Income Portfolios
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Unitholders and Trustees of
The Benchmark Funds
Fixed Income Portfolios
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of the Bond, International Bond, Short
Duration, Short-Intermediate Bond, U.S. Government Securities and U.S. Treasury
Index Portfolios, comprising the Fixed Income Portfolios of The Benchmark
Funds, as of November 30, 1995, and the related statements of operations for
the year then ended and changes in net assets and financial highlights for the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the investments owned at
November 30, 1995 by physical examination of the securities held by the
custodian and by correspondence with outside depositories and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Bond, International Bond, Short Duration, Short-Intermediate Bond, U.S.
Government Securities and U.S. Treasury Index Portfolios, comprising the Fixed
Income Portfolios of The Benchmark Funds, at November 30, 1995, the results of
their operations and the changes in their net assets and financial highlights
for the periods indicated therein, in conformity with generally accepted
accounting principles.
[SIGNATURE LOGO ERNST & YOUNG LLP]
Chicago, Illinois
January 16, 1996
32
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
THE BENCHMARK FUNDS
Investment Adviser, Transfer Agent and Custodian
The Northern Trust Company
50 S. LaSalle Street
Chicago, IL 60675
Administrator and Distributor
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, IL 60606
Trustees
William H. Springer, Chairman
Edward J. Condon, Jr.
John W. English
James J. Gavin, Jr.
William B. Jordan
Frederick T. Kelsey
Richard P. Strubel
Officers
Marcia L. Beck, President
Paul W. Klug, Jr., Vice President
John W. Mosior, Vice President
Nancy L. Mucker, Vice President
Pauline Taylor, Vice President
Scott M. Gilman, Treasurer
Michael J. Richman, Secretary
Howard B. Surloff, Assistant Secretary
Independent Auditors
Ernst & Young LLP
233 S. Wacker Dr.
Chicago, IL 60606
Legal Counsel
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
This Annual Report is authorized for distribution to prospective
investors only when preceded or accompanied by a Prospectus which
contains facts concerning the objectives and policies, management,
expenses and other information.
The
Benchmark
Funds
Fixed
Income
Portfolios
Annual Report
November 30, 1995
<PAGE>
PART C.
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Equity Portfolios Prospectus: Financial Highlights - Selected
Data for a Unit Outstanding from Commencement of Operations (1) through November
30, 1993 (November 30, 1994, with respect to the International Growth Portfolio)
and for the years ended November 30, 1994 and November 30, 1995 for the
Balanced, Equity Index, Diversified Growth, Focused Growth, Small Company Index
and International Growth Portfolios.
Included in the Fixed Income Portfolios Prospectus:
Financial Highlights - Selected Data for a Unit Outstanding from Commencement of
Operations (2) through November 30, 1993 (November 30, 1994 with respect to the
International Bond Portfolio) and for the years ended November 30, 1994 and
November 30, 1995 for the Short Duration, U.S. Government Securities, Short-
Intermediate Bond, U.S. Treasury Index, Bond and International Bond Portfolios.
Included in the Money Market Portfolios Prospectus:
Financial Highlights - Selected Data for a Unit Outstanding from Commencement of
Operations (3) through November 30, 1990 and for each of the five years ended
November 30, 1995 for the Government Select Portfolio.
- ----------
(1) Balanced and Focused Growth Portfolios commenced investment operations on
July 1, 1993. Equity Index, Diversified Growth and Small Company Index
Portfolios commenced investment operations on January 11, 1993, International
Growth Portfolio commenced investment operations on March 28, 1994.
(2) Short Duration Portfolio commenced investment operations on June 2, 1993.
U.S. Government Securities Portfolio commenced operations on April 5, 1993.
Short-Intermediate Bond, U.S. Treasury Index and Bond Portfolios commenced
investment operations on January 11, 1993. International Bond Portfolio
commenced investment operations on March 28, 1994.
(3) Government Select Portfolio commenced operations on November 7, 1990.
<PAGE>
Financial Highlights - Selected Data for a Unit Outstanding for each of the ten
years ended November 30, 1995 for the Government Portfolio.
Financial Highlights - Selected Data for a Unit Outstanding for each of the ten
years ended November 30, 1995 for the Diversified Assets and Tax-Exempt
Portfolios.
(i) Included in the Statements of Additional Information
Statement of Investments as of November 30, 1995 for the Balanced, Equity Index,
Diversified Growth, Focused Growth, Small Company Index, International Growth,
Short Duration, U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, Bond, International Bond, Government Select, Government,
Diversified Assets and Tax-Exempt Portfolios.
Statements of Assets and Liabilities as of November 30, 1995 for the Balanced,
Equity Index, Diversified Growth, Focused Growth, Small Company Index,
International Growth, Short Duration, U.S. Government Securities,
Short-Intermediate Bond, U.S. Treasury Index, Bond, International Bond,
Government Select, Government, Diversified Assets and Tax-Exempt Portfolios.
Statement of Operations for the year ended November 30, 1995 for the Balanced,
Equity Index, Diversified Growth, Focused Growth, Small Company Index,
International Growth, Short Duration, U.S. Government Securities,
Short-Intermediate Bond, U.S. Treasury Index, Bond, International Bond,
Government Select, Government, Diversified Assets and Tax-Exempt Portfolio.
Statement of Changes in Net Assets for the year ended November 30, 1995 for the
Balanced, Diversified Growth, Equity Index, Focused Growth, Small Company Index,
Short Duration, U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, and Bond Portfolios, for the year ended November 30, 1994 for
the Balanced, Diversified Growth, Equity Index, Focused Growth, Small Company
Index, Short Duration, U.S. Government Securities, Short-Intermediate Bond, U.S.
Treasury Index, and Bond Portfolios and for the period ended November 30, 1994
for the International Growth and International Bond Portfolios.
(b) Exhibits
The following exhibits are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A as initially filed (Reference A), to
Pre-Effective Amendment No. 1 (Reference B), to Post-Effective Amendment No. 1
to such Registration Statement (Reference C), to Post-Effective Amendment No. 2
to such Registration Statement (Reference D), to Post-Effective Amendment No. 4
to such Registration Statement (Reference E), to Post-Effective Amendment No. 7
to such Registration Statement (Reference F), to Post-Effective Amendment No. 11
to such Registration Statement (Reference G), to Post-Effective Amendment
<PAGE>
No. 12 to such Registration Statement (Reference H), to Post- Effective
Amendment No. 13 to such Registration Statement (Reference I), to Post-Effective
Amendment No. 16 to such Registration Statement (Reference J), to Post-Effective
Amendment No. 17 to such Registration Statement (Reference K), to Post-
Effective Amendment No. 19 to such Registration Statement (Reference L), to
Post-Effective Amendment No. 20 to such Registration Statement (Reference M), to
Post-Effective Amendment No. 21 to such Registration Statement (Reference N), to
Post- Effective Amendment No. 22 to such Registration Statement (Reference O) ,
to Post-Effective Amendment No. 23 to such Registration Statement (Reference P),
to Post-Effective Amendment No. 25 to such Registration Statement (Reference Q),
to Post- Effective Amendment No. 26 to such Registration Statement (Reference
R), to Post-Effective Amendment No. 27 to such Registration Statement (Reference
S) and to Post-Effective Amendment No. 28 to such Registration Statement
(Reference T).
1 - Agreement and Declaration of Trust dated July 15, 1982 (Reference A).
1(a)- Amendment No. 1 dated November 22, 1982 to Agreement and Declaration
of Trust (Reference A).
1(b)- Amendment No. 2 dated April 21, 1983 to Agreement and Declaration of
Trust (Reference B).
1(c)- Amendment No. 3 dated May 19, 1983 to Agreement and Declaration of
Trust (Reference B).
1(d)- Amendment No. 4 dated May 19, 1983 to Agreement and Declaration of
Trust (Reference B).
1(e)- Amendment No. 5 dated May 19, 1983 to Agreement and Declaration of
Trust (Reference B).
1(f)- Amendment No. 6 dated December 19, 1983 to Agreement and Declaration
of Trust (Reference D).
1(g)- Amendment No. 7 dated August 23, 1985 to Agreement and Declaration of
Trust (Reference E).
1(h)- Amendment No. 8 dated September 26, 1990 to Agreement and Declaration
of Trust (Reference H).
1(i)- Amendment No. 9 dated October 1, 1990 to Agreement and Declaration of
Trust (Reference H).
1(j)- Amendment No. 10 to Agreement and Declaration of Trust (Reference I).
1(k)- Amendment No. 11 to Agreement and Declaration of Trust (Reference J).
<PAGE>
1(l)- Amendment No. 12 to Agreement and Declaration of Trust (Reference L).
1(m)- Amendment No. 13 to Agreement and Declaration of Trust (Reference P).
2- By-Laws of the Registrant (Reference A).
2(a)- Amendment dated May 9, 1983 to Section 2.3 of the By- Laws (Reference
B).
2(b)- Amendment dated April 21, 1983 to Sections 1.1 and 5.3 of the By-Laws
(Reference D).
2(c)- Amendment dated August 29, 1983 to Section 6.3 of the By-Laws
(Reference D).
2(d)- Amendment dated December 19, 1983 to Sections 1.1 and 5.3 of the
By-Laws (Reference D).
2(e)- Amendment dated January 26, 1987 to Section 3.7 of the By-Laws
(Reference F).
3- Not Applicable.
4- Not Applicable.
5- Advisory Agreement dated October 5, 1990 between Registrant and The
Northern Trust Company (Reference H).
5(a)- Addendum No. 1 to Advisory Agreement between Registrant and The
Northern Trust Company (Reference I).
5(b)- Addendum No. 1, dated June 8, 1992, to Investment Advisory Agreement,
dated October 5, 1990, between The Northern Trust Company and the
Registrant (Reference J).
5(c)- Addendum No. 2 to Investment Advisory Agreement between the Registrant
and The Northern Trust Company (Reference K).
5(d)- Addendum No. 3 to Investment Advisory Agreement between the Registrant
and The Northern Trust Company (Reference M).
5(e)- Addendum No. 4 to Investment Advisory Agreement between the Registrant
and The Northern Trust Company (Reference S).
6- Distribution Agreement dated June 8, 1992 between Registrant and
Goldman, Sachs & Co. (Reference I).
<PAGE>
6(a)- Addendum No. 1 to Distribution Agreement between the Registrant and
Goldman, Sachs & Co. (Reference K).
6(b)- Addendum No. 2 to Distribution Agreement between the Registrant and
Goldman, Sachs & Co. (Reference L).
6(c)- Form of Addendum No. 3 to Distribution Agreement between the
Registrant and Goldman, Sachs & Co. (Reference T).
7 - Not Applicable.
8- Custodian Agreement dated June 8, 1992 between Registrant and The
Northern Trust Company (Reference I).
8(a)- Addendum No. 1 to Custodian Agreement between the Registrant and The
Northern Trust Company (Reference J).
8(b)- Addendum No. 2 to Custodian Agreement between Registrant and The
Northern Trust Company (Reference L).
8(c)- Foreign Custody Agreement between the Registrant and The Northern
Trust Company (Reference T).
9 - Agreement and Plan of Reorganization between Registrant and The
Benchmark Tax-Exempt Fund (Reference G).
9(b)- Addendum No. 1 to Transfer Agency Agreement between the Registrant and
The Northern Trust Company (Reference L).
9(c)- Addendum No. 2 to Transfer Agency Agreement between the Registrant and
The Northern Trust Company (Reference S).
9(d)- Administration Agreement dated June 8, 1992 between Registrant and
Goldman, Sachs & Co. (Reference I).
9(e)- Amendment dated August 1, 1992 to Administration Agreement dated June
8, 1992 between Registrant and Goldman, Sachs & Co. (Reference J).
9(f)- Addendum No. 1 to Administration Agreement between the Registrant and
Goldman, Sachs & Co. (Reference K).
9(g)- Addendum No. 2 to Administration Agreement between the Registrant and
Goldman, Sachs & Co. (Reference L).
9(h)- Addendum No. 3 to Administration Agreement between the Registrant and
Goldman, Sachs & Co. (Reference S).
<PAGE>
12- Not Applicable.
13- Subscription Agreement with Goldman, Sachs & Co. (Reference B).
13(a)- Amendment No. 1 to Subscription Agreement with Goldman, Sachs & Co.
(Reference B).
13(b)- Amendment No. 2 to Subscription Agreement with Goldman, Sachs & Co.
(Reference C).
13(c)- Amendment No. 3 to Subscription Agreement with Goldman, Sachs & Co.
(Reference E).
14- Not Applicable.
15- Servicing Agreement (Reference T).
16- Schedule for computation of performance data for Equity Index
Portfolio, Diversified Growth Portfolio, U.S. Treasury Index
Portfolio, Short-Intermediate Bond Portfolio and Bond Portfolio
(Reference L).
16(a)- Schedule for computation of performance data for Diversified Assets
Portfolio, Government Portfolio, Government Select Portfolio,
Tax-Exempt Portfolio and California Municipal Portfolio (Reference M).
16(b)- Schedule for computation of performance data for U.S. Government
Securities Portfolio (Reference N).
16(c)- Schedule for computation of performance data for Short Duration
Portfolio (Reference O).
16(d)- Schedule for computation of performance data for Balanced Portfolio,
Diversified Growth Portfolio, Equity Index Portfolio, Focused Growth
Portfolio and Small Company Index Portfolio (Reference Q).
The following exhibits are filed herewith:
1(h)- Amendment No. 8 dated September 26, 1990 to Agreement and Declaration
of Trust.
1(i)- Amendment No. 9 dated October 1, 1990 to Agreement and Declaration of
Trust.
1(j)- Amendment No. 10 dated April 27, 1992 to Agreement and Declaration of
Trust.
1(k)- Amendment No. 11 to Agreement and Declaration of Trust.
1(l)- Amendment No. 12 dated April 27, 1993 to Agreement and Declaration of
Trust.
<PAGE>
1(m)- Agreement No. 13 dated July 20, 1993 to Agreement and Declaration of
Trust.
1(n)- Amendment No. 14 dated July 11, 1995 to Agreement and Declaration of
Trust.
5- Advisory Agreement dated October 5, 1990 between Registrant and The
Northern Trust Company.
5(b)- Addendum No. 1, dated June 8, 1992 to the Investment Advisory
Agreement between The Northern Trust Company and the Registrant.
5(c)- Addendum No. 2 dated January 8, 1993 to Investment Advisory Agreement
between the Registrant and The Northern Trust Company.
5(d)- Addendum No. 3 dated July 1, 1993 to the Investment Advisory Agreement
between the Registrant and The Northern Trust Company.
5(e)- Addendum No. 4 dated March 25, 1994 to the Investment Advisory
Agreement between the Registrant and The Northern Trust Company.
6(a)- Addendum No. 1 dated January 8, 1993 to the Distribution Agreement
between the Registrant and Goldman, Sachs & Co.
6(b)- Addendum No. 2 dated July 1, 1993 to the Distribution Agreement
between the Registrant and Goldman, Sachs & Co.
8(a)- Addendum No. 1 dated January 8, 1993 to Custodian Agreement between
Registrant and The Northern Trust Company.
8(b)- Addendum No. 2 dated July 1, 1993 to Custodian Agreement between
Registrant and The Northern Trust Company.
8(c)- Foreign Custody Agreement between the Registrant and The Northern
Trust Company.
9(a)- Revised and Restated Transfer Agency Agreement dated January 8, 1993
between Registrant and The Northern Trust Company.
9(b)- Addendum No. 1 to Transfer Agency Agreement dated July 1, 1993 between
the Registrant and The Northern Trust Company.
9(c)- Addendum No. 2 to Transfer Agency Agreement dated March
<PAGE>
25, 1994 between the Registrant and The Northern Trust Company.
9(d)- Administration Agreement dated June 8, 1992 between Registrant and
Goldman, Sachs & Co.
9(e)- Amendment dated August 1, 1992 to Administration Agreement between
Registrant and Goldman, Sachs & Co.
9(f)- Addendum No. 1 to Administration Agreement dated January 8, 1993
between the Registrant and Goldman, Sachs & Co.
9(g)- Addendum No. 2 to Administration Agreement dated July 1, 1993 between
The Registrant and Goldman, Sachs & Co.
9(h)- Addendum No. 3 to Administration Agreement dated March 25, 1994
between The Registrant and Goldman, Sachs & Co.
10- Consent of Counsel
11- Consent of Ernst & Young LLP
18- Plan entered into by Registrant pursuant to Rule 18f-3
27- Financial Data Schedules
Item 25. Persons Controlled by or Under Common Control with Registrant
Registrant is controlled by its Board of Trustees.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class March 15, 1995
- -------------- --------------
Class A Class C Class D
------- ------- -------
<S> <C> <C> <C>
Diversified Assets Portfolio Units ......... 1 N/A N/A
Government Portfolio Units ................. 1 N/A N/A
Government Select Portfolio Units .......... 1 N/A N/A
Tax-Exempt Portfolio Units ................. 1 N/A N/A
Equity Index Portfolio Units ............... 1 1 1
Small Company Index Portfolio Units ........ 1 N/A 1
Diversified Growth Portfolio Units ......... 1 N/A 1
Focused Growth Portfolio Units ............. 1 N/A 1
U.S. Treasury Index Portfolio Units ........ 1 N/A 1
U.S. Government Securities Portfolio ....... 1 N/A 1
Short-Intermediate Bond Portfolio Units .... 1 N/A 1
Bond Portfolio Units ....................... 1 1 1
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Short Duration Portfolio Units 1 N/A N/A
Balanced Portfolio Units 1 N/A 1
International Growth Portfolio Units 1 N/A 1
International Bond Portfolio Units 1 N/A 1
</TABLE>
Item 27. Indemnification
Section 6.4, 6.5 and 6.6 of the Registrant's Agreement and Declaration of Trust
provide for indemnification of the Registrant's Trustees and officers under
certain circumstances. A copy of such Agreement and Declaration of Trust was
filed as Exhibit 1 to Registrant's Registration Statement on Form N-1 as
initially filed and a copy of Section 6.5 thereof (as amended) was filed as
Exhibit 1(d) to Pre-Effective Amendment No. 1 to such Registration Statement.
Paragraph 7 of the Advisory Agreement between the Registrant and The Northern
Trust Company provides for indemnification of The Northern Trust Company or, in
lieu thereof, contribution by the Registrant, under certain circumstances. A
copy of the Advisory Agreement is filed as Exhibit 5(b) to Post-Effective
Amendment No. 12 to Registrant's Registration Statement on Form N-1A.
Paragraph 7 of the Administration Agreement between the Registrant and Goldman,
Sachs & Co. provides for indemnification of Goldman, Sachs & Co. or, in lieu
thereof, contribution by the Registrant, under certain circumstances. Copies of
the Administration Agreement was filed as Exhibit 17(e) to Post- Effective
Amendment No. 13 to Registrant's Registration Statement on Form N-1A.
A mutual fund and trustee and officer liability policy purchased jointly by the
Registrant and other investment companies advised and/or distributed by Goldman,
Sachs & Co. insures such persons and their respective Trustees, partners,
officers and employees, subject to the policy's coverage limits and exclusions
and varying deductibles, against loss resulting from claims by reason of any
act, error, omission, misstatement, misleading statement, neglect or breach of
duty.
Item 28. Business and Other Connections of Investment Adviser
The Northern Trust Company, Registrant's investment adviser, is a full service
commercial bank and also provides a full range of trust and fiduciary services.
Set forth below is a list of all of the directors, senior officers and those
officers primarily responsible for Registrant's affairs of The Northern Trust
Company and, with respect to each such person, the name and business address of
the company (if any) with which such person has been connected at any time since
June 1, 1990, as well as the capacity in which such person was connected.
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Dolores E. Cross Northern Trust Corp- Director
oration
Chicago State President
University
95th Street at
King Drive
Chicago, IL 60643
Student Loan Director
Marketing
Association
1025 Thomas
Jefferson, N.W.
Washington, DC 20007
Shorebank Corporation Former
7054 S. Jeffrey Director
Chicago, IL 60649
Washington, DC 20007
John R. Goodwin None
Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Robert S. Hamada The University Edward Eagle
Director of Chicago Brown
Graduate School of Distinguished
Business Service
1101 East 58th Street Professor of
Chicago, IL 60637 Finance and
Dean
Northern Trust Director
Corporation
50 S. LaSalle Street
Chicago, IL 60675
A.M. Castle & Co. Director
3400 North Wolf Road
Franklin Park, IL 60131
Manville Corporation Former
P.O. Box 5108 Director
Denver, CO 80217-5108
Chicago Board of Trade Director
141 West Jackson
Boulevard
Chicago, IL 60604
Riverwood Former
International Director
Corporation
3350 Cumberland Circle
Atlanta, GA 30339
Barry G. Hastings Northern Trust President &
President & Chief Corporation Chief Operating
Operating Officer & 50 S. LaSalle Street Officer &
Director & Former Chicago, IL 60675 Director
Vice Chairman
Former Senior
Executive Vice
President
Northern Futures Former
Corporation Director
50 S. LaSalle Street
Chicago, IL 60675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Barry G. Hastings The Northern Trust Former
(Cont'd.) International Banking Director
Corporation
One World Trade Center
New York, NY 10048
Northern Trust Director
Securities, Inc.
50 S. LaSalle Street
Chicago, IL 60675
Nortrust of Arizona Chairman
Holding Corporation of the
2398 East Camelback Board &
Rd. Director
Phoenix, AZ 85016
Northern Trust of Director
California Corporation
355 S. Grand Avenue
Los Angeles, CA 90017
Northern Trust Vice Chairman
of Florida of the Board
Corporation & Director
700 Brickell Avenue
Miami, FL 33131
Northern Trust Bank Chairman
of Texas N. A. of the
2020 Ross Avenue Board
Dallas, TX 75201 & Director
Nortrust Realty Director
Management, Inc.
50 South LaSalle Street
Chicago, IL 60675
Robert A. Helman Mayer, Brown & Platt Partner
Director 190 S. LaSalle Street
Chicago, IL 60603
Northern Trust Director
Corporation
50 S. LaSalle Street
Chicago, IL 60675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Robert A. Helman Chicago Stock Exchange Governor
(Cont'd.) One Financial Plaza
440 S. LaSalle St.
Chicago, IL 60605
LaSalle Street Fund, Former
Incorporated Director
11 S. LaSalle Street
Chicago, IL 60603
The Shorebank Former
Corporation Director
7054 S. Jeffrey
Boulevard
Chicago, IL 60649
Environmental Systems Former
Company Director
333 Executive Court
Little Rock, AR 72205
The Horsham Director
Corporation
24 Hazelton Avenue
Toronto, Ontario,
Canada
M5R 2E2
Alberta Natural Gas Director
Company, Ltd.
2900, 240 Fourth
Ave., N.W.
Calgary, Alberta
Canada T2P 4L7
Brambles USA, Inc. Director
400 N. Michigan Avenue
Chicago, IL 60611
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Arthur L. Kelly KEL Enterprises Ltd. Managing
Director 135 S. LaSalle Street Partner
Chicago, IL 60603
Bayerische Motoren Director
Werke
(BMW) A.G. BMW Haus
Petuelring 130
Postfach 40 02 40
D-8000
Munich 40 Germany
Deere & Company Director
John Deere Rd.
Moline, IL 61265
Northern Trust Director
Corporation
50 S. LaSalle Street
Chicago, IL 60675
Nalco Chemical Director
Company
One Nalco Center
Naperville, IL
60563-1198
Snap-on Incorporated Director
2801 80th Street
Kenosha, WI 53140
Tejas Gas Corporation Director
1301 McKinney St.
Houston, TX 77010
Twin Disc, Former
Incorporated Director
1328 Racine Street
Racine, WI 53403
Ardis Krainik Lyric Opera General Director
Director 20 North Wacker Drive
Chicago, IL 60606
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Robert D. Krebs Santa Fe Pacific Former Chairman,
Director Corporation President
1700 E. Golf Road and Chief
Schaumburg, IL Executive
60173-5860 Officer &
Director
President and Chief Burlington Northern
Executive Officer Santa Fe Corporation
& Director 777 Main Street
Fort Worth, TX 76102
Burlington Northern Director
Inc
777 Main Street
Fort Worth, TX 76102
Burlington Northern Director
Railroad Company
777 Main Street
Fort Worth, TX 76102
Santa Fe Pacific Director
Pipelines, Inc.
888 S. Figueroa Street
Los Angeles, CA 90017
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
Phelps Dodge Director
Corporation
2600 North Central
Avenue
Phoenix, AZ
85004-3014
Catellus Development Former
Corporation Director
201 Mission Street
San Francisco, CA
94105
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Robert D. Krebs Santa Fe Energy Director
(Cont'd.) Resources, Inc.
1616 South Voss Road
Houston, TX 77057
Santa Fe Pacific Director
Gold Corporation
P.O. Box 27019
Albuquerque, NM 87125
Santa Fe Pacific Director
Gold Corporation
6200 Uptown Blvd.
Albuquerque, NM 87110
The Atchison Topeka Former
and Santa Fe Railway Director
Company
1700 E. Golf Road
Schaumburg, IL
60173-5860
Frederick A. Krehbiel Molex Incorporated Chairman and
Director 2222 Wellington Court Chief Executive
Lisle, IL 60532-1682 Officer, Former
Vice Chairman
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
Nalco Chemical Company Director
One Nalco Center
Naperville, IL
60563-1198
Tellabs, Inc. Director
4951 Indiana Avenue
Lisle, IL 60532
A.M. Castle & Co. Former
3400 North Wolf Road Director
Franklin Park, IL 60131
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Roger W. Kushla The Northern Trust Director
Senior Vice President Company of New York
80 Broad Street
19th Floor
New York, NY 10004
Robert A. LaFleur None
Senior Vice President
Thomas L. Mallman None
Senior Vice President
James J. Mitchell, III Northern Trust Former
Executive Vice Securities, Inc. Director
President 50 S. LaSalle Street
Chicago, IL 60675
Northern Trust Bank of Former
Texas N.A. Director
2020 Ross Avenue
Dallas, TX 75201
The Northern Trust Director
Company of New York
80 Broad Street
19th Floor
New York, NY 10004
William G. Mitchell Northern Trust Director
Director Corporation
50 South LaSalle Street
Chicago, IL 60675
The Interlake Director
Corporation
7701 Harger Road
Oak Brook, IL
60521-1488
Peoples Energy Director
Corporation
122 South Michigan
Avenue
Chicago, IL 60603
The Sherwin-Williams Director
Company
101 Prospect Avenue, N.W.
Cleveland, OH 44115-1075
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
William A. Osborn Northern Trust Director
Chairman and Corporation
Chief Executive Securities, Inc.
Officer 50 S. LaSalle Street
Former President Chicago, IL 60675
and Chief Operating
Officer& Former Senior
Executive Vice
President Nortrust of Arizona Former
Holding Corporation Director
2398 East Camelback Rd
Phoenix, AZ 85016
Northern Trust of Director
California Corporation and Former
355 S. Grand Avenue Chairman of
Los Angeles, CA 90017 the Board
Northern Trust Bank of Former Chairman
California N.A. of the Board
355 S. Grand Avenue
Los Angeles, CA 90017
Nortrust Realty Director
Management Inc.
50 S. LaSalle St.
Chicago, IL 60675
The Northern Trust Former
International Banking Director
Corp.
1 World Trade Center
New York, NY 10048
Northern Futures Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
Sheila A. Penrose RCB International Inc Director
Executive Vice 29 Federal Street
President Stamford, CT 06901
Perry R. Pero Northern Futures Director
Senior Executive Vice Corporation
Vice President, 50 South LaSalle Street
Chief Financial Chicago, IL 60675
Officer and
Cashier
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Perry R. Pero Northern Investment Former Chairman,
(Cont'd.) Corporation President
50 South LaSalle Street and Director
Chicago IL 60675 Former Treasurer
Tanglewood Bancshares, Treasurer
Inc
600 Bering Dr.
Houston, TX 77057
RCB International
Inc
29 Federal Street
Stamford, CT 06901
Northern Trust Director
Securities, Inc.
50 South LaSalle Street
Chicago, IL 60675
Nortrust Realty Director
Management, Inc.
50 South LaSalle Street
Chicago, IL 60675
Peter L. Rossiter Schiff, Hardin Former
Executive Vice & Waite Partner
7200 Sears Tower
Chicago, IL 60606
Tanglewood Bancshares Vice President
Inc and Director
600 Bering Dr.
Houston, TX 77057
Consolidated Director
Communications Inc.
