<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1997.
FILE NO. 33-4163
FILE NO. 811-4620
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 23 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. /X/
------------------------
CRESTFUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
32 South Street
Baltimore, Maryland 21210
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (800) 273-7827
TODD B. CIPPERMAN, VICE PRESIDENT
c/o SEI Investments Company
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
COPIES TO:
John H. Grady, Jr., Esquire David M. Carter, Esquire
Morgan, Lewis & Bockius LLP Hunton & Williams
1800 M Street NW Riverfront Plaza, East
Washington, D.C. 20036 Tower
951 East Byrd Street
Richmond, Virginia
23219-4074
------------------------
It is proposed that this filing will become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on [date] pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / on [date] pursuant to (a)(2) of Rule 485
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of shares of common stock is being registered by this
Registration Statement. Registrant's Rule 24f-2 Notice for fiscal year ended
November 30, 1996 was filed on January 29, 1997.
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<PAGE>
CRESTFUNDS, INC.
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 23
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- --------------------------------------------------
<S> <C> <C>
PART A
Item 1. Cover Page........................................ Cover Page
Item 2. Synopsis.......................................... Summary of Portfolio Expenses
Item 3. Condensed Financial Information................... *
Item 4. General Description of Registrant................. Description of Common Stock; Investment Objectives
and Policies; General Investment Policies of the
Portfolios; Investment Limitations of the
Portfolios; Description of Permitted Investments
and Risk Factors
Item 5. Management of the Company......................... Description of Common Stock; Portfolio
Transactions; Banking Law Matters; Advisory and
Related Agreements; Other Expense Information
Item 5A. Management's Discussion of Fund Performance....... *
Item 6. Capital Stock and Other Securities................ Description of Common Stock; How to Purchase,
Exchange and Redeem Shares; Dividends and Tax
Matters
Item 7. Purchase of Securities Being Offered.............. Advisory and Related Agreements; Pricing of Shares
and Valuation; How to Purchase, Exchange and
Redeem Shares
Item 8. Redemption or Repurchase.......................... How to Purchase, Exchange and Redeem Shares
Item 9. Pending Legal Proceedings......................... *
PART B
Item 10. Cover Page........................................ Cover Page
Item 11. Table of Contents................................. Cover Page
Item 12. General Information and History................... *
Item 13. Investment Objectives and Policies................ Investment Policies and Limitations of the
Portfolios; Investment Practices of the
Underlying CrestFunds; Portfolio Transactions
Item 14. Management of the Registrant...................... Directors and Officers and Affiliated Persons
Item 15. Control Persons and Principal Holders............. *
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- --------------------------------------------------
<S> <C> <C>
Item 16. Investment Advisory and Other Services............ Directors and Officers and Affiliated Persons; The
Adviser; Administrator and Distributor; Transfer
Agent; Custodian; Auditor
Item 17. Brokerage Allocation.............................. Portfolio Transactions
Item 18. Capital Stock and Other Securities................ Additional Description of Common Stock
Item 19. Purchase, Redemption, and Pricing of Securities
Being Offered................................... Valuation of Portfolio Securities; Additional
Information Regarding Pricing and Redemptions
Item 20. Tax Status........................................ Distributions and Taxes; Tax Status of the
Portfolios
Item 21. Underwriters...................................... Additional Description of Common Stock;
Administrator and Distributor
Item 22. Calculation of Yield Quotations................... Portfolio Performance
Item 23. Financial Statements.............................. Financial Statements
</TABLE>
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* Not Applicable
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
(ii)
<PAGE>
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO, AMONG OTHER THINGS, THIS PROSPECTUS HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITIES OF THE PORTFOLIOS
REFERENCED IN THIS PROSPECTUS MAY NOT BE SOLD NOR MAY OFFERS TO BUY SUCH
SECURITIES BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF SECURITIES
REFERENCED HEREIN IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO SUCH REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION , 1997.
CRESTFUNDS, INC. -- TRUST CLASS
PROSPECTUS
, 1997
CrestFunds, Inc. (the "Company"), a Maryland corporation, is a registered
open-end management investment company consisting of fifteen separate investment
portfolios. This Prospectus, however, relates only to the following three
separate diversified investment portfolios (each a "Portfolio" and, together,
the "Portfolios"): Maximum Growth Portfolio, Growth and Income Portfolio, and
Balanced Portfolio. Each Portfolio offers investors a range of asset allocation
strategies designed to accommodate different investors' philosophies and goals
by investing in select underlying funds in the CrestFunds family of funds. The
Portfolios are currently managed by Crestar Asset Management Company (the
"Adviser"). Each Portfolio offers one class of shares, Trust Class shares, which
are offered primarily to tax-advantaged and other employee benefit or retirement
accounts which have entered into certain management, administration and/or
servicing arrangements with Crestar Bank or its affiliates.
MAXIMUM GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
BALANCED PORTFOLIO
THE PORTFOLIOS' SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED,
INSURED OR ENDORSED BY, CRESTAR BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTING IN MUTUAL
FUNDS INVOLVES RISKS, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED. THE VALUE OF AN INVESTMENT IN THE PORTFOLIOS AND ITS RETURN WILL
FLUCTUATE AND IS NOT GUARANTEED. WHEN SOLD, THE VALUE OF AN INVESTMENT MAY BE
HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED.
Please read this Prospectus before investing. This Prospectus sets forth
concisely information about the above-referenced Portfolios that a prospective
investor should know before investing, and is designed to help investors decide
if a Portfolio's goals match their own. Retain this document for future
reference. A Statement of Additional Information dated [ , 1997] has
been filed with the Securities and Exchange Commission ("SEC") and may be
obtained upon request and without charge by writing SEI Financial Services
Company (the "Distributor"), at Oaks, Pennsylvania 19456, or by calling
1-800-273-7827. The Statement of Additional Information is incorporated into
this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus and in the related Statement of Additional Information, in
connection with any offer of shares in the Portfolios. If given or made, such
other information or representations must not be relied upon as having been
authorized by the Portfolios or the Distributor. This Prospectus and the related
Statement of Additional Information do not constitute an offer by any Portfolio
or Distributor to sell shares of any Portfolio to any person to whom it is
unlawful to make such an offer.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary of Portfolio Expenses.................................................................................... 3
Investment Objectives and Policies............................................................................... 5
General Investment Policies of the Portfolios.................................................................... 6
Investment Limitations of the Portfolios......................................................................... 8
Pricing of Shares and Valuation.................................................................................. 8
How to Purchase, Exchange and Redeem Shares...................................................................... 8
Dividends and Tax Matters........................................................................................ 9
Performance...................................................................................................... 10
Portfolio Transactions........................................................................................... 11
Advisory and Related Agreements.................................................................................. 11
Other Expense Information........................................................................................ 12
Banking Law Matters.............................................................................................. 12
Description of Common Stock...................................................................................... 12
Description of Permitted Investments and Risk Factors............................................................ 13
</TABLE>
2
<PAGE>
SUMMARY OF PORTFOLIO EXPENSES
The expense summary format below was developed for use by all mutual funds to
help investors make their investment decisions. The purpose of these tables is
to assist investors in understanding the various costs and expenses that an
investor in the Portfolios would bear. Investors should consider this expense
information for the Portfolios along with other important information in this
Prospectus, including each Portfolio's investment objective. Shares of the
Portfolios are currently offered, without payment of any sales charge, primarily
to tax-advantaged and other employee benefit or retirement accounts with which
Crestar Bank, or affiliates thereof, has entered into certain management,
administration, and/or servicing arrangements. Such relationships may involve
the payment of account or service fees not reflected in the tables below.
The Portfolios invest in Trust Class shares of the underlying CrestFunds that
are also advised by the Adviser. The underlying CrestFunds primarily invest
directly in stocks, bonds and other securities. The Portfolios will not incur
any sales charges when they invest in underlying CrestFunds.
THE PORTFOLIOS' EXPENSE TABLE
The table below does not reflect any of the operating costs and investment
advisory fees of the underlying CrestFunds. The Portfolios, and ultimately the
Portfolios' shareholders, will indirectly bear their pro-rata share of the
expenses of the underlying CrestFunds. Investors would not incur the Portfolios'
expenses as detailed below if they were to perform their own review and analysis
and invest in the affiliated underlying CrestFunds directly.
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) --
NET OF WAIVERS AND/OR REIMBURSEMENTS:
<TABLE>
<CAPTION>
MAXIMUM GROWTH GROWTH AND INCOME BALANCED
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- -----------
<S> <C> <C> <C>
Advisory Fee (1)...................................................... .08% .09% .11%
12b-1 Fees............................................................ None None None
Other Expenses (2).................................................... .17% .16% .14%
----- ----- -----
Total Operating Expenses (3).......................................... .25% .25% .25%
</TABLE>
- ------------------------------
(1) The Adviser has voluntarily agreed to waive its advisory and management fees
and/or reimburse certain expenses to keep the total operating expenses of
each Portfolio from exceeding .25% of each Portfolio's total assets. Absent
fee waivers and/or expense reimbursements, the advisory fees for each
Portfolio would be .25%.
(2) SEI Fund Resources (the "Administrator") has voluntarily agreed to waive its
fee for each Portfolio for a twelve month period, effective on the
commencement of operations. Absent fee waivers and/or expense
reimbursements, "Other Expenses" are estimated to be .46% for the Maximum
Growth Portfolio, .36% for the Growth and Income Portfolio, and .18% for the
Balanced Portfolio.
(3) Absent fee waivers and/or expense reimbursements, total operating expenses
for the Maximum Growth Portfolio, Growth and Income Portfolio, and Balanced
Portfolio would be .71%, .61% and .43%, respectively.
EXPLANATION OF ANNUAL PORTFOLIO OPERATING EXPENSES. Advisory fees are paid by
the Portfolios to the Adviser for managing the Portfolios' investments and
business affairs (see "Advisory and Related Agreements"). Advisory fees and
Other Expenses are reflected in each Portfolio's share price and are not charged
directly to individual shareholder accounts. The expenses and fees of the
underlying CrestFunds are not reflected in the above expense table.
EXAMPLE REFLECTING EXPENSES OF THE PORTFOLIOS' AND THE UNDERLYING CRESTFUNDS'
You would pay the following direct and indirect expenses on a $1,000 investment
in a Portfolio, assuming the Portfolios' share of the expenses incurred by the
underlying CrestFunds ("Indirect Expenses"), as set forth below in "Ranges of
the Portfolios' Share of Indirect Expenses", and further assuming (1) 5% annual
return and (2) redemption at the end of each time period:
<TABLE>
<CAPTION>
PORTFOLIO 1 YEAR 3 YEARS
- ------------------------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Maximum Growth Portfolio............................................................................... $ 13 $ 39
Growth and Income Portfolio............................................................................ $ 12 $ 38
Balanced Portfolio..................................................................................... $ 12 $ 37
</TABLE>
EXPLANATION OF EXAMPLE. This hypothetical example illustrates the expenses
associated with a $1,000 investment over periods of 1 and 3 years based on the
expenses in the table above and an assumed annual return of 5%. The Example
includes Indirect Expenses for the underlying CrestFunds' most recent fiscal
year. The Indirect Expenses
3
<PAGE>
are calculated by taking the midpoint of the ranges of Indirect Expenses
applicable to each Portfolio, as set forth below in "Ranges of the Portfolios'
Share of Indirect Expenses." The actual amount of Indirect Expenses will
fluctuate each time the Portfolios' assets are reallocated among the underlying
CrestFunds, which are used in calculating the ranges of the Portfolios' share of
Indirect Expenses. THE RETURN OF 5% AND EXPENSES SHOULD NOT BE CONSIDERED
INDICATIONS OF ACTUAL OR EXPECTED PERFORMANCE OR EXPENSES, BOTH OF WHICH MAY
VARY.
EXPENSES OF THE UNDERLYING CRESTFUNDS
The chart below provides the total operating expense ratios for the underlying
CrestFunds, which are used in calculating the ranges of the Portfolios' share of
Indirect Expenses. The following figures are based on historical expenses for
each underlying fund's most recently reported fiscal year end and are calculated
as a percentage of average net assets of each underlying fund. Where
appropriate, expense ratios are adjusted to reflect current fees.
<TABLE>
<CAPTION>
ASSET CLASS EXPENSE RATIO
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<S> <C>
CASH RESERVE FUND........................................................................................ .65%
LIMITED TERM BOND FUND................................................................................... .78%
INTERMEDIATE BOND FUND................................................................................... .88%
GOVERNMENT BOND FUND..................................................................................... .71%
VALUE FUND............................................................................................... 1.02%
CAPITAL APPRECIATION FUND................................................................................ 1.04%
SPECIAL EQUITY FUND...................................................................................... 1.04%
</TABLE>
RANGES OF THE PORTFOLIOS' SHARE OF INDIRECT EXPENSES
Based upon the current asset allocation percentages for each Portfolio (see
"Investment Objectives and Policies") and the above expense ratios for the
underlying CrestFunds, the ranges of the weighted average of the expense ratios
of the underlying CrestFunds in which each Portfolio currently expects to invest
are as follows:
<TABLE>
<CAPTION>
RANGES OF INDIRECT EXPENSE
PORTFOLIO RATIOS
- --------------------------------------------------------------------------------------- -------------------------------
<S> <C>
Maximum Growth Portfolio............................................................... .96 - 1.03%
Growth and Income Portfolio............................................................ .85 - 1.03%
Balanced Portfolio..................................................................... .84 - .96%
</TABLE>
4
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The Portfolios provide investors with the opportunity to pursue three distinct
asset allocation strategies implemented through investments in shares of
selected CrestFunds. By investing in the Portfolios, investors have the
opportunity to diversify and allocate their assets among the broad range of
funds in the CrestFunds family of funds. The Adviser simplifies the
diversification and asset allocation process by reviewing, analyzing, selecting,
monitoring, reallocating and rebalancing each Portfolio's holdings of CrestFunds
for investors.
The assets of each Portfolio will be allocated among underlying CrestFunds in
accordance with its investment objective, the Adviser's outlook for the economy,
the financial markets and the relative market valuations of the underlying
CrestFunds. Each Portfolio has the ability to invest its assets allocated to a
particular asset class in one or more of the underlying CrestFunds, which have
differing investment objectives, policies and risk characteristics (see
"Investments in Shares of the Underlying CrestFunds"). The risks associated with
investing in a Portfolio will vary depending upon how the assets within its
asset classes are allocated from time to time among the underlying CrestFunds.
Although the Portfolios currently expect to invest in one or more of the
underlying CrestFunds identified below, the Adviser has the discretion to change
the particular CrestFunds used as underlying investments for the Portfolios. If
the Adviser determines in the future that it is in a Portfolio's best interest,
the Adviser may substitute or include other underlying funds from the CrestFunds
family of funds, including CrestFunds that do not currently exist.
