As filed with the Securities and Exchange Commission on
December 11,
1995
Securities Act File No. 33-17957
Investment Company Act File No. 811-5366
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No.
23
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 24
HT INSIGHT FUNDS, INC. d/b/a HARRIS INSIGHT FUNDS
(Exact Name of Registrant as Specified in Charter)
One Exchange Place, Boston, MA 02109
(Address of Principal Executive Offices including Zip Code)
Registrant's Telephone Number, including Area Code: (800) 982-
8782
Name and Address of Agent for Service: Copies to:
Patricia L. Bickimer, Esq. Cameron S. Avery, Esq.
Harris Insight Funds Bell, Boyd & Lloyd
One Exchange Place, 4th Floor Three First National Plaza
Boston, MA 02109 Chicago, IL 60602
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b), or
on pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a),
75 days after filing pursuant to paragraph (a); or
on pursuant to paragraph (a) of Rule 485
Registrant has previously filed a declaration of indefinite
registration of its shares of capital stock pursuant to Rule 24f-
2 under the Investment Company Act of 1940, as amended.
Registrant's Rule 24f-2 Notice for the fiscal year ended December
31, 1994 was filed on February 24, 1995.
HARRIS INSIGHT FUNDS
The purpose of this filing is to (i) add Institutional Shares
to each of the Equity Fund and the Intermediate Bond Fund; (ii)
effect certain portfolio name changes; and (iii) to combine the
Company's Prospectuses and the Statement of Additional
Information with those of the Harris Insight Funds Trust.
HARRIS INSIGHT FUNDS
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495 (a)
under the Securities Act of 1933
N-1A Item No.
Part A Location
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Table; Financial Highlights
Item 3. Condensed Financial Information Financial Highlights;
Calculation of Yield and Total Return
Item 4. General Description of Registrant Cover Page;
Investment Objectives and Policies; Investment Strategies;
Organization and Capital Stock
Item 5. Management of the Fund Management
Item 6. Capital Stock and Other Securities Cover Page;
Dividends and Distributions; Federal Income Taxes; Account
Services; Organization and Capital Stock
Item 7. Purchase of Securities Being Offered Management;
Determination of Net Asset Value; Purchase of Shares; Exchange
Privilege
Item 8. Redemption or Repurchase Redemption of Shares;
Exchange Privilege
Item 9. Pending Legal Proceedings Not Applicable
N-1A Item No.
Part B Location
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment
Strategies; Investment Restrictions; Portfolio Transactions
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Holders of Securities
Management; Organization and Capital Stock (Prospectus)
Item 16. Investment Advisory and Other Services Management
(Prospectus); Management; Service Plans; Custodian; Independent
Accountants
Item 17. Brokerage Allocation and Other Practices Portfolio
Transactions
Item 18. Capital Stock Capital Stock
Item 19. Purchase, Redemption and Pricing of Securities
Determination of Net Asset
Securities Being Offered Value; Financial
Statements
Item 20. Tax Status Federal Income Taxes
Item 21. Underwriters Management; Service Plans
Item 22. Calculation of
Performance Data Calculation of Yield and Total
Return
Item 23. Financial Statements Financial Statements;
Unaudited Financial Statements for the Ten Months Ended
October 31, 1995
Part C
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this
Registration Statement.