Illinois Consolidated
Telephone Company
121 S. 17th St.
Mattoon, IL 61938
Northern Trust Executive
Corporation Vice
50 South LaSalle President,
Street General
Chicago, IL 60675 Counsel and
Secretary
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Harold B. Smith Illinois Tool Chairman of
Director Works Inc. the Executive
3600 West Lake Committee
Avenue and a
Glenview, IL Director
60025-5811
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
W. W. Grainger, Inc. Director
5500 West Howard Street
Skokie, IL 60077
Northwestern Mutual Trustee
Life Insurance Co.
720 East Wisconsin Avenue
Milwaukee, WI 53202
William D. Smithburg The Quaker Oats Chairman,
Director Company President and
321 North Clark Street Chief Executive
Chicago, IL 60610 Officer
and Director
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
Abbott Laboratories Director
One Abbott Park Road
Abbott Park, IL
60064-3500
Corning Incorporated Director
Corning, NY 14831
Prime Capital Director
Corporation
P.O. Box 8460
Rolling Meadows,
IL 60008
James M. Snyder None
Senior Vice
President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Connection
Name and Position Business Address with
with Investment Adviser of Other Company Other Company
- ----------------------- ---------------- -------------
<S> <C> <C>
Bide L. Thomas Commonwealth Edison Former
Company President
One First National and a
Plaza Former
Chicago, IL 60603 Director
MYR Group Inc. Director
*(formerly L.E. Myers
Company)
2550 W. Golf Rd.
Rolling Meadows, IL 60008
Northern Trust Director
Corporation
50 South LaSalle Street
Chicago, IL 60675
R. R. Donnelley Director
& Sons Company
77 West Wacker Drive
Chicago, IL 60601
* Name change
</TABLE>
Item 29. Principal Underwriters
(a) Goldman, Sachs & Co., or an affiliate or a division thereof,
currently serves as investment adviser and distributor of
the units or shares of Goldman Sachs Money Market Trust,
Goldman Sachs Trust, Goldman Sachs Equity Portfolios, Inc.
and Trust for Credit Unions. Goldman, Sachs & Co., or a
division thereof currently serves as administrator and
distributor for The Benchmark Funds, The Commerce Funds and
Paragon Portfolio.
(b) Set forth below is certain information pertaining to the
general partners of Goldman, Sachs & Co., Registrant's
principal underwriter. None of the Partners hold positions
or offices with the Registrant.
GOLDMAN SACHS GENERAL PARTNERS
Name and Principal Name and Principal
Business Address Business Address
- ---------------- ----------------
Jon S. Corzine, Chairman (1)(2) Henry M. Paulson, Jr.,
<PAGE>
Chairman (1)(2) T. Willem Mesdag (14)
Roy J. Zuckerberg (5) Gaetano J. Muzio (11)
David M. Silfen (5) Robin Neustein (2)
Richard M. Hayden (7) Timothy J. O'Neill (2)
Robert J. Hurst (2) Scott M. Pinkus (2)
Howard C. Katz (2) John J. Powers (2)
Peter K. Barker (9) Stephen D. Quinn (2)
Eric S. Dobkin (5) Arthur J. Reimers, III (7)
Willard J. Overlock, Jr. (2) James P. Riley, Jr. (2)
Jonathan L. Cohen (2) Richard A. Sapp (7)
Frederic B. Garonzik (7) Donald F. Textor (5)
Kevin W. Kennedy (2) Thomas B. Walker, III (2)
William C. Landreth (8) Patrick J. Ward (7)
Daniel M. Neidich (2) Jeffrey M. Weingarten (7)
Edward Spiegel (5) Jon Winkelried (2)
Robert F. Cummings, Jr. (2) Richard E. Witten (2)
Angelo De Caro (2) Gregory K. Palm (2)(7)
Steven G. Einhorn (5) Carlos A. Cordeiro (7)
David B. Ford (2) John O. Downing (5)
David M. Leuschen (2) Mark Evans (13)
Michael R. Lynch (2) Michael D. Fascitelli (2)
Michael D. McCarthy (2) Sylvain M. Hefes (7)
Donald C. Opatrny, Jr. (2) Reuben Jeffrey, III (7)
Thomas E. Tuft (5) Lawrence H. Linden (2)
Robert J. Katz (1)(2) Jun Makihara (10)
Michael P. Mortara (2) Masanori Mochida (10)
Lloyd C. Blankfein (2) Robert B. Morris III (11)(7)
John P. Curtin, Jr. (2) Philip D. Murphy (14)
Gavyn Davies (7) Suzanne M. Nora Johnson (9)
Dexter D. Earle (5) Terence M. O'Toole (2)
John Ehara (10) Carl G.E. Palmstierna (7)
J. Christopher Flowers (2) Michael G. Rantz (7)
Gary Gensler (2) J. David Rogers (5)
Charles T. Harris, III (2) Joseph Sassoon (7)
Thomas J. Healey (2) Peter Savitz (7)(2)
Stephen Hendel (2) Charles B. Seelig, Jr. (2)
Robert E. Higgins (2) Ralph F. Severson (11)
Ernest S. Liu (5) Gene T. Sykes (9)
Eff W. Martin (11) Gary A. Syman (10)
Charles B. Mayer, Jr. (2) Leslie C. Tortora (2)
Michael J. O'Brien (7) John L. Townsend, III (2)
Mark Schwartz (2) Lee G. Vance (7)
Stephen M. Semlitz (2) David A. Viniar (2)
Robert K. Steel (5) John S. Weinberg (2)
John A. Thain (2)(7) Peter A. Weinberg (2)
John L. Thornton (7) Laurence M. Weiss (2)
Bracebridge H. Young, Jr. (7) George W. Wellde, Jr. (10)
Joseph R. Zimmel (2) Jaime E. Yordan (2)(16)
Barry L. Zubrow (2) Sharmin Mossavar-Rahmani (5)
Gary L. Zwerling (2) Hideo Ishihara (10)
Jon R. Aisbitt (7) Paul M. Achleitner (14)
Andrew M. Alper (2) Armen A. Avanessians (2)
William J. Buckley (5) Joel S. Beckman (2)
Frank L. Coulson, Jr. (2) David W. Blood (7)
Connie Duckworth (8) Zachariah Cobrinik (10)
Richard A. Friedman (2) Gary D. Cohn (7)
Alan R. Gillespie (7) Christopher A. Cole (2)
Joseph H. Gleberman (2) Henry Cornell (13)
Jacob D. Goldfield (2) Robert V. Delaney (2)
Steven M. Heller (2) Joseph Della Rosa (5)
Ann F. Kaplan (2) J. Michael Evans (7)
Robert S. Kaplan (2) Lawton W. Fitt (5)
Peter D. Kiernan, III (2) Joseph D. Gatto (2)
John P. McNulty (5) Peter C. Gerhard (2)
<PAGE>
Nomi P. Ghez (5)
David T. Hamamoto (2)
Walter H. Haydock (2)(15)
David L. Henle (5)
Francis J. Ingrassia (2)
Scott B. Kapnick (7)
Kevin M. Kelly (2)
John C. Kleinert (2)
Jonathan L. Kolatch (2)
Peter S. Kraus (2)
Robert Litterman (2)
Jonathan M. Lopatin (2)
Thomas J. Macirowski (2)
Peter G. Mallinson (13)
Oki Matsumoto (10)
E. Scott Mead (7)
Eric M. Mindich (5)
Steven T. Mnuchin (2)
Thomas K. Montag (2)
Edward A. Mule (2)
Kipp M. Nelson (7)
Christopher K. Norton (2)
Robert J. O'Shea (2)
Wiet H. Pot (7)
Jack L. Salzman (5)
Eric S. Schwartz (5)
Michael F. Schwerin (2)
Richard S. Sharp (7)
Richard G. Sherlund (5)
Michael S. Sherwood (7)
Cody J. Smith (2)
Daniel W. Stanton (5)
Esta E. Stecher (2)
Frederic E. Steck (2)
Byron D. Trott (8)
Barry S. Volpert (2)
Peter S. Wheeler (13)
Anthony G. Williams (7)
Gary W. Williams (5)
Tracy R. Wolstencroft (4)
Danny O. Yee (13)
Michael J. Zamkow (2)
Mark A. Zurack (5)
Jim O'Neill (2)
Peter D. Sutherland (7)
- ----------------------
(1) Management Committee
(2) 85 Broad Street, New York, NY 10004
(3) Mellon Bank Center, 1735 Market Street, 26th Floor,
Philadelphia, PA 19103
(4) 100 Crescent Court, Suite 1000, Dallas, TX 75201
(5) One New York Plaza, New York, NY 10004
(6) 1000 Louisiana Street, Suite 550, Houston, TX 77002
(7) Peterborough Court, 133 Fleet Street, London EC4A 2BB,
England
(8) 4900 Sears Tower, Chicago, IL 60606
(9) 333 South Grand Avenue, Suite 1900, Los Angeles, CA 90071
(10) ARK Mori Bldg.,10th Floor, 12-32 Akasaka, 1-chome, Minato- ku, Tokyo 107,
Japan
(11) 555 California Street, 45th Floor, San Francisco, CA 94104
(12) Exchange Place, 53 State Street, 13th Floor, Boston, MA
02109
(13) Asia Pacific Finance Tower, 35th Floor, Citibank Plaza, 3
<PAGE>
Garden Road, Hong Kong
(14) Finanz GmbH, MesseTurm, 60308 Frankfurt am Main, Germany
(15) Munsterhof 4, 8022, Zurich, Switzerland
(16) Casa de Bolsa, S.A. de C.V. Av. de las Palmas 405, Piso 18.
Lomas de Chapultepec Mexico 11000, D.F.
(c) Not Applicable.
Item 30. Location of Accounts and Records
The Agreement and Declaration of Trust, By-laws and minute books of the
Registrant are in the physical possession of Goldman, Sachs & Co., Goldman Sachs
Asset Management, 85 Broad Street, New York, New York, 10004. Records relating
to Goldman, Sachs & Co.'s functions as distributor and administrator for the
Registrant are located at the same address. All other accounts, books and other
documents required to be maintained under Section 31(a) of the Investment
Company Act of 1940 and the Rules promulgated thereunder are in the physical
possession of The Northern Trust Company, 50 S. LaSalle Street, Chicago,
Illinois 60675.
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) The Annual Report will contain certain performance information and is
available to any recipient of the Prospectuses upon request and without
charge by writing to Goldman, Sachs & Co., 4900 Sears Tower, Chicago,
Illinois
60606.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for the effectiveness of this Post-Effective Amendment No. 31
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 31 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City and
State of New York on the 29th day of March 1996.
THE BENCHMARK FUNDS
By: /s/ MICHAEL J. RICHMAN
----------------------
Michael J. Richman
Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Name Title Date
---- ----- ----
MARCIA L. BECK * President March 29, 1996
---------------------
Marcia L. Beck
SCOTT M. GILMAN * Treasurer March 29, 1996
---------------------
Scott M. Gilman
WILLIAM H. SPRINGER * Trustee March 29, 1996
---------------------
William H. Springer
JAMES J. GAVIN, JR.* Trustee March 29, 1996
---------------------
James J. Gavin, Jr.
FREDERICK T. KELSEY * Trustee March 29, 1996
---------------------
Frederick T. Kelsey
EDWARD J.CONDON * Trustee March 29, 1996
---------------------
Edward J. Condon
JOHN W. ENGLISH * Trustee March 29, 1996
--------------------
John W. English
<PAGE>
RICHARD P. STRUBEL * Trustee March 29, 1996
---------------------
Richard P. Strubel
*By: /s/ MICHAEL J. RICHMAN March 29, 1996
- -----------------------------
Michael J. Richman,
Attorney-in-fact
<PAGE>
THE BENCHMARK FUNDS
EXHIBIT INDEX
Exhibit
-------
1(h)- Amendment No. 8 dated September 26, 1990 to Agreement and Declaration
of Trust.
1(i)- Amendment No. 9 dated October 1, 1990 to Agreement and Declaration of
Trust.
1(j)- Amendment No. 10 dated April 27, 1992 to Agreement and Declaration of
Trust.
1(k)- Amendment No. 11 to Agreement and Declaration of Trust.
1(l)- Amendment No. 12 dated April 27, 1993 to Agreement and Declaration of
Trust.
1(m)- Agreement No. 13 dated July 20, 1993 to Agreement and Declaration of
Trust.
1(n)- Amendment No. 14 dated July 11, 1995 to Agreement and Declaration of
Trust.
5- Advisory Agreement dated October 5, 1990 between Registrant and The
Northern Trust Company.
5(b)- Addendum No. 1, dated June 8, 1992 to the Investment Advisory
Agreement between The Northern Trust Company and the Registrant.
5(c)- Addendum No. 2 dated January 8, 1993 to Investment Advisory Agreement
between the Registrant and The Northern Trust Company.
5(d)- Addendum No. 3 dated July 1, 1993 to the Investment Advisory Agreement
between the Registrant and The Northern Trust Company.
5(e)- Addendum No. 4 dated March 25, 1994 to the Investment Advisory
Agreement between the Registrant and The Northern Trust Company.
6(a)- Addendum No. 1 dated January 8, 1993 to the Distribution Agreement
between the Registrant and Goldman, Sachs & Co.
6(b)- Addendum No. 2 dated July 1, 1993 to the Distribution Agreement
between the Registrant and Goldman, Sachs & Co.
8(a)- Addendum No. 1 dated January 8, 1993 to Custodian Agreement between
Registrant and The Northern Trust Company.
8(b)- Addendum No. 2 dated July 1, 1993 to Custodian Agreement between
Registrant and The Northern Trust Company.
8(c)- Foreign Custody Agreement between the Registrant and The Northern
Trust Company.
<PAGE>
9(b)- Addendum No. 1 to Transfer Agency Agreement dated July 1, 1993 between
the Registrant and The Northern Trust Company.
9(c)- Addendum No. 2 to Transfer Agency Agreement dated March
25, 1994 between the Registrant and The Northern Trust Company.
9(d)- Administration Agreement dated June 8, 1992 between Registrant and
Goldman, Sachs & Co.
9(e)- Amendment dated August 1, 1992 to Administration Agreement between
Registrant and Goldman, Sachs & Co.
9(f)- Addendum No. 1 to Administration Agreement dated January 8, 1993
between the Registrant and Goldman, Sachs & Co.
9(g)- Addendum No. 2 to Administration Agreement dated July 1, 1993 between
The Registrant and Goldman, Sachs & Co.
9(h)- Addendum No. 3 to Administration Agreement dated March 25, 1994
between The Registrant and Goldman, Sachs & Co.
10- Consent of Counsel
11- Consent of Ernst & Young LLP
18- Plan entered into by Registrant pursuant to Rule 18f-3
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> DIVERSIFIED ASSETS PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 2,466,611
<INVESTMENTS-AT-VALUE> 2,466,611
<RECEIVABLES> 679,601
<ASSETS-OTHER> 48,918
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,195,130
<PAYABLE-FOR-SECURITIES> 58,648
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 526,135
<TOTAL-LIABILITIES> 584,783
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,612,248
<SHARES-COMMON-STOCK> 2,612,248
<SHARES-COMMON-PRIOR> 2,893,840
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,901)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,610,347
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 169,238
<OTHER-INCOME> 0
<EXPENSES-NET> 9,719
<NET-INVESTMENT-INCOME> 159,519
<REALIZED-GAINS-CURRENT> (1,460)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 158,059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 159,519
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43,084,716
<NUMBER-OF-SHARES-REDEEMED> (43,366,308)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (281,533)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (1960)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,081
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 9,719
<AVERAGE-NET-ASSETS> 2,832,286
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 892,749
<INVESTMENTS-AT-VALUE> 892,749
<RECEIVABLES> 51,671
<ASSETS-OTHER> 8
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 944,428
<PAYABLE-FOR-SECURITIES> 49,563
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,201
<TOTAL-LIABILITIES> 93,764
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 851,102
<SHARES-COMMON-STOCK> 851,102
<SHARES-COMMON-PRIOR> 788,341
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (438)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 850,664
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 169,238
<OTHER-INCOME> 0
<EXPENSES-NET> 2,714
<NET-INVESTMENT-INCOME> 42,613
<REALIZED-GAINS-CURRENT> (828)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 41,785
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (42,613)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10,203,042
<NUMBER-OF-SHARES-REDEEMED> (10,140,281)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 62,848
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (525)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,939
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3084
<AVERAGE-NET-ASSETS> 775,553
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> GOVERNMENT SELECT PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 685,847
<INVESTMENTS-AT-VALUE> 685,847
<RECEIVABLES> 16,704
<ASSETS-OTHER> 5
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 702,556
<PAYABLE-FOR-SECURITIES> 10,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,414
<TOTAL-LIABILITIES> 17,414
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 685,315
<SHARES-COMMON-STOCK> 685,315
<SHARES-COMMON-PRIOR> 493,933
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (173)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 685,142
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 33,397
<OTHER-INCOME> 0
<EXPENSES-NET> 1,138
<NET-INVESTMENT-INCOME> 32,259
<REALIZED-GAINS-CURRENT> (73)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 32,186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (32,259)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,588,011
<NUMBER-OF-SHARES-REDEEMED> (3,396,629)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 191,424
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (215)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,423
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,339
<AVERAGE-NET-ASSETS> 569,070
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.06)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 4
<NAME> TAX-EXEMPT PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 771,976
<INVESTMENTS-AT-VALUE> 771,976
<RECEIVABLES> 75,923
<ASSETS-OTHER> 15
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 847,914
<PAYABLE-FOR-SECURITIES> 5,840
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 38,344
<TOTAL-LIABILITIES> 44,184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 803,691
<SHARES-COMMON-STOCK> 803,691
<SHARES-COMMON-PRIOR> 853,112
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 39
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 803,730
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 26,869
<OTHER-INCOME> 0
<EXPENSES-NET> 2,371
<NET-INVESTMENT-INCOME> 24,498
<REALIZED-GAINS-CURRENT> 48
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 24,546
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (24,498)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,729,794
<NUMBER-OF-SHARES-REDEEMED> (5,779,215)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (49,373)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (9)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,687
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,761
<AVERAGE-NET-ASSETS> 674,856
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> DIVERSIFIED GROWTH PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 121,237
<INVESTMENTS-AT-VALUE> 146,873
<RECEIVABLES> 226
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147,136
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184
<TOTAL-LIABILITIES> 184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,694
<SHARES-COMMON-STOCK> 12,030
<SHARES-COMMON-PRIOR> 16,699
<ACCUMULATED-NII-CURRENT> 1,735
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,887
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,636
<NET-ASSETS> 146,952
<DIVIDEND-INCOME> 2,695
<INTEREST-INCOME> 140
<OTHER-INCOME> 0
<EXPENSES-NET> 1,056
<NET-INVESTMENT-INCOME> 1,779
<REALIZED-GAINS-CURRENT> 3,960
<APPREC-INCREASE-CURRENT> 27,856
<NET-CHANGE-FROM-OPS> 33,595
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,361)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,123
<NUMBER-OF-SHARES-REDEEMED> (7,920)
<SHARES-REINVESTED> 128
<NET-CHANGE-IN-ASSETS> (18,051)
<ACCUMULATED-NII-PRIOR> 1,318
<ACCUMULATED-GAINS-PRIOR> (2,073)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,229
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,717
<AVERAGE-NET-ASSETS> 153,642
<PER-SHARE-NAV-BEGIN> 9.88
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 2.26
<PER-SHARE-DIVIDEND> (.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.20
<EXPENSE-RATIO> .69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> DIVERSIFIED GROWTH PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 121,237
<INVESTMENTS-AT-VALUE> 146,873
<RECEIVABLES> 226
<ASSETS-OTHER> 37
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 147,136
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 184
<TOTAL-LIABILITIES> 184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,694
<SHARES-COMMON-STOCK> 18
<SHARES-COMMON-PRIOR> 4
<ACCUMULATED-NII-CURRENT> 1,735
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,887
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25,636
<NET-ASSETS> 146,952
<DIVIDEND-INCOME> 2,695
<INTEREST-INCOME> 140
<OTHER-INCOME> 0
<EXPENSES-NET> 1,056
<NET-INVESTMENT-INCOME> 1,779
<REALIZED-GAINS-CURRENT> 3,960
<APPREC-INCREASE-CURRENT> 27,856
<NET-CHANGE-FROM-OPS> 33,595
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17
<NUMBER-OF-SHARES-REDEEMED> (3)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (18,051)
<ACCUMULATED-NII-PRIOR> 1,318
<ACCUMULATED-GAINS-PRIOR> (2,073)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,229
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,717
<AVERAGE-NET-ASSETS> 153,642
<PER-SHARE-NAV-BEGIN> 9.88
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> 2.25
<PER-SHARE-DIVIDEND> (0.08)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.16
<EXPENSE-RATIO> 1.08
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> EQUITY INDEX PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 404,309
<INVESTMENTS-AT-VALUE> 498,714
<RECEIVABLES> 1,926
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 500,704
<PAYABLE-FOR-SECURITIES> 963
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 778
<TOTAL-LIABILITIES> 1,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 391,426
<SHARES-COMMON-STOCK> 34,621
<SHARES-COMMON-PRIOR> 26,581
<ACCUMULATED-NII-CURRENT> 416
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,235
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,886
<NET-ASSETS> 498,963
<DIVIDEND-INCOME> 9,510
<INTEREST-INCOME> 1,001
<OTHER-INCOME> 0
<EXPENSES-NET> 855
<NET-INVESTMENT-INCOME> 9,656
<REALIZED-GAINS-CURRENT> 13,989
<APPREC-INCREASE-CURRENT> 94,961
<NET-CHANGE-FROM-OPS> 118,606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,464)
<DISTRIBUTIONS-OF-GAINS> (5,459)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,925
<NUMBER-OF-SHARES-REDEEMED> (11,059)
<SHARES-REINVESTED> 1174
<NET-CHANGE-IN-ASSETS> 217,143
<ACCUMULATED-NII-PRIOR> 323
<ACCUMULATED-GAINS-PRIOR> 3,705
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,140
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,040
<AVERAGE-NET-ASSETS> 380,061
<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> 3.47
<PER-SHARE-DIVIDEND> (.30)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.86
<EXPENSE-RATIO> 0.22
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> EQUITY INDEX PORTFOLIO CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> SEP-29-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 404,309
<INVESTMENTS-AT-VALUE> 498,714
<RECEIVABLES> 1,926
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 500,704
<PAYABLE-FOR-SECURITIES> 963
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 778
<TOTAL-LIABILITIES> 1,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 391,426
<SHARES-COMMON-STOCK> 1,329
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 416
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,235
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,886
<NET-ASSETS> 498,963
<DIVIDEND-INCOME> 9,510
<INTEREST-INCOME> 1,001
<OTHER-INCOME> 0
<EXPENSES-NET> 855
<NET-INVESTMENT-INCOME> 9,656
<REALIZED-GAINS-CURRENT> 13,989
<APPREC-INCREASE-CURRENT> 94,961
<NET-CHANGE-FROM-OPS> 118,606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (93)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,353
<NUMBER-OF-SHARES-REDEEMED> (31)
<SHARES-REINVESTED> 7
<NET-CHANGE-IN-ASSETS> 217,143
<ACCUMULATED-NII-PRIOR> 323
<ACCUMULATED-GAINS-PRIOR> 3,705
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,140
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,040
<AVERAGE-NET-ASSETS> 380,061
<PER-SHARE-NAV-BEGIN> 13.43
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> .45
<PER-SHARE-DIVIDEND> (.07)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.86
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> EQUITY INDEX PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 404,309
<INVESTMENTS-AT-VALUE> 498,714
<RECEIVABLES> 1,926
<ASSETS-OTHER> 64
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 500,704
<PAYABLE-FOR-SECURITIES> 963
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 778
<TOTAL-LIABILITIES> 1,741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 391,426
<SHARES-COMMON-STOCK> 59
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 416
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 12,235
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,886
<NET-ASSETS> 498,963
<DIVIDEND-INCOME> 9,510
<INTEREST-INCOME> 1,001
<OTHER-INCOME> 0
<EXPENSES-NET> 855
<NET-INVESTMENT-INCOME> 9,656
<REALIZED-GAINS-CURRENT> 13,989
<APPREC-INCREASE-CURRENT> 94,961
<NET-CHANGE-FROM-OPS> 118,606
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 58
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 217,143
<ACCUMULATED-NII-PRIOR> 323
<ACCUMULATED-GAINS-PRIOR> 3,705
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,140
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,040
<AVERAGE-NET-ASSETS> 380,061
<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> 3.47
<PER-SHARE-DIVIDEND> (.28)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.83
<EXPENSE-RATIO> 0.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> FOCUSED GROWTH PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 73,213
<INVESTMENTS-AT-VALUE> 87,962
<RECEIVABLES> 1,366
<ASSETS-OTHER> 49
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,377
<PAYABLE-FOR-SECURITIES> 2,613
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176
<TOTAL-LIABILITIES> 2,789
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,218
<SHARES-COMMON-STOCK> 6,871
<SHARES-COMMON-PRIOR> 5,906
<ACCUMULATED-NII-CURRENT> 320
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,749
<NET-ASSETS> 86,588
<DIVIDEND-INCOME> 888
<INTEREST-INCOME> 155
<OTHER-INCOME> 0
<EXPENSES-NET> 694
<NET-INVESTMENT-INCOME> 349
<REALIZED-GAINS-CURRENT> 5,691
<APPREC-INCREASE-CURRENT> 13,058
<NET-CHANGE-FROM-OPS> 19,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (147)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2560
<NUMBER-OF-SHARES-REDEEMED> (1,605)
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 28,787
<ACCUMULATED-NII-PRIOR> 118
<ACCUMULATED-GAINS-PRIOR> (4390)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 837
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,123
<AVERAGE-NET-ASSETS> 76,148
<PER-SHARE-NAV-BEGIN> 9.79
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 2.71
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.53
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> FOCUSED GROWTH PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-08-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 73,213
<INVESTMENTS-AT-VALUE> 87,962
<RECEIVABLES> 1,366
<ASSETS-OTHER> 49
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,377
<PAYABLE-FOR-SECURITIES> 2,613
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 176
<TOTAL-LIABILITIES> 2,789
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 70,218
<SHARES-COMMON-STOCK> 39
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 320
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,301
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,749
<NET-ASSETS> 86,588
<DIVIDEND-INCOME> 888
<INTEREST-INCOME> 155
<OTHER-INCOME> 0
<EXPENSES-NET> 694
<NET-INVESTMENT-INCOME> 349
<REALIZED-GAINS-CURRENT> 5,691
<APPREC-INCREASE-CURRENT> 13,058
<NET-CHANGE-FROM-OPS> 19,098
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 39
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 28,787
<ACCUMULATED-NII-PRIOR> 118
<ACCUMULATED-GAINS-PRIOR> (4390)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 837
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,036
<AVERAGE-NET-ASSETS> 76,148
<PER-SHARE-NAV-BEGIN> 9.55
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 2.93
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.48
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 9
<NAME> SMALL COMPANY INDEX PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 82,881
<INVESTMENTS-AT-VALUE> 94,767
<RECEIVABLES> 198
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,084
<SHARES-COMMON-STOCK> 7,310
<SHARES-COMMON-PRIOR> 7,104
<ACCUMULATED-NII-CURRENT> 724
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,279
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,856
<NET-ASSETS> 94,943
<DIVIDEND-INCOME> 1,340
<INTEREST-INCOME> 69
<OTHER-INCOME> 0
<EXPENSES-NET> 279
<NET-INVESTMENT-INCOME> 1,130
<REALIZED-GAINS-CURRENT> 5,913
<APPREC-INCREASE-CURRENT> 13,771
<NET-CHANGE-FROM-OPS> 20,814
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,027)
<DISTRIBUTIONS-OF-GAINS> (3,919)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,491
<NUMBER-OF-SHARES-REDEEMED> (1,736)
<SHARES-REINVESTED> 451
<NET-CHANGE-IN-ASSETS> 17,823
<ACCUMULATED-NII-PRIOR> 621
<ACCUMULATED-GAINS-PRIOR> 3,285
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 34486
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 697
<AVERAGE-NET-ASSETS> 86,043
<PER-SHARE-NAV-BEGIN> 10.86
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> 2.67
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> (0.56)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.98
<EXPENSE-RATIO> .32
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 9
<NAME> SMALL COMPANY INDEX CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-11-1994
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 82,881
<INVESTMENTS-AT-VALUE> 94,767
<RECEIVABLES> 198
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,084
<SHARES-COMMON-STOCK> 3
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 724
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,279
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,856
<NET-ASSETS> 94,943
<DIVIDEND-INCOME> 1,340
<INTEREST-INCOME> 69
<OTHER-INCOME> 0
<EXPENSES-NET> 279
<NET-INVESTMENT-INCOME> 1,130
<REALIZED-GAINS-CURRENT> 5,913
<APPREC-INCREASE-CURRENT> 13,771
<NET-CHANGE-FROM-OPS> 20,814
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17,823
<ACCUMULATED-NII-PRIOR> 621
<ACCUMULATED-GAINS-PRIOR> 3,285
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 344
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 697
<AVERAGE-NET-ASSETS> 86,043
<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> .18
<PER-SHARE-GAIN-APPREC> 2.87
<PER-SHARE-DIVIDEND> (.14)
<PER-SHARE-DISTRIBUTIONS> (0.56)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.95
<EXPENSE-RATIO> 0.71
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> BOND PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 272,366
<INVESTMENTS-AT-VALUE> 286,506
<RECEIVABLES> 3,701
<ASSETS-OTHER> 264
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,471
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 346
<TOTAL-LIABILITIES> 346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,258
<SHARES-COMMON-STOCK> 13,661
<SHARES-COMMON-PRIOR> 14,071
<ACCUMULATED-NII-CURRENT> 447
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,720)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,140
<NET-ASSETS> 290,125
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,703
<OTHER-INCOME> 0
<EXPENSES-NET> 959
<NET-INVESTMENT-INCOME> 15,744
<REALIZED-GAINS-CURRENT> 1,622
<APPREC-INCREASE-CURRENT> 34,676