CASH RESERVE FUND
LIMITED TERM BOND FUND
INTERMEDIATE BOND FUND
GOVERNMENT BOND FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
VALUE FUND
The investment objective of each Portfolio is set forth below. Each Portfolio's
objective, the asset allocation percentage ranges described below, the list of
underlying CrestFunds described above, and those policies identified as
non-fundamental may be changed by the Company's Board of Directors without
shareholder approval. A Portfolio's investment policies identified as
fundamental may not be changed except by approval of the majority of the
outstanding shares of that Portfolio. The Adviser will manage each Portfolio
consistent with that Portfolio's investment objective and policies. There is no
assurance that a Portfolio will achieve its investment objective. For more
information regarding each Portfolio's investment policies, please refer to the
Statement of Additional Information.
MAXIMUM GROWTH PORTFOLIO
The Maximum Growth Portfolio seeks to provide a high level of capital
appreciation, without regard to current income. Under normal market conditions,
at least 80% of the Portfolio's total assets will be invested in shares of
underlying CrestFunds that invest primarily in equity securities that seek
capital appreciation. The Portfolio's remaining assets may be invested in shares
of underlying CrestFunds that invest primarily in fixed-income securities,
shares of underlying CrestFunds that are money market funds, securities issued
by the U.S. Government, its agencies or instrumentalities, repurchase agreements
and short-term paper.
In general, relative to the other Portfolios, the Maximum Growth Portfolio
should offer investors the potential for a high level of capital growth, and the
potential for a lower level of current income, while subjecting investors to a
medium to high level of principal risk. The Portfolio currently plans to invest
in shares of the following underlying CrestFunds within the percentage ranges
set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT
OF THE MAXIMUM GROWTH
ASSET CLASS PORTFOLIO'S ASSETS)
- -------------------------------- -------------------------
<S> <C>
Equity ......................... 80-100%
- -----
VALUE FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
Money Market ................... 0-20%
- ------------
CASH RESERVE FUND
</TABLE>
GROWTH AND INCOME PORTFOLIO
The Growth and Income Portfolio seeks to provide long-term capital appreciation,
with current income as a secondary objective. Under normal market conditions, at
least 80% of the Portfolio's total assets will be invested in shares of
underlying CrestFunds that invest primarily in either equity securities that
seek capital appreciation, or invest primarily in fixed-income securities that
seek income. The Portfolio's remaining assets may be invested in shares of
underlying CrestFunds that are money market funds, securities issued by the U.S.
Government, its agencies or instrumentalities, repurchase agreements and
short-term paper.
In general, relative to the other Portfolios, the Growth and Income Portfolio
should offer investors the potential for a medium to high level of capital
growth
5
<PAGE>
and the potential for a medium level of income, while subjecting investors to a
medium level of principal risk. The Portfolio currently plans to invest in
shares of the following underlying CrestFunds within the percentage ranges set
forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE (PERCENT
OF THE GROWTH AND INCOME
ASSET CLASS PORTFOLIO'S ASSETS)
- --------------------------------- -------------------------
<S> <C>
Equity .......................... 60-80%
- -----
VALUE FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
Bond ............................ 20-40%
- ----
LIMITED TERM BOND FUND
INTERMEDIATE BOND FUND
GOVERNMENT BOND FUND
Money Market .................... 0-20%
- ------------
CASH RESERVE FUND
</TABLE>
BALANCED PORTFOLIO
The Balanced Portfolio seeks both capital appreciation and current income. Under
normal market conditions, the Portfolio will invest primarily in shares of
underlying CrestFunds that invest primarily in equity securities, but at least
25% of the Portfolio's total assets will be invested in shares of underlying
CrestFunds that invest primarily in fixed-income securities. The Portfolio's
remaining assets may be invested in shares of underlying CrestFunds that are
money market funds, securities issued by the U.S. Government, its agencies or
instrumentalities, repurchase agreements and short-term paper.
In general, relative to the other Portfolios, the Balanced Portfolio should
offer investors a balanced level of income and capital appreciation, while
subjecting investors to a lower level of principal risk. The Portfolio currently
plans to invest in shares of the following underlying CrestFunds within the
percentage ranges set forth below:
<TABLE>
<CAPTION>
INVESTMENT RANGE
(PERCENT OF THE BALANCED
ASSET CLASS PORTFOLIO'S ASSETS)
- --------------------------------- -------------------------
<S> <C>
Equity .......................... 40-70%
- -----
VALUE FUND
CAPITAL APPRECIATION FUND
SPECIAL EQUITY FUND
Bond ............................ 30-60%
- ----
LIMITED TERM BOND FUND
INTERMEDIATE BOND FUND
GOVERNMENT BOND FUND
Money Market .................... 0-20%
- ------------
CASH RESERVE FUND
</TABLE>
GENERAL INVESTMENT POLICIES OF THE PORTFOLIOS
To achieve each Portfolio's investment objective, the Adviser will attempt to
identify and select a diversified portfolio of underlying CrestFunds. In the
selection process, the Adviser analyzes many factors, including the underlying
CrestFunds' investment objectives, total return, volatility and expenses. Each
Portfolio invests a percentage of its assets, within percentage ranges the
Adviser believes appropriate, in select underlying CrestFunds, which are
separately-managed series of the Company. The percentages will reflect the
extent to which each Portfolio invests in the particular market segment
represented by each underlying fund in the CrestFunds family of funds, and the
varying degrees of potential investment risk and reward represented by each
Portfolio's investments in those corresponding underlying funds. These
percentage ranges may change when it is appropriate in light of each Portfolio's
investment objective. Each Portfolio may invest up to 100% of its assets in
shares of the underlying CrestFunds. In addition, when the Adviser deems it
appropriate, in order to meet liquidity needs or for temporary defensive
purposes, each Portfolio may invest its assets directly in securities issued by
the U.S. Government or its agencies or instrumentalities, repurchase agreements
and short-term paper. To the extent that a Portfolio is engaged in temporary
defensive investing, it will not be pursuing its investment objective.
INVESTMENTS IN SHARES OF THE UNDERLYING CRESTFUNDS
Each of the underlying CrestFunds pursues its own investment objective by
investing in particular types of securities. Each underlying fund's objectives
and primary investment policies are set forth below.
CASH RESERVE FUND -- The Cash Reserve Fund, a money market fund, seeks to
provide high current income to the extent consistent with the preservation of
capital and the maintenance of liquidity by investing in high quality, U.S.
dollar-denominated money market instruments of U.S. and foreign issuers,
including floating and variable rate instruments.
LIMITED TERM BOND FUND -- The Limited Term Bond Fund seeks to provide a high
level of current income by investing exclusively in investment-grade
fixed-income securities of U.S. and foreign issuers. The Fund is managed to
maintain a dollar-weighted average portfolio maturity of between 1 and 5 years.
INTERMEDIATE BOND FUND -- The Intermediate Bond Fund seeks to provide a high
level of current income
6
<PAGE>
by investing exclusively in investment-grade fixed-income securities of U.S and
foreign issuers. The Fund is managed to maintain a dollar-weighted average
portfolio maturity of between 5 and 10 years.
GOVERNMENT BOND FUND -- The Government Bond Fund seeks to provide a high level
of current income in a manner consistent with preserving principal by investing
primarily in obligations issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. In seeking current income, the Fund also may
consider the potential for capital gain. Under normal conditions, at least 65%
of the Fund's total assets will be invested in U.S. Government bonds or other
debt instruments, including repurchase agreements secured by U.S. Government
securities.
VALUE FUND -- The Value Fund seeks to provide long-term capital appreciation
and, as a secondary objective, current income, by investing primarily in income
producing equity securities of U.S and foreign companies with large market
capitalizations.
CAPITAL APPRECIATION FUND -- The Capital Appreciation Fund seeks to provide
long-term capital appreciation by investing primarily in the equity securities
of U.S and foreign companies with medium to large market capitalizations.
SPECIAL EQUITY FUND -- The Special Equity Fund seeks to provide long-term
capital appreciation by investing primarily in the equity securities of U.S and
foreign companies with small to medium market capitalizations.
The following risk factors are associated with a Portfolio's investments in
underlying CrestFunds:
- - When the Portfolios invest in underlying CrestFunds, shareholders will be
exposed to the risks associated with investing in those underlying CrestFunds.
Those risks include risks associated with investing in foreign securities,
asset-backed securities, delayed delivery transactions, American Depositary
Receipts, mortgage-backed securities, repurchase agreements and reverse
repurchase agreements.
- - The Portfolios and the underlying CrestFunds have the same officers, Directors
and investment adviser, which may give rise to certain conflicts of interest.
- - Each Portfolio's investment performance is substantially related to the
investment performance of the underlying CrestFunds.
- - Investing in the underlying CrestFunds involves certain additional expenses
that would not be present in a direct investment in the underlying CrestFunds.
When a Portfolio invests in underlying CrestFunds, shareholders bear not only
the Portfolio's expenses, but also the expenses of the underlying CrestFunds.
Summary information about the principal types of investments made by the
underlying CrestFunds is set forth in the "Description of Permitted Investments
and Risk Factors." More information about the underlying CrestFunds is contained
in the Portfolios' Statement of Additional Information, and in the Prospectus
and Statement of Additional Information relating to the underlying CrestFunds,
which may be obtained without charge by writing the Distributor at Oaks,
Pennsylvania 19456, or by calling 1-800-273-7827.
INVESTMENTS IN OTHER SECURITIES
In addition to shares of the underlying CrestFunds, the Portfolios may invest in
the following types of securities, which are described briefly below. The
Portfolios are not limited by this discussion, however, and may purchase other
types of securities and enter into other types of transactions if they meet each
of their respective investment objectives and policies.
BANKERS' ACCEPTANCES. Bankers' acceptances are time drafts or bills of exchange
drawn on and accepted by a bank, the customary means of effecting payment for
merchandise sold in import-export transactions and a source of financing used
extensively in international trade. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT. Certificates of deposit are interest bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity.
COMMERCIAL PAPER. Commercial paper is comprised of short-term obligations
issued by banks, broker-dealers, municipalities, corporations or other entities
for purposes such as financing their current obligations.
LETTERS OF CREDIT. Issuers or financial intermediaries who provide demand
features or standby commitments often support their ability to buy securities on
demand by obtaining letters of credit ("LOCs") or other guarantees from banks.
REPURCHASE AGREEMENTS. In a repurchase agreement, a mutual fund buys a security
at one price and simultaneously agrees to sell it back at a higher price. In the
event of bankruptcy of the other party to a
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repurchase agreement, the mutual fund could experience delays in recovering its
cash. To the extent that, in the meantime, the value of securities purchased had
decreased, the mutual fund could experience a loss.
SHORT-TERM PAPER. Short-term paper is comprised of instruments, such as notes
and bills of exchange, that are payable on demand or that have a maturity of
nine months or less.
TIME DEPOSITS. Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market.
INVESTMENT LIMITATIONS OF THE PORTFOLIOS
The following summarizes each Portfolio's principal investment limitations. A
complete listing is contained in the Statement of Additional Information. These
limitations are fundamental and may not be changed without shareholder approval.
Except for the Portfolios' percentage limitations concerning borrowing, the
limitations and policies discussed in this Prospectus are considered at the time
of purchase. Accordingly, the sale of securities is not required in the event of
a subsequent change in circumstances.
1. Each Portfolio may not, with respect to 75% of its total assets, purchase
the securities of any issuer (other than securities of other investment
companies and securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, (a) more than 5% of
its total assets would be invested in the securities of that issuer, or (b)
it would hold more than 10% of the outstanding voting securities of the
issuer.
2. Each Portfolio may borrow money for temporary or emergency purposes in an
amount not exceeding 5% of the Portfolio's total assets. In addition, each
Portfolio may borrow money in excess of 5% of the Portfolio's total assets
for any reason (a) by borrowing from banks or (b) by engaging in reverse
repurchase agreements.
PRICING OF SHARES AND VALUATION
The net asset value ("NAV") per share of each Portfolio is determined by
dividing the total market value of such Portfolio's investments and other
assets, less any liabilities, by the total number of outstanding shares of that
Portfolio. The assets of each Portfolio consist primarily of shares of the
underlying CrestFunds, which are valued at their respective net asset values.
Excluding shares of the underlying CrestFunds, portfolio securities generally
are valued at the last quoted sales price for such securities. Securities traded
only on over-the-counter markets are valued at the last over-the-counter bid
price. Securities for which there were no transactions on the valuation date are
valued at the most recent quoted bid price. A pricing service may be used to
obtain last sale price of each security held. Securities for which market
quotations are not readily available are valued at fair value as determined by
the Board of Directors. NAV per share is determined daily as of the regular
close of business of the New York Stock Exchange ("NYSE") (currently, 4:00 p.m.
Eastern time) on each Business Day.
HOW TO PURCHASE, EXCHANGE AND
REDEEM SHARES
DISTRIBUTOR
Shares of each Portfolio are sold on a continuous basis by the Portfolios'
Distributor. The Distributor is a registered broker-dealer with principal
offices at Oaks, Pennsylvania 19456.
PURCHASE OF SHARES
Trust Class shares are offered continuously to tax-advantaged and other employee
benefit or retirement accounts with which Crestar Bank, or an affiliate thereof,
has entered into certain management, administration, and/or servicing
agreements. For further information on opening an account, contact your plan
sponsor or financial intermediary for the services and procedures which pertain
to your account. Sales personnel of financial institutions distributing the
Portfolios' shares and other persons entitled to receive compensation for
selling such shares may receive differing compensation.
Purchases will be effected only on days on which the NYSE and the Portfolios'
custodian, Crestar Bank, are open for business ("Business Days"). The issuance
of shares is recorded on the books of the Portfolios, and share certificates
will not be issued for shares of the Portfolios. The Portfolios reserve the
right to reject any purchase order.
EFFECTIVE TIME OF PURCHASES
Purchase orders for the Portfolios must be received by Crestar Bank before the
regular close of business of the NYSE (currently, 4:00 p.m., Eastern time) on a
Business Day. Orders are priced according to the NAV determined on that day. Any
orders received after that time will be processed at the NAV next calculated.
All purchases must be paid for in U.S. dollars and checks must be drawn on U.S.
banks. Purchase orders will be executed by 4:00 p.m., Eastern time, on the
Business Day on which the purchase order is received in good order by Crestar
Bank. Payment for the purchase is expected at the time of the
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order but must be received within 5 business days of the date of the order. Each
Portfolio reserves the right to withhold redemption proceeds until it is
reasonably satisfied that checks received as payment have cleared (which can
take up to 7 days). If available funds are not received within 5 business days,
the order may be canceled and notice thereof will be provided to the party
placing the order.