Information contained herein is subject to completion or
amendment. A registration
statement relating to the securities has been filed with the
Securities and Exchange
Commission but has not yet become effective. These securities may
not be sold nor may
offers to buy 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 these securities in any state in
which such offers, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws
of any such state.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 8, 1995
HARRIS INSIGHT FUNDS
One Exchange Place, Boston, Massachusetts 02109
Telephone: (800) 982-8782
The Harris Insight Funds Trust (the "Trust") is an open-end,
diversified
management investment company that currently offers a selection of
eleven
investment portfolios. HT Insight Funds, Inc. (the "Company") is
an open-end,
diversified management investment company that currently offers
six investment
portfolios. (The twelve portfolios of the Trust and the six
portfolios of the
Company are collectively referred to herein as the "Harris Insight
Funds" or
the "Funds.") This Prospectus describes one class of shares (the
"Shares" or
the "Institutional Shares") of each of the twelve investment
portfolios offered
by the Trust and one class of shares (the "Shares" or the
"Institutional Shares")
of five of the portfolios offered by the Company. The Funds are as
follows:
o Harris Insight Equity Fund (the "Equity Fund")
o Harris Insight Equity Income Fund (the "Equity Income Fund")
o Harris Insight Growth Fund (the "Growth Fund")
o Harris Insight Small-Cap Opportunity Fund (the "Small-Cap
Fund")
o Harris Insight Index Fund (the "Index Fund")
o Harris Insight International Fund (the "International Fund")
o Harris Insight Balanced Fund (the "Balanced Fund")
o Harris Insight Convertible Securities Fund (the "Convertible
Securities
Fund")
o Harris Insight Intermediate Bond Fund (the "Intermediate Bond
Fund")
o Harris Insight Bond Fund (the "Bond Fund")
o Harris Insight Intermediate Government Bond Fund (the
"Government Fund")
o Harris Insight Intermediate Tax-Exempt Bond Fund (the
"Intermediate
Tax-Exempt Fund")
o Harris Insight Tax-Exempt Bond Fund (the "Tax-Exempt Fund")
o Harris Insight Government Money Market Fund (the "Government
Money Fund")
o Harris Insight Money Market Fund (the "Money Fund")
o Harris Insight Tax-Exempt Money Market Fund (the "Tax-Exempt
Money Fund")
Harris Trust & Savings Bank is the Investment Adviser to the
Funds and Harris
Investment Management, Inc., a subsidiary of Harris Bankcorp,
Inc., acts as
the Portfolio Management Agent for each of the Funds, except the
Tax-Exempt
Money Fund. Dunedin Fund Managers, Limited acts as Investment Sub-
Adviser to
the International Fund. Shares of each Fund are offered by Funds
Distributor,
Inc., the distributor for the Trust and the Company.
SHARES OF THE GOVERNMENT MONEY FUND, THE MONEY FUND AND THE
TAX-EXEMPT MONEY
FUND (COLLECTIVELY, THE "MONEY MARKET FUNDS") ARE NEITHER INSURED
NOR GUARANTEED
BY THE U.S. GOVERNMENT. ALTHOUGH EACH MONEY MARKET FUND IS
ACTIVELY MANAGED
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE, THERE IS
NO ASSURANCE
THAT IT WILL BE ABLE TO DO SO.
This Prospectus sets forth concisely the information a
prospective investor
should know before investing in the Funds. Please read and retain
it for future
reference. A Statement of Additional Information dated ,
1995, containing
more detailed information about the Funds has been filed with the
Securities
and Exchange Commission and (together with any supplements
thereto) is incorporated
by reference into this Prospectus. The Statement of Additional
Information may
be obtained without charge by writing or calling the Harris
Insight Funds at
the address and telephone number printed above.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR
ENDORSED BY HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS AFFILIATES,
AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES
COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL
OFFENSE.
, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S>
<C>
Expense Table
3
Highlights
6
Financial Highlights
8
Investment Objectives and Policies
9
Equity Fund
9
Equity Income Fund
9
Growth Fund
9
Small-Cap Fund
9
Index Fund
10
International Fund
10
Balanced Fund
10
Convertible Securities Fund
11
Intermediate Bond Fund
12
Bond Fund
13
Government Fund
13
Intermediate Tax-Exempt Fund
13
Tax-Exempt Fund
14
The Money Market Funds
14
Government Money Fund
14
Money Fund
15
Tax-Exempt Money Fund
15
All Funds; All Equity and Fixed Income Funds
15
Investment Strategies
17
Investment Limitations
26
Management
27
Determination of Net Asset Value
30
Purchase of Shares
31
Redemption of Shares
32
Exchange Privilege
33
Dividends and Distributions
33
Federal Income Taxes
34
Account Services
35
Organization and Capital Stock
36
Reports to Shareholders
37
Calculation of Yield and Total Return
37
</TABLE>
No person has been authorized to give any information or to
make any
representations other than those contained in this Prospectus, the
Statement
of Additional Information and/or in the Funds' official sales
literature in
connection with the offering of the Funds' shares and, if given or
made, such
other information or representations must not be relied upon as
having been
authorized by the Company, the Trust or the Distributor. This
Prospectus does
not constitute an offer in any state in which, or to any person to
whom, such
offer may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain information concerning
shareholder
transaction expenses and projected annual fund operating expenses
for
Institutional Shares of the Funds during the current fiscal year.