<NET-CHANGE-FROM-OPS> 52,042
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,211)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (347)
<NUMBER-OF-SHARES-SOLD> 3,353
<NUMBER-OF-SHARES-REDEEMED> (4,459)
<SHARES-REINVESTED> 696
<NET-CHANGE-IN-ASSETS> 32,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,342)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,592
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,235
<AVERAGE-NET-ASSETS> 265,356
<PER-SHARE-NAV-BEGIN> 18.29
<PER-SHARE-NII> 1.17
<PER-SHARE-GAIN-APPREC> 2.66
<PER-SHARE-DIVIDEND> (1.14)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (.02)
<PER-SHARE-NAV-END> 20.96
<EXPENSE-RATIO> 0.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> BOND PORTFOLIO CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> JUL-03-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 272,366
<INVESTMENTS-AT-VALUE> 286,506
<RECEIVABLES> 3,701
<ASSETS-OTHER> 264
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,471
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 346
<TOTAL-LIABILITIES> 346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,258
<SHARES-COMMON-STOCK> 177
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 447
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,720)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,140
<NET-ASSETS> 290,125
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,703
<OTHER-INCOME> 0
<EXPENSES-NET> 959
<NET-INVESTMENT-INCOME> 15,744
<REALIZED-GAINS-CURRENT> 1,622
<APPREC-INCREASE-CURRENT> 34,676
<NET-CHANGE-FROM-OPS> 52,042
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (82)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (2)
<NUMBER-OF-SHARES-SOLD> 201
<NUMBER-OF-SHARES-REDEEMED> (28)
<SHARES-REINVESTED> 4
<NET-CHANGE-IN-ASSETS> 32,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,342)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,592
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,235
<AVERAGE-NET-ASSETS> 265,356
<PER-SHARE-NAV-BEGIN> 20.21
<PER-SHARE-NII> .47
<PER-SHARE-GAIN-APPREC> .74
<PER-SHARE-DIVIDEND> (0.45)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.01)
<PER-SHARE-NAV-END> 20.96
<EXPENSE-RATIO> .60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> BOND PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 272,366
<INVESTMENTS-AT-VALUE> 286,506
<RECEIVABLES> 3,701
<ASSETS-OTHER> 264
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 290,471
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 346
<TOTAL-LIABILITIES> 346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 281,258
<SHARES-COMMON-STOCK> 6
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 447
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,720)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,140
<NET-ASSETS> 290,125
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,703
<OTHER-INCOME> 0
<EXPENSES-NET> 959
<NET-INVESTMENT-INCOME> 15,744
<REALIZED-GAINS-CURRENT> 1,622
<APPREC-INCREASE-CURRENT> 34,676
<NET-CHANGE-FROM-OPS> 52,042
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 32,719
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,342)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,592
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,235
<AVERAGE-NET-ASSETS> 256,356
<PER-SHARE-NAV-BEGIN> 18.29
<PER-SHARE-NII> 1.08
<PER-SHARE-GAIN-APPREC> 2.66
<PER-SHARE-DIVIDEND> (1.09)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.94
<EXPENSE-RATIO> 0.75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 11
<NAME> SHORT DURATION PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 77,741
<INVESTMENTS-AT-VALUE> 77,724
<RECEIVABLES> 252
<ASSETS-OTHER> 59
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78,035
<PAYABLE-FOR-SECURITIES> 978
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,584
<TOTAL-LIABILITIES> 32,562
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,066
<SHARES-COMMON-STOCK> 4,554
<SHARES-COMMON-PRIOR> 9,005
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (611)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (17)
<NET-ASSETS> 45,473
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,377
<OTHER-INCOME> 0
<EXPENSES-NET> 181
<NET-INVESTMENT-INCOME> 4,196
<REALIZED-GAINS-CURRENT> (41)
<APPREC-INCREASE-CURRENT> 161
<NET-CHANGE-FROM-OPS> 4,316
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,196)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (44,330)
<ACCUMULATED-NII-PRIOR> 35
<ACCUMULATED-GAINS-PRIOR> (570)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 290
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 576
<AVERAGE-NET-ASSETS> 72,400
<PER-SHARE-NAV-BEGIN> 9.97
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.01
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.99
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> SHORT-INTERMEDIATE BOND PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 154,373
<INVESTMENTS-AT-VALUE> 157,848
<RECEIVABLES> 925
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 158,808
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 117
<TOTAL-LIABILITIES> 117
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155,142
<SHARES-COMMON-STOCK> 7,655
<SHARES-COMMON-PRIOR> 4,926
<ACCUMULATED-NII-CURRENT> 206
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (132)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,475
<NET-ASSETS> 158,691
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,712
<OTHER-INCOME> 0
<EXPENSES-NET> 440
<NET-INVESTMENT-INCOME> 6,272
<REALIZED-GAINS-CURRENT> 735
<APPREC-INCREASE-CURRENT> 6,055
<NET-CHANGE-FROM-OPS> 13,062
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,177)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,158
<NUMBER-OF-SHARES-REDEEMED> (1,714)
<SHARES-REINVESTED> 285
<NET-CHANGE-IN-ASSETS> 62,481
<ACCUMULATED-NII-PRIOR> 112
<ACCUMULATED-GAINS-PRIOR> (867)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 732
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,115
<AVERAGE-NET-ASSETS> 122,062
<PER-SHARE-NAV-BEGIN> 19.53
<PER-SHARE-NII> 1.02
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> (1.01)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.73
<EXPENSE-RATIO> .36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 12
<NAME> SHORT-INTERMEDIATE BOND PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 154,373
<INVESTMENTS-AT-VALUE> 157,848
<RECEIVABLES> 925
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 158,808
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 117
<TOTAL-LIABILITIES> 117
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 155,142
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 206
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (132)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,475
<NET-ASSETS> 158,691
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,712
<OTHER-INCOME> 0
<EXPENSES-NET> 440
<NET-INVESTMENT-INCOME> 6,272
<REALIZED-GAINS-CURRENT> 735
<APPREC-INCREASE-CURRENT> 6,055
<NET-CHANGE-FROM-OPS> 13,062
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 62,481
<ACCUMULATED-NII-PRIOR> 112
<ACCUMULATED-GAINS-PRIOR> (867)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 732
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,115
<AVERAGE-NET-ASSETS> 122,062
<PER-SHARE-NAV-BEGIN> 19.53
<PER-SHARE-NII> .94
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> (.94)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.71
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 55,181
<INVESTMENTS-AT-VALUE> 55,731
<RECEIVABLES> 657
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,423
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27
<TOTAL-LIABILITIES> 27
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,031
<SHARES-COMMON-STOCK> 2,805
<SHARES-COMMON-PRIOR> 1,327
<ACCUMULATED-NII-CURRENT> 75
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (260)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 550
<NET-ASSETS> 56,396
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,800
<OTHER-INCOME> 0
<EXPENSES-NET> 112
<NET-INVESTMENT-INCOME> 1,688
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 1,548
<NET-CHANGE-FROM-OPS> 3,296
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,644)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,965
<NUMBER-OF-SHARES-REDEEMED> 1,564
<SHARES-REINVESTED> 77
<NET-CHANGE-IN-ASSETS> 31,090
<ACCUMULATED-NII-PRIOR> 33
<ACCUMULATED-GAINS-PRIOR> (320)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 187
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 341
<AVERAGE-NET-ASSETS> 31,074
<PER-SHARE-NAV-BEGIN> 19.05
<PER-SHARE-NII> 1.05
<PER-SHARE-GAIN-APPREC> 1.02
<PER-SHARE-DIVIDEND> (1.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.08
<EXPENSE-RATIO> .36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 13
<NAME> U.S. GOVERNMENT SECURITIES PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 55,181
<INVESTMENTS-AT-VALUE> 55,731
<RECEIVABLES> 657
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,423
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27
<TOTAL-LIABILITIES> 27
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,031
<SHARES-COMMON-STOCK> 3
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 75
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (260)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 550
<NET-ASSETS> 56,396
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,800
<OTHER-INCOME> 0
<EXPENSES-NET> 112
<NET-INVESTMENT-INCOME> 1,688
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 1,548
<NET-CHANGE-FROM-OPS> 3,296
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3
<NUMBER-OF-SHARES-REDEEMED> (1)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 31,090
<ACCUMULATED-NII-PRIOR> 33
<ACCUMULATED-GAINS-PRIOR> (320)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 187
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 341
<AVERAGE-NET-ASSETS> 31,074
<PER-SHARE-NAV-BEGIN> 19.05
<PER-SHARE-NII> .96
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> (0.97)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.04
<EXPENSE-RATIO> .75
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> U.S. TREASURY INDEX PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 16,927
<INVESTMENTS-AT-VALUE> 17,723
<RECEIVABLES> 233
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,991
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 31
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,233
<SHARES-COMMON-STOCK> 851
<SHARES-COMMON-PRIOR> 1,986
<ACCUMULATED-NII-CURRENT> 21
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,090)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 796
<NET-ASSETS> 17,960
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,760
<OTHER-INCOME> 0
<EXPENSES-NET> 85
<NET-INVESTMENT-INCOME> 1,675
<REALIZED-GAINS-CURRENT> 823
<APPREC-INCREASE-CURRENT> 3,234
<NET-CHANGE-FROM-OPS> 5,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,700)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 748
<NUMBER-OF-SHARES-REDEEMED> (1,953)
<SHARES-REINVESTED> 70
<NET-CHANGE-IN-ASSETS> (19,345)
<ACCUMULATED-NII-PRIOR> 50
<ACCUMULATED-GAINS-PRIOR> (1,913)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 293
<AVERAGE-NET-ASSETS> 32,933
<PER-SHARE-NAV-BEGIN> 18.77
<PER-SHARE-NII> 1.11
<PER-SHARE-GAIN-APPREC> 2.01
<PER-SHARE-DIVIDEND> (1.11)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.78
<EXPENSE-RATIO> .26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 14
<NAME> U.S. TREASURY INDEX PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 16,927
<INVESTMENTS-AT-VALUE> 17,723
<RECEIVABLES> 233
<ASSETS-OTHER> 35
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,991
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31
<TOTAL-LIABILITIES> 31
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,233
<SHARES-COMMON-STOCK> 14
<SHARES-COMMON-PRIOR> 1
<ACCUMULATED-NII-CURRENT> 21
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,090)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 796
<NET-ASSETS> 17,960
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,760
<OTHER-INCOME> 0
<EXPENSES-NET> 85
<NET-INVESTMENT-INCOME> 1,675
<REALIZED-GAINS-CURRENT> 823
<APPREC-INCREASE-CURRENT> 3,234
<NET-CHANGE-FROM-OPS> 5,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (19,345)
<ACCUMULATED-NII-PRIOR> 50
<ACCUMULATED-GAINS-PRIOR> (1,913)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 293
<AVERAGE-NET-ASSETS> 32,933
<PER-SHARE-NAV-BEGIN> 18.77
<PER-SHARE-NII> 1.00
<PER-SHARE-GAIN-APPREC> 2.03
<PER-SHARE-DIVIDEND> (1.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.75
<EXPENSE-RATIO> .65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 15
<NAME> BALANCED PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 33,570
<INVESTMENTS-AT-VALUE> 37,924
<RECEIVABLES> 981
<ASSETS-OTHER> 39
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 38,944
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47
<TOTAL-LIABILITIES> 47
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 35,074
<SHARES-COMMON-STOCK> 3,519
<SHARES-COMMON-PRIOR> 3,310
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (579)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,354
<NET-ASSETS> 38,897
<DIVIDEND-INCOME> 349
<INTEREST-INCOME> 1,089
<OTHER-INCOME> 0
<EXPENSES-NET> 221
<NET-INVESTMENT-INCOME> 1,217
<REALIZED-GAINS-CURRENT> 587
<APPREC-INCREASE-CURRENT> 4,952
<NET-CHANGE-FROM-OPS> 6,756
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,221)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,054
<NUMBER-OF-SHARES-REDEEMED> (959)
<SHARES-REINVESTED> 114
<NET-CHANGE-IN-ASSETS> 7,435
<ACCUMULATED-NII-PRIOR> 52
<ACCUMULATED-GAINS-PRIOR> (1,166)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 290
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 464
<AVERAGE-NET-ASSETS> 36,250
<PER-SHARE-NAV-BEGIN> 9.50
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> 1.55
<PER-SHARE-DIVIDEND> (.34)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.05
<EXPENSE-RATIO> .61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL BOND PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 28,883
<INVESTMENTS-AT-VALUE> 31,471
<RECEIVABLES> 1,080
<ASSETS-OTHER> 165
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,716
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30,112
<SHARES-COMMON-STOCK> 1,503
<SHARES-COMMON-PRIOR> 1,352
<ACCUMULATED-NII-CURRENT> 36
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,577
<NET-ASSETS> 32,682
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,206
<OTHER-INCOME> 0
<EXPENSES-NET> 308
<NET-INVESTMENT-INCOME> 1,898
<REALIZED-GAINS-CURRENT> 731
<APPREC-INCREASE-CURRENT> 2,700
<NET-CHANGE-FROM-OPS> 5,329
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,605)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 297
<NUMBER-OF-SHARES-REDEEMED> (243)
<SHARES-REINVESTED> 97
<NET-CHANGE-IN-ASSETS> 5,735
<ACCUMULATED-NII-PRIOR> 36
<ACCUMULATED-GAINS-PRIOR> (67)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 473
<AVERAGE-NET-ASSETS> 32,075
<PER-SHARE-NAV-BEGIN> 19.93
<PER-SHARE-NII> 1.26
<PER-SHARE-GAIN-APPREC> 2.28
<PER-SHARE-DIVIDEND> (1.73)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.74
<EXPENSE-RATIO> .96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 16
<NAME> INTERNATIONAL BOND PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> NOV-22-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 28,883
<INVESTMENTS-AT-VALUE> 31,471
<RECEIVABLES> 1,080
<ASSETS-OTHER> 165
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,716
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 34
<TOTAL-LIABILITIES> 34
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30,112
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 36
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,577
<NET-ASSETS> 32,682
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,206
<OTHER-INCOME> 0
<EXPENSES-NET> 308
<NET-INVESTMENT-INCOME> 1,898
<REALIZED-GAINS-CURRENT> 731
<APPREC-INCREASE-CURRENT> 2,700
<NET-CHANGE-FROM-OPS> 5,329
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,735
<ACCUMULATED-NII-PRIOR> 36
<ACCUMULATED-GAINS-PRIOR> (67)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 289
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 473
<AVERAGE-NET-ASSETS> 32,075
<PER-SHARE-NAV-BEGIN> 22.17
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> (0.08)
<PER-SHARE-DIVIDEND> (0.37)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.74
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 17
<NAME> INTERNATIONAL GROWTH PORTFOLIO CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 147,597
<INVESTMENTS-AT-VALUE> 148,634
<RECEIVABLES> 2,386
<ASSETS-OTHER> 430
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,450
<PAYABLE-FOR-SECURITIES> 2,433
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 293
<TOTAL-LIABILITIES> 2,726
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 150,907
<SHARES-COMMON-STOCK> 15,049
<SHARES-COMMON-PRIOR> 13,046
<ACCUMULATED-NII-CURRENT> 2,579
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,836)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,074
<NET-ASSETS> 148,724
<DIVIDEND-INCOME> 2,686
<INTEREST-INCOME> 671
<OTHER-INCOME> 0
<EXPENSES-NET> 1,563
<NET-INVESTMENT-INCOME> 1,794
<REALIZED-GAINS-CURRENT> (4,915)
<APPREC-INCREASE-CURRENT> 727
<NET-CHANGE-FROM-OPS> (2,394)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (684)
<DISTRIBUTIONS-OF-GAINS> (510)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,479
<NUMBER-OF-SHARES-REDEEMED> (4,573)
<SHARES-REINVESTED> 97
<NET-CHANGE-IN-ASSETS> 15,512
<ACCUMULATED-NII-PRIOR> 537
<ACCUMULATED-GAINS-PRIOR> 521
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,475
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,032
<AVERAGE-NET-ASSETS> 147,552
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> (.36)
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.88
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BENCHMARK FUNDS ANNUAL REPORT DATED NOVEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 17
<NAME> INTERNATIONAL GROWTH PORTFOLIO CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 147,597
<INVESTMENTS-AT-VALUE> 148,634
<RECEIVABLES> 2,386
<ASSETS-OTHER> 430
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,450
<PAYABLE-FOR-SECURITIES> 2,433
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 293
<TOTAL-LIABILITIES> 2,726
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 150,907
<SHARES-COMMON-STOCK> 2
<SHARES-COMMON-PRIOR> 2
<ACCUMULATED-NII-CURRENT> 2,579
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,836)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,074
<NET-ASSETS> 148,724
<DIVIDEND-INCOME> 2,686
<INTEREST-INCOME> 671
<OTHER-INCOME> 0
<EXPENSES-NET> 1,563
<NET-INVESTMENT-INCOME> 1,794
<REALIZED-GAINS-CURRENT> (4,915)
<APPREC-INCREASE-CURRENT> 727
<NET-CHANGE-FROM-OPS> (2,394)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,512
<ACCUMULATED-NII-PRIOR> 537
<ACCUMULATED-GAINS-PRIOR> 521
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,475
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,032
<AVERAGE-NET-ASSETS> 147,552
<PER-SHARE-NAV-BEGIN> 10.21
<PER-SHARE-NII> .19
<PER-SHARE-GAIN-APPREC> (.48)
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.83
<EXPENSE-RATIO> 1.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT 99.1(h)
THE BENCHMARK MONEY MARKET FUND
DIVERSIFIED ASSETS AND GOVERNMENT PORTFOLIOS
AMENDMENT NO.8 AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Section 7.3 of the Agreement and Declaration of Trust dated
July 15, 1982 (the "Declaration") of The Benchmark Money Market Fund Diversified
Assets and Government Portfolios (the "Trust") provides that the Declaration may
be amended at any time by an instrument in writing signed by a majority of the
then Trustees (or by an officer of the Trust pursuant to the vote of a majority
of the then Trustees); and
WHEREAS, Section 7.3 of the Declaration also provides that any such
amendment having the purpose of changing the name of the Trust shall not require
authorization by Unitholder vote; and
WHEREAS, a majority of the Trustees have adopted the following
resolutions, which the Trustees have provided shall be effective October 1,
1990:
RESOLVED, that the Section 1.1 of the Agreement and Declaration of
Trust be, and the same hereby is, amended to read in its entirety as follows:
Section 1.1 Name. This Trust shall be known as "The Benchmark Funds" and the
Trustees shall conduct the business of the Trust under that name or any other
name as they may from time to time determine.
RESOLVED, that the President or any Vice President of this Trust is
authorized to execute an instrument in writing effecting the aforesaid amendment
and to cause the same to be filed wherever in the discretion of such officer
such filing is appropriate.
NOW THEREFORE, the undersigned, Nancy L. Mucker, the duly elected,
appointed and serving Vice President of The Benchmark Money Market Fund
Diversified Assets and Government Portfolios, hereby amends the Declaration by
amending Section 1.1 as set forth above, such amendment to be effective October
1, 1990.
Dated this 26th Day of September, 1990
/s/ Nancy L. Mucker
---------------------
Nancy L. Mucker
Vice President
<PAGE>
STATE OF ILLINOIS :
: ss
COUNTY OF COOK :
Then personally appeared the above-named Nancy L. Mucker and
acknowledged this instrument to be her free act and deed this 26th day of
September, 1990.
/s/ Nancy James
-----------------------
Notary Public
My commission expires: 11-21-92
[NOTARIAL SEAL]
<PAGE>
EXHIBIT 99.1(i)
THE BENCHMARK FUNDS
AMENDMENT NO. 9 TO AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust dated July
15, 1982, as amended (the "Declaration"), of The Benchmark Funds (the "Trust")
provides that the Declaration may be amended to establish and designate new
Series of Units by and instrument in writing executed by a majority of the
Trustees of the Trust and setting forth such establishment and designation and
the relative rights and preferences of such Series;
NOW THEREFORE, the undersigned, being a majority of the Trustees of the
Trust, (1) hereby amend the Declaration by designating and establishing two
additional Series of Units to be known respectively as "Tax-Exempt Units" and
"Government Select Units", each such new Series to have the relative rights and
preferences set forth in Subsections (a) through (k) of Section 4.2 of the
Declaration, and (2) hereby determine pursuant to Section 7.3 of the Declaration
that the foregoing amendment shall be effective upon the execution of a
certificate by a Trustee or Officer of the Trust to the effect that said
amendment has been duly adopted.
<PAGE>
THE BENCHMARK FUNDS
OFFICER'S CERTIFICATE
The undersigned, Nancy L. Mucker, the duly elected, appointed and serving
Vice President of The Benchmark Funds, hereby certifies that Amendment No. 9 to
the Agreement and Declaration of Trust dated July 15, 1982 of The Benchmark
Funds, a copy of which is attached hereto, has been duly adopted by the Board of
Trustees of said entity than said Amendment No. 9 is effective as of the date
hereof.
Date this 1st day of October, 1990.
/s/ Nancy L. Mucker
------------------------
Nancy L. Mucker
STATE OF ILLINOIS :
: ss.
COUNTY OF COOK :
Then personally appeared the above-named Nancy L. Mucker and acknowledged
this instrument to be her free act and deed this 1st day of October, 1990.
/s/ Nancy L. Mucker
------------------------
Notary Public
My commission expires:11-21-92
[NOTARIAL SEAL]
<PAGE>
EXHIBIT 99.1(j)
THE BENCHMARK FUNDS
AMENDMENT NO. 10 TO AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust dated July
15, 1982, as amended (the "Declaration"), of The Benchmark Funds (the "Trust")
provides that the Declaration may be amended to establish and designate new
Series of Units by an instrument in writing executed by a majority of the
Trustees of the Trust and setting forth such establishment and designation and
the relative rights and preferences of such Series;
NOW THEREFORE, the undersigned, being a majority of the Trustees of the
Trust, (1) hereby amend the Declaration by designating and establishing two
additional Series of Units to be known respectively as "California Municipal
Units" and "Short Duration Units", each such new Series to have the relative
rights and preferences set forth in Subsections (a) through (k) of Section 4.2
of the Declaration, and (2) hereby determine pursuant to Section 7.3 of the
Declaration that the foregoing amendment shall be effective upon the execution
of a certificate by a Trustee or Officer of the Trust to the effect that said
amendment has been duly adopted.
<PAGE>
WITNESS our hands this 27th day of April, 1992
/s/ James J. Gavin, Jr.
--------------------------
James J. Gavin, Jr.
/s/ William B. Jordan
--------------------------
William B. Jordan
/s/ Frederick T. Kelsey
--------------------------
Frederick T. Kelsey
/s/ Robert P. Mayo
--------------------------
Robert P. Mayo
/s/ Terence J. Mulvihill
--------------------------
Terence J. Mulvihill
/s/ William H. Springer
--------------------------
William H. Springer
/s/ Richard P. Strubel
--------------------------
Richard P. Strubel
STATE OF ILLINOIS
COUNTY OF COOK
Then personally appeared the above-mentioned Trustees and acknowledged
this instrument to be their free act and deed this 27th of April, 1992.
/s/ Nancy James
--------------------------
Notary Public
My Commission Expires:11-21-92
<PAGE>
EXHIBIT 99.1(k)
THE BENCHMARK FUNDS
AMENDMENT NO. 11 TO AGREEMENT AND DECLARATION OF TRUST
------------------------------------------------------
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust dated
July 15, 1982, as amended, (the"Declaration") of The Benchmark Funds (the
"Trust") provides that the Declaration may be amended to establish and designate
new Series of Units by an instrument in writing executed by a majority of the
Trustees of the Trust and setting forth such establishment and designation and
the relative rights and preferences of such Series;
NOW THEREFORE, the undersigned, being a majority of the Trustees of the
Trust hereby:
(1) amend the Declaration by designating and establishing eight
additional Series of Units (sometimes referred to collectively as "Additional
Series") to be known respectively as "Equity Index Units," "Small Company Index
Units," "Diversified Growth Units," "Focused Growth Units," "U.S. Treasury Index
Units," "U.S. Government Securities Units," "Short-Intermediate Bond Units" and
"Bond Units". Except as otherwise provided for below with respect to Units of a
particular Subseries of an Additional Series, all Units of each Additional
Series shall be identical and shall have the relative rights and preferences set
forth in Subsections (a) through (k) of Section 4.2 of the Declaration;
(2) amend the Declaration by designating and establishing four
Subseries, respectively Subseries A, B, C and D, within each Additional Series.
Units of a particular Subseries of an Additional Series shall also be Units of
that Series under the Declaration. Pursuant to Section 4.1 of the Declaration,
Units of each respective Subseries shall have the following relative rights and
preferences:
(a) Liabilities belonging to Subseries. Each Subseries of an Additional
Series shall bear a pro rata portion of the "liabilities belonging to" that
Series. In addition, to the extent permitted by rule or order of the Securities
and Exchange Commission and as may be from time to time determined by the Board
of Trustees (whether or not Units of a particular Subseries affected are issued
and outstanding):
(i) Subseries A Units of a particular Additional Series and no other
Subseries established hereby shall bear such expenses, costs, charges and
reserves as the Board of Trustees may from time to time determine are directly
attributable to such Units
<PAGE>
and which should therefore be borne solely by such Units;
(ii) Subseries B Units of a particular Additional Series and no other
Subseries established hereby shall bear (1) the expenses and liabilities of
payments to institutions under any agreements entered into by or on behalf of
the Trust which provide for services by the institutions exclusively for
beneficial Unitholders of such Subseries B, (2) expenses and liabilities arising
from transfer agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries B Units, an (3) such other
expenses, costs, charges and reserves as the Board of Trustees may from time to
time determine are directly attributable to such Subseries B Units and which
should therefore be borne solely by such Units;
(iii) Subseries C Units of a particular Additional Series and no other
Subseries established hereby shall bear (1) the expenses and liabilities of
payments to institutions under any agreements entered into by or on behalf of
the Trust which provide for services by the institutions exclusively for
beneficial Unitholders of such Subseries C, (2) expenses and liabilities arising
from transfer agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries C Units, and (3) such
other expenses, costs, charges and reserves as the Board of Trustees may from
time to time determine are directly attributable to such Subseries C Units and
which should therefore be borne solely by such Units;
(iv) Subseries D Units of a particular Additional Series and no other
Subseries established hereby shall bear (1) the expenses and liabilities of
payments to institutions under any agreements entered into by or on behalf of
the Trust which provide for services by the institutions exclusively for
beneficial Unitholders of such Subseries D, (2) expenses and liabilities arising
from transfer agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries D Units, and (3) such
other expenses, costs, charges and reserves as the Board of Trustees may from
time to time determine are directly attributable to such Subseries D Units and
which should therefore be borne solely by such Units;
The expenses and liabilities set forth in subparagraphs (i), (ii),
(iii) and (iv) are sometimes referred to collectively as "special Subseries
liabilities" and individually as a "special Subseries liability";
(b) Dividends. Dividends and distributions on Units of a particular
Subseries of an Additional Series may be paid to the holders of Units of that
Subseries after providing for any actual and accrued liabilities belonging to
that Series and any special Subseries liability with respect to that Subseries.