It is the responsibility of the applicable plan sponsors and financial
intermediaries to transmit orders for purchases by their customers to the
transfer agent and for the plan sponsors and financial intermediaries to deliver
required funds on a timely basis in accordance with the above-stated procedures.
Any fees and/or losses incurred due to cancellation of an order will be the
responsibility of the party placing the order.
EXCHANGES
Investors may exchange shares of the Portfolios for Trust Class shares of other
Portfolios. All dividends credited to the shareholder up to the date of exchange
are paid to the shareholder at the end of the month. Each Portfolio reserves the
right to refuse exchanges if the Portfolio would be unable to invest effectively
in accordance with its investment objective and policies or would otherwise be
affected adversely. The Portfolios further reserve the right to terminate or
modify the exchange privilege in the future. Exchanges are subject to the same
time frames listed above. An exchange is considered a sale and subsequent
purchase of shares and may result in a capital gain or loss for federal income
tax purposes.
Investors may also exchange shares of the Portfolios for Trust Class shares,
Investors Class A shares or Investors Class B shares of the underlying
CrestFunds. Each fund in the CrestFunds family of funds reserves the right to
redeem Trust Class shares held by shareholders who are not eligible to purchase
Trust Class shares if such shares are not converted to Investors Class A shares
or Investors Class B shares after 30 days.
To exchange Trust Class shares of the Portfolios for shares of other Portfolios
or the underlying CrestFunds, such shares must be available for purchase by
investors, the investor must be eligible to purchase such shares, and the shares
must be offered by the investor's plan sponsor or financial intermediary.
Exchange purchases by any person or group may be refused if, in the Adviser's
judgment, a Portfolio or fund in the CrestFunds family of funds would be unable
to invest effectively in accordance with its investment objective and policies,
or would otherwise potentially be adversely affected.
REDEMPTION OF SHARES
Customers may redeem all or part of their Trust Class shares of a Portfolio held
through their employee benefit or retirement account in accordance with
instructions and limitations pertaining to their account. It is the
responsibility of each plan sponsor or financial intermediary to transmit
redemption orders to Crestar Bank and to credit the customers' accounts with the
redemption proceeds on a timely basis. No charge for wiring redemption payments
is imposed by the Portfolios, although banks may charge their customer accounts
for services provided in connection with the redemption of shares of the
Portfolios. Information concerning these services and any charges are available
from the plan sponsor or financial intermediary. Redemption orders are effected
at the NAV next determined after receipt of the order in good order by Crestar
Bank. All dividends credited to the shareholder up to the date of redemption are
paid to the shareholder at the end of the month.
Crestar Bank reserves the right to wire redemption proceeds within 7 days
following receipt of the order.
Subject to each Portfolio's compliance with applicable regulations, each
Portfolio has reserved the right to pay the redemption, either totally or
partially, by a distribution of securities or other property (instead of cash)
from a Portfolio's investments. The securities or property distributed in such a
distribution would be valued at the same amount as that assigned to them in
calculating the NAV for the shares being sold. If a shareholder receives a
distribution in kind, brokerage or transaction charges may be incurred when
converting the securities to cash, and the shareholder may realize a gain or
loss for tax purposes on both the distribution and the subsequent conversion.
With respect to tax-advantaged and other employee benefit or retirement
accounts, any distributions personally received by a shareholder from the
account prior to age 59 1/2 are generally subject to a 10% penalty tax, as well
as to ordinary income taxes. To avoid the 10% penalty, such shareholders must
generally roll over your distribution to another tax-advantaged account or
tax-qualified retirement plan (if permitted) within 60 days.
DIVIDENDS AND TAX MATTERS
DISTRIBUTIONS. Income dividends from the Portfolios are declared and
distributed monthly. Capital gains, if any, are declared and distributed
annually. All Portfolios distribute substantially all of their net investment
income and capital gains (if any) to shareholders each year. Unless the
Portfolios are instructed otherwise,
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all income dividends and capital gains distributions are automatically
reinvested into additional shares of the Portfolio immediately upon payment
thereof.
FEDERAL TAXES. Each Portfolio's distributions are taxable when they are paid,
whether taken in cash or reinvested in additional shares, except that
distributions declared in December and paid in January will be taxable as if
paid on December 31. Each Portfolio will send shareholders a tax statement by
January 31 showing the tax status of the distributions received in the past year
and will file a copy with the Internal Revenue Service ("IRS"). You should keep
all statements you receive to assist in your personal record keeping.
CAPITAL GAINS. Shareholders may realize a capital gain or loss when they redeem
or exchange shares. For most types of accounts, the Portfolios will report the
proceeds of the redemptions to investors and the IRS annually. However, because
the tax treatment also depends on an individual's purchase price and the
individual's personal tax position, shareholders should keep their regular
account statements to use in determining their tax.
"BUYING A DIVIDEND." On the ex-dividend date for an income dividend or
distribution from capital gains, each Portfolio's share value is reduced by the
amount of the distribution. If you buy shares just before the record date
("buying a dividend"), you would pay the full price for the shares and then
receive a portion of the share price as a taxable distribution.
OTHER TAX INFORMATION. In addition to federal taxes, an investor may be subject
to state or local taxes depending on the laws in such investor's area. An
investor should consult a tax adviser concerning the application of state and
local taxes to investments in the Portfolios, which may differ from the federal
income tax consequences described above. When an investor signs an account
application, such investor will be asked to certify that the social security or
taxpayer identification number is correct and that the investor is not subject
to backup withholding for failing to report income to the IRS. If an investor
violates IRS regulations, the IRS can require the Portfolios to withhold 31% of
such investor's taxable distributions and redemptions. Please refer to the
Statement of Additional Information for more information regarding taxes.
TAX-DEFERRED INVESTMENTS. Individual retirement accounts and participants in
other tax-qualified retirement plans generally will not be subject to federal
tax liability on either income or capital gain distributions from the
Portfolios. Rather, participants in such plans will be taxed when they begin
taking distributions from their individual retirement accounts and/or the plans.
There are various restrictions under the Internal Revenue Code on eligibility,
contributions and withdrawals, depending on the type of tax-deferred account or
tax-qualified retirement plan. The rules governing tax-deferred accounts and
tax-qualified retirement plans are complex, and failure to comply with the
governing rules and regulations may result in a substantial cost to an investor,
including the loss of tax advantages and the imposition of additional taxes and
penalties by the IRS. An investor should consult with a tax professional on the
specific rules governing your own plan.
PERFORMANCE
Performance of a Portfolio may be quoted in advertising in terms of yield,
effective yield or total return, as appropriate. Performance figures are based
on historical results and are not intended to indicate future performance.
Yield is calculated by dividing the net investment income (net of expenses)
earned by the Portfolio over a 30-day period, by the average number of shares
entitled to receive distributions, expressed as an annualized percentage rate.
The effective yield is calculated similarly, but assumes that the income earned
from the investment is reinvested. The effective yield will be slightly higher
than the yield because of the compounding effect of this assumed reinvestment.
Because yield accounting methods differ from the methods used for other
accounting purposes, each Portfolio's yield may not equal its distribution rate,
the income paid to an account or the income reported in the Portfolio's
financial statements.
Total returns are based on the overall dollar or percentage change in value of a
hypothetical investment in a Portfolio and assumes that all dividends and
capital gain distributions are reinvested. A cumulative total return reflects a
Portfolio's performance over a stated period of time. An average annual total
return reflects the hypothetical annually compounded return that would have
produced the same cumulative total return if the Portfolio's performance had
been constant over the entire period. Because average annual total returns tend
to smooth out variations in the Portfolios' returns, investors should recognize
that they are not the same as actual year-by-year results. When a Portfolio
quotes an average annual total return covering a period of less than one year,
the calculation assumes the performance will remain constant for the rest of the
year. Since this may or may not occur, these average annual total returns should
be viewed as hypothetical returns rather than actual performance. To illustrate
the components of overall performance, the Portfolios may separate their
cumulative and average
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annual total returns into income results and capital gain or loss. The
Portfolios may quote their total returns on a before tax or after tax basis.
PORTFOLIO TRANSACTIONS
As discussed above, the Portfolios will primarily invest in shares of the
underlying CrestFunds. Orders for transactions in these underlying funds will be
placed with SEI Financial Services Company, distributor for the underlying
CrestFunds and the Portfolios. The Portfolios may execute brokerage or other
agency transactions through an affiliate of the Distributor or through an
affiliate of the Adviser, which are registered broker-dealers.
The frequency of portfolio transactions, also known as a Portfolio's portfolio
turnover rate, will vary from year to year depending on market conditions. The
portfolio turnover rates for each of the Maximum Growth Portfolio and Growth and
Income Portfolio is not expected to exceed 25%. The portfolio turnover rate for
the Balanced Portfolio is not expected to exceed 25% with respect to the
Portfolio's investments in shares of underlying CrestFunds that invest primarily
in common stocks and 25% with respect to the Portfolio's remaining investments.
To ensure that a Portfolio's assets are allocated in accordance with its
investment objective, the Adviser will reallocate a Portfolio's assets within
the percentage ranges shown previously (see "Investment Objectives and
Policies"). A Portfolio's investments are continuously monitored and are
reallocated as often as the Adviser deems appropriate. In addition, to ensure
that a Portfolio's allocations fall within the selected percentage ranges, the
Adviser will adjust or rebalance the allocation of underlying CrestFunds in each
Portfolio. Portfolio allocations are typically reviewed once every month for
rebalancing at the discretion of the Adviser. If, however, market conditions
warrant, the Adviser may make more frequent reallocation and rebalancing
decisions, which will result in a higher portfolio turnover rate. The Portfolios
will purchase or sell shares of the underlying CrestFunds and other portfolio
securities: (a) to accommodate purchases and redemptions of each Portfolio's
shares; (b) in response to market or other economic conditions; and (c) to
maintain or modify the allocation of each Portfolio's assets among the
underlying portfolios within the percentage limits deemed from time to time by
the Adviser to be appropriate. It is important to note, however, that the
portfolio turnover rate of certain of the underlying CrestFunds may exceed 100%.
Such a turnover rate may result in higher transaction costs and may result in
additional tax consequences for shareholders (including the Portfolios).
ADVISORY AND RELATED AGREEMENTS
THE ADVISER
Crestar Asset Management Company (the "Adviser"), formerly Capitoline Investment
Services, Incorporated, 919 East Main Street, Richmond, Virginia 23219, provides
investment advisory services to each of the Portfolios subject to the general
supervision of the Company's Board of Directors.
The Adviser is a wholly-owned subsidiary of Crestar Bank, which is a subsidiary
of Crestar Financial Corporation, a MidAtlantic Region banking organization.
Crestar Financial Corporation had total assets of approximately $22.1 billion as
of January 31, 1997. Crestar Financial Corporation was organized in 1962 as a
bank holding company registered under the federal Bank Holding Company Act of
1956 and files annual and periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. (See "Banking Law
Matters.")
The Adviser was organized in 1973 and is one of the largest investment advisory
organizations in Virginia. As of January 31, 1997, the Adviser managed trust and
investment assets of approximately $13.4 billion.
PORTFOLIO MANAGEMENT
The Portfolios will be managed by the Adviser's Policy & Strategy Committee. The
Adviser's Policy & Strategy Committee is comprised of the President & Chief
Investment Officer, Director of Equity Investment Management, Director of Fixed
Income Investment Management, Director of Cash Investment Management and senior
portfolio managers. The Committee meets regularly, usually on a weekly basis, to
review the financial market outlook and implement asset allocation adjustments
as needed.
ADVISORY AGREEMENTS
The Company has entered into investment advisory agreements with the Adviser
("Advisory Agreements") on behalf of each Portfolio, pursuant to which the
Adviser is paid for its advisory services to each Portfolio at an annual rate of
.25% of the average daily net assets of each Portfolio. The Adviser, at its sole
discretion, may waive or reimburse a Portfolio for a portion of that Portfolio's
investment advisory fee in order to limit total operating expenses. Any waiver,
which may be discontinued at any time, has the effect of increasing the
Portfolio's yield for the period during which the waiver was in effect and may
not be recouped at a later date.
ADMINISTRATOR AND DISTRIBUTOR
The Administrator, a Delaware business trust, provides the Company with
administrative services, including fund accounting, regulatory reporting,
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necessary office space, equipment, personnel and facilities. SEI Financial
Management Corporation, a wholly-owned subsidiary of SEI Investments Company
("SEI"), is the owner of all beneficial interest in the Administrator.
The Administrator is entitled to a fee of $40,000 annually for each Portfolio.
Commencing with the operation of each Portfolio, the Administrator has
voluntarily agreed to waive its fee for a twelve month period. The Distributor,
a wholly-owned subsidiary of SEI, provides the Company with distribution
services. Each Portfolio may execute brokerage or other agency transactions
through the Distributor for which the Distributor receives compensation.
TRANSFER AGENT AND CUSTODIAN
Crestar Bank, 919 East Main Street, Richmond, VA 23219, acts as each Portfolio's
transfer agent, dividend paying agent and custodian. As transfer agent, Crestar
Bank maintains shareholder accounts and records for each Portfolio. For its
services as transfer agent, Crestar Bank is paid a monthly fee at the annual
rate of .05% of average net assets of each Portfolio.
As custodian, Crestar Bank safeguards and controls the Portfolios' cash and
securities, handles the receipt and delivery of securities and collects income
on portfolio investments. For these services, Crestar Bank is paid a monthly fee
at an annual rate of up to .03% of each Portfolio's average net assets.
Crestar Bank is permitted to subcontract any or all of its functions to one or
more qualified sub-transfer agents, sub-custodians or other persons. Crestar
Bank is permitted to compensate those agents for their services, but no such
compensation may increase the aggregate amount of payments by the Portfolios to
Crestar Bank pursuant to transfer agent or custodian agreements.
DIRECTORS AND OFFICERS
Pursuant to the Company's Articles of Incorporation, the Board of Directors
decides upon matters of general policy and reviews the actions of the Adviser,
Administrator and Distributor. The officers of the Company conduct and supervise
its daily business operations.
OTHER EXPENSE INFORMATION
For the purpose of the Adviser's obligation to reimburse expenses, each
Portfolio's annual expenses are estimated and accrued daily, and any appropriate
estimated payments will be made by the Adviser monthly. Each Portfolio's
expenses, which include Company expenses attributable to a particular Portfolio,
are allocated to that Portfolio. Expenses not directly attributable to a
particular Portfolio, are allocated among the Portfolios in proportion to their
average net assets.