Expenses and fees
payable by
shareholders are
summarized in
this table and
expressed as a
percentage of average
net assets.
<TABLE>
<CAPTION>
EQUITY
INTER-
EQUITY INCOME GROWTH SMALL-CAP
INDEX NATIONAL BALANCED
FUND FUND FUND FUND
FUND FUND FUND
<S> <C> <C> <C> <C>
<C> <C> <C>
SHAREHOLDER TRANSAC-
TION EXPENSES
Maximum Sales Load
Imposed on Pur-
chases None None None None
None None None
ANNUAL FUND OPERATING
EXPENSES*:
(as a percentage of
average net assets)
Advisory Fees 0.69%+ 0.70% 0.90% 1.00%
0.25% 1.05% 0.60%
Rule 12b-1 Fees None None None None
None None None
Other Expenses 0.21% 0.23% 0.20% 0.20%
0.20% 0.27% 0.28%
Total Fund Operating
Expenses 0.90% 0.93% 1.10% 1.20%
0.45% 1.32% 0.88%
* Customers of a financial institution, such as Harris Trust &
Savings Bank,
may also be charged certain fees and expenses by their
institution. These
fees may vary depending on the capacity in which the institution
provides
fiduciary and investment services to the particular client
(e.g., trust, estate
settlement, advisory and custodian services).
+ Reflects advisory fees after waivers. Without waivers, the ratio
of total
fund operating expenses to average net assets would be 0.91%.
The investment
adviser has voluntarily agreed to waive a portion of its
advisory fees and
will not increase its advisory fee without prior approval of the
Company's
Board of Directors and 30 days' prior notice to shareholders.
With respect to each Fund, other than the Equity Fund, the
amount of "Other
Expenses" in the table above is based on estimated expenses and
projected
assets for the current fiscal year. With respect to the Equity
Fund, the amount
of "Other Expenses" is based on amounts incurred during the most
recent fiscal
year.
</TABLE>
<PAGE>
EXPENSE TABLE (CONTINUED)
<TABLE>
<CAPTION>
CONVERTIBLE INTERMEDIATE
INTERMEDIATE
SECURITIES BOND BOND
GOVERNMENT TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND
FUND FUND FUND
<S> <C> <C> <C>
<C> <C> <C>
SHAREHOLDER TRANSAC-
TION EXPENSES
Maximum Sales Load
Imposed on Pur-
chases None None None
None None None
ANNUAL FUND OPERATING
EXPENSES*:
(as a percentage of
average net assets)
Advisory Fees 0.70% 0.37%+ 0.40%
0.30% 0.60% 0.60%
Rule 12b-1 Fees None None None
None None None
Other Expenses 0.22% 0.23% 0.20%
0.20% 0.20% 0.20%
Total Fund Operating
Expenses 0.92% 0.60%+ 0.60%
0.50% 0.80% 0.80%
* Customers of a financial institution, such as Harris Trust, may
also be charged
certain fees and expenses by their institution. These fees may
vary depending
on the capacity in which the institution provides fiduciary and
investment
services to the particular client (e.g., trust, estate
settlement, advisory
and custodian services).
+ Reflects advisory fees after waivers. Without waivers, the ratio
of total
fund operating expenses to average net assets would be 0.92%.
The investment
adviser has voluntarily agreed to waive a portion of its
advisory fees and
will not increase its advisory fee without prior approval of the
Company's
Board of Directors and 30 days' prior notice to shareholders.
With respect to each Fund, other than the Intermediate
Bond Fund, the amount of "Other Expenses" in the table
above is based on estimated expenses and projected assets
for the current fiscal year. With respect to the
Intermediate Bond Fund, the amount of "Other Expenses"
is based on amounts incurred during the most recent fiscal
year.
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY
TAX-EXEMPT
MONEY FUND FUND
MONEY FUND
<S> <C> <C>
<C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None None
None
ANNUAL FUND OPERATING EXPENSES*:
(as a percentage of average net assets
after voluntary fee waivers)
Advisory Fees 0.11% 0.11%
0.11%
Other Expenses 0.18% 0.18%
0.17%
Total Fund Operating Expenses 0.29% 0.29%
0.28%
* Reflects expenses after waivers of advisory fees and other
expenses based
on net expenses incurred during the most recent fiscal year.