To the extent that the Trustees determine to pay such a dividend or distribution
which provides for a special Subseries liability
<PAGE>
with respect to a particular Subseries, it shall be distributed pro rata to the
holders of that Subseries in proportion to the number of Units of that Subseries
held by them at the date and time of record established for the payment of such
dividend or distribution, except that in connection with any dividends or
distribution program or procedure the Trustees may determine that no dividend or
distribution shall be payable on Units as to which the Unitholder's purchase
order and/or payment have not been received by the time or times established by
the Trustees under such program or procedure;
(c) Liquidation. In the event of liquidation or dissolution of the
Trust, the Unitholders of each Subseries of a particular Additional Series shall
be entitled to receive, as a Subseries, when as declared by the Trustees, the
excess of the assets belonging to that Additional Series over the liabilities
belonging to that Series and any special Subseries liabilities with respect to
that Subseries. The assets so distributable to the Unitholders of any particular
Subseries of an Additional Series shall be distributed among such Unitholders in
proportion to the number of Units of that Subseries held by them and recorded on
the books of the Trust;
(d) Voting. On each matter submitted to a vote of the Unitholders, each
holder of a Unit shall be entitled to one vote for each such Unit standing in
his name on the books of the Trust irrespective of the particular Series or
Subseries thereof and all Units of all Series and any Subseries thereof shall
vote as a single class ("Single Class Voting"); provided however, that (i) as to
any matter with respect to which a separate vote of any Series or Subseries of
an Additional Series is required by the 1940 Act or would be required under the
Massachusetts Business Corporation Law if the Trust were a Massachusetts
business corporation, such requirements as to a separate vote by that Series or
Subseries shall apply in lieu of Single Class Voting described above; (ii) in
the event that the separate vote requirements referred to in (i) above apply
with respect to one or more Series or Subseries, then, subject to (iii) below,
the Units of all other Series and any Subseries shall vote as a single class;
and (iii) as to any matter which does not affect the interest of all Unitholders
of a particular Additional Series thereof, only the Unitholders of the one or
more affected Subseries shall be entitled to vote;
(e) Redemption by Unitholder. Each holder of Units of a particular
Subseries of an Additional Series shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Units of that Subseries at a
redemption price equal to the net asset value per Unit of that Subseries next
determined in accordance with paragraph (g) below after the Units are properly
tendered for redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which determination shall be
conclusive, that
<PAGE>
conditions exist which make payment wholly in cash unwise or undesirable, the
Trust may make payment wholly or partly in securities or other assets belonging
to the Series of which the Units being redeemed are a part at the value of such
securities or assets used in determination of net asset value;
(f) Redemption by Trust. Each Unit of each Subseries of a particular
Additional Series is subject to redemption by the Trust at the redemption price
which would be applicable if such Unit was then being redeemed by the Unitholder
pursuant to paragraph (e) above at any time if the Trustees determine in their
sole discretion that failure to so redeem may have materially adverse
consequences to the holders of the Units, or any Series or Subseries of a
particular Additional Series thereof, of the Trust, and upon such redemption the
holders of the Units so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price. In addition, the
Trustees, in their sole discretion, may cause the Trust to redeem all of the
Units of one or more Subseries of an Additional Series held by (a) any
Unitholder if the value of such Units held by such Unitholder is less than the
minimum amount established from time to time by the Trustees or (b) all
Unitholders if the value of such Units held by all Unitholders is less than the
minimum amount established from time to time by the Trustees;
(g) Net Asset Value. The net asset value per Unit of a particular
Subseries of an Additional Series shall be the quotient obtained by dividing the
value of the net assets of that Subseries (being the assets belonging to that
Additional Series less the liabilities belonging to that Series and less any
special Subseries liabilities with respect to that Subseries) by the total
number of Units of that Subseries outstanding, all determined in accordance with
the methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time;
(h) Equality. All Units of each Subseries of an Additional Series shall
represent an equal proportionate interest in the assets belonging to that Series
(subject to the liabilities belonging to that Series and any special Subseries
liabilities with respect to that Subseries), and each Unit of any particular
Subseries of an Additional Series shall be equal to each other Unit of that
Subseries. The Trustees may from time to time divide or combine the Units of any
particular Subseries of an Additional Series into a greater or lesser number of
Units of that Subseries without thereby changing the proportionate beneficial
interest in the assets belong to that Subseries or in any way affecting the
rights of Units of any other Series or Subseries; and
<PAGE>
(3) determines that pursuant to Section 7.3 of the Declaration the
foregoing amendments shall be effective upon the execution of a certificate by a
Trustee or Officer of the Trust to the effect that the said amendments have been
adopted.
WITNESS our hands this __________day of __________
/s/ William H. Springer
-------------------------------
William H. Springer
-------------------------------
James J. Gavin, Jr.
/s/ William B. Jordan, III
-------------------------------
William B. Jordan, III
/s/ Frederick T. Kelsey
-------------------------------
Frederick T. Kelsey
-------------------------------
Robert P. Mayo
-------------------------------
Terrence J. Mulvihill
/s/ Richard P. Strubel
-------------------------------
Richard P. Strubel
<PAGE>
EXHIBIT 99.1(l)
THE BENCHMARK FUNDS
AMENDMENT NO. 12 TO AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust date July
15, 1982, as amended, (the "Declaration") of The Benchmark Funds (the "Trust")
provides that the Declaration may be amended to establish and designate new
Series of Units by an instrument in writing executed by a majority of the
Trustees of the Trust and setting forth such establishment and designation and
the relative rights and preferences of such Series;
NOW THEREFORE, the undersigned, being a majority of the Trustees of the
Trust hereby:
(1) amend the Declaration by designating and establishing an additional
Series of Units ("Additional Series") to be known as "Balanced Units". Except as
otherwise provided for below with respect to Units of a particular Subseries of
the Additional Series, all Units of the Additional Series shall be identical and
shall have the relative rights and preferences set forth in Subsections (a)
through (k) of Section 4.2 of the Declaration;
(2) amend the Declaration by designating and establishing four Subseries,
respectively Subseries A, B, C and D, within the Additional Series. Units of a
particular Subseries of the Additional Series shall also be Units of that Series
under the Declaration. Pursuant to Section 4.1 of the Declaration, Units of each
respective Subseries shall have the following relative rights and preferences:
(a) Liabilities belonging to Subseries. Each Subseries of the
Additional Series shall bear a pro rata portion of the "liabilities
belonging to" such Additional Series. In addition, to the extent permitted
by rule or order of the Securities and Exchange Commission and as may be
from time to time determined by the Board of Trustees (whether or not Units
of a particular Subseries affected are issued and outstanding):
(i) Subseries A Units of the Additional Series and no other
Subseries established hereby shall bear such expenses, costs, charges
and reserves as the Board of Trustees may from time to time determine
are directly attributable to such Units and which should therefore be
borne solely by such Units:
<PAGE>
(ii) Subseries B Units of the Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries B, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries B Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries B Units and which should therefore be borne solely by
such Units;
(iii) Subseries C Units of the Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries C, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries C Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries C Units and which should therefore be borne solely by
such Units;
(iv) Subseries D Units of the Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries D, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries D Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries D Units and which should therefore be borne solely by
such Units;
The expenses and liabilities set forth in subparagraphs (i), (ii), (iii) and
(iv) are sometimes referred to collectively as "special Subseries liabilities"
and individually as a "special Subseries liability";
(b) Dividends. Dividends and distributions on Units of a particular
Subseries of the Additional Series may be paid to the holders of Units of that
Subseries after providing for any actual and accrued liabilities belonging to
that Series and any special
<PAGE>
Subseries liability with respect to that Subseries. To the extent that the
Trustees determine to pay such a dividend or distribution which provides for a
special Subseries liability with respect to a particular Subseries, it shall be
distributed pro rata to the holders of that Subseries in proportion to the
number of Units of that Subseries held by them at the date and time of record
established for the payment of such dividend or distribution, except that in
connection with any dividends or distribution program or procedure the Trustees
may determine that no dividend or distribution shall be payable on Units as to
which the Unitholder's purchase order and/or payment have not been received by
the time or times established by the Trustees under such program or procedure;
(c) Liquidation. In the event of liquidation or dissolution of the Trust,
the Unitholders of each Subseries of the Additional Series shall be entitled to
receive, as a Subseries, when and as declared by the Trustees, the excess of the
assets belonging to that Additional Series over the liabilities belonging to
that Series and any special Subseries liabilities with respect to that
Subseries. The assets so distributable to the Unitholders of any particular
Subseries of the Additional Series shall be distributed among such Unitholders
in proportion to the number of Units of that Subseries held by them and recorded
on the books of the Trust;
(d) Voting. On each matter submitted to a vote of the Unitholders, each
holder of a Unit shall be entitled to one vote for each such Unit standing in
his name on the books of the Trust irrespective of the particular Series or
Subseries thereof and all Units of all Series and any Subseries thereof shall
vote as a single class ("Single Class Voting"); provided however, that (i) as to
any matter with respect to which a separate vote of any Series or Subseries of
the Additional Series is required by the 1940 Act or would be required under the
Massachusetts Business Corporation Law if the Trust were a Massachusetts
business corporation, such requirements as to a separate vote by that Series or
Subseries shall apply in lieu of Single Class Voting described above; (ii) in
the event that the separate vote requirements referred to in (i) above apply
with respect to one or more Series or Subseries, then, subject to (iii) below,
the Units of all other Series and any Subseries shall vote as a single class;
and (iii) as to any matter which does not affect the interest of all Unitholders
of the Additional Series thereof, only the Unitholders of the one or more
affected Subseries shall be entitled to vote;
(e) Redemption by Unitholder. Each holder of Units of a particular
Subseries of the Additional Series shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to require
the Trust to redeem all or any part of his Units of that Subseries at a
redemption price equal to the net asset value per Unit of that Subseries next
determined in accordance with paragraph (g) below after the Units are properly
tendered for redemption. Payment of the redemption price shall be in cash;
provided, however, that if the Trustees determine, which determination shall be
conclusive, that conditions
<PAGE>
exist which make payment wholly in cash unwise or undesirable, the Trust may
make payment wholly or partly in securities or other assets belonging to the
Series of which the Units being redeemed are a part at the value of such
securities or assets used in such determination of net asset value;
(f) Redemption by Trust. Each Unit of each Subseries of the Additional
Series is subject to redemption by the Trust at the redemption price which would
be applicable if such Unit was then being redeemed by the Unitholder pursuant to
paragraph (e) above at any time if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse consequences to
the holders of the Units, or any Series or Subseries of a particular Additional
Series thereof, of the Trust, and upon such redemption the holders of the Units
so redeemed shall have no further right with respect thereto other than to
receive payment of such redemption price. In addition, the Trustees, in their
sole discretion, may cause the Trust to redeem all of the Units of one or more
Subseries of an Additional Series held by (a) any Unitholder if the value of
such Units held by such Unitholder is less than the minimum amount established
from time to time by the Trustees or (b) all Unitholders if the value of such
Units held by all Unitholders is less than the minimum amount established from
time to time by the Trustees;
(g) Net Asset Value. The net asset value per Unit of a particular Subseries
of the Additional Series shall be the quotient obtained by dividing the value of
the net assets of that Subseries (being the assets belonging to the Additional
Series less the liabilities belonging to the Series and less any special
Subseries liabilities with respect to that Subseries ) by the total number of
Units of that Subseries outstanding, all determined in accordance with the
methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time;
(h) Equality. All Units of each Subseries of the Additional Series shall
represent an equal proportionate interest in the assets belonging to such
Additional Series (subject to the liabilities belonging to that Series and any
special Subseries liabilities with respect to that Subseries), and each Unit of
any particular Subseries of the Additional Series shall be equal to each other
Unit of that Subseries. The Trustees may from time to time divide or combine the
Units of any particular Subseries of the Additional Series into a greater or
lesser number of Units of that Subseries without thereby changing the
proportionate beneficial interest in the assets belonging to that Subseries or
in any way affecting the rights of Units of any other Series or Subseries; and
(3) determines that pursuant to Section 7.3 of the Declaration the
foregoing amendments shall be effective upon the execution of a certificate by a
Trustee or Officer of the Trust to the effect that the said amendments have been
adopted.
<PAGE>
WITNESS our hands this 27th day of April, 1993.
/s/ William H. Springer
- ---------------------------
William H. Springer
/s/ James J. Gavin, Jr.
- ---------------------------
James J. Gavin, Jr.
/s/ William B. Jordan, III
- ---------------------------
William B. Jordan, III
/s/ Frederick T. Kelsey
- ---------------------------
Frederick T. Kelsey
/s/ Robert P. Mayo
- ---------------------------
Robert P. Mayo
/s/ Terrence J. Mulvihill
- ---------------------------
Terrence J. Mulvihill
/s/ Richard P. Strubel
- ---------------------------
Richard P. Strubel
<PAGE>
STATE OF ILLINOIS:
: SS.
COUNTY OF COOK :
Then personally appeared the above mentioned Trustees and acknowledged this
instrument to be their free act and deed this 27th day of April, 1993.
/s/ Nancy James
-------------------------
Notary Public
My Commission Expires: 11-21-96
<PAGE>
THE BENCHMARK FUNDS
OFFICER'S CERTIFICATE
The undersigned, John W. Mosior, the duly elected, appointed and
serving Vice President of The Benchmark Funds, hereby certifies that Amendment
No. 12 to the Agreement and Declaration of Trust dated July 15, 1982 of The
Benchmark Funds, as previously amended, a copy of which is attached hereto, has
been duly adopted by the Board of Trustees of said entity and said Amendment No.
12 is effective as of the date hereof.
Dated this 27th day of April, 1993.
/s/ John W. Mosior
---------------------------
John W. Mosior
Vice President of the Trust
STATE OF ILLINOIS :
: SS.
COUNTY OF COOK :
Then personally appeared the above-named John W. Mosior and acknowledged
this instrument to be his free act and deed this 27th day of April, 1993.
/s/ Nancy James
---------------------------
Notary Public
My Commission expires: 11-21-96
[Notarial Seal]
<PAGE>
EXHIBIT 99.1(m)
THE BENCHMARK FUNDS
AMENDMENT NO. 13 TO AGREEMENT AND DECLARATION OF TRUST
WHEREAS, Section 4.1 of the Agreement and Declaration of Trust dated July
15, 1982, as amended, (the "Declaration") of The Benchmark Funds (the "Trust")
provides that the Declaration may be amended to establish and designate new
Series of Units by an instrument in writing executed by a majority of the
Trustees of the Trust and setting forth such establishment and designation and
the relative rights and preferences of such Series;
NOW THEREFORE, the undersigned, being a majority of the Trustees of the
Trust hereby:
(1) amend the Declaration by designating and establishing two additional
Series of Units (each an "Additional Series") to be known as "International
Growth Portfolio Units" and "International Bond Portfolio Units". Except as
otherwise provided for below with respect to Units of a particular Subseries of
an Additional Series, all Units of an Additional Series shall be identical and
shall have the relative rights and preferences set forth in Subsections (a)
through (k) of Section 4.2 of the Declaration;
(2) amend the Declaration by designating and establishing four Subseries,
respectively Subseries A, B, C and D, within each Additional Series. Units of a
particular Subseries of an Additional Series shall also be Units of that Series
under the Declaration. Pursuant to Section 4.1 of the Declaration, Units of each
respective Subseries shall have the following relative rights and preferences:
(a) Liabilities belonging to Subseries. Each Subseries of an
Additional Series shall bear a pro rata portion of the "liabilities
belonging to" such Additional Series. In addition, to the extent permitted
by rule or order of the Securities and Exchange Commission and as may be
from time to time determined by the Board of Trustees (whether or not Units
of a particular Subseries affected are issued and outstanding):
(i) Subseries A Units of an Additional Series and no other
Subseries established hereby shall bear such expenses, costs, charges
and reserves as the Board of Trustees may from time to time determine
are directly attributable to such Units and which should therefore be
borne solely by such Units;
(ii) Subseries B Units of an Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries B, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustee may from time to time
determine are directly attributable to such Subseries B Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries B Units and which should therefore be borne solely by
such Units;
(iii) Subseries C Units of an Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries C, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries C Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries C Units and which should therefore be borne solely by
such Units;
<PAGE>
(iv) Subseries D Units of an Additional Series and no other
Subseries established hereby shall bear (1) the expenses and
liabilities of payments to institutions under any agreements entered
into by or on behalf of the Trust which expenses are incurred for
services by the institutions exclusively for beneficial Unitholders of
such Subseries D, (2) expenses and liabilities arising from transfer
agency services that the Board of Trustees may from time to time
determine are directly attributable to such Subseries D Units, and (3)
such other expenses, costs, charges and reserves as the Board of
Trustees may from time to time determine are directly attributable to
such Subseries D Units and which should therefore be borne solely by
such Units;
The expenses and liabilities set forth in subparagraphs (i),
(ii), (iii) and (iv) are sometimes referred to collectively as "special
Subseries liabilities" and individually as a "special Subseries
liability";
(b) Dividends. Dividends and distributions on Units of a particular
Subseries of an Additional Series may be paid to the holders of Units of
that Subseries after providing for any actual and accrued liabilities
belonging to that Series and any special Subseries liability with respect
to that Subseries. To the extent that the Trustees determine to pay such a
dividend or distribution which provides for a special Subseries liability
with respect to a particular Subseries, it shall be distributed pro rata to
the holders of that Subseries in proportion to the number of Units of that
Subseries held by them at the date and time of record established for the
payment of such dividend or distribution, except that in connection with
any dividends or distribution program or procedure the Trustees may
determine that no dividend or distribution shall be payable on Units as to
which the Unitholder's purchase order and/or payment have not been received
by the time or times established by the Trustees under such program or
procedure;
(c) Liquidation. In the event of liquidation or dissolution of the
Trust, the Unitholders of each Subseries of an Additional Series shall be
entitled to receive, as a Subseries, when and as declared by the Trustees,
the excess of the assets belonging to that Additional Series over the
liabilities belonging to that Series and any special Subseries liabilities
with respect to that Subseries. The assets so distributable to the
Unitholders of any particular Subseries of an Additional Series shall be
distributed among such Unitholders in proportion to the number of Units of
that Subseries held by them and recorded on the books of the Trust;
(d) Voting. On each matter submitted to a vote of the Unitholders,
each holder of a Unit shall be entitled to one vote for each such Unit
standing in his name on the books of the Trust irrespective of the
particular Series or Subseries thereof and all Units of all Series and any
Subseries thereof shall vote as a single class ("Single Class Voting");
provided however, that (i) as to any matter with respect to which a
separate vote of any Series or Subseries of an Additional Series is
required by the 1940 Act or would be required under the Massachusetts
Business Corporation Law if the Trust were a Massachusetts business
corporation, such requirements as to a separate vote by that Series or
Subseries shall apply in lieu of Single Class Voting described above; (ii)
in the event that the separate vote requirements referred to in (i) above
apply with respect to one or more Series or Subseries, then, subject to
(iii) below, the Units of all other Series and any Subseries shall vote as
a single class; and (iii) as to any matter which does not affect the
interest of all Unitholders of an Additional Series thereof, only the
Unitholders of the one or more affected Subseries shall be entitled to
vote;
(e) Redemption by Unitholder. Each holder of Units of a particular
Subseries of an Additional Series shall have the right at such times as may
permitted by the Trust, but no less frequently than once each week, to
require the Trust to redeem all or any part of his Units of that Subseries
at a redemption price equal to the net asset value per Unit of that
Subseries next determined in accordance with paragraph (g) below after the
Units are properly tendered for redemption. Payment of the redemption price
shall be in cash; provided, however, that if the Trustees
2
<PAGE>
determine, which determination shall be conclusive, that conditions
exist which make payment wholly in cash unwise or undesirable, the Trust
may make payment wholly or partly in securities or other assets belonging
to the Series of which the Units being redeemed are a part at the value of
such securities or assets used in such determination of net asset value;
(f) Redemption by Trust. Each Unit of each Subseries of an Additional
Series is subject to redemption by the Trust at the redemption price which
would be applicable if such Unit was then being redeemed by the Unitholder
pursuant to paragraph (e) above at any time if the Trustees determine in
their sole discretion that failure to so redeem may have materially adverse
consequences to the holders of the Units, or any Series or Subseries of a
particular Additional Series thereof, of the Trust, and upon such
redemption the holders of the Units so redeemed shall have no further right
with respect thereto other than to receive payment of such redemption
price. In addition, the Trustees, in their sole discretion, may cause the
Trust to redeem all of the Units of one or more Subseries of an Additional
Series held by (a) any Unitholder if the value of such Units held by such
Unitholder is less than the minimum amount established from time to time by
the Trustees or (b) all Unitholders if the value of such Units held by all
Unitholders is less than the minimum amount established from time to time
by the Trustees;
(g) Net Asset Value. The net asset value per Unit of a particular
Subseries of an Additional Series shall be the quotient obtained by
dividing the value of the net assets of that Subseries (being the assets
belonging to the Additional Series less the liabilities belonging to the
Series and less any special Subseries liabilities with respect to that
Subseries) by the total number of Units of that Subseries outstanding, all
determined in accordance with the methods and procedures, including without
limitation those with respect to rounding, established by the Trustees from
time to time;
(h) Equality. All Units of each Subseries of an Additional Series
shall represent an equal proportionate interest in the assets belonging to
such Additional Series (subject to the liabilities belonging to that Series
and any special Subseries liabilities with respect to that Subseries), and
each Unit of any particular Subseries of an Additional Series shall be
equal to each other Unit of that Subseries. The Trustees may from time to
time divide or combine the Units of any particular Subseries of an
Additional Series into a greater or lesser number of Units of that
Subseries without thereby changing the proportionate beneficial interest in
the assets belonging to that Subseries or in any way affecting the rights
of Units of any other Series or Subseries; and
3
<PAGE>
(3) determines that pursuant to Section 7.3 of the Declaration the
foregoing amendments shall be effective as of the date hereof.
WITNESS our hands this 20th day of July, 1993.
/s/ William H. Springer
--------------------------
William H. Springer
/s/ James J. Gavin, Jr.
--------------------------
James J. Gavin, Jr.
/s/ William B. Jordan, III
--------------------------
William B. Jordan, III
/s/ Frederick T. Kelsey
--------------------------
Frederick T. Kelsey
/s/ Robert P. Mayo
---------------------------
Robert P. Mayo
/s/ Terence J. Mulvihill
--------------------------
Terence J. Mulvihill
/s/ Richard P. Strubel
--------------------------
Richard P. Strubel
4
<PAGE>
STATE OF ILLINOIS:
: SS.
COUNTY OF COOK :
Then personally appeared the above mentioned Trustees and acknowledged this
instrument to be their free act and deed this 20th day of July, 1993.
/s/ Nancy James
------------------------
Notary Public
My Commission Expires: 11-21-96
5
<PAGE>
THE BENCHMARK FUNDS
OFFICER'S CERTIFICATE
The undersigned, Michael J. Richman, the duly elected, appointed and
serving Secretary of The Benchmark Funds, hereby certifies that Amendment No. 13
to the Agreement and Declaration of Trust dated July 15, 1982 of The Benchmark
Funds, as previously amended, a copy of which is attached hereto, has been duly
adopted by the Board of Trustees of said entity and said Amendment No. 13 is
effective as of the date hereof.
Dated this 20th day of July, 1993.
/s/ Michael J. Richman
---------------------------
Michael J. Richman
Secretary of the Trust
STATE OF ILLINOIS:
: SS.
COUNTY OF COOK :
Then personally appeared the above-named Michael J. Richman and
acknowledged this instrument to be his free act and deed this 20th day of July,
1993.
/s/ Nancy James
-------------------------------
Notary Public
My Commission expires: 11-21-96
[Notarial Seal]
<PAGE>
EXHIBIT 99.1(n)
THE BENCHMARK FUNDS
AMENDMENT NO. 14 TO AGREEMENT AND DECLARATION OF TRUST
Termination of Series of Trust
THE UNDERSIGNED, constituting all the Trustees of The Benchmark Funds, a
Massachusetts business trust (the "Trust"), acting pursuant to and in accordance
with Article VII, Section 7.3 of the Trust's Agreement and Declaration of Trust
dated July 15, 1982, as further amended, do hereby terminate and abolish the
California Municipal Portfolio as a series of the Trust effective July 11, 1995.
Nothing herein shall effect the other series of the Trust.
WITNESS our hands this 11th day of July, 1995.
/s/ William H. Springer
------------------------------------
William H. Springer
/s/ James J. Gavin, Jr.
------------------------------------
James J. Gavin, Jr.
/s/ William B. Jordan, III
------------------------------------
William B. Jordan, III
/s/ Frederick T. Kelsey
------------------------------------
Frederick T. Kelsey
/s/ Edward J. Condon
------------------------------------
Edward J. Condon
/s/ John W. English
------------------------------------
John W. English
/s/ Richard P. Strubel
------------------------------------
Richard P. Strubel
<PAGE>
STATE OF ILLINOIS : [SEAL]
:
COUNTY OF COOK :
Then personally appeared the above mentioned Trustees and acknowledged this
instrument to be their free act and deed this 11th day of July, 1995.
/s/ Nancy James
------------------------------------
Notary Public
My Commission Expires: 11-21-96
<PAGE>
THE BENCHMARK FUNDS
OFFICER'S CERTIFICATE
The undersigned, John W. Mosior, the duly elected, appointed and serving
Vice President of The Benchmark Funds, hereby certifies that Amendment No.14 to
the Agreement and Declaration of Trust dated July 15, 1982 of The Benchmark
Funds, as previously amended, a copy of which is attached hereto, has been duly
adopted by the Board of Trustees of said entity and said Amendment No. 14 is
effective as of the date hereof.
Dated this 11th day of July, 1995.
/s/ John W. Mosior
------------------------------------
John W. Mosior
Vice President of the Trust
STATE OF ILLINOIS :
[SEAL]
COUNTY OF COOK :
The personally appeared the above-named John W. Mosior and acknowledged
this instrument to be his free act and deed this 11th day of July, 1995.
/s/ Nancy James
------------------------------------
Notary Public
My Commission expires: 11-21-96
<PAGE>
EXHIBIT 99.5
THE BENCHMARK FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 5th day of October, 1990 between THE BENCHMARK FUNDS, a
Massachusetts business trust (the "Trust"), and THE NORTHERN TRUST COMPANY, an
Illinois state bank (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is an open-end, management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue units of beneficial interest ("Units")
in separate series with each such series representing the interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Trust presently intends to offer units of beneficial interest in
four portfolios, known as the Diversified Assets Portfolio, Government
Portfolio, Government Select Portfolio and Tax-Exempt Portfolio (such Portfolios
[the "Current Portfolios"] together with all other portfolios subsequently
established by the Trust and made subject to this Agreement being herein
collectively referred to as the "Portfolios"); and
WHEREAS, the Trust desires to retain the Adviser to render investment advisory
services to the Trust and each of its Current Portfolios as indicated below and
the Adviser is willing to so render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Adviser.
(a) The Trust hereby appoints the Adviser to act as investment adviser to
the Trust and each of its Current Portfolios for the periods and on
the terms herein set forth. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
(b) In the event that the Trust establishes one or more portfolios other
than the Current Portfolios
1
<PAGE>
with respect to which it desires to retain the Adviser to act as
investment adviser hereunder, it shall notify the Adviser in writing.
If the Adviser is willing to render such services under this Agreement
it shall notify the Trust in writing whereupon such portfolio shall
become a Portfolio hereunder and shall be subject to the provisions of
this Agreement to the same extent as the Current Portfolios except to
the extent that said provisions (including those relating to the
compensation payable by the Trust to the Adviser) are modified with
respect to such Portfolio in writing by the Trust and the Adviser at
the time.