BANKING LAW MATTERS
Banking laws and regulations, including the Glass-Steagall Act (as currently
interpreted by the Board of Governors of the Federal Reserve System), prohibit a
bank holding company registered under the Bank Holding Company Act of 1956 or
any 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 and prohibit banks generally from issuing,
underwriting, selling or distributing securities. The same laws and regulations
generally permit a bank or bank affiliate to act as an investment adviser and to
purchase shares of the investment company as agent for and upon the order of a
customer. Upon advice of counsel, the Company's Board of Directors believes that
the Adviser, Crestar Bank and any bank or bank affiliate may perform processing
or transfer agency or similar services described in this Prospectus for each
Portfolio and its shareholders without violating applicable federal banking laws
or regulations.
However, judicial or administrative decisions or interpretations of, as well as
changes in, either federal or state statutes or regulations relating to the
activities of banks and their affiliates could prevent a bank or bank affiliate
from continuing to perform all or a part of the activities contemplated by this
Prospectus. If banks or bank affiliates were prohibited from so acting, the
Company would change its existing policies to permit bank customers who are
shareholders to remain shareholders of a Portfolio and would implement
alternative means for continuing the servicing of such shareholders. In such
event, changes in the operation of the Portfolio might occur and a shareholder
serviced by such bank or bank affiliates may no longer be able to avail itself
of the bank's or its affiliates' services. It is not expected that shareholders
would suffer any adverse financial consequences as a result of any of these
occurrences.
DESCRIPTION OF COMMON STOCK
The Maximum Growth Portfolio, Growth and Income Portfolio, and Balanced
Portfolio are diversified portfolios of the Company. The authorized capital
stock of the Company, which was incorporated as a Maryland corporation on March
17, 1986, consists of 20 billion shares of stock having a par value of one tenth
of one cent ($.001) per share. The Board of Directors may, without shareholder
approval and at the Company's
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expense, divide the authorized stock into an unlimited number of separate
series. Currently all the authorized stock of the Company is divided into
fifteen separate series: Maximum Growth Portfolio Common Stock, Growth and
Income Portfolio Common Stock, Balanced Portfolio Common Stock, Cash Reserve
Fund Common Stock, U.S. Treasury Money Fund Common Stock, Tax Free Money Fund
Common Stock, Limited Term Bond Fund Common Stock, Intermediate Bond Fund Common
Stock, Government Bond Fund Common Stock, Maryland Municipal Bond Fund Common
Stock, Virginia Intermediate Municipal Bond Fund Common Stock, Virginia
Municipal Bond Fund Common Stock, Value Fund Common Stock, Capital Appreciation
Fund Common Stock and Special Equity Fund Common Stock, representing shares for
each of the Company's fifteen CrestFunds. The CrestFunds offer one or more of
three classes of shares: Trust Class shares, Investors Class A shares and
Investors Class B shares, which provide for variations in distribution and
servicing costs, transfer agent fees, voting rights and dividends. Such
variations may affect performance. For more information concerning these
classes, please refer to the prospectus for the underlying CrestFunds, contact
the Distributor at Oaks, Pennsylvania 19456 or call 1-800-273-7827.
All shares of the Company have equal voting and liquidation rights, and
fractional shares have those rights proportionately. Generally, shares will be
voted in the aggregate without reference to a particular series or class, unless
the matter affects only one series or class or voting by a series or class is
required by law, in which case shares will be voted separately by the series or
class, as the case may be. Maryland law does not require the Company to hold
annual meetings of shareholders and the Company does not intend to do so, though
special meetings will be held when required by law. Shareholders representing
25% or more of the Company or a series may, as set forth in the Company's
By-laws, call meetings of the Company or a series, as the case may be,
including, in the case of a meeting of the entire Company, the purpose of voting
on removal of one or more Directors. There are no conversion or preemptive
rights in connection with shares of each series. All shares, when issued and
paid for in accordance with the terms of the offering, will be fully paid and
non-assessable.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following briefly describes the primary types of securities in which the
underlying CrestFunds may invest. The underlying CrestFunds are not limited by
this discussion, however, and may purchase other types of securities and enter
into other types of transactions if they meet each of their respective
investment objectives and policies, and their respective quality, maturity and
liquidity requirements. More detailed information about the underlying
CrestFunds' investments is contained in the Portfolio's Statement of Additional
Information, and in the Prospectus and Statement of Additional Information
relating to the underlying CrestFunds, which may be obtained without charge by
writing the Distributor at Oaks, Pennsylvania 19456, or by calling
1-800-273-7827.
AMERICAN DEPOSITARY RECEIPTS ("ADRS"). ADRs are securities, typically issued by
a U.S. financial institution (a "depositary"), that evidence ownership interests
in a security or a pool of securities issued by a foreign issuer and deposited
with the depositary. ADRs may be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas an unsponsored
facility may be established by a depositary without participation by the issuer
of the underlying security. Holders of unsponsored depositary receipts generally
bear all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through, to the holders of the receipts, voting rights with respect to the
deposited securities. Designed for use in U.S. securities markets, ADRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.
EQUITY SECURITIES. Equity securities, such as common stocks, are units of
ownership of a corporation. Owners typically are entitled to vote on the
selection of directors and other important matters as well as to receive
dividends on their holdings. In the event that a corporation is liquidated, the
claims of secured and unsecured creditors and owners of bonds and preferred
stock take precedence over the claims of those who own common stock. For the
most part, however, common stock has more potential for appreciation.
Investments in common stocks are subject to market risks which may cause their
prices to fluctuate over time. Changes in value of portfolio securities will not
necessarily affect cash income derived from these securities but will affect a
mutual fund's net asset value. Investments in small capitalization companies
involve greater risk than is customarily associated with larger, more
established companies due to the greater business risks of small size, limited
markets and financial resources, narrow product lines and the frequent lack of
depth of management.
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FIXED-INCOME SECURITIES. Fixed-income securities are debt obligations issued by
governments, corporations, municipalities and other borrowers. The market value
of fixed income investments will change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal will also affect the value of
these investments. Changes in the value of portfolio securities will not affect
cash income derived from these securities but will affect a mutual fund's net
asset value.
FOREIGN INVESTMENTS. Investing in foreign securities traded in the United
States involves risks in addition to the risks inherent in domestic investments.
Foreign investments may be affected by the strength of foreign currencies
relative to the U.S. dollar, or by political or economic developments in foreign
countries. Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
public information about their operations. In addition, foreign markets may be
less liquid or more volatile than U.S. markets and may offer less protection to
investors. These risks are typically greater for investments in less developed
countries whose governments and financial markets may be more susceptible to
adverse political and economic developments. In addition to the political and
economic factors that can affect foreign securities, a governmental issuer may
be unwilling to repay principal and interest when due, and may require that the
conditions for payment be renegotiated. These factors could make foreign
investments, especially those in developing countries more volatile.
INVESTMENT-GRADE SECURITIES. Investment-grade securities include securities
rated BBB or higher by Standard & Poor's Corporation ("S&P") or Baa or higher by
Moody's Investors Service ("Moody's"), which generally provide adequate to
strong protection of principal and interest payments. Securities rated BBB or
Baa may be more susceptible to potential adverse changes in circumstances which
may lead to a weakened capacity to make principal and interest payments, and may
have speculative characteristics as well.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities are securities issued by
government and non-government entities such as banks, mortgage lenders or other
financial institutions. These instruments entitle the holder to a share of all
interest and principal payments from mortgages underlying the security. The
mortgages backing these securities include conventional thirty-year fixed rate
mortgages, graduated payment mortgages, and adjustable rate mortgages. A
mortgage-backed security may be an obligation of the issuer backed by a mortgage
or pool of mortgages or a direct interest in an underlying pool of mortgages.
Some mortgage-backed securities, such as collateralized mortgage obligations
("CMOs"), make payments of both principal and interest at a variety of
intervals; others make semiannual interest payments at a predetermined rate and
repay principal at maturity (like a typical bond). Mortgage-backed securities
are based on different types of mortgages including those on commercial real
estate or residential properties. Other types of mortgage-backed securities will
likely be developed in the future.
PREFERRED STOCK. Preferred stock is a class of capital stock that pays
dividends at a specified rate and that has preference over common stock in the
payment of dividends and the liquidation of assets. Preferred stock does not
ordinarily carry voting rights.
U.S. GOVERNMENT SECURITIES. U.S. Government securities are securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities. They may
be backed by the credit of the U.S. Government as a whole or only by the issuing
agency. For example, securities issued by the Federal Home Loan Banks and the
Federal Home Loan Mortgage Corporation are supported only by the credit of the
issuing agency, and not by the U.S. Government. Securities issued by the Federal
Farm Credit System, the Federal Land Banks and Fannie Mae are supported by the
agency's right to borrow money from the U.S. Treasury under certain
circumstances. U.S. Treasury securities and some agency securities, such as
those issued by the Federal Housing Administration and the Government National
Mortgage Association, are backed by the full faith and credit of the U.S.
Government and are the highest quality government securities. Guarantees of
principal by agencies or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value or yield of these
securities nor to the value of a mutual fund's shares.
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CRESTFUNDS-REGISTERED TRADEMARK-, INC.
MAXIMUM GROWTH PORTFOLIO, GROWTH AND INCOME PORTFOLIO, AND BALANCED PORTFOLIO
TRUST CLASS SHARES
STATEMENT OF ADDITIONAL INFORMATION
, 1997
This Statement is not a prospectus but should be read in conjunction with the
current Trust Class Prospectus (dated , 1997) for the above-referenced
portfolios of CrestFunds-Registered Trademark-, Inc. (the "Company"). Please
retain this document for future reference. To obtain without charge additional
copies of the Trust Class Prospectus for the above referenced Portfolios, or the
Prospectus or Statement of Additional Information for the other funds in the
CrestFunds family of funds, please call 1-800-273-7827.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Investment Policies and Limitations of the Portfolios............................................................ 3
Investment Practices of the Underlying CrestFunds................................................................ 3
Portfolio Transactions........................................................................................... 7
Valuation of Portfolio Securities................................................................................ 7
Portfolio Performance............................................................................................ 8
Additional Information Regarding Pricing and Redemptions......................................................... 9
Additional Description of Common Stock........................................................................... 9
Tax Status of the Portfolios..................................................................................... 10
Distributions and Taxes.......................................................................................... 11
Directors and Officers and Affiliated Persons.................................................................... 12
The Adviser...................................................................................................... 13
Administrator and Distributor.................................................................................... 13
Transfer Agent................................................................................................... 14
Custodian........................................................................................................ 14
Auditor.......................................................................................................... 14
Appendix......................................................................................................... 15
</TABLE>
<PAGE>
CRESTFUNDS, INC.
CrestFunds, Inc. (the "Company") is a registered open-end management investment
company that currently consists of fifteen separate investment portfolios
("portfolios" or "series"). The Company was established as a Maryland
corporation on March 17, 1986. The Company's Articles of Incorporation permit it
to offer separate series of common stock ("shares") and separate classes of each
series. Except for the differences among the Trust Class, Investors Class A
shares and Investors Class B shares, each share of each series represents an
equal proportionate interest in that series with each other share of that
series.
This Statement of Additional Information relates to the following investment
portfolios: Maximum Growth Portfolio, Growth and Income Portfolio, and Balanced
Portfolio (each a "Portfolio" and, collectively, the "Portfolios"). Shareholders
may purchase shares in the Portfolios through one class, the Trust Class.
Investors may purchase shares of the other series in the CrestFunds family of
funds through three separate classes, the Trust Class Shares, Investors Class A
and Investors Class B, which provide for variations in distribution and
servicing costs, transfer agent fees, voting rights and dividends.
ADVISER:
Crestar Asset Management Company (the "Adviser")
TRANSFER AGENT:
Crestar Bank (the "Transfer Agent")
CUSTODIAN:
Crestar Bank (the "Custodian")
ADMINISTRATOR:
SEI Fund Resources (the "Administrator")
DISTRIBUTOR:
SEI Financial Services Company (the "Distributor")
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INVESTMENT POLICIES AND LIMITATIONS OF THE PORTFOLIOS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of a Portfolio's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation shall be determined immediately after and
as a result of the Portfolio's acquisition of such security or other asset.
Accordingly, any subsequent changes in values, net assets, or other
circumstances will not be considered when determining whether the investment
complies with a Portfolio's investment policies and limitations.
Each Portfolio's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting securities,"
of the Portfolio (67% or more of the voting securities present or 50% of the
outstanding voting securities, whichever is less) as defined in the Investment
Company Act of 1940 (the "1940 Act"). However, except for the fundamental
investment limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental and
may be changed without shareholder approval.
THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF MAXIMUM GROWTH
PORTFOLIO, GROWTH AND INCOME PORTFOLIO, AND BALANCED PORTFOLIO SET FORTH IN
THEIR ENTIRETY. EACH PORTFOLIO MAY NOT:
1. with respect to 75% of its total assets, purchase the securities of any
issuer (other than securities of other investment companies and securities
issued or guaranteed by the U.S. Government, or any of its agencies or
instrumentalities) if, as a result thereof, (a) more than 5% of the
Portfolio's total assets would be invested in the securities of that issuer,
or (b) the Portfolio would hold more than 10% of the outstanding voting
securities of that issuer;
2. borrow money, except that a Portfolio (a) may borrow money for temporary or
emergency purposes in an amount not exceeding 5% of the Portfolio's total
assets determined at the time of the borrowing and (b) may borrow money from
banks or by engaging in reverse repurchase agreements. Asset coverage of at
least 300% is required for all borrowings, except where a Portfolio has
borrowed money for temporary purposes in amounts not exceeding 5% of its
total assets;
3. underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the
Securities Act of 1933 (the "Securities Act") in the disposition of
restricted securities;
4. issue senior securities (as defined in the 1940 Act), except as permitted by
rule, regulation or order of the Securities and Exchange Commission (the
"SEC");
5. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities or securities issued by investment companies) if, as a
result, more than 25% of the Portfolio's total assets would be invested in
the securities of companies whose principal business activities are in the
same industry. Each Portfolio may invest up to 100% of its assets in
securities issued by investment companies;
6. purchase or sell real estate, unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Portfolio from
investing in securities or other instruments either issued by companies that
invest in real estate, backed by real estate or securities of companies
engaged in the real estate business);
7. purchase or sell physical commodities, unless acquired as a result of
ownership of securities or other instruments; and
8. lend any security or make any other loan, except as permitted by the 1940
Act.
THE FOLLOWING LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED WITHOUT
SHAREHOLDER APPROVAL.
1. Each Portfolio does not currently intend to purchase securities on margin,
except that a Portfolio may obtain such short-term credits as are necessary
for the clearance of transactions.
2. Each Portfolio does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities that
are deemed to be illiquid because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.
3. Each Portfolio does not currently intend to sell securities short.
4. Each Portfolio does not currently intend to purchase or sell futures
contracts or put or call options.