Without any fee
and expense waivers, total operating expenses (annualized) for
the six months
ended June 30, 1995 and the fiscal year ended December 31, 1994
would have
been 0.31% and 0.31% for the Government Money Fund, 0.31% and
0.30% for the
Money Fund and 0.30% and 0.30% for the Tax-Exempt Money Fund.
Customers of
a financial institution, such as Harris Trust, may also be
charged certain
fees and expenses by their institution. These fees may vary
depending on the
capacity in which the institution provides fiduciary and
investment services
to the particular client (e.g., trust, estate settlement,
advisory and custodian
services).
</TABLE>
<PAGE>
EXPENSE TABLE (CONTINUED)
EXAMPLE
You would pay the following expenses on a $1,000 investment in
Institutional
Shares, assuming (1) a hypothetical 5% gross annual return and (2)
redemption
at the end of each time period:
<TABLE>
<CAPTION>
EQUITY
INTER-
EQUITY INCOME GROWTH SMALL-CAP INDEX
NATIONAL BALANCED
FUND FUND FUND FUND FUND
FUND FUND
<S> <C> <C> <C> <C> <C> <C>
<C>
1 year $9 $9 $11 $12 $5
$13 $9
3 years 29 30 35 38 14
42 28
5 years 50 51 61 66 25
72 49
10 years 111 114 134 145 57
159 108
</TABLE>
<TABLE>
<CAPTION>
CONVERTIBLE INTERMEDIATE
INTERMEDIATE
SECURITIES BOND BOND GOVERNMENT
TAX-EXEMPT TAX-EXEMPT
FUND FUND FUND FUND
FUND FUND
<S> <C> <C> <C> <C>
<C> <C>
1 year $9 $6 $6 $5
$8 $8
3 years 29 19 19 16
26 26
5 years 51 33 33 28
44 44
10 years 113 75 75 63
99 99
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY
TAX-EXEMPT
MONEY FUND FUND
MONEY FUND
<S> <C> <C>
<C>
1 year $3 $3
$3
3 years 9 9
9
5 years 16 16
16
10 years 37 37
36
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES
OR PERFORMANCE WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
The purpose of the expense table is to assist the investor in
understanding
the various costs and expenses that an investor in a Fund will
bear directly
or indirectly. For more information concerning the various costs
and expenses,
see "Management."
<PAGE>
HIGHLIGHTS
The following sixteen investment portfolios are described in this
Prospectus:
EQUITY FUND -- seeks to provide capital appreciation and current
income by investing
primarily in common stocks.
EQUITY INCOME FUND -- seeks to provide current income and,
secondarily, capital
appreciation by investing primarily in common stocks and
convertible securities.
GROWTH FUND -- seeks to provide capital appreciation and,
secondarily, current
income by investing primarily in common stocks and convertible
securities of
companies with above-average growth potential.
SMALL-CAP FUND -- seeks to provide long term capital growth by
investing primarily
in equity securities of smaller to medium capitalization
companies.
INDEX FUND -- seeks to provide the return and risk characteristics
of the S&P
500 Index, by investing primarily in securities of companies that
comprise that
index.
INTERNATIONAL FUND -- seeks to provide international
diversification and capital
appreciation by investing primarily in common stocks of foreign
companies. Current
income is a secondary objective.
BALANCED FUND -- seeks to provide current income and capital
appreciation by
investing in a balanced portfolio of fixed income and equity
securities.
CONVERTIBLE SECURITIES FUND -- seeks to provide capital
appreciation and current
income by investing primarily in securities such as bonds,
debentures, notes,
preferred stocks or warrants that are convertible into common
stocks.
INTERMEDIATE BOND FUND -- seeks to provide a high level of total
return, including
a competitive level of current income, by investing primarily in
investment
grade debt securities with an intermediate term average maturity.
BOND FUND -- seeks to provide a high level of total return,
including a competitive
level of current income, by investing primarily in investment
grade debt securities
of varying maturities.
GOVERNMENT FUND -- seeks to provide a high level of current
income, consistent
with preservation of capital, by investing primarily in Government
Securities
(as defined below in "Investment Strategies") having an
intermediate term average
maturity.