2. Delivery of Documents. The Trust has delivered (or will deliver as soon as
is possible) to the Adviser copies of each of the following documents:
(a) Agreement and Declaration of Trust dated as of July 15, 1982, together
with all Amendments thereto (such Agreement and Declaration of Trust,
as presently in effect and as amended from time to time, is herein
called the "Trust Agreement"), copies of which are also on file with
the Secretary of The Commonwealth of Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws");
(c) Administration Agreement between the Trust and its Administrator;
(d) Distribution Agreement between the Trust and its Distributor;
(e) Custodian Agreement between the Trust and its Custodian;
(f) Transfer Agency Agreement between the Trust and its Transfer Agent;
(g) Prospectus and Statement of Additional Information for the Current
Portfolios, (such Prospectus and Statement of Additional Information,
as presently in effect and as amended, supplemented and/or superseded
from time to time, is herein called the "Prospectus and Statement of
Additional Information" respectively);
(h) Post Effective Amendment No. 11 to the Trust's Registration Statement
on Form N-1A (No. 2-80543)
2
<PAGE>
under the Securities Act of 1933 (the "1933 Act") and Amendment No. 12
to the Trust's Registration Statement on such form (No. 811-3605)
under the 1940 Act filed as a single document with the Securities and
Exchange Commission (the "Commission") (such Registration Statement,
as presently in effect and as amended from time to time, is herein
called the "Registration Statement");
The Trust agrees to promptly furnish the Adviser from time to time with copies
of all amendments of or supplements to or otherwise current versions of any of
the foregoing documents not heretofore furnished.
3. Duties of Adviser.
(a) Subject to the general supervision of the Trustees of the Trust, the
Adviser shall manage the investment operations of each of the
Portfolios and the composition of each Portfolio's assets, including
the purchase, retention and disposition thereof. In this regard, the
Adviser
(i) shall provide supervision of the Portfolios' assets, furnish a
continuous investment program for such Portfolios, determine from
time to time what investments or securities will be purchased,
retained or sold by the Portfolios, and what portion of the
assets will be invested or held uninvested as cash;
(ii) shall place orders pursuant to its determinations either directly
with the issuer or with any broker and/or dealer or other persons
who deals in the securities in which the Portfolio in question is
dealing. In placing orders with brokers, dealers or other persons
the Adviser shall attempt to obtain the best net price and
execution of its orders, provided that to the extent the
execution and price available from more than one broker, dealer
or other such persons are believed to be comparable, the Adviser
may,at its discretion but subject to applicable law, select the
executing broker, dealer or such other persons on the basis of
the Adviser's opinion of the reliability and quality of such
broker, dealer or such other persons;
(iii) may, on occasions when it deems the purchase or sale of a
security to be in the best interests of a Portfolio as well as
other fidu-
3
<PAGE>
ciary or agency accounts managed by the Adviser, aggregate, to
the extent permitted by applicable laws and regulations, the
securities to be sold or purchased in order to obtain the best
net price and execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Adviser in the manner it
considers to be most equitable and consistent with its fiduciary
obligations to such Portfolio and to such other accounts.
(b) The Adviser, in connection with its rights and duties with
respect to the Trust,
(i) shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with
like aims; and
(ii) shall act in conformity with the Trust Agreement, By-Laws,
Registration Statement, Prospectus and Statement of
Additional Information, the instructions and directions of
the Trustees of the Trust, and will use its best efforts to
comply with and conform to the requirements of the 1940 Act
and all other applicable federal and state laws, regulations
and rulings.
(c) The Adviser shall:
(i) comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition
conduct its activities under this Agreement in accordance
with other applicable law; and
(ii) maintain a policy and practice of conducting its investment
advisory services hereunder independently of its commercial
banking operations and those of any affiliated bank of the
Adviser. When the Adviser makes investment recommendations
for a Portfolio, its investment advisory personnel will not
inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Portfolio's
account are customers of its commercial banking department
or
4
<PAGE>
the commercial banking department of any affiliated bank of
the Adviser.
(d) The Adviser shall not, unless permitted by the Securities and
Exchange Commission:
(i) permit the Portfolios to execute transactions with the
Adviser's Bond Department.
(ii) permit the Portfolios to purchase certificates of deposit of
the Adviser or its affiliate banks, commercial paper issued
by the Adviser's parent holding company or other securities
issued or guaranteed by the Adviser, its parent holding
company or their subsidiaries or affiliates.
(e) The Adviser shall render to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably
request.
(f) The services of the Adviser hereunder are not deemed exclusive
and the Adviser shall be free to render similar services to
others (including other investment companies) so long as its
services under this agreement are not impaired thereby.
4. Expenses. During the term of this Agreement, the Adviser will pay all costs
incurred by it in connection with the performance of its duties under
paragraph 3 hereof, other than the cost (including taxes, brokerage
commissions and other transaction costs, if any) of securities purchased or
sold for each of the Portfolios.
5. Compensation.
(a) For the services provided and the expenses assumed by the Adviser
pursuant to this Agreement, the Trust will pay to the Adviser as full
compensation therefor a fee at an annual rate of .25 of 1% of each
Portfolio's average net assets.
(b) The fee will be computed based on net assets on each day and will be
paid to the Adviser monthly.
6. Books and Records. The Adviser agrees to maintain, and preserve for the
periods prescribed by Rule 31a-2 of the Commission under the 1940 Act, such
records as are required to be maintained by Rule 31a-1 of the Commission
under the 1940 Act [other than clause (b)(4) and paragraphs (c), (d) and
(e) thereof]. The Adviser further agrees that all records
5
<PAGE>
which it maintains for the Trust are the property of the Trust and it will
surrender promptly to the Trust any of such records upon the Trust's
request.
7. Indemnification.
(a) The Trust hereby agrees to indemnify and hold harmless the Adviser,
its directors, officers, and employees and each person, if any, who
controls the Adviser (collectively, the "Indemnified Parties") against
any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the 1933 Act,
the Securities Exchange Act of 1934, the 1940 Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements made
not misleading in the Registration Statement, the Prospectus, the
Statement of Additional Information, or any application or other
document filed in con- nection with the qualification of the
Trust or Units of the Trust under the Blue Sky or securities laws
of any jurisdiction ("Application"), except insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any such untrue statement
or omission or alleged untrue statement or omission either
pertaining to a breach of the Adviser's duties in connection with
this Agreement or made in reliance upon and in conformity with
information furnished by, through or on behalf of the Adviser for
use in connection with the Registration Statement, any
Application, the Prospectus or the Statement of Additional
Information; or
(ii) subject to clause (i) above, the Adviser acting in accordance
with the terms hereof; and the Trust will reimburse each
Indemnified Party for any legal or
6
<PAGE>
other expense incurred by such Indemnified Party in connection
with investigating or defending any such loss, claim, damages,
liability or action.
(b) If the indemnification provided for in paragraph 7(a) is due in
accordance with the terms of such paragraph but is for any reason held
by a court to be unavailable from the Trust, then the Trust shall
contribute to the aggregate amount paid or payable by the Trust and
the Indemnified Parties as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the Trust
and such Indemnified Parties in connection with the operation of the
Trust, (ii) the relative fault of the Trust and such Indemnified
Parties, and (iii) any other relevant equitable considerations. The
Trust and the Adviser agree that it would not be just and equitable if
contribution pursuant to this subparagraph (b) were determined by pro
rata allocation or other method of allocation which does not take
account of the equitable considerations referred to above in the
subparagraph (b). The amount paid or payable as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subparagraph (b) shall be deemed to include
any legal or other expense incurred by the Trust and the Indemnified
Parties in connection with investigating or defending any such loss,
claim, damage, liability or action. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(c) It is understood, however, that nothing in this paragraph 7 shall
protect any Indemnified Party against, or entitle any Indemnified
Party to indemnification against, or contribution with respect to, any
liability to the Trust or its Unitholders to which such Indemnified
Party is subject, by reason of its willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of a
reckless disregard to its obligations and duties, under this Agreement
or otherwise, to an extent or in a manner inconsistent with Section 17
of the 1940 Act.
7
<PAGE>
8. Duration and Termination. Insofar as the holders of Units representing the
interests in the Current Portfolios are affected by this Agreement, it
shall continue, unless sooner terminated as provided herein, until April
30, 1992, and, insofar as the holders of Units representing the interests
in each of the other Portfolios are affected by this Agreement, it (as
supplemented by the terms specified in any notice and agreement pursuant to
paragraph 1(b) hereof) shall continue (assuming approval by the initial
holder(s) of Units of such Portfolio) until April 30 of the year following
the year in which the Portfolio becomes a Portfolio hereunder, and with
respect to each Portfolio thereafter shall continue automatically for
periods of one year so long as each such latter continuance is approved at
least annually (a) by the vote of a majority of the Trustees of the Trust
who are not parties to this Agreement or interested persons (as defined by
the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trustees of the Trust or
by vote of a majority of the outstanding Units (as defined with respect to
voting securities in the 1940 Act) representing the interests in such
Portfolio; provided, however, that this Agreement may be terminated by the
Trust as to any Portfolio at any time, without the payment of any penalty,
by vote of a majority of the Trustees of the Trust or by vote of a majority
of the outstanding Units (as so defined) representing the interests in the
Portfolio affected thereby on 60 days' written notice to the Adviser, or by
the Adviser at any time, without the payment of any penalty, on 60 days'
written notice to the Trust. This Agreement will automatically and
immediately terminate in the event of its assignment (as defined by the
1940 Act).
9. Name of the Trust. The Adviser agrees that the name "The Benchmark" may be
used in the name of the Trust and that such name, any related logos and any
service marks containing the words "The Benchmark" may be used in
connection with the Trust's business only for so long as this Agreement
(including any continuance or amendment hereof) remains in effect and that
such use shall be royalty free. At such time as this Agreement shall no
longer be in effect, the Trust will cease such use. The Trust acknowledges
that it has no rights to the name "The Benchmark," such logos or service
marks other than those granted in this paragraph and that the Adviser
reserves to itself the right to grant the nonexclusive right to use the
name "The Benchmark," such logos or service marks to any other person,
including, but not limited to, another investment company.
10. Status of Adviser as Independent Contractor. The Adviser shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided
8
<PAGE>
herein or authorized by the Trustees of the Trust from time to time, have
no authority to act for or represent the Trust in any way or otherwise be
deemed an agent of the Trust.
11. Amendment of Agreement. This Agreement may be amended by mutual consent,
but the consent of the Trust must be approved (a) by vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such amendment, and
(b) by vote of a majority of the outstanding Units (as defined with respect
to voting securities by the 1940 Act) representing the interests in each
Portfolio affected by such amendment.
12. Unitholder Liability. This Agreement is executed by or on behalf of the
Trust with respect to each of the Portfolios and the obligations hereunder
are not binding upon any of the Trustees, officers or Unitholders of the
Trust individually but are binding only upon the Trust and its assets and
property. All obligations of the Trust under this Agreement shall apply
only on a Portfolio-by-Portfolio basis, and the assets of one Portfolio
shall not be liable for the obligations of another Portfolio.
13. Miscellaneous. The Trust's Declaration of Trust as amended to date is on
file with the Secretary of The Commonwealth of Massachusetts. The captions
in this Agreement are included for convenience of reference only and in no
way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. If any provision of this Agreement shall be
held or made invalid by a court decision, statue, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement
shall be construed in accordance with applicable federal law and (except as
to paragraph 12 hereof which shall be construed in accordance with the laws
of The Commonwealth of Massachusetts) the laws of the State of Illinois and
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors (subject to the last sentence of paragraph
8) and, to the extent provided in paragraph 7 hereof, each Indemnified
Party. Anything herein to the contrary notwithstanding, this Agreement
shall not be construed to require, or to impose any duty upon, either of
the parties to do anything in violation of any applicable laws or
regulations. Any provision in this Agreement requiring compliance with any
statue or regulation shall mean such statue or regulation as amended and in
effect from time to time.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ATTEST: THE BENCHMARK FUNDS
/s/ Michelle Lenzmeier By: Stephen Wells
As its: President
ATTEST: THE NORTHERN TRUST COMPANY
/s/ Victoria Antoni By: Sheila Penrose
As its: Senior Vice President
10
<PAGE>
EXHIBIT 99.5(b)
THE BENCHMARK FUNDS
ADDENDUM NO.1 TO THE INVESTMENT ADVISORY AGREEMENT
--------------------------------------------------
This Addendum, dated as of the 8th day of June, 1992, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY (the "Investment Adviser"), an Illinois state bank.
WHEREAS, the Trust and the Investment Adviser have entered into an
Investment Advisory Agreement dated as of October 5, 1990 (the "Advisory
Agreement"), pursuant to which the Trust appointed the Investment Adviser to act
as investment adviser to the Trust for the Diversified Assets Portfolio,
Government Portfolio, Government Select Portfolio and Tax-Exempt Portfolio;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the
event the Trust establishes one or more additional investment portfolios with
respect to which it desires to retain the Investment Adviser to act as
investment adviser under the Advisory Agreement, the Trust shall so notify the
Investment Adviser in writing and if the Investment Adviser is willing to render
such services it shall notify the Trust in writing, and the compensation to be
paid to the Investment Adviser shall be that which is agreed to in writing by
the Trust and the Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement; the Trust
has notified the Investment Adviser that it is establishing the California
Municipal Portfolio and Short Duration Portfolio (the "Portfolios"), and that it
desires to retain the Investment Adviser to act as the investment adviser
therefor, and the Investment Adviser has notified the Trust that it is willing
to serve as investment adviser for the Portfolios;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment. The Trust hereby appoints the Investment
Adviser to act as investment adviser to the Trust for
the Portfolios for the period and on the term set forth
in the Advisory Agreement. The Investment Adviser
hereby accepts such appointment and agrees to render
the services set forth in the Advisory Agreement for
the compensation herein provided.
2. Compensation. For the services provided and the
expenses assumed pursuant to the Advisory Agreement,
the Trust will pay the Investment Adviser, and the
Investment Adviser will accept as full compensation
therefor from the Trust, a fee at an annual rate of .25
of 1% of the California Municipal Portfolio's average
net assets and .40 of 1% of the Short Duration
Portfolio's avenge net assets. The fee will be
<PAGE>
computed based on net assets on each day and will be paid to
the Investment Adviser monthly. Such fee as is attributable to
each Portfolio shall be a separate charge to such Portfolio
and shall be the several (and not joint or joint and several)
obligation of each such Portfolio.
3. Capitalized Terms. From and after the date hereof, the
term "Portfolios" as used in the Advisory Agreement
shall be deemed to include the California Municipal
Portfolio and Short Duration Portfolio. Capitalized
terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Advisory
Agreement.
4. Miscellaneous. Except to the extent supplemented
hereby, the Advisory Agreement shall remain unchanged
and in full force and effect, and is hereby ratified
and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy L. Mucker
--------------- -------------------
As its: Vice President
THE NORTHERN TRUST COMPANY
Attest: /s/ Eileen Ratzka By: /s/ Sheila A. Penrose
----------------- ---------------------
Assistant Secretary
[seal] As its: Senior Vice President
<PAGE>
EXHIBIT 99.5(c)
THE BENCHMARK FUNDS
ADDENDUM NO.2 TO THE INVESTMENT ADVISORY AGREEMENT
This Addendum, dated as of the 8th day of January, 1993, is entered
into between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust,
and THE NORTHERN TRUST COMPANY (the "Investment Adviser"), an Illinois state
bank.
WHEREAS, the Trust and the Investment Adviser have entered into an
Investment Advisory Agreement dated as of October 5, 1990 (the "Advisory
Agreement"), pursuant to which the Trust appointed the Investment Adviser to act
as investment adviser to the Trust for the Diversified Assets Portfolio,
Government Portfolio, Government Select Portfolio and Tax-Exempt Portfolio;
WHEREAS, the Trust and the Investment Adviser have entered into an
Addendum No. 1, dated June 8, 1992, to the Advisory Agreement pursuant to which
the Trust appointed the Investment Adviser to act as investment adviser to the
Trust for the California Municipal Portfolio and Short Duration Portfolio;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the
event the Trust establishes one or more additional investment portfolios with
respect to which it desires to retain the Investment Adviser to act as
investment adviser under the Advisory Agreement, the Trust shall so notify the
Investment Adviser in writing and if the Investment Adviser is willing to render
such services it shall notify the Trust in writing, and the compensation to be
paid to the Investment Adviser shall be that which is agreed to in writing by
the Trust and the Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement, the Trust
has notified the Investment Adviser that it is establishing the Equity Index
Portfolio, Small Company Index Portfolio, Diversified Growth Portfolio, Focused
Growth Portfolio, U.S. Treasury Index Portfolio, U.S. Government Securities
Portfolio, Short-Intermediate Bond Portfolio, and Bond Portfolio (the
"Portfolios"), and that it desires to retain the Investment Adviser to act as
the investment adviser therefor, and the Investment Adviser has notified the
Trust that it is willing to serve as investment adviser for the Portfolios;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment. The Trust hereby appoints the Investment
Adviser to act as investment adviser to the Trust for the
Portfolios for the period and on the terms set forth in the
Advisory Agreement. The Investment Adviser hereby accepts
such appointment and agrees to render the services set forth
in the Advisory Agreement for the compensation herein
provided.
<PAGE>
2. Duties. The Investment Adviser shall perform the following duties with
respect to the Equity Index Portfolio, Small Company Index Portfolio,
Diversified Growth Portfolio and Focused Growth Portfolio in lieu of
clauses (ii) and (iii) of paragraph 3(a) of the Advisory Agreement:
(a) The Investment Adviser shall place orders pursuant to its
determination either directly with the issuer or with any broker and/or
dealer or other persons who deal in securities in which the Portfolio
in question is trading. In executing portfolio transactions and
selecting brokers or dealers with respect to common and preferred
stocks, the Investment Adviser shall use its best judgement to obtain
the best overall terms available. In assessing the best overall terms
available for any transaction, the Adviser shall consider all factors
it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available and in
selecting the broker or dealer to execute a particular transaction, the
Adviser may also consider the brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to any Portfolio and/or other accounts over which the
Adviser and/or an affiliate of the Adviser exercises investment
discretion;
(b) The Investment Adviser may, on occasions when it deems the
purchase or sale of a security to be in the best interests of a
Portfolio as well as other fiduciary or agency accounts managed by the
Investment Adviser, aggregate, to the extent permitted by applicable
laws and regulations, the securities to be sold or purchased in order
to obtain best overall terms available execution. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Investment
Adviser in the manner it considers to be most equitable and consistent
with its fiduciary obligations to such Portfolio and to such other
accounts.
3. Compensation. For the services provided and the expenses assumed
pursuant to the Advisory Agreement, the Trust will pay the Investment
Adviser, and the Investment Adviser will accept as full compensation
therefor from the Trust, a fee at an annual rate of .30 of 1% of the
Equity Index Portfolio's average net assets, .40 of 1% of the Small
Company Index Portfolio's average net assets, .80 of 1% of the
Diversified Growth Portfolio's average net assets, 1.10% of the Focused
Growth Portfolio's average net assets, .40 of 1% of the U.S. Treasury
Index Portfolio's average net assets, .60 of 1% of the U.S. Government
Securities Portfolio's average net assets, .60 of 1% of the Short-
<PAGE>
Intermediate Bond Portfolio's average net assets, and .60 of 1% of the
Bond Portfolio's average net assets. The fee will be computed based on
net assets on each day and will be paid to the Investment Adviser
monthly. Such fee as is attributable to each Portfolio shall be a
separate charge to such Portfolio and shall be the several (and not
joint or joint and several) obligation of each such Portfolio.
4. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Advisory Agreement shall be
deemed to include the Equity Index Portfolio, Small Company
Index Portfolio, Diversified Growth Portfolio, Focused
Growth Portfolio, U.S. Treasury Index Portfolio, U.S.
Government Securities Portfolio, Short-Intermediate Bond
Portfolio and Bond Portfolio. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed
to them in the Advisory Agreement.
5. Miscellaneous. Except to the extent supplemented hereby,
the Advisory Agreement shall remain unchanged and in full
force and effect, and is hereby ratified and confirmed in
all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the dated and year first above written.
THE BENCHMARK FUNDS
Attest: /s/ Michael Richman By:/s/ Stephen B. Wells
--------------- ----------------
Michael Richman Stephen B. Wells
As its: President
THE NORTHERN TRUST COMPANY
Attest: /s/ John T. Hogan By:/s/ Mark Casady
------------- -----------
John T. Hogan Mark Casady
As its: Vice President
<PAGE>
EXHIBIT 99.5(d)
THE BENCHMARK FUNDS
ADDENDUM NO. 3 TO THE INVESTMENT ADVISORY AGREEMENT
This Addendum, dated as of the 1st day of July, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY (the "Investment Adviser"), an Illinois state bank.
WHEREAS, the Trust and the Investment Adviser have entered into an
Investment Advisory Agreement dated as of October 5, 1990 as amended by Addendum
No. 1 dated June 8, 1992 and Addendum No. 2 dated January 8, 1993 (the "Advisory
Agreement"), pursuant to which the Trust appointed the Investment Adviser to act
as investment adviser to the Trust for the Diversified Assets Portfolio,
Government Portfolio, Government Select Portfolio, Tax-Exempt Portfolio,
California Municipal Portfolio, Short Duration Portfolio, U.S. Treasury Index
Portfolio, U.S. Government Securities Portfolio, Short-Intermediate Bond
Portfolio, Bond Portfolio, Equity Index Portfolio, Small Company Index
Portfolio, Diversified Growth Portfolio and Focused Growth Portfolio;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the event
the Trust establishes one or more additional investment portfolios with respect
to which it desires to retain the Investment Adviser to act as investment
adviser under the Advisory Agreement, the Trust shall so notify the Investment
Adviser in writing and if the Investment Adviser is willing to render such
services it shall notify the Trust in writing, and the compensation to be paid
to the Investment Adviser shall be that which is agreed to in writing by the
Trust and the Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement; the Trust has
notified the Investment Adviser that it is establishing the Balanced Portfolio
(the "Portfolio"), and that it desires to retain the Investment Adviser to act
as the investment adviser therefor, and the Investment Adviser has notified the
Trust that it is willing to serve as investment adviser for the Portfolio;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Trust for the Portfolio for the period
and on the terms set forth in the Advisory Agreement. The Investment
Adviser hereby accepts such appointment and agrees to render the
services set forth in the Advisory Agreement for the compensation
herein provided.
2. Duties. The Investment Adviser shall perform the following duties with
respect to the common and preferred stocks of the Portfolio in lieu of
clauses (ii) and (iii) of paragraph 3(a) of the Advisory Agreement:
(a) The Investment Adviser shall place orders pursuant to its
determination either directly with the issuer or with any broker
and/or dealer or other persons who deal in the securities in which the
Portfolio in question is trading. In executing portfolio transactions
and selecting brokers or dealers, the Investment Adviser shall use its
best judgment to obtain the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser
shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available and in selecting the broker or dealer to execute a
particular transaction, the Adviser may also consider the brokerage
and research services (as those terms are defined in Section 28(e)
1
<PAGE>
of the Securities Exchange Act of 1934) provided to any Portfolio
and/or other accounts over which the Adviser and/or an affiliate of
the Adviser exercises investment discretion;
(b) The Investment Adviser may, on occasions when it deems the
purchase or sale of a security to be in the best interests of a
Portfolio as well as other fiduciary or agency accounts managed by the
Investment Adviser, aggregate, to the extent permitted by applicable
laws and regulations, the securities to be sold or purchased in order
to obtain best overall terms available execution. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Investment
Adviser in the manner it considers to be most equitable and consistent
with its fiduciary obligations to such Portfolio and to such other
accounts.
3. Compensation. For the services provided and the expenses assumed
pursuant to the Advisory Agreement, the Trust will pay the Investment
Adviser, and the Investment Adviser will accept as full compensation
therefor from the Trust, a fee at an annual rate of .80 of 1% of the
Portfolio's average net assets. The fee will be computed based on net
assets on each day and will be paid to the Investment Adviser monthly.
Such fee as is attributable to each Portfolio shall be a separate
charge to such Portfolio and shall be the several (and not joint or
joint and several) obligation of each such Portfolio.
4. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Advisory Agreement shall be deemed to
include the Balanced Portfolio. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the
Advisory Agreement.
5. Miscellaneous. Except to the extent supplemented hereby, the Advisory
Agreement shall remain unchanged and in full force and effect, and is
hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy L. Mucker
Nancy L. Mucker
Vice President of the Trust
THE NORTHERN TRUST COMPANY
Attest:/s/ Mary Wiersema By: /s/ James L. Kermes
Its: Chief Investment Officer
2
<PAGE>
EXHIBIT 99.5(e)
THE BENCHMARK FUNDS
ADDENDUM NO. 4 TO THE INVESTMENT ADVISORY AGREEMENT
This Addendum, dated as of the 25th day of March, 1994, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY (the "Investment Adviser"), an Illinois state bank.
WHEREAS, the Trust and the Investment Adviser have entered into an
Investment Advisory Agreement dated as of October 5, 1990 as amended by Addendum
No. 1 dated June 8, 1992, Addendum No. 2 dated January 8, 1993 and Addendum No.
3 dated July 1, 1993 (the "Advisory Agreement"), pursuant to which the Trust
appointed the Investment Adviser to act as investment adviser to the Trust for
the Diversified Assets Portfolio, Government Portfolio, Government Select
Portfolio, Tax-Exempt Portfolio, California Municipal Portfolio, Short Duration
Portfolio, U.S. Treasury Index Portfolio, U.S. Government Securities Portfolio,
Short- Intermediate Bond Portfolio, Bond Portfolio, Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth Portfolio, Focused Growth
Portfolio and Balanced Portfolio;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the event
the Trust establishes one or more additional investment portfolios with respect
to which it desires to retain the Investment Adviser to act as investment
adviser under the Advisory Agreement, the Trust shall so notify the Investment
Adviser in writing and if the Investment Adviser is willing to render such
services it shall notify the Trust in writing, and the compensation to be paid
to the Investment Adviser shall be that which is agreed to in writing by the
Trust and the Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement; the Trust has
notified the Investment Adviser that it is establishing the International Growth
Portfolio and International Bond Portfolio (the "Portfolios"), and that it
desires to retain the Investment Adviser to act as the investment adviser
therefor, and the Investment Adviser has notified the Trust that it is willing
to serve as investment adviser for the Portfolios;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Trust for the Portfolios for the period
and on the terms set forth in the Advisory Agreement. The Investment
Adviser hereby accepts such appointment and agrees to render the
services set forth in the Advisory Agreement for the compensation
herein provided.
2. Duties. The Investment Adviser shall perform the following duties with
respect to common and preferred stocks of the Portfolios in lieu of
clauses (ii) and (iii) of paragraph 3(a) of the Advisory Agreement:
(a) The Investment Adviser shall place orders pursuant to its
determination either directly with the issuer or with any broker
and/or dealer or other persons who deal in the securities in which the
Portfolios in question is trading. In executing portfolio transactions
and selecting brokers or dealers, the Investment Adviser shall use its
best judgment to obtain the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser
shall consider all factors it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available and in selecting the broker or dealer to execute a
particular transaction, the Adviser may also consider the brokerage
and research services (as those terms are defined in Section 28(e)
1
<PAGE>
of the Securities Exchange Act of 1934) provided to any Portfolio
and/or other accounts over which the Adviser and/or an affiliate of
the Adviser exercises investment discretion;
(b) The Investment Adviser may, on occasions when it deems the
purchase or sale of a security to be in the best interests of a
Portfolio as well as other fiduciary or agency accounts managed by the
Investment Adviser, aggregate, to the extent permitted by applicable
laws and regulations, the securities to be sold or purchased in order
to obtain best overall terms available execution. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Investment
Adviser in the manner it considers to be most equitable and consistent
with its fiduciary obligations to such Portfolio and to such other
accounts.
3. Compensation. For the services provided and the expenses assumed
pursuant to the Advisory Agreement, the Trust will pay the Investment
Adviser, and the Investment Adviser will accept as full compensation
therefor from the Trust, a fee at an annual rate of .90 of 1% of
average net assets for International Bond Portfolio and 1% of average
net assets for International Growth Portfolio. The fee will be
computed based on net assets on each day and will be paid to the
Investment Adviser monthly. Such fee as is attributable to each
Portfolio shall be a separate charge to such Portfolio and shall be
the several (and not joint or joint and several) obligation of each
such Portfolio.
4. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Advisory Agreement shall be deemed to
include the International Growth Portfolio and International Bond
Portfolio. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Advisory Agreement.