INVESTMENT PRACTICES OF THE UNDERLYING CRESTFUNDS
Each underlying CrestFund's investments must be consistent with its investment
objective and policies.
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Accordingly, not all of the security types and investment techniques discussed
below are eligible investments for each of the underlying CrestFunds.
ASSET-BACKED SECURITIES. Asset-backed securities are securities secured by
non-mortgage assets such as company receivables, truck and auto loans, leases
and credit card receivables. Such securities are generally issued as
pass-through certificates, which represent undivided fractional ownership
interests in the underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized obligations and are
generally issued as the debt of a special purpose entity, such as a trust,
organized solely for the purpose of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain period by a letter of credit issued by a financial institution (such as
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the asset-backed securities. There also is
the possibility that recoveries on repossessed collateral may not, in some
cases, be available to support payments on those securities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset, but is generally less than the prepayment risk associated with
mortgage-backed securities. In addition, credit card receivables are unsecured
obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
DELAYED DELIVERY TRANSACTIONS. These transactions involve a commitment by a
mutual fund to purchase or sell specific securities at a predetermined price
and/or yield, with payment and delivery taking place after a period longer than
the customary settlement period for that type of security (and more than seven
days in the future). Typically, no interest accrues to the purchaser until the
security is delivered.
When purchasing securities on a delayed delivery basis, the purchaser assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. These securities are subject to market fluctuation due to changes
in market interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general level
of interest rates has changed. Because the purchaser is not required to pay for
securities until the delivery date, these risks are in addition to the risks
associated with other investments. If a mutual fund remains substantially fully
invested at a time when delayed delivery purchases are outstanding, the delayed
delivery purchases may result in a form of leverage. When a mutual fund has sold
a security on a delayed delivery basis, the mutual fund does not participate in
further gains or losses with respect to the security. If the other party to a
delayed delivery transaction fails to deliver or pay for the securities, the
mutual fund could miss a favorable price or yield opportunity, or could suffer a
loss. A mutual fund may renegotiate delayed delivery transactions after they are
entered into, and may sell underlying securities before they are delivered,
which may result in capital gains or losses.
FOREIGN INVESTMENTS. Investing in securities issued by companies or other
issuers whose principal activities are outside the United States may involve
significant risks in addition to the risks inherent in U.S. investments. The
value of securities denominated in foreign currencies and of dividends and
interest paid with respect to such securities will fluctuate based on the
relative strength of the U.S. dollar. A mutual fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by a mutual fund.
In addition, there is generally less publicly available information about
foreign issuers' financial condition and operations, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Foreign issuers are generally not bound by uniform accounting, auditing
and financial reporting requirements and standards of practice comparable to
those applicable to U.S. issuers. Further, economies of particular countries or
areas of the world may differ favorably or unfavorably from the economy of the
United States.
Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by
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foreign governments or foreign government-sponsored enterprises. Investments in
foreign countries also involve a risk of local political, economic, or social
instability; military action or unrest; or adverse diplomatic developments. The
considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.
Foreign markets may offer less protection to investors than U.S. markets. It is
anticipated that in most cases the best available market for foreign securities
will be on exchanges or in over-the-counter markets located outside of the
United States. Foreign stock markets, while growing in volume and
sophistication, are generally not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. issuers. Foreign security trading practices, including those involving
securities settlement where mutual fund assets may be released prior to receipt
of payment, may expose a mutual fund to increased risk in the event of a failed
trade or the insolvency of a foreign broker-dealer and may involve substantial
delays. In addition, the costs of foreign investing, including withholding
taxes, brokerage commissions and custodial costs, are generally higher that for
U.S. investors. In general, there is less overall governmental supervision and
regulation of securities exchanges, brokers and listed companies than in the
United States. It may also be difficult to enforce legal rights in foreign
countries.
U.S. dollar denominated foreign securities impose restrictions on transfer
within the U.S. or to U.S. persons. Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American Depositary Receipts ("ADRs") and European Depositary Receipts ("EDRs")
are certificates evidencing ownership of shares of a foreign-based issuer held
in trust by a bank or similar financial institution. Designed for use in U.S.
and European securities markets, respectively, ADRs and EDRs are alternatives to
the purchase of the underlying securities in their national markets and
currencies. EDRs are securities, typically issued by a non-U.S. financial
institution, that evidence ownership interests in a security or a pool of
securities issued by either a U.S. or foreign issuer. EDRs may be available for
investment through "sponsored" or "unsponsored" facilities.
INDEXED SECURITIES. Indexed securities are securities whose prices are indexed
to the prices of other securities, securities indices, currencies, precious
metals or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically provide for a
maturity value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices.
The performance of indexed securities depends to a great extent on the
performance of the security or other instrument to which they are indexed, and
may also be influenced by interest rate changes. At the same time, indexed
securities are subject to the credit risks associated with the issuer of the
security, and their values may decline substantially if the issuer's
creditworthiness deteriorates. Recent issuers of indexed securities have
included banks, corporations and certain U.S. Government agencies. Indexed
securities may be more volatile than the underlying instruments.
LENDING OF SECURITIES. Securities lending allows a mutual fund to retain
ownership of the securities loaned and, at the same time, to earn additional
income. There may be delays in the recovery of loaned securities, or even a loss
of rights in collateral supplied should the borrower fail financially.
It is the current view of the staff of the SEC that a mutual fund may engage in
loan transactions only under the following conditions: (1) the mutual fund must
receive at least 100% collateral in the form of cash or cash equivalents (e.g.,
U.S. Treasury bills or notes) from the borrower; (2) the borrower must increase
the collateral whenever the market value of the securities loaned (determined on
a daily basis) rises above the value of the collateral; (3) after giving notice,
the mutual fund must be able to terminate the loan at any time; (4) the mutual
fund must receive reasonable interest on the loan or a flat fee from the
borrower, as well as amounts equivalent to any dividends, interest, or other
distributions on the securities loaned and any increase in market value; (5) the
mutual fund may pay only reasonable custodian fees in connection with the loan;
and (6) the board of directors must be able to vote proxies on the securities
loaned, either by terminating the loan or by entering into an alternative
arrangement with the borrower.
Cash received through loan transactions may be invested in short-term high
quality debt securities, U.S. Government securities or money market instruments.
Investing this cash subjects that investment, as
5
<PAGE>
well as the security loaned, to market forces (i.e., capital appreciation or
depreciation).
MORTGAGE-BACKED SECURITIES. The market volatility of mortgage-backed securities
can be greater than the market volatility of other bonds. The value of
mortgage-backed securities may change due to shifts in the market's perception
of issuers. In addition, regulatory or tax changes may adversely affect the
mortgage securities market as a whole. Non-government mortgage-backed securities
may offer higher yields than those issued by government entities, but also may
be subject to greater price changes than government issues. Mortgage-backed
securities are subject to prepayment risk. Prepayment, which occurs when
unscheduled or early payments are made on the underlying mortgages, may shorten
the effective maturities of these securities and may lower their total returns.
During periods of declining interest rates, prepayment of mortgages underlying
mortgage securities can be expected to accelerate. Prepayment of mortgages which
underlie securities purchased at a premium often results in capital losses,
while prepayment of mortgages purchased at a discount often results in capital
gains. Because of these unpredictable prepayment characteristics, it is often
not possible to predict accurately the average life or realized yield or total
return of a particular issue. In the absence of a known maturity, market
participants generally refer to a security's estimated average life. An average
life estimate is a function of an assumption regarding anticipated prepayment
patterns, based upon current interest rates, current conditions in the relevant
housing markets and other factors. The assumption is necessarily subjective, and
thus different market participants can produce different average life estimates
with regard to the same security. There can be no assurance that estimated
average life will be a security's actual average life.
REPURCHASE AGREEMENTS. In a repurchase agreement, a mutual fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date within a number of days from the date
of purchase. A custodian holds the security as collateral for the repurchase
agreement. The resale price reflects the purchase price plus an agreed upon
incremental amount which is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and marked to
market daily) of the underlying security. A mutual fund bears a risk of loss in
the event the other party defaults on its obligations and the mutual fund is
delayed or prevented from exercising its right to dispose of the collateral or
if the mutual fund realizes a loss on the sale of the collateral. A mutual fund
may experience a loss if the market value of the underlying securities declines.
Generally, mutual funds enter into repurchase agreements only with financial
institutions deemed to present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase agreements are considered
loans under the 1940 Act.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS. Investments by a money market
fund are subject to limitations imposed under regulations adopted by the SEC.
Under these regulations, money market funds may only acquire obligations that
present minimal credit risk and that are "eligible securities," which means they
are (i) rated, at the time of investment, by at least two nationally recognized
security rating organizations (one if it is the only organization rating such
obligation) in the highest rating category or, if unrated, determined to be of
comparable quality (a "first tier security"), or (ii) rated according to the
foregoing criteria in the second highest rating category or, if unrated,
determined to be of comparable quality ("second tier security"). A security is
not considered to be unrated if its issuer has outstanding obligations of
comparable priority and security that have a short-term rating. In the case of
taxable money market funds, investments in second tier securities are subject to
the further constraints in that (i) no more than 5% of a Fund's assets may be
invested in second tier securities and (ii) any investment in securities of any
one such issuer is limited to the greater of 1% of the Fund's total assets or $1
million. A taxable money market fund may also hold more than 5% of its assets in
first tier securities of a single issuer for three "business days" (that is, any
day other than a Saturday, Sunday or customary business holiday).
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements are agreements by
which a mutual fund sells securities to financial institutions and
simultaneously agrees to repurchase those securities at a mutually agreed-upon
date and price. At the time a mutual fund enters into a reverse repurchase
agreement, the mutual fund places liquid assets having a value equal to the
repurchase price in a segregated custodial account and monitor this account to
ensure equivalent value is maintained. Reverse repurchase agreements involve the
risk that the market value of securities sold by the mutual fund may decline
below the price at which the mutual fund is obligated to repurchase the
securities. Reverse repurchase agreements are considered to be borrowings by the
mutual fund under the 1940 Act.
STANDBY COMMITMENTS. Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price prior to
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maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the standby commitment or put would only
have value to the mutual fund owning the security to which it relates. In
certain cases, a premium may be paid for a standby commitment or put, which
premium will have the effect of reducing the yield otherwise payable on the
underlying security. Generally, mutual funds limit standby commitment or put
transactions to institutions believed to present minimal credit risk.
Standby commitments are subject to certain risks, including: the ability of
issuers of standby commitments to pay for securities at the time the commitments
are exercised; the fact that standby commitments are not marketable by mutual
funds; and the possibility that the maturities of the underlying securities may
be different from those of the commitments.
VARIABLE OR FLOATING RATE DEMAND OBLIGATIONS ("VRDOS"/"FRDOS"). Variable or
floating rate demand obligations are tax-exempt obligations that bear variable
or floating interest rates and carry rights that permit holders to demand
payment of the unpaid principal balance plus accrued interest from the issuers
or certain financial intermediaries. Floating rate securities have interest
rates that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in the
interest rate. These formulas are designed to result in a market value for the
VRDO or FRDO that approximates its par value. The interest rates on these
securities may be reset daily, weekly, quarterly or some other reset period, and
may have a floor or ceiling on interest rate changes. There is a risk that the
current interest rate on such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand notice exceeding seven
days may be considered illiquid if there is no secondary market for such
security.
Fixed-rate bonds may be subject to third party puts. These bonds and
participation interests in such bonds held by a bank in trust or otherwise have
tender options or demand features that permit the holder to tender (or put)
their bonds to an institution at periodic intervals of up to one year and to
receive the principal amount thereof. Variable rate instruments structured in
this way ("participating VRDOs") are essentially equivalent to other VRDOs. The
IRS has not ruled whether the interest on participating VRDOs is tax-exempt.
A demand instrument with an unconditional demand feature may be acquired solely
in reliance upon a short-term high quality rating or, if unrated, upon finding
of comparable short-term quality.
A variable rate instrument that matures in 397 days or less may be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate. A variable rate instrument that matures in greater than 397 days,
but that is subject to a demand feature that is 397 days or less, may be deemed
to have a maturity equal to the longer of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand. A floating rate instrument that is
subject to a demand feature may be deemed to have a maturity equal to the period
remaining until the principal amount may be recovered through demand.
PORTFOLIO TRANSACTIONS
The Portfolios will primarily invest in shares of the underlying CrestFunds.
Orders for transactions in these underlying funds will be placed with SEI
Financial Services Company, distributor for the underlying CrestFunds and the
Portfolios.
VALUATION OF PORTFOLIO SECURITIES
The assets of each Portfolio consist primarily of shares of the underlying
CrestFunds, which are valued at their respective net asset values. The net asset
value ("NAV") per share of each of the underlying CrestFunds is determined by
dividing the total market value of such Fund's investments and other assets,
less any liabilities, by the total number of outstanding shares of that Fund.
Excluding shares of the underlying CrestFunds, portfolio securities are valued
at the last quoted sales price for such securities, or, if there is no such
reported sales price on the valuation date, at the most recent quoted bid price.
Securities and other assets for which exchange quotations are not readily
available are valued on the basis of closing over-the-counter bid prices, if
available, or at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Board of Directors.
A pricing service may be used to obtain last sale price of each security held.
Valuations of portfolio securities furnished by the pricing service employed by
the Portfolios are based upon a computerized matrix system and/or appraisals by
the pricing service, in each case in reliance upon information concerning market
transactions and quotations from recognized securities dealers. The methods used
by the pricing service and the quality of valuations so established
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are reviewed by officers of the Portfolios and the Portfolios' pricing agent
under general supervision of the Board of Directors. There are a number of
pricing services available, and the Board of Directors, on the basis of on-going
evaluation of these services, may obtain quotes directly from broker-dealers or
market makers, may use other pricing services or discontinue the use of any
pricing service in whole or in part.
PORTFOLIO PERFORMANCE
YIELD CALCULATIONS. The yield of a Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified 30-day period. The
yield is calculated by assuming that the income generated by the investment
during that period generated each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula: Yield = 2[((a-b)/(cd)+1)(6) - 1] in which a =
dividends and interest earned during the period; b = expenses accrued for the
period (net of reimbursements); c = the average daily number of shares
outstanding during the period that were entitled to receive dividends; and d =
the maximum offering price per share on the last day of the period.
Yield information may be useful in reviewing a Portfolio's performance and in
providing a basis for comparison with other investment alternatives. However,
each Portfolio's yield fluctuates, unlike investments that pay a fixed interest
rate over a stated period of time. When comparing investment alternatives,
investors should also note the quality and maturity of the portfolio securities
of the respective investment companies that they have chosen to consider.