INTERMEDIATE TAX-EXEMPT FUND -- seeks to provide a high level of
current income
that is exempt from federal income tax by investing, under normal
market conditions,
at least 80% of its assets in municipal obligations with an
intermediate term
average maturity.
TAX-EXEMPT FUND -- seeks to provide a high level of current income
that is exempt
from federal income tax by investing, under normal market
conditions, at least
80% of its assets in municipal obligations of varying maturities.
GOVERNMENT MONEY FUND -- (money market fund) -- seeks to provide
investors with
as high a level of current income as is consistent with its
investment policies
and with preservation of capital and liquidity, by investing in
short-term
Government Securities and certain repurchase agreements.
MONEY FUND -- (money market fund) -- seeks to provide investors
with as high
a level of current income as is consistent with its investment
policies and
with preservation of capital and liquidity, by investing in a
broad range of
short-term money market instruments.
TAX-EXEMPT MONEY FUND -- (money market fund) -- seeks to provide
investors with
as high a level of current income as is consistent with its
investment policies
and with preservation of capital and liquidity, by investing
primarily in high-
quality, short-term municipal obligations.
<PAGE>
WHO MANAGES EACH FUND'S INVESTMENTS?
Harris Trust & Savings Bank ("Harris Trust" or the "Investment
Adviser")
is the investment adviser for each Fund. Harris Trust has provided
investment
management service to clients for over 100 years. Harris Trust
provides investment
services for pension, profit-sharing and personal portfolios. As
of June 30,
1995, assets under management total approximately $23 billion. See
page 27.
Harris Investment Management, Inc. ("HIM" or the "Portfolio
Management Agent")
provides daily portfolio management services for the Funds, other
than the
Tax-Exempt Money Fund. HIM and its predecessors have managed
client assets for
over 100 years. HIM has a staff of 96, including 64 professionals,
providing
investment expertise to the management of the Harris Insight Funds
and for pension,
profit-sharing and institutional portfolios. As of June 30, 1995,
assets under
management are estimated to exceed $13 billion. See page 28.
Harris Trust and HIM are subsidiaries of Harris Bankcorp.,
Inc.
Dunedin Fund Managers, Limited ("Dunedin" or the "Investment
Sub- Adviser")
acts as the Investment Sub-Adviser for the International Fund.
Dunedin has been
providing international advisory services for United States mutual
funds for
six years. At June 30, 1995, assets under management totaled over
$8.4 billion.
WHAT ADVANTAGES DO THE FUNDS OFFER?
The Funds are designed for individual and institutional
investors. A single
investment in shares of the Funds gives the investor benefits
customarily available
only to large investors, such as diversification of investment,
greater liquidity
and professional management, block purchases of securities, and
relief from
bookkeeping, safekeeping of securities and other administrative
details.
WHEN ARE DIVIDENDS PAID?
Dividends from each of the Money Market Funds are declared
daily and paid
monthly. Dividends from the Intermediate Bond Fund, the Bond Fund,
the Government
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund are
declared
daily and paid monthly. Dividends from the Convertible Securities
Fund, the
Equity Fund, the Equity Income Fund, the Growth Fund, the Index
Fund and the
Balanced Fund are declared and paid quarterly. Dividends from the
Small-Cap
Fund and the International Fund are declared and paid semi-
annually. Any net
capital gains will be declared and paid annually. See page 33.
HOW ARE SHARES REDEEMED?
Shares may be redeemed at their next determined net asset
value after receipt
of a proper request by the Registered Representative servicing
your account,
the Distributor, or through any Service Agent. See page 32.
WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?
Each Fund's performance will change daily based on many
factors, including
the quality of the Fund's investments, U.S. and international
economic conditions,
general market conditions and international exchange rates.
Certain of the Funds
invest in securities of foreign issuers that involve risks not
typically associated
with U.S. issuers. There is no assurance that any Fund will
achieve its investment
objective. See "Investment Strategies."
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the ten months ended
October 31,
1995 are derived from the unaudited financial statements of the
Company dated
October 31, 1995. All other data presented are derived from the
financial statements
of the Company for the year ended December 31, 1994 audited by
Price Waterhouse
LLP, independent accountants. This information should be read in
conjunction
with the financial statements and notes thereto that appear in the
Statement
of Additional Information and which are incorporated by reference
in this
Prospectus. Institutional Shares of the Money Market Funds were
formerly known
as Class C Shares. Institutional Shares of the other Funds were
not previously
offered.