5. Miscellaneous. Except to the extent supplemented hereby, the Advisory
Agreement shall remain unchanged and in full force and effect, and is
hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy L. Mucker
Nancy L. Mucker
Vice President of the Trust
THE NORTHERN TRUST COMPANY
Attest:/s/ Eileen C. Ratzka By: /s/ Roger Kushla
[Corporate Seal] Its: Senior Vice President
2
<PAGE>
EXIBIT 99.6(a)
THE BENCHMARK FUNDS
ADDENDUM NO.1 TO THE DISTRIBUTION AGREEMENT
This Addendum, dated as of the 8th day of January, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
GOLDMAN, SACHS & CO. a New York limited partnership (the "Distributor").
WHEREAS, the Trust and the Distributor have entered into a Distribution
Agreement dated as of June 8, 1992 (the "Distribution Agreement"), pursuant to
which the Trust appointed the Distributor to act as distributor to the Trust for
the Diversified Assets Portfolio, the Government Portfolio, the TaxExempt
Portfolio, the Government Securities Portfolio, the California Municipal
Portfolio and the Short Duration Portfolio;
WHEREAS, the Trust is establishing the Equity Index Portfolio, Small
Company Index Portfolio, Diversified Growth Portfolio, Focused Growth Portfolio,
U.S. Treasury Index Portfolio, U.S. Government Securities Portfolio,
ShortIntermediate Bond Portfolio, and Bond Portfolio (the "Portfolios"), and it
desires to retain the Distributor to act as distributor to provide for the sale
and distribution of the Units of the Portfolios and the Distributor is willing
to render such services;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Distributor
as exclusive distributor of the Units of each of the
Portfolios on the terms and for the periods set forth
in the Distribution Agreement. The Distributor hereby
accepts such appointment and agrees to render the
services and perform the duties set forth in the
Distribution Agreement without compensation.
2. Capitalized Terms. From and after the date hereof, the
term "Portfolios" as used in the Distribution Agreement
shall be deemed to include the Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth
Portfolio, Focused Growth Portfolio, U.S. Treasury
Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate Bond Portfolio and Bond Portfolio.
Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the
Distribution Agreement.
<PAGE>
3 Miscellaneous. Except to the extent supplemented hereby, the
Distribution Agreement shall remain unchanged and in full
force and effect, and is hereby ratified and confirmed on all
respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Michael J. Richman By:/s/ Nancy L. Mucker
Michael J. Richman Nancy L. Mucker
Secretary of the Trust Vice President of the Trust
GOLDMAN, SACHS & CO.
Attest:/s/ Michael J. Richman By:/s/ Alan Shuch
Michael J. Richman Alan Shuch
Counsel to the Funds Partner
<PAGE>
EXHIBIT 99.6(b)
THE BENCHMARK FUNDS
ADDENDUM NO.2 TO THE DISTRIBUTION AGREEMENT
This Addendum, dated as of the 1st day of July, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
GOLDMAN, SACHS & CO., a New York limited partnership (the "Distributor").
WHEREAS, the Trust and the Distributor have entered into a Distribution
Agreement dated as of June 8, 1992, as amended by Addendum No. 1 dated January
8, 1993 (the "Distribution Agreement"), pursuant to which the Trust appointed
the Distributor to act as distributor to the Trust for the Diversified Assets
Portfolio, the Government Portfolio, the Tax- Exempt Portfolio, the Government
Securities Portfolio, the California Municipal Portfolio, the Short Duration
Portfolio, Equity Index Portfolio, Small Company Index Portfolio, Diversified
Growth Portfolio, Focused Growth Portfolio, U.S. Treasury Index Portfolio, U.S.
Government Securities Portfolio, Short-Intermediate Bond Portfolio and Bond
Portfolio;
WHEREAS, the Trust is establishing the Balanced Portfolio (the
"Portfolio"), and it desires to retain the Distributor to act as distributor to
provide for the sale and distribution of the Units of the Portfolios and the
Distributor is willing to render such services;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Distributor as exclusive
distributor of the Units of each of the Portfolios on the terms and
for the periods set forth in the Distribution Agreement. The
Distributor hereby accepts such appointment and agrees to render the
services and perform the duties set forth in the Distribution
Agreement without compensation.
2. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Distribution Agreement shall be deemed to
include the Diversified Assets Portfolio, Government Portfolio,
Government Select Portfolio, Tax-Exempt Portfolio, California
Municipal Portfolio, Short Duration Portfolio, Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth Portfolio, Focused
Growth Portfolio, U.S. Treasury Index Portfolio, U.S. Government
Securities Portfolio, Short-Intermediate Bond Portfolio, Bond
Portfolio and Balanced Portfolio. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the
Distribution Agreement.
<PAGE>
3. Miscellaneous. Except to the extent supplemented hereby, the
Distribution Agreement shall remain unchanged and in full force and
effect, and is hereby ratified and confirmed in all respects as
supplemented hereby.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By:/s/ Nancy L. Mucker
Vice President of the Trust
GOLDMAN, SACHS & CO.
Attest:____________________ By:/s/ Michael Armellino
Partner
<PAGE>
EXHIBIT 99.8(a)
THE BENCHMARK FUNDS
ADDENDUM NO. 1 TO THE CUSTODIAN AGREEMENT
This Addendum, dated as of the 8th day of January, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY, an Illinois state bank ("Northern").
WHEREAS, the Trust and Northern have entered into a Custodian Agreement
dated June 8, 1992, pursuant to which the Trust appointed Northern to act as
custodian to the Trust for its Portfolios;
WHEREAS, the Trust is establishing the Equity Index Portfolio, Small
Company Index Portfolio, Diversified Growth Portfolio, Focused Growth Portfolio,
U.S. Treasury Index Portfolio, U.S. Government Securities Portfolio, Short-
Intermediate Bond Portfolio, and Bond Portfolio (the "Portfolios"), and it
desires to retain Northern to act as the custodian therefor, and Northern is
willing to so act; and
WHEREAS, the parties hereto desire to amend the Custodian Agreement to
accommodate transactions in futures contracts and related options and make other
changes in such agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints Northern custodian to the Trust
for the Portfolios for the period and on the terms set forth in the
Custodian Agreement. Northern hereby accepts such appointment and
agrees to render the services set forth in the Custodian Agreement for
the compensation therein provided.
2. Delivery of Documents. The Trust has furnished Northern with copies,
properly certified or authenticated, of the following: before any
Portfolio engages in any transactions regulated by the Commodity
Futures Trading Commission ("CFTC"), a copy of either (i) a filed
notice of eligibility to claim the exclusion from the definition of
"commodity pool operator" contained in Section 2(a)(1)(A) of the
Commodity Exchange Act ("CEA") that is provided in Rule 4.5 under the
CEA, together with all supplements as are required by the CFTC, or
(ii) a letter which has been granted the Trust by the CFTC which
states that the
<PAGE>
Trust will not be treated as a "pool" as defined in Section 4.10(d) of
the CFTC's General Regulations, or (iii) a letter which has been
granted the Trust by the CFTC which states that the CFTC will not take
any enforcement action if the Trust does not register as a "commodity
pool operator."
The Trust will furnish Northern from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
3. Segregated Accounts.
(a) Northern shall upon receipt of Proper Instructions establish
and maintain a segregated account or accounts on its records for and
on behalf of each Portfolio of the Trust, into which account or
accounts may be transferred cash and/or securities, including
securities in the Book-Entry System (i) for the purposes of compliance
by the Trust with the procedures required by a securities or option
exchange, providing such procedures comply with the Investment Company
Act of 1940 and Release No. 10666 or any subsequent release or
releases of the Securities and Exchange Commission("SEC") relating to
the maintenance of segregated accounts by registered investment
companies, and (ii) for other proper corporate purposes, but only, in
the case of clause (ii), upon receipt of Proper Instructions.
(b) Northern may enter into separate custodial agreements with
various futures commission merchants ("FCMs") that the Trust uses
(each an "FCM Agreement"), pursuant to which the Trust's margin
deposits in any transactions involving futures contracts and options
on futures contracts will be held by the Trust in accounts (each an
"FCM Account") subject to the disposition by the FCM involved in such
contracts in accordance with the customer contract between FCM and the
Trust ("FCM Contract"), SEC rules governing such segregated accounts,
CFTC rules and the rules of the applicable commodities exchange. Such
FCM Agreements shall only be entered into upon receipt of Proper
Instructions from the Trust which state that (i) a customer agreement
between the FCM and the Trust has been entered into; and (ii) the
Trust is in compliance with all the rules and regulations of the CFTC.
Transfers of initial margin shall be made into an FCM Account only
upon Proper Instructions; transfers of premium and variation margin
may be made into an FCM Account pursuant to Oral Instructions.
Transfers of funds from an FCM Account to the FCM for which Northern
holds such an account may only occur upon certification by the FCM to
Northern that pursuant to the FCM Agreement and the
<PAGE>
FCM Contract, all conditions precedent to its right to give Northern
such instruction have been satisfied.
4. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Custodian Agreement shall be deemed to
include the Equity Index Portfolio, Small Company Index Portfolio,
Diversified Growth Portfolio, Focused Growth Portfolio, U.S. Treasury
Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate Bond Portfolio and Bond Portfolio. Capitalized
terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Custodian Agreement.
5. Miscellaneous. Except to the extent supplemented hereby, the Custodian
Agreement shall remain unchanged and in full force and effect, and is
hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest: /s/ Michael Richman By: /s/ Stephen B. Wells
---------------------- ----------------------
As its: President
THE NORTHERN TRUST COMPANY
Attest: /s/ John T. Hogan By: /s/ Mark Casady
---------------------- ----------------------
As its: Vice President
<PAGE>
EXHIBIT 99.8(b)
THE BENCHMARK FUNDS
ADDENDUM NO.2 TO THE CUSTODIAN AGREEMENT
This Addendum No. 2, dated as of the 1st day of July, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY, an Illinois state bank ("Northern").
WHEREAS, the Trust and Northern have entered into a Custodian Agreement
dated June 8, 1992, as amended by Addendum No. 1 dated January 8, 1993, pursuant
to which the Trust has appointed Northern to act as custodian to the Trust for
its Diversified Assets Portfolio, Government Portfolio, Government Select
Portfolio, Tax-Exempt Portfolio, California Municipal Portfolio, Short Duration
Portfolio, Equity Index Portfolio, Small Company Index Portfolio, Diversified
Growth Portfolio, Focused Growth Portfolio, U.S. Treasury Index Portfolio, U.S.
Government Securities Portfolio, Short-Intermediate Bond Portfolio and Bond
Portfolio (collectively, the "Portfolios"); and
WHEREAS, the Trust is establishing the Balanced Portfolio (the
"Portfolio"), and it desires to retain Northern to act as the custodian
therefor, and Northern is willing to so act; and
WHEREAS, the parties hereto desire to enter into this Addendum No. 2 to
modify and restate in its entirety paragraph 3 of Addendum No. 1 and to make
certain other changes in such agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints Northern custodian to the Trust
for the Portfolio for the period and on the terms set forth in the
Custodian Agreement. Northern hereby accepts such appointment and
agrees to render the services set forth in the Custodian Agreement for
the compensation therein provide.
2. Paragraph 3 of Addendum No. 1 to the aforesaid Custodian Agreement is
modified and restated in its entirety as follows:
<PAGE>
Segregated Accounts.
(a) Northern shall upon receipt of Proper Instructions establish
and maintain a segregated account or accounts on its records for and
on behalf of each Portfolio of the Trust, into which account or
accounts may be transferred cash and/or securities, including
securities in the Book-Entry system (i) for the purposes of compliance
by the Trust with the procedures required by a securities or option
exchange, providing such procedures comply with the Investment Company
Act of 1940 and Release No. 10666 or any subsequent release or
releases of the Securities and Exchange Commission ("SEC") relating to
the maintenance of segregated accounts by registered investment
companies, and (ii) for other proper corporate purposes, but only, in
the case of clause (ii), upon receipt of Proper Instructions.
(b) Northern may enter into separate procedural, safekeeping or
other agreements with various futures commission merchant ("FCMs") and
banks that are unaffiliated with the Trust (each a "Safekeeping
Arrangement"), pursuant to which the banks will act as the Trust's
custodian with respect to the Trust's margin deposits in transactions
involving futures contracts and options on futures contracts. Such
margin deposits will be held in segregated accounts (each an "FCM
Account") subject to the disposition by the FCM involved in accordance
with the customer contract between FCM and the Trust ("FCM Contract"),
SEC rules governing such segregated accounts, CFTC rules and the rules
of the applicable commodities exchange. Transfers of initial and
variation margin and premiums shall be made from the Trust's custodial
accounts under the Custodian Agreement upon Proper Instructions.
3. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Custodian Agreement shall be deemed to
include the Diversified Assets Portfolio, Government Portfolio,
Government Select Portfolio, Tax-Exempt Portfolio, California
Municipal Portfolio, Short Duration Portfolio, Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth Portfolio, Focused
Growth Portfolio, U.S. Treasury Index Portfolio, U.S. Government
Securities Portfolio, Short-Intermediate Bond Portfolio and Balanced
Portfolio. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Custodian Agreement.
<PAGE>
4. Miscellaneous. Except to the extent supplemented hereby, the Custodian
Agreement shall remain unchanged and in full force and effect, and is
hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest: /s/ Nancy James By: /s/ Nancy L. Mucker
----------------------------
Vice President of the Trust
THE NORTHERN TRUST COMPANY
Attest: /s/ Mary L. Wiersema By: /s/ James L. Kermes
----------------------------
Its:Chief Investments Officer
<PAGE>
EXHIBIT 99.8(c)
THE BENCHMARK FUNDS
FOREIGN CUSTODY AGREEMENT
Agreement dated this 1st day of March 1994 between The Benchmark Funds, a
Massachusetts business trust (the "Trust"), and The Northern Trust Company, an
Illinois state bank ("Northern").
1. Appointment of Custodian. The Trust hereby appoints Northern custodian
of all securities (including repurchase agreements, cash, cash equivalents and
other instruments (collectively, "Property") now owned or hereafter acquired by
the Trust on behalf of its International Growth Portfolio and International Bond
Portfolio, and any other investment portfolios of the Trust which may invest in
the securities of foreign issuers and which are specifically authorized by
resolution of the Trust's Board of Trustees to be added to this Agreement
(collectively, the "Portfolios"), and Northern hereby accepts such appointment,
upon the terms and conditions set forth in this Agreement. The Trust agrees
promptly to deliver and pay, or cause to be delivered and paid, to Northern, as
custodian for the Portfolios, or to an agent appointed pursuant to Section 8(a)
hereof or a sub-custodian appointed pursuant to Section 8(b) or 8(c) hereof, all
securities and cash now owned or hereafter acquired by the Trust on behalf of
the Portfolios.
2. Custody of Cash; Separate Accounts.
(a) Accounts. Northern will hold all cash and cash equivalents of each
Portfolio, in a separate account or accounts in the name of such
Portfolio, subject only to draft or order by Northern in accordance
with the terms of this Agreement. If and when authorized by proper
instructions of the Trustees or Officers of the Trust in accordance
with a vote of the majority of the Trustees of the Trust, Northern may
open and maintain an additional account or accounts in such other
banks or trust companies as may be designated by such instructions,
provided that such account to accounts shall be in the name of
Northern in its capacity as custodian and subject only to its draft or
order in accordance with the terms of this Agreement.
It is understood that the Property in such account or accounts may be
held in such countries or other jurisdictions as shall be specified
from time to time in "proper instructions" (as defined in Section 9
hereof).
<PAGE>
(b) Proceeds of Sale of Shares of Trust. Upon receipt of funds for the
purchase of shares of any Portfolio, Northern shall promptly deposit
the purchase price in the account or accounts maintained pursuant to
Section 2(a) hereof.
(c) Collections. Unless otherwise directed by proper instructions from the
Trustees or Officers of the Trust, Northern shall collect, receive and
deposit in the account or accounts maintained pursuant to Section 2(a)
hereof all income, principal and other payments in respect of the
Property held by it under this Agreement and, subject to the other
provisions of this Agreement, do all other things necessary or proper
in connection with the collection of such income, principal and other
payments. Without limiting the generality of the foregoing, Northern
Shall:
(i) present for payment by the date of payment all coupons and other
income items requiring presentation;
(ii) present for payment all securities which may mature or be
called, redeemed, retired or otherwise become payable by the
date such securities become payable;
(iii) endorse and deposit for collection, on behalf of the Trust,
checks, drafts or other negotiable instruments no later than the
next business day as received;
(iv) execute ownership and other certificates and affidavits for all
Federal and State tax purposes in connection with the collection
of income; and
(v) notify the Trust as soon as reasonably practicable whenever
income, principal or other payments due on securities are not
collected in due course.
In any case in which Northern does not receive any such due and unpaid
income, principal or other payment within a reasonable time after it has made
proper demands for the same, it shall so notify the Trust in writing, including
copies of all demand letters, any written responses thereto, and memoranda of
telephonic demands and oral responses to written and telephonic demands, and
await proper instructions from the Trustees or Officers of the Trust. Northern
shall not be obligated to take legal action for collection unless and until
reasonably indemnified to its satisfaction.
3. Custody of Securities.
<PAGE>
(a) Receipt of Securities. Northern will hold in a separate account, and
physically segregated at all times from those of any other persons,
firms, corporations or other Portfolios, pursuant to the provisions
hereof, all securities received by it for or for the account of a
Portfolio, subject to Sections 3(d), 8(a), 8(b) and 8(c) hereof, which
shall include securities the Portfolio desires to be held in places
within the United States ("domestic securities") and "foreign
securities," as defined in paragraph (c)(1) of Rule 17f-5 ("Rule
17f-5") under the Investment Company Act of 1940, as amended
(hereinafter collectively called "Securities") All Securities shall be
held or disposed of by Northern for the Trust pursuant to the terms of
this Agreement. Northern shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such Securities,
except pursuant to proper instructions and only for the account of the
Trust as set forth in Section 5 hereof. Any Securities delivered to
Northern other than in bearer form shall be properly endorsed and in
form for transfer or shall be in the name of Northern, the Trust or a
nominee of Northern of the Trust, subject to Sections 3(d), 8(a), 8(b)
and (c) hereof.
(b) Registered Name; Nominees. Northern shall register Securities of the
Trust held by it under this Agreement, other than those in bearer
from, in the name of the Trust or Northern or a nominee of the Trust
or Northern. Securities held by an agent appointed pursuant to Section
8(a) hereof or a sub-custodian appointed pursuant to Section 8(b) or
8(c) hereof may be registered in the name of such agent or
sub-custodian or a nominee of such agent or sub-custodian.
(c) Record Keeping and Inventory. Northern shall maintain records of all
receipts, deliveries and locations of Securities held by it under this
Agreement, together with a current inventory thereof. Without limiting
the generality of the foregoing, Northern shall comply with such
proper instructions from the Trustees or Officers of the Trust as may
be issued from time to time in this regard. With respect to Securities
held by any agent appointed pursuant to Section 8(a) hereof or any
sub-custodian appointed pursuant to Section 8(b) or 8(c) hereof,
Northern may rely upon certificates of the agent or sub-custodian as
to its holdings, it being understood that such reliance in no way
relieves Northern of its responsibilities under this Agreement.
Northern
<PAGE>
will promptly report to the Trust the results of such inspections,
indicating any shortages or discrepancies uncovered thereby, and will
take appropriate action to remedy any such shortage or discrepancies.
(d) Use of Securities Depositories. Northern, each agent appointed
pursuant to Section 8(a) hereof and each sub-custodian appointed
pursuant to Section 8(b) or 8(c) hereof may deposit all or any part of
the Securities held by it hereunder and eligible therefor in the
depository systems covered by Rule 17f-4(b) under the 1940 Act;
provided that Northern, each such agent and each such sub-custodian
shall comply in all respects with clauses (d)(1) through (d)(4) of
Rule 17f-4 under the 1940 Act and, with respect to foreign securities
depositories, Rule 17f-5 under the 1940 Act; and provided further,
that no such deposit may be made prior to the approval by the Trust of
such depository system, which approval may be subject to such
conditions as the Trust may from time to time determine; and provided
further that with respect to domestic depository systems, (1) all
books and records maintained by Northern and each such agent and
sub-custodian which relate to the Trust's participation in such
depository systems will at all time during regular business hours be
open to inspection by the Trust's duly authorized officers, employees,
agents and auditors, and the Trust will be furnished with all the
information in respect of the services rendered to it as it may
require, (2) in connection with the use of such depository systems,
Northern will cooperate with the Trust in enforcing such rights as may
exist against such depository systems with respect to transactions or
Securities of a Portfolio. (3) payment for Securities purchased for
the account of any Portfolio shall be made only upon (i) receipt of
advice from the depository system that such Securities have been
transferred to the account (the "Account") contemplated by clause
(d)(2) of Rule 17f-4 under the 1940 Act and (ii) the making of an
entry on the records of Northern or such agent or sub-custodian, as
the case may be, to reflect such payment and transfer for the Account
of such Portfolio, and (4) transfer of Securities sold for the Account
of any Portfolio shall be made only upon (i) receipt of advice from
the depository system that payment for such Securities has been
transferred to the Account, and (ii) the making of an entry on the
records of Northern or such agent or sub-custodian, as the case may
be,
<PAGE>
to reflect such transfer and payment for the Account of such
Portfolio. Except as may otherwise be agreed upon in writing by
Northern and the Trust, Securities of a Portfolio shall be maintained
in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as
sub-custodians pursuant to Section 8(c) hereof.
(e) Use of Sub-Custodians. With respect to Property which is maintained by
Northern in the custody of a sub-custodian pursuant to Section 8(b) or
8(c): (1) Northern will identify on its books as belonging to the
particular Portfolio any Property held by such sub-custodian; (2) any
Property held by a sub-custodian of Northern will be subject only to
the instructions of Northern or its agents, and any Securities held in
an eligible foreign securities depository (as defined in Section 8(c))
for the account of a sub-custodian will be subject only to the
instructions of such sub-custodian; (3) any agreement Northern shall
enter into with a foreign sub-custodian shall require that (i) the
Property is not subject to any right, charge, security interest, lien
or claim of any kind in favor of such sub-custodian or its creditors
except for a claim of payment for its safe custody or administration
and (ii) beneficial ownership of such Property is freely transferable
without the payment of money or value other than for safe custody or
administration; provided, however, that the foregoing shall not apply
to the extent that any of the above- mentioned rights, charges, etc.
result from any compensation or other expenses arising with respect to
the safekeeping of Property pursuant to such agreement; (4) Northern
will supply to the Trust at least monthly a statement in respect to
any Property held by each sub-custodian, including an identification
of the entity having possession of such Property, and Northern will
send to the Trust an advice or notification of any transfers of
Property indicating, as to Property acquired for a Portfolio, the
identity of the entity having physical possession of such Property. In
the absence of the filing in writing with Northern by the Trust of
exceptions or objections to any such statement within sixty (60) days
of the trust's receipt of such statement, or within sixty (60) days
after the date that a material defect is reasonably discoverable, the
Trust shall be deemed to have approved such statement; and in such
case or upon written approval of the Trust of any such statement
Northern shall, to the extent permitted
<PAGE>
by law and provided Northern has used reasonable care with respect to
its obligations under this Agreement, be released, relieved and
discharged with respect to all matters and things set forth in such
statement as though such statement has been settled by the decree of a
court of competent jurisdiction in an action in which the Trust and
all persons having any equity interest in the Trust were parties; and
(5) Northern hereby warrants to the Trust that in its opinion, after
due inquiry, the established procedures to be followed by each of its
branches, each branch of a "qualified U.S. bank" and each eligible
"foreign custodian" (as defined in Section 8(c)) holding Property of
the Trust pursuant to this Agreement afford protection for such
Property at least equal to that afforded by Northern's established
procedures with respect to similar Property held by Northern (and its
securities depositories) in Chicago, Illinois.
(f) Distributions, Rights, Etc. Northern shall receive and collect all
distributions, rights and other items of like nature in respect of
Property held by it or by an agent appointed pursuant to section 8(a)
or a sub-custodian appointed pursuant to Section 8(b) or 8(c) of this
Agreement and deal with the same in accordance with this Agreement and
its other obligations to the Trust.
(g) Proxies, Notices, Voting, Etc. Northern shall arrange for the receipt
by it of all forms of proxies and all notices of meetings, calls,
maturities, tender offers, exchange offers and expirations of rights
and any other notices, consents, or announcements affecting or
relating to Property held by Northern, its agents appointed pursuant
to Section 8(a) hereof and all sub- custodians appointed pursuant to
Section 8(b) and 8(c) hereof, and upon issuance of proper
instructions, Northern shall execute and deliver such proxies or other
authorizations as may be necessary or appropriate.
(h) Nondiscretionary Details. In general, Northern shall attend to all
nondiscretionary details in connection with the sale, exchange,
substitution, purchase, transfer or other dealing with Property of the
Trust except as otherwise from time to time directed by proper
instructions from the Trustees or Officers of the Trust.
4. Disbursements of Cash. Upon the issuance of proper instructions,
Northern shall make payments or disbursements of
<PAGE>
cash of each Portfolio held by it or subject to its draft or order under this
Agreement, insofar as such cash is available, only for the following purposes:
(a) Purchases Generally. To pay for and receive Property purchased for the
account of such Portfolio, payment to be made only (1) in accordance
with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in
which the transaction occurs, (2) in the case of a purchase effected
through a depository system, in accordance with the conditions set
forth in Section 3(d) hereof, or (3) in the case of repurchase
agreements, against delivery of the Securities which are the subject
of such repurchase agreement in certificate form or receipt of advice
from a depository system that such Securities have been transferred to
the Portfolio's Account (except that in the case of a repurchase
agreement Northern may transfer fund to the Account of the other party
to the repurchase agreement (i.e., the seller of the Securities) prior
to the receipt of written evidence that the Securities subject to such
repurchase agreement have been transferee by book-entry into the
Portfolio's Account, provided that Northern shall be responsible to
the Trust in the event that such Securities are not so transferred by
book-entry), the making of an entry on the records of Northern
reflecting such transfer, and receipt of written evidence of the
agreement by such person to repurchase such Securities from such
Portfolio. All Securities accepted by Northern either shall be
accompanied by payment of, or a "due bill" for, any dividends,
interest or other distributions of the issuer, due the purchaser or
Northern shall take such action as may be necessary to obtain the
same.
(b) Dividends and Distributions. To release or otherwise apply cash for
the payment of dividends or other distributions to shareholders of
such Portfolio which are payable in cash.
(c) Disbursements and Liabilities. To make or cause to be made
disbursements for the payment on behalf of the Trust with respect to
such Portfolio of interest, taxes, investment advisory, agency,
professional, custodial and administration fees and all other
operating expenses, including registration and qualification cost and
other expenses of issuing and selling shares of such Portfolio or
changing its capital structure,
<PAGE>
whether or not such expenses shall be in whole or in part capitalized
or treated as deferred expenses.
(d) Redemption of Trust Shares. Subject to the Trust Agreement, the
Trust's then current Prospectus and applicable resolutions of Trust's
Trustees, to make funds available for payment to shareholders who have
duly requested redemption of their shares by the Trust pursuant to
such Prospectus.
(e) Conversions. To convert monies received with respect to Securities of
foreign issue into United States dollars or any other currency
necessary to effect any transaction involving the Securities whenever
it is practicable to do so through customary banking channels, using
any method or agency available, including, but not limited to, the
facilities of Northern, its subsidiaries, affiliates or
sub-custodians.
(f) Other Purposes. To make or cause to be made disbursements for any
other purpose which is declared in such instructions to be a proper
trust purpose; provided, however, that before making any such
disbursement Northern shall have received a copy of a resolution of
the Trustees certified by the Secretary of the Trust specifying the
amount of such disbursement, setting forth the purpose for which such
disbursement is to be made, declaring such purpose to be a proper
trust purpose and naming the person(s) to whom the disbursement is to
be made.
5. Release and Delivery of Securities. Northern shall have sole power to
release or deliver any Securities of a Portfolio held by it pursuant to this
Agreement. Upon issuance of proper instructions, Northern will transfer,
exchange or deliver Securities held by it hereunder only for the following
purposes:
(a) Sales. To deliver Securities which have been sold for the account of
such Portfolio in accordance with the customary or established
securities trading of securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering Securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later
payment for such Securities from such purchaser or dealer.