Investors should recognize that in periods of declining interest rates a
Portfolio's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates a Portfolio's yield will tend to be
somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a Portfolio from the continuous sale of its shares will likely be
invested in instruments producing lower yields than the balance of the
Portfolio's holdings, thereby reducing the Portfolio's current yield. In periods
of rising interest rates, the opposite can be expected to occur.
The distribution rate, which expresses the historical amount of income dividends
paid as a percentage of the share price may also be quoted. The distribution
rate is calculated by dividing the daily dividend per share by its offering
price (including the maximum sales charge, if applicable) for each day in the
30-day period, averaging the resulting percentages, then expressing the average
rate in annualized terms. The distribution rate may also be calculated without
giving effect to applicable sales charges.
TOTAL RETURN CALCULATIONS. The total return of a Portfolio refers to the
average compounded rate of return to a hypothetical investment for designated
time periods (including but not limited to, the period from which the Portfolio
commenced operations through the specified date), assuming that the entire
investment is redeemed at the end of each period. In particular, total return
will be calculated according to the following formula: P(1 + T)(n) = ERV, where
P = a hypothetical initial payment of $1,000; T = average annual total return; n
= number of years; and ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the designated time period as of the end of
such period.
Total returns quoted in advertising reflect all aspects of the Portfolio's
return, including the effect of reinvesting dividends and capital gain
distributions (if any), and any change in the Portfolio's NAV over the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a Portfolio over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative total return of 100% over
ten years would produce an average annual total return of 7.18%, which is the
steady annual rate of return that would equal 100% growth on a compounded basis
in ten years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a Portfolio's
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to the actual
year-to-year performance of the Portfolio.
In addition to average annual total returns, each Portfolio may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and cumulative total returns may
be quoted as a percentage or as a dollar amount, and may be calculated for a
single investment, a series of investments, or a series of redemptions, over any
time period. Total returns may be broken down into their components of income
and capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns, yields and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
A Portfolio's performance may be compared in advertising to the performance of
other mutual funds
8
<PAGE>
in general or to the performance of particular types of mutual funds, especially
those with similar objectives. This performance may be expressed as a ranking
prepared by Lipper Analytical Services, Inc. ("Lipper," sometimes referred to as
"Lipper Analytical Services"), an independent service, that monitors the
performance of mutual funds. The Lipper performance analysis ranks funds on the
basis of total return, assuming reinvestment of all distributions, but does not
take sales charges or redemption fees into consideration and is prepared without
regard to tax consequences.
ADDITIONAL INFORMATION REGARDING PRICING AND REDEMPTIONS
The Portfolios are open for business and their NAVs are calculated each day the
NYSE and Crestar Bank, the Custodian, are open. The NAV of each Portfolio is
determined as of the close of regular trading hours of the NYSE, normally 4:00
p.m. Eastern time. The NYSE and Crestar Bank have designated the following
holiday closings for 1997, and the Adviser expects the schedule to be the same
in the future: New Year's Day (observed), Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day (observed), Independence Day, Labor
Day, Columbus Day (observed), Veterans' Day, Thanksgiving Day and Christmas Day.
The holiday closing schedule may be changed by the NYSE and Crestar Bank. When
the NYSE is closed, or when trading is restricted for any reason other than its
customary weekend or holiday closings, or under emergency circumstances as
determined by the SEC to merit such action, the Portfolios will determine NAVs
at the close of business, the time of which will coincide with the closing of
the NYSE. To the extent that Portfolio securities are traded in other markets on
days the NYSE or Crestar Bank are closed (and a Portfolio is not open for
business), a Portfolio's NAV may be significantly affected on days when
investors do not have access to the Portfolio to purchase or redeem shares.
If the Directors determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in securities
or other property, valued for this purpose as they are valued in computing the
NAV of each Portfolio. Shareholders receiving securities or other property on
redemption may realize a gain or loss for tax purposes and will incur any costs
of sale, as well as the associated inconveniences.
Pursuant to Rule 11a-3 under the 1940 Act, a Portfolio is required to give
shareholders at least 60 days' notice prior to terminating or modifying a
Portfolio's exchange privilege. Under the Rule, the 60 day notification
requirement may be waived if (1) the only effect of a modification would be to
reduce or eliminate an administrative fee, redemption fee or deferred sales
charge ordinarily payable at the time of exchange; or (2) a Portfolio
temporarily suspends the offering of shares as permitted under the 1940 Act or
by the SEC or because it is unable to invest amounts effectively in accordance
with its investment objective and policies.
In the Prospectus, the Portfolios have notified shareholders that they reserve
the right at any time without prior notice to shareholders to refuse exchange
purchases by any person or group if, in the Adviser's judgment, a Portfolio
would be unable to invest effectively in accordance with its investment
objective and policies, or would otherwise potentially be adversely affected.
ADDITIONAL DESCRIPTION OF COMMON STOCK
The following information may be important to those investors who may want to
exchange shares of a Portfolio for shares of underlying CrestFunds. Investors
Class A shares and Investors Class B shares are offered continuously to
individual and institutional customers investing directly in CrestFunds. The
U.S. Treasury Money Fund has indefinitely suspended its offering of Investors
Class A shares. The offering may recommence upon supplementing the Investors
Class A shares and Investors Class B shares Prospectus. Shares of the Cash
Reserve Fund, the U.S. Treasury Money Fund and the Tax Free Money Fund (the
"money market funds") are offered at NAV. Investors Class A shares of Limited
Term Bond Fund are offered at NAV plus a maximum 2.0% sales charge. Investors
Class A shares of Intermediate Bond Fund are offered at NAV plus a maximum 3.0%
sales charge. Investors Class A shares of Virginia Intermediate Municipal Bond
Fund are offered at NAV plus a maximum 3.5% sales charge. Equity funds are
offered at NAV plus a maximum 4.5% sales charge. Investors Class A shares of
each money market fund pay an additional distribution-related 12b-1 fee at
annual rate of .25% of the average net assets of the Investors Class A shares of
that Fund. The Investors Class A shares and Investors Class B shares of each
Fund also pay a fee for transfer agency services at an annual rate of .06% of
the average net assets of that Fund. Performance of Investors Class A shares and
Investors Class B shares is lower than that of Trust Class shares of the same
Fund due to Investors Class A shares' and the Investors Class B shares' higher
total expenses. Investors Class A shares and Investors Class B shares bond fund
yields and bond and equity fund total returns generally include the effects of
the maximum applicable sales charge, or contingent deferred sales charge, which
has the effect of lowering the yield and total return figures.
9
<PAGE>
Investors Class B shares are offered with a contingent deferred sales charge to
retail investors who engage an investment professional for investment advice.
Investors Class B shares are subject to an annual distribution fee at the rate
of .75% of average net assets, an annual shareholder service fee at the rate of
.25% of average net assets, and a contingent deferred sales charge upon
redemption within seven years of purchase, which decreases from a maximum of 5%
to 0%. At the end of seven years, Investors Class B shares automatically convert
to Investors Class A shares. Investors Class B shares are available for the
Special Equity Fund, the Value Fund, the Cash Reserve Fund, the Government Bond
Fund, the Maryland Municipal Bond Fund, and the Virginia Municipal Bond Fund.
Performance for Investors Class B shares is expected to be lower than that of
Investors Class A shares and Trust Class shares of a Fund due to Investors Class
B shares' higher total expenses.
TAX STATUS OF THE PORTFOLIOS
The following is only a summary of certain additional federal tax considerations
generally affecting the Portfolios and their shareholders that are not described
in the Portfolios' prospectus. No attempt is made to present a detailed
explanation of the federal, state or local tax treatment of the Portfolios or
their shareholders and the discussion here and in the Portfolios' prospectus is
not intended as a substitute for careful tax planning.
This discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.
Each Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Portfolios. Each Portfolio intends to
qualify as a regulated investment company ("RIC") under Subchapter M of the Code
so that it will be relieved of federal income tax on that part of its income
that is distributed to shareholders. In order to qualify for treatment as a RIC,
a Portfolio must distribute annually to its shareholders at least 90% of its
investment company taxable income which is, generally, net investment income
plus the excess, if any, of net short-term capital gain over net long-term
capital loss ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following (1) at least 90% of a
Portfolio's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or other income derived with respect
to its business of investing in such stock or securities; (2) less than 30% of a
Portfolio's gross income each taxable year must be derived from the sale or
other disposition of stocks, securities or certain other investments held for
less than three months; (3) at the close of each quarter of a Portfolio's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. Government securities, securities of other RICs and
other securities, with such other securities limited, in respect of any one
issuer, to an amount that does not exceed 5% of the value of a Portfolio's
assets and that does not represent more than 10% of the outstanding voting
securities of such issuer; and (4) at the close of each quarter of a Portfolio's
taxable year, not more than 25% of the value of its assets may be invested in
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer or of two or more issuers which are engaged in the same,
similar, or related trades or businesses, if the Portfolio owns at least 20% of
the voting power of such issuers.
Notwithstanding the Distribution Requirement described above, which only
requires a Portfolio to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a Portfolio will be subject to a nondeductible 4% federal excise tax to
the extent it fails to distribute by the end of any calendar year at least 98%
of its ordinary income for that year and 98% of its capital gain net income (the
excess of short- and long-term capital gain over short- and long-term capital
loss) for the one-year period ending on October 31 of that year, plus certain
other amounts. Each Portfolio intends to make sufficient distributions to avoid
liability for the federal excise tax applicable to RICs. A Portfolio may in
certain circumstances be required to liquidate portfolio investments in order to
make sufficient distributions to avoid federal excise tax liability when the
investment advisor might not otherwise have chosen to do so, and liquidation of
investments in such circumstances may affect the ability of a Portfolio to
satisfy the requirements for qualification as a RIC.
If capital gain distributions have been made with respect to shares that are
sold at a loss after being held for six months or less, then the loss is treated
as a long-term capital loss to the extent of the capital gain distributions. If
a Portfolio fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions (including capital gain
distributions) generally will be taxable as
10
<PAGE>
ordinary income dividends to its shareholders, subject to the dividends received
deduction for corporate shareholders who have held shares for more than 45 days.
A Portfolio will be required in certain cases to withhold and remit to the
United States Treasury 31% of amounts payable to any shareholder who: (1) has
provided the Portfolio either an incorrect tax identification number or no
number at all; (2) is subject to backup withholding by the Internal Revenue
Service for failure to properly report payments of interest or dividends; or (3)
has failed to certify to the Portfolio that such shareholder is not subject to
backup withholding.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If distributions are mailed and the U.S. Postal Service cannot
deliver the checks, or if the checks remain uncashed for six months, the
Portfolios will hold distributions without interest or until you provide the
Portfolio with alternate instructions.
Each Portfolio declares and pays dividends equal to its entire net investment
income on a monthly basis. Net capital gains, if any, are declared and
distributed annually by all Portfolios, normally in December. Unless the
Portfolio's Transfer Agent is otherwise instructed, all dividends and
distributions of capital gains are automatically re-invested into additional
shares of common stock of that Portfolio immediately upon payment thereof.
Each Portfolio intends to qualify for tax treatment as a "regulated investment
company" under the Internal Revenue Code. By distributing all of its net
investment income and any net realized short-term and long-term capital gains
for a taxable year in accordance with the timing requirements imposed by the
Code, and by meeting certain other requirements relating to the sources of
income and diversification of assets, a Portfolio should not be liable for
federal income or excise taxes.
FEDERAL TAXES. Distributions from each Portfolio's taxable net investment
income and net short-term capital gains are taxed as dividends, and capital gain
distributions are taxed as long-term capital gains. The Portfolios'
distributions are taxable when they are paid, whether taken in cash or
reinvested in additional shares, except that distributions declared in October,
November or December to shareholders of record in such month and paid the
subsequent January will be taxed as though paid on December 31.
The Portfolios will send shareholders a tax statement by January 31 showing the
status of the taxable distributions received in the prior year, and will file a
copy with the IRS. In addition, within 60 days from the end of each Portfolio's
fiscal year end, the shareholders will be notified as to the portion of
distributions paid that qualify as exempt-interest dividends, capital gain
distributions, and qualified dividends for corporate investors. It is suggested
that shareholders keep all statements received to assist in personal record
keeping.
STATE AND LOCAL TAXES. In addition to federal taxes, shareholders may be
subject to state or local taxes on their investment, depending on state law.
CAPITAL GAINS. Shareholders may realize a capital gain or loss when they redeem
(sell) or exchange shares of the Portfolios. For most types of accounts, the
Portfolios will report the proceeds of a shareholder's redemptions to the
shareholder and the IRS annually. However, because the tax treatment also
depends on the purchase price and the shareholder's personal tax position,
shareholders should keep their regular account statements to use in determining
their tax.
"BUYING A DIVIDEND." On the ex-dividend date for a Portfolio's distribution,
the Portfolio's share value is reduced by the amount of the distribution. If a
shareholder were to buy shares just before the record date ("buying a
dividend"), the shareholder would pay the full price for the shares and then, in
effect, receive a portion of the price back as a taxable distribution.
OTHER TAX INFORMATION. When an investor signs his account application, he will
be asked to provide his social security or taxpayer identification number and
certify that the number provided is correct and that he is not subject to 31%
backup withholding for failing to report income to the IRS. If an investor fails
to provide the correct number or violates IRS regulations, the IRS can require
the Portfolios to withhold 31% of such investor's taxable distributions and
redemptions.
Each Portfolio is treated as a separate entity in all respects for tax purposes.
There is a risk that a Portfolio may be unable to meet tax rules that require
mutual funds to derive less than 30% of their gross income from gains realized
upon the sale of securities held less than 3 months. If this were to occur, the
affected Portfolio may be required to pay federal as well as Maryland state
income taxes from its assets.
The information above is only a summary of some of the tax consequences
generally affecting the Portfolios and their shareholders, and no attempt has
been made to discuss individual tax consequences. In addition to federal income
taxes, shareholders may be subject to state and local taxes on distributions
received from the Portfolios. Investors should consult
11
<PAGE>
their tax advisers to determine whether a Portfolio is suitable to their
particular situations.
DIRECTORS AND OFFICERS AND AFFILIATED PERSONS
The Directors and officers of the Company and their principal occupations during
the past five years are set forth below. The Director who is an "interested
person" (as defined in the 1940 Act) by virtue of his affiliation with either a
Portfolio or the Adviser is indicated by an asterisk (*).
Kathryn L. Stanton, Vice President, Assistant Secretary. Deputy General Counsel,
Vice President and Assistant Secretary of SEI. Vice President and Assistant
Secretary of the Distributor and the Administrator since 1994. Associate,
Morgan, Lewis & Bockius LLP (law firm) 1989-1994.
Todd Cipperman, Vice President and Assistant Secretary. Vice President and
Assistant Secretary of SEI, the Administrator and the Distributor since 1995.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston & Strawn
(law firm), 1991-1994.
* Jesse F. Williams III, Chairman, President, and Director. Chairman of the
Board, Harrison & Bates Incorporated (real estate company), since 1971. Mr.
Williams is also a member of the advisory board of Crestar Bank. His address is
823 East Main Street, Suite 1800, Richmond, Virginia 23219.
F. David Fowler, Director. Dean of School of Business and Public Management of
George Washington University since 1992. Mr. Fowler is also a member of the
board of directors of FTP Software Corporation (software sales). Previously, he
was a Partner at KPMG Peat Marwick LLP (public accountants). His business
address is 710 21st Street, N.W., Suite 206, Washington, D.C. 20052.
John Bruce James, Jr., Director. Vice President of Virginia Landmark Corporation
(real estate company) since 1970. Mr. James is also a member of the Commission
of Architectural Review, City of Richmond, since 1982; a member of the Board of
Trustees of the Instructive Visiting Nurses Association since 1976; and a member
of the Board of Directors of The Retreat Hospital, Richmond, Virginia, since
1982. Previously, he was a member of the Board of Trustees, Hampden-Sydney
College. His address is 3910 Exeter Road, Richmond, Virginia 23221.
Jean L. Oakey, Director. Partner at Wells Coleman & Co. (public accountants).
Her business address is 3800 Patterson Avenue, Richmond, Virginia 23221.
Glen Douglas Pond, Director. Retired. Formerly the Director of the Virginia
Retirement System. His address is 21 Waterfront Court, Cedar Point, Urbanna,
Virginia 23175.
David M. Carter, Secretary. Partner, Hunton & Williams, Fund Counsel.
Kevin P. Robins, Vice President, Assistant Secretary. Senior Vice President &
General Counsel of SEI, the Administrator and the Distributor since 1994. Vice
President of SEI, the Administrator and the Distributor 1992-1994. Associate,
Morgan, Lewis & Bockius LLP (law firm) prior to 1992.
Robert DellaCroce, Controller, Assistant Secretary. Director, Funds
Administration and Accounting of SEI since 1994. Senior Audit Manager, Arthur
Andersen LLP, 1986 -1994.
As of November 30, 1996, the Directors and officers of the Company received the
following compensation:
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION FROM PENSION OR RETIREMENT
REGISTRANT FOR BENEFITS ACCRUED AS ESTIMATED ANNUAL
FISCAL PART OF FUND BENEFITS UPON
NAME OF PERSON, POSITION YEAR ENDED 1996 EXPENSES RETIREMENT
- ------------------------------------------- ------------------- --------------------------- -----------------------
<S> <C> <C> <C>
Jesse F. Williams, III, Chairman, President
and Director............................. $ 8,000 0 0
F. David Fowler, Director.................. $ 6,250 0 0
John Bruce James, Jr., Director............ $ 8,000 0 0
Jean L. Oakey, Director.................... $ 8,000 0 0
Glen Douglas Pond, Director................ $ 8,000 0 0
<CAPTION>
TOTAL COMPENSATION
FROM REGISTRANT AND
FUND COMPLEX PAID TO
DIRECTORS FOR FISCAL
NAME OF PERSON, POSITION YEAR ENDED 1996
- ------------------------------------------- ---------------------
<S> <C>
Jesse F. Williams, III, Chairman, President
and Director............................. $ 8,000
F. David Fowler, Director.................. $ 6,250
John Bruce James, Jr., Director............ $ 8,000
Jean L. Oakey, Director.................... $ 8,000
Glen Douglas Pond, Director................ $ 8,000
</TABLE>
The Company was incorporated in the State of Maryland as Bayshore Funds, Inc. on
March 17, 1986. At a special meeting of shareholders held July 7, 1992,
shareholders approved an amendment to the Articles of Incorporation changing the
name to CrestFunds, Inc. The change was effective July 10, 1992.
12
<PAGE>
THE ADVISER
The Portfolios will be managed by the Adviser's Policy & Strategy Committee. The
Adviser's Policy & Strategy Committee is comprised of the President & Chief
Investment Officer, Director of Equity Investment Management, Director of Fixed
Income Investment Management, Director of Cash Investment Management, and senior
portfolio managers. This committee meets regularly, usually on a weekly basis,
to review the financial market outlook and implement asset allocation
adjustments as needed.
Pursuant to investment advisory agreements, as amended (the "Advisory
Agreements"), the Adviser, a wholly-owned subsidiary of Crestar Bank, a
subsidiary of Crestar Financial Corp., furnishes at its own expense all
services, facilities and personnel necessary in connection with managing each
Portfolio's investments and effecting portfolio transactions for each Portfolio.
Each Advisory Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board of Directors or by vote of
the shareholders, and in either case by a majority of the Directors who are not
parties to each Advisory Agreement or interested persons of any such party, at a
meeting called for the purpose of voting on each Advisory Agreement.
Each Advisory Agreement is terminable without penalty by any Portfolio on 60
days' written notice when authorized either by vote of its shareholders or by a
vote of a majority of the Board of Directors, or by the Adviser on 60 days'
written notice, and will automatically terminate in the event of its assignment.
Each Advisory Agreement also provides that, with respect to each Portfolio,
neither the Adviser nor its personnel shall be liable for any error of judgment
or mistake of law or for any act or omission in the performance of its duties to
the Portfolio, except for willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's or their duties or by reason of reckless
disregard of its or their obligations and duties under the Advisory Agreements.
Each Advisory Agreement provides that the Adviser may render services to others.
The fees paid pursuant to the Advisory Agreements are accrued daily and paid
monthly. For its services under the Advisory Agreements, the Adviser receives
fees with respect to each Portfolio at the annual rate of .25% of the average
daily net assets of each Portfolio. The Adviser may choose to waive or reimburse
a Portfolio for a portion of that Portfolio's investment advisory fee.
In addition to receiving its advisory fee from the Portfolios, the Adviser may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in a Portfolio. In some instances the Adviser may
elect to credit against any investment management fee received from a client who
is also a shareholder in the Portfolio an amount equal to all or a portion of
the fees received by the Adviser and its affiliates from a Portfolio with
respect to the client's assets invested in the Portfolio.
The Company has, under each Advisory Agreement, confirmed its obligation to pay
all other expenses, including interest charges, taxes, brokerage fees and
commissions; certain insurance premiums; fees, interest charges and expenses of
the custodian, transfer agent and dividend disbursing agent; telecommunications
expenses; auditing, legal and compliance expenses; costs of forming the
corporation and maintaining corporate existence; costs of preparing and printing
the Company's prospectus, statement of additional information, subscription
order forms and shareholder reports and delivering them to existing and
prospective shareholders; costs of maintaining books of original entry for
portfolio and Portfolio accounting and other required books and accounts and of
calculating the NAV of shares of the Portfolios; costs of reproduction,
stationery and supplies; compensation of directors and officers and employees of
the Company and costs of other personnel performing services for the Company who
are not officers of the Adviser, the Company's Distributor or their respective
affiliates; costs of corporate meetings; SEC registration fees and related
expenses; state securities laws registration fees and related expenses; fees
payable to the Adviser under the Advisory Agreements and to the Company's
Distributor under the Administration and Distribution Agreement and all other
fees and expenses paid by a Portfolio pursuant to the Administration Plans or
Distribution Plans.
ADMINISTRATOR AND DISTRIBUTOR
THE ADMINISTRATOR
The Company and the Administrator have entered into an administration agreement
(the "Administration Agreement") effective March 1, 1995.
The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Financial Management Corporation
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<PAGE>
("SFM"), a wholly-owned subsidiary of SEI Investments Company ("SEI"), is the
owner of all beneficial interests in the Administrator. SEI and its affiliates,
including the Administrator, are leading providers of investment products and
services to financial institutions, institutional investors, and money managers.
The Administrator and its affiliates also serve as administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors' Inner
Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, CoreFunds, Inc.,
CUFUND, FMB Funds, Inc., First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc., Inventor Funds, Inc., Marquis
Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The Pillar Funds, Profit Funds Investment Trust, Rembrandt
Funds-Registered Trademark-, Santa Barbara Group of Mutual Funds, Inc., 1784
Funds-Registered Trademark-, SEI Asset Allocation Trust, SEI Daily Income Trust,
SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
Stepstone Funds, STI Classic Funds, STI Classic Variable Trust, and Turner
Funds.
The Administrator is entitled to a fee of $40,000 annually from each Portfolio.
Commencing with the operation of each Portfolio, the Administrator has
voluntarily agreed to waive its fee for a twelve month period.
THE DISTRIBUTOR
The Distributor, a wholly-owned subsidiary of SEI, and the Company are parties
to a distribution agreement ("Distribution Agreement") effective as of March 1,
1995. The Distribution Agreement shall be reviewed and ratified at least
annually (1) by the Company's Directors or by the vote of a majority of the
outstanding shares of the Company, and (2) by the vote of a majority of the
Directors of the Company who are not parties to the Distribution Agreement or
interested persons (as defined in the 1940 Act) of any party to the Distribution
Agreement, cast in person at a meeting called for the purpose of voting on such
approval. The Distribution Agreement will terminate in the event of any
assignment, as defined in the 1940 Act, and is terminable with respect to a
particular Portfolio on not less than sixty days' notice by the Directors, by
vote of a majority of the outstanding shares of such Portfolio or by the
Distributor. The Distributor receives no compensation for its services.
TRANSFER AGENT
The Transfer Agent and the Company, on behalf of each of the Portfolios, have
entered into a transfer agent agreement (the "Transfer Agent Agreement") dated
as of July 10, 1992. The Transfer Agent maintains an account for each
shareholder and monitors tax reporting, performs other transfer agency functions
and acts as dividend disbursing agent for each Portfolio. For these services,
the Transfer Agent will be paid an annual fee of .05% of the average daily net
assets of each Portfolio.
The Transfer Agent Agreement will continue in effect only if such continuance is
specifically approved at least annually by the Board of Directors or by a vote
of the shareholders and in either case by a majority of the Directors who are
not parties to the Transfer Agent Agreement or interested persons of any such
party, at a meeting called for the purpose of voting on the Transfer Agent
Agreement.
CUSTODIAN
The Custodian, 919 East Main Street, Richmond, Virginia 23219, and the Company,
on behalf of each of the Portfolios, have entered into a custodian agreement
dated as of July 10, 1992. The Custodian's responsibilities include safeguarding
and controlling the Portfolios' cash and securities, handling the receipt and
delivery of securities and collecting income on Portfolio investments. For these
services, the Custodian will receive a fee computed and paid monthly, based on
the total net assets of each such Portfolio, the number of portfolio
transactions of the Portfolio and the number of securities in the Portfolio's
portfolio. The Custodian's fee for any fiscal year of the Company will not
exceed .03% of each Portfolio's average daily net assets.
AUDITOR
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281,
independent auditors, have been selected as auditors for the Company. Deloitte &
Touche LLP has acted as independent auditors of the Company since its inception.
14
<PAGE>
APPENDIX
DESCRIPTION OF CORPORATE BOND RATINGS
The following descriptions of corporate bond ratings have been published by
Standard &Poor's Corporation ("S&P") and Moody's Investors Service ("Moody's").
S&P RATINGS
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A by S&P 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.
Bonds which are rated BBB by S&P are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
MOODY'S RATINGS
Bonds which are rated Aaa by Moody's 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 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. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. 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. Together with
bonds rated Aaa, they comprise what are generally known as high-grade bonds.
Bonds which are rated A by Moody's 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.
Debt rated Baa by Moody's is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
15
<PAGE>
CRESTFUNDS, INC.
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 23
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements: None
Part A--Prospectus: None
Part B--Statement of Additional Information: None
(b) Additional Exhibits
<TABLE>
<C> <S>
1(a) Articles of Incorporation of the Registrant (filed as Exhibit 1 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
1(b) Articles of Amendment to the Articles of Incorporation dated as of July
10, 1992 (filed as Exhibit 1(b) to Post-Effective Amendment No. 9 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
1(c) Articles Supplementary to the Articles of Incorporation dated as of July
10, 1992 (filed as Exhibit 1(c) to Post-Effective Amendment No. 9 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
1(d) Articles Supplementary to the Articles of Incorporation dated as of March
28, 1995 (filed as Exhibit 1(d) to Post-Effective Amendment No. 18 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
1(e) Articles Supplementary to the Articles of Incorporation dated as of
February 27, 1996 (filed as Exhibit 1(e) to Post-Effective Amendment
No. 20 to Registration Statement on Form N-1A (File No. 33-4163) and
incorporated herein by reference).
2 Copy of amended By-Laws of the Registrant (filed as Exhibit 2 to
Post-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
3 Not applicable.
4 Form of Certificate for shares of Cash Reserve Fund Common Stock of the
Registrant (filed as Exhibit 4 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Form of Certificate for shares of U.S. Treasury Fund Common Stock of the
Registrant (filed as Exhibit 4 to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A (File No. 33-3143) and incorporated
herein by reference).
Form of Certificate for shares of Tax Free Fund Common Stock of the
Registrant (filed as Exhibit 4 to Post-Effective Amendment No. 4 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
5 Form of revised Investment Advisory Agreement between the Registrant and
Capitoline Investment Services Incorporated (filed as Exhibit 5 to
Post-Effective Amendment No. 8 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
</TABLE>
C-1
<PAGE>
<TABLE>
<C> <S>
6(a) Administration Agreement between the Registrant and SEI Financial
Management Corporation (filed as Exhibit 6(a) to Post-Effective
Amendment No. 16 to Registration Statement on Form N-1A (File No.
33-4163) and incorporated herein by reference).
6(b) Distribution Agreement between Registrant and SEI Financial Services
Company (filed as Exhibit 6(b) to Post-Effective Amendment No. 17 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
7 Not applicable.
8(a) Custodian Agreement between Registrant and Crestar Bank (filed as Exhibit
8(a) to Post-Effective Amendment No. 9 to Registration Statement on
Form N-1A (File No. 33-4163) and incorporated herein by reference).
8(b) Transfer Agency Agreement between Registrant and Crestar Bank (filed as
Exhibit 8(b) to Post-Effective Amendment No. 9 to Registration
Statement on Form N-1A (File No. 33-4163) and incorporated herein by
reference).
9 Not applicable.
10(c) Opinion of Hunton & Williams (filed as Exhibit 10(c) to Post-Effective
Amendment No. 20 to Registration Statement on Form N-1A (File No.
33-4163) and incorporated herein by reference).
11(a) Not applicable.
12 Not applicable.
13 Investment representation letter of John Y. Keffer as initial purchaser
of shares of stock of the Registrant (filed as Exhibit 13 to
Pre-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
14 Not applicable.
15 Distribution and Service Plans adopted under Rule 12b-1 by the Registrant
on behalf of each series (filed as Exhibit 15 to Post-Effective
Amendment No. 9 to Registration Statement on Form N-1A (File No.