(b) Securities Loans. Upon receipt of the collateral
<PAGE>
required by the Trust's then current Prospectus, to deliver Securities
which have ben lent for the account of such Portfolio.
(c) Redemption or Maturity. To deliver Securities owned for the account of
such Portfolio to the issuer thereof or its agent when such Securities
are called, redeemed, retired or otherwise become payable; provided,
that in any such case, the cash or other consideration payable in
respect thereof is to be delivered to Northern.
(d) Changes of Name and Denomination. To deliver Securities owned for the
account of such Portfolio to the issuer thereof or its agent for
transfer into the name of the Trust or Northern or a nominee of either
or a permitted sub-custodian or agent or a nominee of such
sub-custodian or agent, or for exchange for a different number of
bonds, certificates, or other evidence representing the same aggregate
face amount or number of units bearing the same interest rate,
maturity dates and call/put provisions, if any; provided, that in any
such case, the new Securities are to be delivered to Northern.
(e) Street Delivery. To deliver Securities owned for the account of such
Portfolio to the broker or dealer selling the same for examination in
accordance with the then current "street delivery" custom.
(f) Securities as Collateral. To deliver Securities owned for the account
of such Portfolio for the purpose of pledge or hypothecation to secure
any loan (including a reverse repurchase agreement) incurred by the
Trust; provided that Securities shall be released only upon payment to
Northern of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to
proper prior authorization, further Securities may be delivered for
that purpose. Upon issuance of proper instructions, Northern shall pay
such loan upon redelivery to it of the Securities pledged or
hypothecated therefor and upon surrender of the note or notes, if any,
evidencing the loan.
(g) Exchanges, Deposits, Tenders, Etc. To exchange Securities or interim
receipts or temporary Securities held by it to by any agent appointed
pursuant to Section 8(a) hereof or any sub- custodian appointed
pursuant to Section 8(b) or 8(c) hereof for the account of such
Portfolio for
<PAGE>
other Securities alone or for other Securities and cash, and to expend
cash, insofar as cash is available, in connection with any merger,
consolidation, reorganization, recapitalization, conversion or in
connection with the exercise of subscription or purchase rights, or
otherwise; to deposit any such Securities and cash in accordance with
the terms of any reorganization or protective plan or otherwise, and
to deliver Securities and related documents to the designated
depository or other receiving agent in response to tender offers or
similar offers to purchase received in writing.
(h) Other Purposes. To release or deliver any Securities held by it for
the account of such Portfolio for any other purpose which such
instructions declare to be a proper trust purpose; provided, however,
that before making such release or delivery Northern shall have
received a copy of the resolution of the Trustees certified by the
Secretary of the Trust specifying the Securities to be delivered,
setting forth the purpose for which such release or delivery is to be
made, declaring such purpose to be a proper trust purpose and naming
the person(s) to whom such release or delivery is to be made.
6. Records; Accounts and Reporting.
(a) Records. Northern shall create, maintain and retain all records
relating to its activates and obligations under this Agreement in such
manner as will enable the Trust and Northern to meet their respective
obligations under: (i) the 1940 Act, particularly Sections 30 and 31
thereof, and the rules and regulations thereunder including the
preparation and filing of all required periodic and other reports,
(ii) applicable Federal and State tax laws, and (iii) any other law or
administrative rule or procedure which may be applicable to the Trust
or Northern. All records maintained by Northern in connection with the
performance of its duties under this Agreement will remain the
property of the Trust, shall be returned to the Trust promptly upon
request and, in the event of termination of this Agreement, will be
delivered in accordance with Section 16 hereof.
(b) Accounts and Reporting. Northern shall keep the books of accounting
for the Trust and each of its Portfolios, including all books
necessary to permit prompt determinations of the Federal and State tax
status and origin of the Trust, each
<PAGE>
such Portfolio and the dividends and other distributions declared
and/or paid thereby as and to the extent provided in or contemplated
by the Trust's current Prospectus as in effect from time to time (such
determination being collectively referred to herein as "Tax
Determinations"). Northern shall render statements or copies thereof
and shall make Tax Determinations from time to time as contemplated by
proper instructions from the Trustees or Officers of the Trust.
(c) Access to Records. Without limiting Section 3(d) hereof, subject to
security requirements of Northern applicable to its own employees
having access to similar records within Northern and such regulations
as to the conduct of such matters as may be reasonably imposed by
Northern after prior consultation with an officer of the Trust or its
administrator, the books and records of Northern pertaining to its
actions under this Agreement shall be open to inspection and audit at
reasonable times by those persons or classes or persons designated in
proper instructions from the Trustees or Officers of the Trust.
(d) Cooperations with the Trust and its Auditors. Northern shall cooperate
with the Trust and the Trust's independent public accounts in
connection with: (1) the preparation of reports to shareholders of the
Trust, to the Securities and Exchange Commission (including all
required periodic and other reports), to State securities
commissioners, and to others, (2) annual and other audits of the books
and records of the Trust (including, without limitation, such
procedures as may be designated in proper instructions from the
Trustees or officers of the Trust, and (3) other matters of a like
nature. Northern shall, subject to restrictions under applicable law,
obtain from any sub-custodian appointed pursuant to Section 8(c)
hereof an undertaking to permit independent public accountants of the
Trust such reasonable access to the records of such sub-custodian as
may be required in connection with their examination of the books and
records pertaining to the affairs of the Trust or to supply a
verifiable confirmation of the contents of such records.
7. Additional Duties of Northern.
(a) Valuation; Net Income Computation. Unless otherwise directed by proper
instructions from the Trustees or Officers of the Trust, Northern
shall compute and determine on the days at the times
<PAGE>
specified in the Trust's then current Prospectus, the net asset value
of a spare of each Portfolio, such computation and determination to be
made in accordance with the Trust's then current Prospectus, and shall
promptly notify the Administrator of the Trust of the result of such
computation and determination.
Unless advised otherwise by proper instructions from the Trustees or
Officers of the Trust, Northern shall also calculate at the times
specified in the Trust's then current Prospectus the net income of
each Portfolio and shall promptly advise the Administrator of the
Trust of the results of such calculations. Such calculation shall be
made in accordance with the Trust's then current Prospectus.
8. Appointment of Agents and Sub-Custodians.
(a) Appointment of Agents. Northern, as custodian, may at any time or
times appoint (and may at any time remove) in accordance with the 1940
Act any other bank, trust company or responsible commercial agent to
carry out such of the provisions of this Agreement as Northern may
from time to time direct, provided that the appointment of such agent
shall not relieve Northern of any of its responsibilities under this
Agreement.
(b) Appointment of Sub-Custodians Generally. Northern, as custodian, may
from time to time employ one or more sub-custodians, but only in
accordance with the terms and conditions set forth in a resolution of
the Trustees of the Trust authorizing the appointment of each
particular sub-custodian, it being understood and agreed that: (1)
Northern shall have no more responsibility or liability to the Trust
on account of any actions or omissions of any sub- custodian so
employed than such sub-custodian has to Northern; (2) the
responsibility to liability of the sub-custodian to Northern shall
conform to any resolution of the Trustees of the Trust authorizing the
appointment of the particular sub-custodian or to the terms of any
agreement entered into between Northern and such sub-custodian to
which such resolution relates; provided, than Northern shall not be
responsible for the solvency of any sub-custodian appointed by it with
reasonable care; and (3) in no event shall Northern be responsible for
any act, omission, default or for the solvency of any eligible foreign
securities depository approved by the
<PAGE>
Board of Trustees pursuant to Section 3(d) hereof. Any determination
of whether Northern or a sub-custodian has exercised reasonable care
under the terms of any such agreement or otherwise shall be made in
light of prevailing standards applicable to professional custodians in
the jurisdiction in which such custodial services are performed.
Northern shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth above with respect
to sub-custodians generally and regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of Northern or another U.S. bank,
Northern shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Northern may only deposit Securities in an account with a
sub-custodian which includes exclusively the assets held by Northern
for its customers, and Northern will cause such account to be
designated by such sub-custodian as a special custody account for the
exclusive benefit of customers of Northern.
(c) Appointment of Foreign Sub-Custodians. Northern may hold the
Portfolios' foreign securities and cash and cash equivalents in such
amounts as Northern may determine to be reasonably necessary to effect
a Portfolio's foreign securities transactions in accounts established
by Northern with one of its branches, a branch of a qualified U.S.
bank, an eligible foreign custodian or an eligible foreign securities
depository; provided, however, that the Board of Trustees of the Trust
has approved the use of such eligible foreign custodian (and
Northern's contract with such custodian) or eligible foreign
securities depository by resolution, and proper instructions to such
effect have been provided to Northern. Furthermore, if a branch of
Northern, a branch of a qualified U.S. bank or an eligible foreign
custodian is selected to act as Northern's sub-custodian to hold any
Property, such entity is authorized to hold such in its Account with
any eligible foreign securities depository in which it participates so
long as such foreign securities depository has been approved by the
Board of Trustees of the Trust. For purposes of this
<PAGE>
Agreement (1) "qualified U.S. bank" shall mean a qualified U.S. bank
as defined in Rule 17f-5 under the 1940 Act ("Rule 17f-5"); (2)
"eligible foreign custodian" shall mean an eligible foreign custodian
as defined in Rule 17f-5; and (3) "eligible foreign securities
depository" shall mean a securities depository or clearing agency,
incorporated or organized under the laws of a country other than the
United States, which operates (i) the central system for handling of
securities or equivalent book-entries in that country or (ii) a
transnational system for the central handling of securities or
equivalent book-entries, or is otherwise authorized by the Securities
and Exchange Commission to hold the portfolio securities of registered
investment companies.
For purposes of this Section 8(c), the term "sub-custodian" will refer to
(i) any branch of Northern, (ii) any branch of a qualified U.S. bank or any
eligible foreign custodian with which Northern has entered into an agreement of
the type contemplated hereunder or (iii) any eligible foreign securities
depository.
If, after the initial approval of the sub-custodians by the Board of
Trustees of the Trust in connection with this Agreement, Northern wishes to
appoint other sub-custodians to hold Property of the Portfolios, it will so
notify the Trust and will provide it with information reasonably necessary to
determine any such new sub-custodian's eligibility under Rule 17f-5, including a
copy of the proposed agreement with such sub-custodian. The Trust shall within
30 days after receipt of such notice give a written approval or disapproval of
the proposed action.
If Northern intends to remove any sub-custodian previously approved, it
shall so notify the Trust and shall move the Property deposited with such
sub-custodian to another sub-custodian previously approved or to a new
sub-custodian provided that the appointment of any new sub-custodian will be
subject to the requirements set forth in the preceding paragraph. Northern shall
take steps as may be required to remove any sub-custodian which has ceased to
meet the requirements of Rule 17f-5.
Northern shall provide to the Trust on at least an annual basis, a report
confirming that its arrangements hereunder with respect to foreign
sub-custodians remain in compliance with the rules of the Securities and
Exchange Commission governing such arrangements.
9. Proper Instructions Generally.
(a) Proper Instructions Generally. Proper instructions shall be deemed to
have been issued upon issuance of written instructions signed by
<PAGE>
not less than one officer and one responsible employee of Northern
which in the case of each such officer and employee Northern's' Board
of Directors shall have from time to time authorized to give the
particular class of instructions in question. Different persons may be
authorized to give instructions for different purposes.
(b) Proper Instructions from the Trustees or Officers of the Trust. Proper
instructors from the Trustees or Officers of the Trust shall be deemed
to have been issued upon receipt by Northern of written instructions
(including receipt of facsimile) signed by a majority of the Trustees
of the Trust or by not less than two of the Officers or Trustees of
the Trust designated from time to time by resolution of the Trustees.
Such instructions shall be deemed proper instructions as that term is
used in this Agreement in addition to also being deemed proper
instructions from the Trustees or Officers of the Trust. A certificate
executed by the Secretary or Assistant Secretary of the Trust as to
the persons serving as Trustees and/or who are Officers of the Trust
designated as set forth above may be received and accepted by Northern
as conclusive evidence of those persons who are such Trustees and/or
Officers and may be considered to be accurate until receipt of written
notice (or oral notice followed by written confirmation within seven
days) to the contrary. In the case of conflict between instructions
under Section 9(a)and under this Section 9(b), those given pursuant to
this Section 9(b) shall prevail upon receipt by Northern.
10. Delivery of Documents. The Trust has furnished Northern with copies,
properly certified or authenticated, of the following: before any Portfolio
engages in any transactions regulated by the Commodity Futures Trading
Commission ("CFTC"), a copy of either (i) a filed notice of eligibility to claim
the exclusion from the definition of "commodity pool operator" contained in
Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA") that is provided in
Rule 4.5 under the CEA, together with all supplements as are required by the
CFTC, or (ii) a letter which has been granted the Trust by the CFTC which states
that the Trust will not be treated as a "pool" as defined in Section 4.10(d) of
the CFTC's General Regulations, or (iii) a letter which has been granted the
Trust by the CFTC which states that the CFTC will not take any enforcement
action if the Trust does not register as a "commodity pool operator."
The Trust will furnish Northern from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the forgoing,
if any.
<PAGE>
11. Segregated Accounts.
(a) Northern shall upon receipt of proper instructions establish
and maintain a segregated account or accounts on its records for and
on behalf of each Portfolio of the Trust, into which account or
accounts may be transferred cash and/or Securities, including
securities in a depository system (i) for the purposes of compliance
by the Trust with the procedures required by a securities or option
exchange, providing such procedures comply with the 1940 Act and
release No. 10666 or any subsequent release or releases of the
Securities and Exchange Commission ("SEC") relating to the maintenance
of segregated accounts by registered investment companies, and (ii)
for other proper corporate purposes, but only, in the case of clause
(ii), upon receipt of proper instructions.
(b) Northern may enter into separate procedural, safekeeping or
other agreements with various futures commission merchants ("FCMs")
and banks that are unaffiliated with the Trust (each a "Safekeeping
Arrangement"), pursuant to which the banks will act as the Trust's
custodian with respect to the Trust's margin deposits in transactions
involving futures contracts and options on futures contracts. Such
margin deposits will be held in segregated accounts (each and "FCM
Account") subject to the disposition by the FCM involved in accordance
with the customer contract between FCM and the Trust ("FCM Contract"),
SEC rules governing such segregated accounts, CFTC rules and the rules
of the applicable commodities exchange. Transfers of initial and
variation margin and premiums shall be made from the Trust's custodial
accounts under the Custodian Agreement upon proper instructions.
12. Compensation; Reimbursement. The Trust shall pay to Northern, as
custodian, the compensation and expense reimbursement set forth in Exhibit A
hereto.
13. Duration and Termination. This Agreement shall continue, unless sooner
terminated as provided herein, until February 29, 1996, and for each Portfolio
thereafter shall continue automatically for periods of one year so long as each
such latter continuance is approved at least annually (a) by the vote of a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons (as defined by the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust or by a majority of the outstanding Shares (as
defined with respect to voting securities in the 1940 Act) representing the
interests in such Portfolio; provided, however, that this Agreement may be
terminated by the Trust at any time,
<PAGE>
without the payment of any penalty, by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding Shares (as so defined) of the
Trust on 60 days' written notice to Northern, or by Northern at any time,
without the payment of any penalty, on 60 days' written notice to the Trust.
14. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved by vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such party.
15. Interpretative and Additional Provisions. In connection with the
operation of this Agreement, Northern and the Trust may agree from time to time,
by written instrument signed by both parties, on such provisions interpretative
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement, provided that no
such interpretative or additional provisions shall contravene any applicable
Federal or State laws or regulations, or any provision of the Trust Agreement or
the Trust's By-laws, as the same may from time to time be amended. No
interpretative or additionally provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
16. Successor Custodian.
(a) Appointment of Successor by Trust. If a successor custodian is
appointed by the Trust and a certified copy of the related appointing
resolutions is delivered to Northern, Northern shall, upon termination
of this Agreement or substitution of such successor for Northern,
deliver to such successor custodian, duly endorsed and in proper form
for transfer, all Securities then held by Northern hereunder (or by
any agent or sub-custodian of Northern) and all funds or other
Property of the Trust deposited with or held by Northern Hereunder (or
by any agent or sub- custodian of Northern).
(b) Delivery Pursuant to Shareholders Resolution. In the event that this
Agreement is to be terminated but no new custodian can be found by the
Trust, the Trust shall, before authorizing the delivery of the
Securities, funds and other Property to anyone other than a successor
custodian, submit to its Shareholders the question of whether the
Trust shall be liquidated or shall function without a custodian. Upon
approval by the Shareholders for the Trust to liquidate or function
without a custodian Northern shall, in like manner, upon receipt of a
certified copy of a resolution of the
<PAGE>
Shareholders of the Trust deliver such Securities, funds and other
Property in accordance with such resolution.
(c) Selection of Successor by Northern. In the event that this Agreement
is terminated and no successor custodian has been appointed by the
Trust or certified copy of a resolution of the Shareholders has been
delivered to Northern on or before the date when such termination
shall become effective, then Northern shall have the right to deliver
to a back or trust company of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last
published report, of not less than $200 million, all Securities,
funds, property and instruments of the Trust held by Northern under
this Agreement (or any agent or sub-custodian of Northern) and all
instruments held by Northern (or such agent or sub-custodian) relative
thereto. Thereafter, such bank or trust company shall be the successor
custodian to Northern Under this Agreement.
17. Communications. Notices and other writings delivered or mailed postage
prepaid to the Trust in care of The Benchmark Funds, 4900 Sears Tower, Chicago,
Illinois, 60606, or to The Northern Trust Company at 50 South LaSalle Street,
Chicago, Illinois 60675, Attentions: Fund Accounting, Canal Center, or to such
other address as the Trust or Northern may hereafter specify by written notice
to the most recent address specified by the party to whom such notice is
addressed, shall be deemed to have been properly delivered or given hereunder to
respective addressee.
18. Miscellaneous. The Trust's Declaration of Trust as amended to date is
on file with the Secretary of The Commonwealth of Massachusetts. The captions in
this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
constructions or effect. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. Any provisions in this Agreement
requiring compliance with any statute or regulation shall mean such statute or
regulation as amended and in effect from time to time. This Agreement shall be
construed in accordance with the laws of the State of Illinois (except as to
Section 19 hereof which shall be construed in accordance with the laws of The
Commonwealth of Massachusetts) and shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
19. Shareholder Liability. This Agreement is executed by or on behalf of
the Trust and the obligations hereunder are not binding upon any of the
Trustees, Officers or Shareholders of the
<PAGE>
Trust individually but are binding only upon the Trust and its assets and
property. All obligations of the Trust under this Agreement shall apply only on
a Portfolio by Portfolio basis, and the assets of one Portfolio shall not be
liable for the obligations of another Portfolio.
THE BENCHMARK FUNDS
By /s/ Nancy L. Mucker
---------------------------------
As its Vice President
THE NORTHERN TRUST COMPANY
By /s/ Jen Sheridan
---------------------------------
As its Senior Vice President
<PAGE>
EXHIBIT A
A. Basic Fee
Each Portfolio:
Flat Fee of $35,000
- plus -
9/100th of 1% of the Portfolio's average daily net assets
The basic fee is an annual fee which will be billed and payable monthly.
B. Out-of-Pocket Expenses Reimbursable by the Trust
The Trust will reimburse Northern Monthly for the following our-of-pocket
expenses incurred by Northern during such month in the performance of its duties
under this Foreign Custody Agreement: (i) telephone; (ii) postage; (iii) courier
fees of independent courier services; (iv) office supplies used in maintaining
the Trust's records; and (v) duplicating.
<PAGE>
EXHIBIT 99.9(b)
THE BENCHMARK FUNDS
ADDENDUM NO.1 TO THE REVISED
AND RESTATED TRANSFER AGENCY AGREEMENT
This Addendum, dated as of the 1st day of July, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY, an Illinois state bank (the "Transfer Agent").
WHEREAS, the Trust and the Transfer Agent have entered into a Revised and
Restated Transfer Agency Agreement dated as of January 8, 1993 (the "Transfer
Agency Agreement"), pursuant to which the Trust appointed the Transfer Agent to
act as transfer agent with respect to each Class of Units in the Diversified
Assets Portfolio, the Government Portfolio, the Tax-Exempt Portfolio, the
Government Securities Portfolio, the California Municipal Portfolio, the Short
Duration Portfolio, the Equity Index Portfolio, Small Company Index Portfolio,
Diversified Growth Portfolio, Focused Growth Portfolio, U.S. Treasury Index
Portfolio, U.S. Government Securities Portfolio, Short- Intermediate Bond
Portfolio and Bond Portfolio;
WHEREAS, the Trust is establishing the Balanced Portfolio (the
"Portfolio"), and it desires to retain the Transfer Agent to render transfer
agency and other services with respect to the Portfolio and each Class of Units
within the Portfolio and the record and/or beneficial owners thereof, and the
Transfer Agent is willing to render such services;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Transfer Agent as transfer agent
with respect to the Portfolio and each Class of Units thereof on the terms
and for the periods set forth in the Transfer Agency Agreement. The
Transfer Agent hereby accepts such appointment and agrees to render the
services and perform the duties set forth in the Transfer Agency Agreement
for the compensation therein provided.
2. Capitalized Terms. From and after the date hereof, the term "Current
Portfolios" as used in the Transfer Agency Agreement shall be deemed to
include the Diversified Assets Portfolio, Government Portfolio, Government
Select Portfolio, Tax-Exempt Portfolio, California Municipal Portfolio,
Short Duration Portfolio, Equity Index Portfolio, Small Company Index
Portfolio, Diversified Growth Portfolio, Focused Growth Portfolio, U.S.
Treasury Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate Bond Portfolio, Bond Portfolio and Balanced Portfolio;
and the term "Non-Money Market Portfolios" as used in the Transfer Agency
Agreement shall be deemed to include the
<PAGE>
Equity Index Portfolio, Small Company Index Portfolio, Diversified Growth
Portfolio, Focused Growth Portfolio, U.S. Treasury Index Portfolio, U.S.
Government Securities Portfolio, Short-Intermediate Bond Portfolio, Bond
Portfolio and Balanced Portfolio. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Transfer
Agency Agreement.
3. Miscellaneous. Except to the extent supplemented hereby, the Transfer
Agency Agreement shall remain unchanged and in full force and effect, and
is hereby ratified and confirmed in all respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the date
and year first above written.
THE BENCHMARK FUNDS
Attest: /s/ Nancy James By: /s/ Nancy L. Mucker
Nancy L. Mucker
Vice President of the Trust
THE NORTHERN TRUST COMPANY
Attest: /s/ Mary L. Wiersema By: /s/ James L. Kermes
Title: Chief Investment Officer
<PAGE>
EXHIBIT 99.9(c)
THE BENCHMARK FUNDS
ADDENDUM NO. 2 TO THE REVISED
AND RESTATED TRANSFER AGENCY AGREEMENT
This Addendum, dated as of the 25th day of March, 1994, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
THE NORTHERN TRUST COMPANY, an Illinois state bank (the "Transfer Agent").
WHEREAS, the Trust and the Transfer Agent have entered into a Revised and
Restated Transfer Agency Agreement dated as of January 8, 1993 and Addendum No.
1 dated July 1, 1993 (the "Transfer Agency Agreement"), pursuant to which the
Trust appointed the Transfer Agent to act as transfer agent with respect to each
Class of Units in the Diversified Assets Portfolio, the Government Portfolio,
the Tax- Exempt Portfolio, the Government Securities Portfolio, the California
Municipal Portfolio, the Short Duration Portfolio, the Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth Portfolio, Focused Growth
Portfolio, U.S. Treasury Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate Bond Portfolio, Bond Portfolio and Balanced Portfolio;
WHEREAS, the Trust is establishing the International Growth Portfolio and
International Bond Portfolio (the "Portfolios"), and it desires to retain the
Transfer Agent to render transfer agency and other services with respect to each
of the Portfolios and each Class of Units within the Portfolios and the record
and/or beneficial owners thereof, and the Transfer Agent is willing to render
such services;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Transfer Agent as transfer
agent with respect to each of the Portfolio and each Class of Units
thereof on the terms and for the periods set forth in the Transfer
Agency Agreement. The Transfer Agent hereby accepts such appointment
and agrees to render the services and perform the duties set forth in
the Transfer Agency Agreement for the compensation therein provided.
2. Capitalized Terms. From and after the date hereof, the term "Current
Portfolios" as used in the Transfer Agency Agreement shall be deemed
to include the Diversified Assets Portfolio, Government Portfolio,
Government Select Portfolio, Tax-Exempt Portfolio, California
Municipal Portfolio, Short Duration Portfolio, Equity Index Portfolio,
Small Company Index Portfolio, Diversified Growth Portfolio, Focused
Growth Portfolio, U.S.
1
<PAGE>
Treasury Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate Bond Portfolio, Bond Portfolio and Balanced
Portfolio; and the term "Non-Money Market Portfolios" as used in the
Transfer Agency Agreement shall be deemed to include the Equity Index
Portfolio, Small Company Index Portfolio, Diversified Growth
Portfolio, Focused Growth Portfolio, U.S. Treasury Index Portfolio,
U.S. Government Securities Portfolio, Short-Intermediate Bond
Portfolio, Bond Portfolio, Balanced Portfolio, International Growth
Portfolio and International Bond Portfolio. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to
them in the Transfer Agency Agreement.
3. Miscellaneous. Except to the extent supplemented hereby, the Transfer
Agency Agreement shall remain unchanged and in full force and effect,
and is hereby ratified and confirmed in all respects as supplemented
hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest: /s/ Nancy James By: /s/ Nancy Mucker
------------------------ -----------------------
Nancy L. Mucker
Vice President of the Trust
THE NORTHERN TRUST COMPANY
Attest: /s/ Eileen C. Ratzka By: /s/ Roger W. Kushla
------------------------ -----------------------
Roger W. Kushla
[SEAL] Senior Vice President
2
<PAGE>
EXHIBIT 99.9(d)
THE BENCHMARK FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made this 8th day of June, 1992, between THE BENCHMARK FUNDS, a
Massachusetts business trust (the "Trust"), and GOLDMAN, SACHS & CO., a New York
limited partnership (the "Administrator").
WITNESSETH:
WHEREAS, the Trust is an open-end, management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue units of beneficial interest
("Units") in separate series with each such series representing the interests in
a separate portfolio of securities and other assets; and
WHEREAS, the Trust currently intends to offer units of beneficial interest
in six portfolios, known as the Diversified Assets Portfolio, Government
Portfolio, Government Select Portfolio, Tax-Exempt Portfolio, California
Municipal Portfolio and Short Duration Portfolio [such Portfolios (the "Current
Portfolios) together with all other portfolios subsequently established by the
Trust and made subject to this Agreement being herein collectively referred to
as the "Portfolios"]; and
WHEREAS, the Trust desires to retain the Administrator to act as
administrator of the Trust and the Administrator is willing to so act;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints the
Administrator to act as administrator of the Trust for the periods and on the
terms herein set forth. The Administrator accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Delivery of Documents. The Trust has delivered (or will deliver as soon
as is possible) to the Administrator copies of each of the following documents:
(a) Agreement and Declaration of Trust of the Trust dated as of July 15,
1982, together with all Amendments thereto (such Agreement and
Declaration of Trust, as currently in effect and as amended from time
to time, is herein called the "Trust Agreement"), copies of which are
also on file with the Secretary of The Commonwealth of Massachusetts;
(b) By-Laws of the Trust (such By-Laws, as currently in effect and as
amended from time to time, are herein called the "By-Laws");
(c) Advisory Agreement between the Trust and The Northern Trust Company
("Northern") (such Agreement, as currently in effect and as amended
and/or superseded from time to time, is herein called the "Advisory
Agreement");
(d) Custodian Agreement between the Trust and Northern;
<PAGE>
(e) Transfer Agency Agreement between the Trust and Northern;
(f) Prospectus and Statement of Additional Information of the Trust (such
Prospectus and Statement of Additional Information, as presently in
effect and as amended, supplemented and/or superseded from time to
time, is herein called the "Prospectus" and "Statement of Additional
Information", respectively);
(g) Post Effective Amendment No. 13 to the Trust's Registration Statement
on Form N- 1A (No. 2-80543) under the Securities Act of 1933 (the
"1933 Act") and Amendment No. 14 to the Trust's Registration Statement
on such form (No. 811-3605) under the 1940 Act filed as a single
document with the Securities and Exchange Commission (the
"Commission") (such Registration Statement, as presently in effect and
as amended from time to time, is herein called the "Registration
Statement";
The Trust agrees to promptly furnish the Administrator from time to time
with copies of all amendments of or supplements to or otherwise current versions
of any of the foregoing documents not heretofore furnished.