33-4163) and incorporated herein by reference).
15(a) Additional Distribution and Service Plans for Cash Reserve Fund, U.S.
Treasury Money Fund and Tax Free Money Fund (filed as Exhibit 15(a) to
Post-Effective Amendment No. 12 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
15(b) Amended and Restated Distribution and Service Plan Trust Class and
Investors Class A (filed as Exhibit 15(b) to Post-Effective Amendment
No. 16 to Registration Statement on Form N-1A (File No. 33-4163) and
incorporated herein by reference).
15(c) Amended and Restated Distribution and Service Plan Investors Class A
(filed as Exhibit 15(c) to Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
15(d) Investors Class B Distribution and Service Plan Contingent Deferred Sales
Charge Class (filed as Exhibit 15(d) to Post-Effective Amendment No. 16
to Registration Statement on Form N-1A (File No. 33-4163) and
incorporated herein by reference).
16 Schedule for computation of performance quotations (filed as Exhibit 16
to Post-Effective Amendment No. 10 to Registration Statement on Form
N-1A (File No. 33-4163) and incorporated herein by reference).
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S>
Other Exhibits Powers of attorney (filed as Other Exhibits to Post-Effective Amendment
No. 14 to Registration Statement on Form N-1A (File No. 33-4163) and to
Post- Effective Amendment No. 17 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Representation letter of Bayshore Funds, Inc. (filed as Other Exhibit to
Post-Effective Amendment No. 1 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Rule 18f-3 Plan (filed as Other Exhibit to Post-Effective Amendment No.
17 to Registration Statement on Form N-1A (File No. 33-4163) and
incorporated herein by reference).
</TABLE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
See the Prospectus and the Statement of Additional Information regarding the
Registrant's control relationships. The Administrator is a subsidiary of SEI
Corporation, which also controls other corporations engaged in providing various
financial and record keeping services, primarily to bank trust departments,
pension plan sponsors, and investment managers.
Item 26. NUMBER OF HOLDERS OF SECURITIES
The following information is furnished as of March 5, 1997.
<TABLE>
<CAPTION>
RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------------ -----------
<S> <C>
TRUST CLASS SHARES
Cash Reserve Fund......................................................................... 871
U.S. Treasury Money Fund.................................................................. 4
Tax Free Money Fund....................................................................... 216
Limited Term Bond Fund.................................................................... 1,064
Intermediate Bond Fund.................................................................... 765
Government Bond Fund...................................................................... 764
Virginia Municipal Bond Fund.............................................................. 765
Maryland Municipal Bond Fund.............................................................. 39
Virginia Intermediate Municipal Bond Fund................................................. 882
Value Fund................................................................................ 181
Capital Appreciation Fund................................................................. 1,063
Special Equity Fund....................................................................... 181
INVESTOR CLASS A SHARES
Cash Reserve Fund......................................................................... 122
U.S. Treasury Money Fund.................................................................. 0
Tax Free Money Fund....................................................................... 11
Limited Term Bond Fund.................................................................... 93
Intermediate Bond Fund.................................................................... 244
Government Bond Fund...................................................................... 0
Virginia Municipal Bond Fund.............................................................. 0
Maryland Municipal Bond Fund.............................................................. 0
Virginia Intermediate Municipal Bond Fund................................................. 289
Value Fund................................................................................ 2,103
Capital Appreciation Fund................................................................. 1,001
Special Equity Fund....................................................................... 845
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
RECORD
TITLE OF CLASS HOLDERS
- ------------------------------------------------------------------------------------------ -----------
<S> <C>
INVESTOR CLASS B SHARES
Cash Reserve Fund......................................................................... 5
Government Bond Fund...................................................................... 65
Virginia Municipal Bond Fund.............................................................. 37
Maryland Municipal Bond Fund.............................................................. 9
Value Fund................................................................................ 724
Special Equity Fund....................................................................... 166
</TABLE>
Item 27. INDEMNIFICATION:
In accordance with section 2-218 of the General Corporation Law of the State
of Maryland, Article EIGHTH of the Registrant's Articles of Incorporation
provides as follows:
"EIGHTH: To the maximum extent permitted by the General Corporation Law
of the State of Maryland as from time to time amended, the Corporation
shall indemnify its currently acting and its former directors and
officers and those persons who, at the request of the Corporation, serve
or have served another corporation, partnership, joint venture, trust or
other enterprise in one or more of such capacities."
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registration has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or the
Registrant on the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of
such issue.
In the event that a claim for indemnification is asserted by a director
or officer of the Registrant in connection with the securities being
registered, the Registrant will not make such indemnification unless (i)
the Registrant has submitted, before a court or other body, the question
of whether the person to be indemnified was liable by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of
duties, and has obtained a final decision on the merits that such person
was not liable by reason of such conduct or (ii) in the absence of such
decision, the Registrant shall have obtained a reasonable determination,
based upon a review of the facts, that such person was not liable by
virtue of such conduct, by (a) the vote of a majority of directors who
are neither interested persons as such term is defined in the Investment
Company Act of 1940, nor parties to the proceeding or (b) an independent
legal counsel in a written opinion.
The Registrant will not advance attorneys' fees or other expenses
incurred by the person to be indemnified unless the Registrant shall have
received an undertaking by or on behalf of such person to repay the
advance unless it is ultimately determined that such person is entitled
to indemnification and one of the following conditions shall have
occurred: (x) such person shall provide security for his undertaking, (y)
the Registrant shall be insured against losses arising by reason of any
lawful advances or (z) a majority of the disinterested, non-party
directors of the Registrant, or an independent legal counsel in a written
opinion, shall have determined that based on a review of readily
available facts there is reason to believe that such person ultimately
will be found entitled to indemnification.
C-4
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND INVESTMENT
SUB-ADVISER:
Other business, profession, vocation or employment of a substantial nature
in which each director or principal officer of Crestar Asset Management Company
is or has been, at any time during the last two fiscal years, engaged for his
own account or in the capacity of director, officer, employee, partner or
trustee are as follows:
<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- ------------------------------------ --------------------------------- ------------------------------------
<S> <C> <C>
Thomas Dean Hogan Crestar Bank Group Executive Vice President
Chairman, Director
Ben L. Jones First Fidelity Bancorp Chief Investment Officer
President, Director
Robert F. Norfleet, Jr. Crestar Bank Director of Client Relations;
Director Prior thereto Corporate Executive
Vice President
Linda Flory Rigsby Crestar Financial Corporation Senior Vice President, Deputy
General Counsel & Corporate
Secretary
Crestar Bank Senior Vice President,
Deputy General Counsel & Corporate
Secretary
</TABLE>
The description of Crestar Asset Management Company under the caption
"Adviser" in the Prospectus and Statement of Additional Information constituting
Parts A and B, respectively, of this Registration Statement are incorporated by
reference herein.
Item 29. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.
Registrant's distributor, SEI Financial Services Company (SFS), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
</TABLE>
C-5
<PAGE>
<TABLE>
<S> <C>
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
</TABLE>
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------- ------------------------------------------------------------ ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President-Investment Services --
Division
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
Steven Kramer Senior Vice President --
David G. Lee Senior Vice President --
William Madden Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Secretary Vice President &
Assistant Secretary
Robert Wagner Senior Vice President --
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------- ------------------------------------------------------------ ------------------------
<S> <C> <C>
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
Robert Crudup Vice President & Managing Director --
Ed Daly Vice President --
Jeff Drennen Vice President --
Mick Duncan Vice President & Team Leader --
Vic Galef Vice President --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Robert S. Ludwig Vice President & Team Leader --
Vicki Malloy Vice President & Team Leader --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant Secretary --
Sandra K. Orlow Vice President & Assistant Secretary --
Donald Pepin Vice President & Managing Director --
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President, General Counsel, Investment Services Vice President &
Division, & Assistant Secretary Assistant Secretary
Wayne M. Withrow Vice President & Managing Director --
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
C-7
<PAGE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodian:
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
SEI Fund Resources
Oaks, PA 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the principal offices of
the Registrant's Advisers and Sub-Advisers:
Crestar Asset Management Company
919 East Main Street
Richmond, Virginia 23219
Item 31. MANAGEMENT SERVICES:
None.
Item 32. UNDERTAKINGS:
The Registrant undertakes for the Fund(s): (1) to call a meeting of
shareholders for the purpose of voting upon the question of removal of a
director or directors, when requested to do so by record holders of not less
than 10% of its outstanding shares; and (2) to assist in communications with
other shareholders pursuant to Section 16(c)(1) and (2), whenever shareholders
meeting the qualifications set forth in Section 16(c) seek the opportunity to
communicate with other shareholders with a view toward requesting a meeting.
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the later
of the commencement of operations of the Maximum Growth Portfolio, Growth &
Income Portfolio, and the Balanced Portfolio of the Registrant or the effective
date of the Post-Effective Amendment No. 23 to the Registrant's 1933 Act
Registration Statement.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 23 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Richmond, Commonwealth of Virginia on this day of April, 1997.
CrestFunds-Registered Trademark-, Inc.
(formerly Bayshore Funds, Inc.)
By:
--------------------------------------
Jesse F. Williams,
CHAIRMAN AND PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity on the dates indicated.
- ------------------------------ Chairman, President & April , 1997
Jesse F. Williams Director
- ------------------------------ Controller April , 1997
Robert DellaCroce
*
- ------------------------------ Director April , 1997
F. David Fowler
*
- ------------------------------ Director April , 1997
John Bruce James, Jr.
*
- ------------------------------ Director April , 1997
Jean L. Oakey
*
- ------------------------------ Director April , 1997
Glen Douglas Pond
*By: -------------------------
Anthony C.J. Nuland
POWER OF ATTORNEY
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NAME EXHIBIT SEQUENTIAL PAGE #
- ---------------------------------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Articles of Incorporation of the Registrant (filed as Exhibit 1 to 1(a)
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Articles of Amendment to the Articles of Incorporation dated as of July 10, 1(b)
1992 (filed as Exhibit 1(b) to Post-Effective Amendment No. 9 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Articles Supplementary to the Articles of Incorporation dated as of July 10, 1(c)
1992 (filed as Exhibit 1(c) to Post Effective Amendment No. to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Articles Supplementary to the Articles of Incorporation dated as of March 1(d)
28, 1995 (filed as Exhibit 1(d) to Post-Effective Amendment No. 18 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Articles Supplementary to the Articles of Incorporation dated as of February 1(e)
27, 1996 (filed as Exhibit 1(e) to Post-Effective Amendment No. 20 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Copy of amended By-Laws of the Registrant (filed as Exhibit 2 to Post 2
Effective Amendment No. 2 to Registration Statement on Form N-1A (File No.
33-4163) and incorporated herein by reference).
Form of Certificate for shares of Cash Reserve Fund Common Stock of the 4
Registrant (filed as Exhibit 4 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Form of Certificate for shares of U.S. Treasury Fund Common Stock of the 4
Registrant (filed as Exhibit 4 to Pre-Effective Amendment No. 1 to
Registration Statement on Form N-1A (File No. 33-3143) and incorporated
herein by reference).
Form of Certificate for shares of Tax Free Fund Common Stock of the 4
Registrant (filed as Exhibit 4 to Post-Effective Amendment No. 4 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Form of revised Investment Advisory Agreement between the Registrant and 5
Capitoline Investment Services Incorporated (filed as Exhibit 5 to
Post-Effective Amendment No. 8 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Administration Agreement between the Registrant and SEI Financial Management 6(a)
Corporation (filed as Exhibit 6(a) to Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME EXHIBIT SEQUENTIAL PAGE #
- ---------------------------------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Distribution Agreement between Registrant and SEI Financial Services Company 6(b)
(filed as Exhibit 6(b) to Post-Effective Amendment No. 17 to Registration
Statement on Form N-1A (File No. 33-4163) and incorporated herein by
reference).
Custodian Agreement between Registrant and Crestar Bank (filed as Exhibit 8(a)
8(a) to Post-Effective Amendment No. 9 to Registration Statement on Form
N-1A (File No. 33-4163) and incorporated herein by reference).
Transfer Agency Agreement between Registrant and Crestar Bank (filed as 8(b)
Exhibit 8(b) to Post-Effective Amendment No. 9 to Registration Statement
on Form N-1A (File No. 33-4163) and incorporated herein by reference).
Opinion of Hunton & Williams (filed as Exhibit 10(c) to Post-Effective 10(c)
Amendment No. 20 to Registration Statement on Form N-1A (File No. 33-4163)
and incorporated herein by reference).
Investment representation letter of John Y. Keffer as initial purchaser of 13
shares of stock of the Registrant (filed as Exhibit 13 to Pre-Effective
Amendment No. 2 to Registration Statement on Form N-1A (File No. 33-4163)
and incorporated herein by reference).
Distribution and Service Plans adopted under Rule 12b-1 by the Registrant on 15
behalf of each series (filed as Exhibit 15 to Post-Effective Amendment No.
9 to Registration Statement on Form N-1A (File No. 33-4163) and
incorporated herein by reference).
Additional Distribution and Service Plans for Cash Reserve Fund, U.S. 15(a)
Treasury Money Fund and Tax Free Money Fund (filed as Exhibit 15(a) to
Post-Effective Amendment No. 12 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Amended and Restated Distribution and Service Plan Trust Class and Investors 15(b)
Class A (filed as Exhibit 15(b) to Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Amended and Restated Distribution and Service Plan Investors Class A (filed 15(c)
as Exhibit 15(c) to Post-Effective Amendment No. 16 to Registration
Statement on Form N-1A (File No. 33-4163) and incorporated herein by
reference).
Investors Class B Distribution and Service Plan Contingent Deferred Sales 15(d)
Charge Class (filed as Exhibit 15(d) to Post-Effective Amendment No. 16 to
Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
Schedule for computation of performance quotations (filed as Exhibit 16 to 16
Post-Effective Amendment No. 10 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME EXHIBIT SEQUENTIAL PAGE #
- ---------------------------------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
Powers of attorney (filed as Other Exhibits to Post-Effective Amendment No. Other Exhibits
14 to Registration Statement on Form N-1A (File No. 33-4163) and to
Post-Effective Amendment No. 17 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Representation letter of Bayshore Funds, Inc. (filed as Other Exhibit to Other Exhibits
Post-Effective Amendment No. 1 to Registration Statement on Form N-1A
(File No. 33-4163) and incorporated herein by reference).
Rule 18f-3 Plan (filed as Other Exhibit to Post-Effective Amendment No. 17 Other Exhibits
to Registration Statement on Form N-1A (File No. 33-4163) and incorporated
herein by reference).
</TABLE>