3. Duties of Administrator.
(a) Subject to the general supervision of the Trustees of the Trust,
the Administrator:
(i) shall provide supervision of all aspects of the Trust's
operations (other than those referred to in paragraph 3(a)
of the Advisory Agreement) (the parties giving due
recognition to the fact that certain of such operations to
be supervised are performed by Northern pursuant to the
Trust's agreements with Northern referred to in paragraph 2
hereof);
(ii) shall, to the extent not provided pursuant to the Trust's
agreements with Northern referred to in paragraph 2 hereof,
provide the Trust with such personnel as are reasonably
necessary for the conduct of the Trust's affairs;
(iii) shall, to the extent not provided pursuant to the Trust's
agreements with Northern referred to in paragraph 2 hereof,
arrange for (A) the preparation for the Trust of all
required tax returns, (B) the prepara- tion and submission
of reports to existing Unitholders, and (C) the periodic
updating of the Prospectus and the preparation of reports
filed with the Commission and other regulatory authorities
(including qualification under state securities or Blue Sky
laws of the Trust's Units);
(iv) shall, to the extent not provided pursuant to the Trust's
agreements with Northern referred to in paragraph 2 hereof,
provide the Trust with adequate office space and all
necessary office equipment and services, including telephone
service, heat, utilities, stationery supplies and similar
items, in Chicago, Illinois;
2
<PAGE>
(v) shall prepare and implement the Trust's expense budgets,
accruals and amortizations.
(b) The Administrator, in the performance of its duties hereunder,
shall act in conformity with the Trust Agreement, By-Laws,
Registration Statement and Prospectus and Statement of Additional
Information and with the instructions and directions of the
Trustees of the Trust, and will use its best efforts to conform
to the requirements of the 1940 Act and all other applicable
federal and state laws, regulations and rulings.
(c) The Administrator shall render to the Trustees of the Trust such
periodic and special reports as the Trustees may reasonably
request.
(d) The services of the Administrator hereunder are not deemed
exclusive and the Administrator shall be free to render similar
services to others so long as its services under this Agreement
are not impaired thereby.
4. Expenses.
(a) During the term of this Agreement, the Administrator will pay all
expenses incurred by it in connection with the performance of its
duties under paragraph 3 hereof, other than the out-of-pocket
cost of the preparations, submissions, updatings and filings
referred to in paragraph 3(a)(iii).
(b) If, in any fiscal year, the sum of a Portfolio's expenses
(including the fee payable pursuant to paragraph 5 hereof and the
fees payable to Northern pursuant to its agreements with the
Trust referred to in paragraph 2 hereof, but excluding taxes,
interest, brokerage commissions relating to the purchase or sale
of Portfolio securities, and extraordinary expenses such as for
litigation) exceeds the expense limitations applicable to such
Portfolio imposed by state securities administrators, as such
limitations may be lowered or raised from time to time, the
Administrator shall reimburse such Portfolio in the amount of
such excess to the extent required by such expense limitations.
(c) If, in any fiscal year, the average net assets of the Diversified
Assets Portfolio exceed $450 million and the Specified Expenses
(as hereinafter defined) of such Portfolio exceed .05 of 1% of
such Portfolio's average net assets for such fiscal year, the
Administrator will reimburse such Portfolio for the amount of
such excess as promptly as possible after the end of the fiscal
year. If, in any fiscal year, the average net assets of either
the Government Portfolio or the Tax-Exempt Portfolio exceeds $75
million and the Specified Expenses of such Portfolio exceed .05
of 1% of such Portfolio's average net assets for such fiscal
year, the Administrator will reimburse such Portfolio for the
amount of such excess. "Specified Expenses" are defined as the
following expenses of a Portfolio: custodial fees (except to the
extent that they exceed the fees specified in the custodial fee
schedule in effect on the date hereof or are due to any upward
adjustment in such fees after the date hereof), fees payable to
the Commission and state securities administrators (except to the
extent the fees payable to the Commission or any such
administrator represent an increase in the schedule of such fees
from the schedule in effect on the date hereof), amortized
expenses of the organization of the Trust, premiums
3
<PAGE>
expensed by the Trust for fidelity bonds, legal fees and
expenses, expenses of preparing and setting in type Prospectuses,
Statements of Additional Information, proxy material, reports and
notices and the printing and distributing of the same to the
Unitholders and regulatory authorities, and compensation and
expenses of the Trustees of the Trust; provided, however, that
auditing fees and expenses are not regarded as "Specified
Expenses."
5. Compensation.
(a) For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust will pay to
the Administrator as full compensation therefor a fee at an
annual rate of .25 of 1% of the first $100 million, .15 of 1% of
the next $200 million, .075 of 1% of the next $450 million, and
.05 of 1% of any excess over a total of $750 million of each
Portfolio's average net assets.
(b) The fee will be computed based on net assets on each day and will
be paid to the Administrator monthly.
6. Books and Records. The Administrator agrees to maintain such records
with respect to its activities hereunder as may be required or as are
appropriate. The Administrator further agrees that all records which it
maintains for the Trust are the property of the Trust and it will surrender
promptly to the Trust any of such records upon the Trust's request.
7. Indemnification.
(a) The Trust hereby agrees to indemnify and hold harmless the
Administrator, its officers, partners and employees and each
person, if any, who controls the Adm- inistrator (collectively
the "Indemnified Parties") against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of
them may become subject under the 1933 Act, the Securities
Exchange Act of 1934, the 1940 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a
material fact required to be stated or necessary to make the
statements made not misleading in the Registration
Statement, the Prospectus or the Statement of Additional
Information, or any application or other document filed in
connection with the qualification of the Trust or Units of
any Portfolio under the Blue Sky or securities laws of any
jurisdiction ("Application"), excepy insofar as such losses,
claims, damages or liabilities (or actions in respect there
of) arise out of or are based upon any such untrue statement
or omission or alleged untrue statement or omission either
pertaining to a breach of the Administrator's duties in
connection with this Agreement or the Distribution Agreement
of even date herewith between the Adminis- trator and the
Trust, made in reliance upon and in conformity with
information furnished by or on behalf of the Administrator
for use in connection with the Registration Statement, the
Prospectus and Statement of Additional Information or any
Application, or
4
<PAGE>
(ii) subject to clause (i) above, the Administrator acting
hereunder or under the Distribution Agreement of even date
herewith between the Administrator and the Trust;
and the Trust will reimburse each Indemnified Party for any legal or
other expenses incurred by such Indemnified Party in connection with
investigating or defending any such loss, claim, damage, liability or
action.
(b) If the indemnification provided for in paragraph 7(a) is due in
accordance with the terms of such paragraph but is for any reason
held by a court to be unavailable from the Trust, then the Trust
shall contribute to the aggregate amount paid or payable by the
Trust and the Indemnified Parties as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect (i) the relative
benefits received by the Trust and such Indemnified Parties in
connection with the operations of the Trust, (ii) the relative
fault of the Trust and such Indemnified Parties, and (iii) any
other relevant equitable considerations. The Trust and the
Administrator agree that it would not be just and equitable if
contribution pursuant to this subparagraph (b) were determined by
pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to
above in this subparagraph (b). The amount paid or payable as a
result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above in this subparagraph (b)
shall be deemed to include any legal or other expense incurred by
the Trust and the Indemnified Parties in connection with
investigating or defending any such loss, claim, damage,
liability or action. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(c) It is understood, however, that nothing in this paragraph 7 shall
protect any Indemnified Party against, or entitle any Indemnified
Party to indemnification against, or contribution with respect
to, any liability to the Trust or its Unit-holders to which such
Indemnified Party is subject, by reason of its willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of any reckless disregard of its
obligations and duties, under this Agreement or the Distribution
Agreement, or otherwise to an extent or in a manner inconsistent
with Section 17 of the 1940 Act.
8. Duration and Termination. Insofar as the holders of Units representing
the interests in the Current Portfolios are affected by this Agreement, it shall
continue, unless sooner terminated as provided herein, until April 30, 1993,
and, insofar as the holders of Units representing the interests in each of the
other Portfolios are affected by this Agreement, it shall continue until April
30 of the year following the year in which the Portfolio becomes a Portfolio
hereunder, and thereafter shall continue automatically for periods of one year
so long as each such latter continuance is approved at least annually (a) by the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined by the 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Trustees of the Trust or by vote of a majority of the outstanding
Units (as defined with respect to voting securities in the 1940 Act)
representing the interests in such Portfolio. This Agreement may be terminated
by the Trust as to any Portfolio at any time, without the payment of any
penalty, by vote of a majority of the Trustees of the Trust or by vote of a
majority of the outstanding Units (as so defined) representing the interests in
the Portfolio affected thereby on 60 days' written notice to the Administrator,
or by the Administrator at any time, without the payment of any penalty, on 60
days' written notice to the Trust. This Agreement will automatically and
immediately terminate in the event of its assignment (as defined by the 1940
Act).
5
<PAGE>
9. Status of Administrator as Independent Contractor. The Administrator
shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Trustees
of the Trust from time to time, have no authority to act for or represent the
Trust in any way or otherwise be deemed an agent of the Trust. The Administrator
represents and warrants to the Trust that it is duly organized as a New York
limited partnership and is and at all times will remain duly authorized and
licensed to carry out its services as contemplated herein and in its
Distribution Agreement with the Trust.
10. Amendment of Agreement. This Agreement may be amended by mutual consent
provided that such amendment is approved by vote of a majority of those Trustees
of the Trust who are not parties to this Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such amendment.
11. Unitholder Liability. This Agreement is executed by or on behalf of the
Trust with respect to each of its Portfolios and the obligations hereunder are
not binding upon any of the Trustees, officers or Unitholders of the Trust
individually but are binding only upon the Portfolio to which such obligations
pertain and the assets and property of such Portfolio.
12. Miscellaneous. The Trust's Declaration of Trust as amended to date is
on file with the Secretary of The Commonwealth of Massachusetts. The captions in
this Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be construed in
accordance with applicable federal law and (except as to paragraph 11 hereof
which shall be construed in accordance with the laws of The Commonwealth of
Massachusetts) the laws of the State of Illinois and shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
(subject to the last sentence of paragraph 8) and, to the extent provided in
paragraph 7 hereof, each Indemnified Party. Anything herein to the contrary
notwithstanding, this Agreement shall not be construed to require, or to impose
any duty upon, either of the parties to do anything in violation of any
applicable laws or regulations.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy L. Mucker
---------------------------------
As its: Vice President
Attest:/s/ Nancy James GOLDMAN, SACHS & CO.
/s/ Nancy L. Mucker
---------------------------------
As Its: Vice President
6
<PAGE>
Exhibit 99.9(e)
THE BENCHMARK FUNDS
Amendment to Administration Agreement
Amendment made this 1st day of August, 1992 to the Administration Agreement
dated June 8, 1992 between the Benchmark Funds, a Massachusetts business trust
(the "Trust"), and Goldman, Sachs & Co., a New York limited partnership (the
"Administration").
1. Paragraph 4(c) of the Agreement is hereby deleted in its entirety and
replaced by the following paragraph:
(c) With respect to the Diversified Assets Portfolio, Government
Portfolio, Government Select Portfolio, Tax-Exempt Portfolio,
California Municipal Portfolio and Short Duration Portfolio, if, in
any fiscal year, the sum of a Portfolio's expenses (including the fee
payable pursuant to paragraph 5 hereof, but excluding the investment
advisory fee payable to Northern pursuant to its agreement with the
Trust referred to in paragraph 2 hereof and taxes, interest, brokerage
commissions relating to the purchase or sale of Portfolio securities,
and extraordinary expenses such as for litigation) exceeds on an
annualized basis .10% of 1% of such Portfolio's average net assets for
such fiscal year, the Ad- ministrator will reimburse such Portfolio
for the amount of such excess in accordance with the following
timetable. Expense reimbursements, if any, will be calculated and paid
monthly. The amount of the reimbursement paid by the Administrator to
each Portfolio will be computed as of the end of each month by (1)
determining the difference between the Portfolio's estimated
annualized expense ratio and the above percentage limitation; (2)
multiplying this percentage by the Portfolio's average net asset value
for such month to obtain the cumulative dollar amount of such excess;
and (3) subtracting from the cumulative dollar amount of such excess
the cumulative amount of reimbursements made to such Portfolio by the
Administrator since the beginning of the fiscal year. A positive
remainder represents the amount to be paid by the Administrator to the
Portfolio; a negative remainder represents the amount to be paid by
the Portfolio to the Administrator.
2. This Amendment will, subject to approval by the Trustees of the Trust as
set forth in paragraph 10 of the Agreement, become effective as of August
1, 1992.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the day and year first above written.
ATTEST: THE BENCHMARK FUNDS
/s/ Michael Richman By: /s/ Scott Gilman
ATTEST: GOLDMAN, SACHS & CO.
/s/ Michael Richman By: /s/ Stephen Hopkins
<PAGE>
EXHIBIT 99.9(f)
THE BENCHMARK FUNDS
ADDENDUM NO. 1 TO THE ADMINISTRATION AGREEMENT
This Addendum, dated as of the 8th day of January 1993, is entered into
between THE BENCHMARK FUNDS (The "Trust"), a Massachusetts business trust, and
GOLDMAN, SACHS & CO., a New York limited partnership (the "Administrator").
WHEREAS, the Trust and the Administrator have entered into an
Administration Agreement dated as of June 8, 1992 (the "Administration
Agreement"), pursuant to which the Trust appointed the Administrator to act as
administrator to the Trust for the Diversified Assets Portfolio, Government
Portfolio, Government Select Portfolio, Tax-Exempt Portfolio, California
Municipal Portfolio and the Short Duration Portfolio;
WHEREAS, the Trust is establishing the Equity Index Portfolio, Small
Company Index Portfolio, Diversified Growth Portfolio, Focused Growth Portfolio,
U.S. Treasury Index Portfolio, U.S. Government Securities Portfolio, Short-
Intermediate Bond Portfolio, and Bond Portfolio (the "Portfolios"), and it
desires to retain the Administrator to act as administrator of the Trust for the
Portfolios and the Administrator is willing to so act;
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Trust hereby appoints the Administrator as
administrator of the Trust for the Portfolios on the terms and for the
periods set forth in the Administration Agreement. The Administrator
hereby accepts such appointment and agrees to render the services and
perform the duties set forth in the Administration Agreement for the
compensation therein provided.
2. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Administration Agreement shall be deemed
to include the Equity Index Portfolio, small Company Index Portfolio,
Diversified Growth Portfolio, Focused Growth Portfolio, U.S. Treasury
Index Portfolio, U.S. Government Securities Portfolio,
Short-Intermediate and Bond Portfolio. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in
the
<PAGE>
Administration Agreement.
3. Miscellaneous. Except to the extent supplemented hereby, the
Administration Agreement shall remain unchanged and in full force and
effect, and is hereby ratified and confirmed in all respects as
supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the
date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Michael Richman By:/s/ Stephen B. Wells
---------------------------- ---------------------
Title: President
GOLDMAN SACHS & CO.
Attest:/s/ Michael Richman By: Alan Shuch
---------------------------- ---------------------
Title: Partner
<PAGE>
EXHIBIT 99.9(g)
THE BENCHMARK FUNDS
ADDENDUM NO. 2 TO THE ADMINISTRATION AGREEMENT
This Addendum, dated as of the 1st day of July, 1993, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
GOLDMAN, SACHS & CO., a New York Partnership (the "Administrator").
WHEREAS, the Trust and the Administrator have entered into an
Administration Agreement dated as of June 8, 1992, as amended by Addendum No. 1
dated January 8, 1993, (the "Administration Agreement"), pursuant to which the
Trust appointed the Administrator to act as administrator to the Trust for the
Diversified Assets Portfolio, Government Portfolio, Government Select Portfolio,
Tax-Exempt Portfolio, U.S. Treasury Index Portfolio, Short-Intermediate Bond
Portfolio, Bond Portfolio, Equity Index Portfolio, Small Company Index
Portfolio, Diversified Growth Portfolio, California Municipal Portfolio, U.S.
Government Securities Portfolio, Short Duration Portfolio and Focused Growth
Portfolio;
WHEREAS, the Trust is establishing the Balanced Portfolio (the
"Portfolio", and it desires to retain the Administrator to act as administrator
of the Trust for the Portfolio and the Administrator is willing to so act;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment. The Trust hereby appoints the Administrator as
administrator of the Trust for the Portfolio on the terms
and for the periods set forth in the Administration
Agreement. The Administrator hereby accepts such
appointment and agrees to render the services and perform
the duties set forth in the Administration Agreement for the
compensation therein provided.
2. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Administration Agreement shall
be deemed to include the Balanced Portfolio. Capitalized
terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Advisory Agreement.
3. Miscellaneous. Except to the extent supplemented hereby,
the Advisory Agreement shall remain unchanged and in full
force and effect, and is hereby ratified and confirmed in
all respects as supplemented hereby.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy L. Mucker
----------- ---------------
Nancy James Nancy L. Mucker
Vice President of the Trust
GOLDMAN SACHS & CO.
Attest:____________________ By:/s/ Michael Armellino
-----------------
Michael Armellino
Partner
<PAGE>
EXHIBIT 99.9(h)
THE BENCHMARK FUNDS
ADDENDUM NO. 3 TO THE ADMINISTRATION AGREEMENT
This Addendum, dated as of the 25th day of March, 1994, is entered into
between THE BENCHMARK FUNDS (the "Trust"), a Massachusetts business trust, and
GOLDMAN, SACHS & CO., a New York Partnership (the "Administrator").
WHEREAS, the Trust and the Administrator have entered into an
Administration Agreement dated as of June 8, 1992, as amended by Addendum No. 1
dated January 8, 1993 and Addendum No. 2 dated July 1, 1993, (the
"Administration Agreement"), pursuant to which the Trust appointed the
Administrator to act as administrator to the Trust for the Diversified Assets
Portfolio, Government Portfolio, Government Select Portfolio, Tax-Exempt
Portfolio, U.S. Treasury Index Portfolio, Short-Intermediate Bond Portfolio,
Bond Portfolio, Equity Index Portfolio, Small Company Index Portfolio,
Diversified Growth Portfolio, California Municipal Portfolio, U.S. Government
Securities Portfolio, Short Duration Portfolio, Focused Growth Portfolio and
Balanced Portfolio;
WHEREAS, the Trust is establishing the International Growth Portfolio
and International Bond Portfolio (the "Portfolios"), and it desires to retain
the Administrator to act as administrator of the Trust for the Portfolios and
the Administrator is willing to so act;
NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Appointment The Trust hereby appoints the Administrator as
administrator of the Trust for the Portfolios on the terms and
for the periods set forth in the Administration Agreement. The
Administrator hereby accepts such appointment and agrees to
render the services and perform the duties set forth in the
Administration Agreement for the compensation therein
provided.
2. Capitalized Terms. From and after the date hereof, the term
"Portfolios" as used in the Administration Agreement shall be
deemed to include the International Growth Portfolio and
International Bond Portfolio. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to
them in the Advisory Agreement.
3. Miscellaneous. Except to the extent supplemented hereby, the
Advisory Agreement shall remain unchanged and in full force
and effect, and is hereby ratified and confirmed in all
respects as supplemented hereby.
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the date and year first above written.
THE BENCHMARK FUNDS
Attest:/s/ Nancy James By: /s/ Nancy Mucker
----------- ------------
Nancy James Nancy L. Mucker
Vice President of the Trust
GOLDMAN, SACHS & CO.
Attest:/s/ Lynne Gardener By: /s/ Michael Armellino
-------------- -----------------
Lynne Gardener Michael Armellino
Partner
<PAGE>
EXHIBIT 99.10
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
Firm under the caption "Additional Trust Information Counsel and Auditors" in
the Statements of Additional Information included in Post-Effective Amendment
No. 31 to the Registration Statement (1933 Act No. 2-80543; 1940 Act No.
811-3605) on Form N- 1A under the Securities Act of 1933, as amended, of The
Benchmark Funds. This consent does not constitute a consent under section 7 of
the Securities Act of 1933, and in consenting to the use of our name and the
references to our Firm under such caption we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under said section 7 or the rules and
regulations of the Securities and Exchange Commission thereunder.
/s/ Drinker Biddle & Reath
--------------------------
Drinker Biddle & Reath
Philadelphia, Pennsylvania
March 27, 1996
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights," "Counsel and Auditors" and "Financial Statements" in the
Registration Statement (Form N-1A) of the Benchmark Funds filed with the
Securities and Exchange Commission and to the incorporation by reference therein
and in the related Prospectus of our report dated January 16, 1996 in this
Post-Effective Amendment No. 31 to the Registration Statement under the
Securities Act of 1933 (Registration No. 2-80543) and in this Amendment No. 32
to the Registration Statement under the Investment Company Act of 1940
(Registration No. 811-3605).
/s/ ERNST & YOUNG LLP
---------------------
ERNST & YOUNG LLP
Chicago, Illinois
March 22, 1996
<PAGE>
EXHIBIT 99.18
THE BENCHMARK FUNDS
(the "Company")
PLAN PURSUANT TO RULE 18f-3 FOR OPERATION OF
A MULTI-CLASS SYSTEM
I. INTRODUCTION
On February 23, 1995, the Securities and Exchange Commission (the
"Commission") adopted Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which permits the creation and operation of a
multi-class distribution structure without the need to obtain an exemptive order
under Section 18 of the 1940 Act. Rule 18f-3, which became effective on April 3,
1995, requires an investment company to file with the Commission a written plan
specifying all of the differences among classes, including the various services
offered to shareholders, different distribution arrangements for each class,
methods for allocating expenses relating to those differences and any conversion
features or exchange privileges. Currently, the Company operates a multi-class
distribution structure pursuant to an exemptive order granted by the Commission
on May 26, 1993. On July 11, 1995 the Board of Trustees of the Company
authorized the Company to operate its current multi-class distribution structure
in compliance with Rule 18f-3. This Plan will become effective immediately when
it is filed with the Securities and Exchange Commission.
II. ATTRIBUTES OF CLASSES
A. Generally
The Company will initially offer four classes of units -- Class A, Class B,
Class C and Class D units -- in the U.S. Government Securities,
Short-Intermediate Bond, U.S. Treasury Index, Bond and International Bond
Portfolios (each a "Portfolio," collectively, the "Fixed Income Portfolios") and
in the Balanced, Equity Index, Diversified Growth, Focused Growth, Small Company
Index and International Growth Portfolios (each a "Portfolio," collectively, the
"Equity Portfolios").
In general, shares of each class will be identical except for different
expense variables (which will result in different returns for each class),
certain related rights and certain transfer agency and shareholder services.
More particularly, Class A, Class B, Class C and Class D units of each Portfolio
will represent interests in the same portfolio of investments of the particular
Portfolio, and will be identical in all respects, except for: (a) the impact of
(i) expenses assessed to a class pursuant to the unitholder servicing plan (the
"Non- 12b-1 Plan") adopted for that class, (ii) transfer agency fees
<PAGE>
and (iii) any other incremental expenses identified from time to time that
should be properly allocated to one class so long as any changes in expense
allocations are reviewed and approved by a vote of the Board of Trustees,
including a majority of the independent Trustees; (b) the fact that a class will
vote separately on any matter submitted to shareholders that pertains to (i) the
Non-12b-1 Plan adopted for that class or (ii) class expenses borne by that
class; (c) the different exchange privileges of each class of units; (d) the
designation of each class of units of a Portfolio; and (e) the different
transfer agency and shareholder services relating to a class of units.
B. Distribution Arrangements/Shareholder Services/Expenses. Sales Charges
Class A units
Class A units of each Portfolio will be available for purchase by The
Northern Trust Company, its affiliates and other institutions and organizations
(collectively, the "Institutions") acting on behalf of their customers, clients,
employees and others (the "Customers") and for their own account. Class A units
of each Portfolio will be available for purchase by Institutions directly or
through procedures established by Institutions in connection with the
requirements of their qualified accounts.
Class A units of each Portfolio initially will be designed to be purchased
by institutional investors or others who can obtain information about their
unitholder accounts and who do not require the transfer agent or servicing agent
services that are provided to Class B, C and D unitholders.
Class A units of each Portfolio will not be subject to a sales charge; but
Class A units of the Small Company Index Portfolio will be subject to an
additional purchase price amount equal to .75% of the net asset value of the
Class A units purchased. Class A units will not be subject to a fee payable
pursuant to the Non-12b-1 plan.
Class B, C and D units
Class B, C and D units of each Portfolio will be available for purchase by
Institutions acting on behalf of Customers and for their own account. Class B, C
and D units will be available for purchase by Institutions directly or through
procedures established by Institutions in connection with the requirements of
their qualified accounts.
Class B units of each Portfolio initially will be designed to be purchased
by organizations maintaining record
- 2 -
<PAGE>
ownership on behalf of beneficial owners where certain services of the Company's
transfer agent and a servicing agent are required that are incident to the
separation of record and beneficial ownership. Class C units of each Portfolio
will initially be designed to be purchased by institutional investors which
require certain account-related services of the Company's transfer agent and a
servicing agent that are incident to the investor being the beneficial owner of
units. Class D units of each Portfolio will initially be designed to be
purchased by investors having a relationship with an organization which requires
that account-related services and information be provided to the investor and
organization by the Company's transfer agent and a servicing agent.
Class B, C and D units of each Portfolio will not be subject to a sales
charge; but Class A units of the Small Company Index Portfolio will be subject
to an additional purchase price amount equal to .75% of the net asset value of
the units purchased. In addition, units of these classes will be subject to a
fee payable pursuant to the Non-12b-1 Plan which will not exceed the annual rate
of .10%, .15% and .25% of the average daily net asset value of the outstanding
Class B units, Class C units and Class D units, respectively, which are held by
or serviced by certain servicing agents for beneficial owners of units.
Services provided or arranged to be provided under the Non-12b-1 Plan
adopted for a class of units may include: (i) establishing and maintaining
separate account records of Customers or other investors; (ii) providing
Customers or other investors with a service that invests their assets in units
of certain classes pursuant to specific or pre-authorized instructions, and
assistance with new account applications; (iii) aggregating and processing
purchase and redemption requests for units of certain classes from Customers or
other investors, and placing purchase and redemption orders with the Company's
transfer agent; (iv) issuing confirmations to Customers or other investors in
accordance with applicable law; (v) arranging for the timely transmission of
funds representing the net purchase price or redemption proceeds; (vi)
processing dividend payments on behalf of Customers or other investors; (vii)
providing information periodically to Customers or other investors showing their
positions in units; (viii) responding to Customer or other investor inquiries
(including requests for prospectuses), and complaints relating to the services
performed by the Institutions; (ix) acting as liaison with respect to all
inquiries and complaints from Customers and other investors relating to errors
committed by the Company or its agents, and other matters pertaining to the
Company; (x) providing or arranging for another person to provide subaccounting
with respect to units of certain classes beneficially owned by Customers or
other investors; (xi) if required by law, forwarding
- 3 -
<PAGE>
unitholder communications from the Company (such as proxy statements and
proxies, unitholder reports, annual and semi-annual financial statements and
dividend, distribution and tax notices) to Customers and other investors; (xii)
providing such office space, facilities and personnel as may be required to
perform its services under the Non-12b-1 Plan; (xiii) maintaining appropriate
management reporting and statistical information; (xiv) paying expenses related
to the preparation of educational and other explanatory materials in connection
with the development of investor services; (xv) developing and monitoring
investment programs; and (xvi) providing such other similar services as the
Company may reasonably request to the extent the Institutions are permitted to
do so under applicable statutes, rules and regulations.
C. Exchange Privileges
Institutions and, to the extent permitted by their account agreements,
Customers generally will be permitted to exchange Class A, B, C and D units of a
Portfolio for Class A, B, C or D units, respectively, of another Portfolio of
the Company as to which the Institution or Customer maintains an existing
account with an identical title.
D. Methodology for Allocating Expenses Among Classes
Expenses of a Portfolio are classified as being either joint or
class-specific.
Joint expenses of a Portfolio are allocated daily to each class of units of
such Portfolio in accordance with Rule 18f-3(c). Class-specific expenses of a
Portfolio are allocated to the specific class of units of such Portfolio.
- 4 -