This table shows the
total return
on one Institutional
Share for each
period illustrated.
<TABLE>
<CAPTION>
GOVERNMENT MONEY FUND
MONEY FUND TAX-EXEMPT MONEY FUND
INSTITUTIONAL SHARES
INSTITUTIONAL SHARES INSTITUTIONAL SHARES
1/1/95 TO 1/1/95
TO 1/1/95 TO
10/31/95 5/16/94* TO
10/31/95 1/5/94* TO 10/31/95 1/5/94* TO
(UNAUDITED) 12/31/94
(UNAUDITED) 12/31/94 (UNAUDITED) 12/31/94
<S> <C> <C> <C>
<C> <C> <C>
Net Asset Value, Beginning of
Period $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00 $ 1.00
Income From Investment
Operations:
Net Investment Income .047 .028
.048 .039 .029 .025
Total from Investment
Operations .047 .028
.048 .039 .029 .025
Less Distributions:
Net Investment Income (.047) (.028)
(.048) (.039) (.029) (.025)
Total Distributions (.047) (.028)
(.048) (.039) (.029) (.025)
Net Asset Value, End of Period $ 1.00 $ 1.00 $
1.00 $ 1.00 $ 1.00 $ 1.00
Total Return(3) 4.85% 2.82%
4.87% 4.08% 2.98% 2.56%
Ratios/Supplemental Data:
Net Assets, End of Period
$(000) 35,486 9,617
194,267 31,990 251,719 237,100
Ratio of Expenses to
Average Net
Assets(1)(2) 0.31% 0.29%
0.50% 0.29% 0.29% 0.28%
Ratio of Net Investment
Income to Average Net
Assets(2) 5.60% 4.52%
5.68% 4.79% 3.51% 2.99%
* Date commenced operations.
(1) Without the voluntary waiver of fees, the expense ratios
(annualized) for
the periods ended October 31, 1995 and December 31, 1994
would have been
0.32% and 0.31% for Government Money Fund 0.31% and 0.30% for
Money Fund
and 0.30% and 0.30% for Tax-Exempt Money Fund, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not
annualized.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of
each of the
Funds. Listed on page following the specific description of
each Fund are
those investments that may be made by (i) all of the Funds, or
(ii) all of the
equity Funds (i.e., Equity, Equity Income, Growth, Small-Cap,
Index, International
and Balanced Funds) and fixed income Funds (i.e., Convertible
Securities ,
Intermediate Bond, Bond, Government, Intermediate Tax-Exempt and
Tax-Exempt
Funds). Each Fund may also invest in securities described in
"Investment Strategies"
below and the Statement of Additional Information.
EQUITY FUND
The Equity Fund seeks to provide investors with capital
appreciation and
current income. The Fund seeks to attain its investment objective
by investing,
under normal market conditions, at least 65% of its total assets
in common stocks
of larger capitalization companies (i.e. companies with market
capitalizations
in excess of $500 million). The Fund's portfolio is generally
comprised of
approximately 50 different issues. Risk is managed by
diversification of
investments.
The Equity Fund seeks
to provide
capital appreciation
and current
income.
The Fund's investment process considers valuation and improving
fundamentals.
The Fund's investments are expected to encompass all major sectors
of the market
resulting in a diversified portfolio. The Fund's Portfolio
Management Agent
believes that an investment process which combines carefully
monitored risk
control with an emphasis on value and fundamental research is
suited for long-term
equity investing.
EQUITY INCOME FUND
The Equity Income Fund seeks to provide current income and
secondarily,
capital appreciation. The Fund seeks to achieve its investment
objective by
investing, under normal market conditions, at least 65% of its
total assets
in common stocks and convertible securities that the Fund's
Portfolio Management
Agent believes offer good value, an attractive yield and dividend
growth potential.
The Equity Income Fund
seeks to
provide current income
and,
secondarily, capital
apprecia-
tion.
The Fund is managed with a disciplined investment process which
seeks to maintain
a diversified portfolio of high quality equity securities. The
Fund generally
emphasizes securities with higher than average dividend yields
and/or stronger
than average growth characteristics. The result of this investment
process is
a diversified portfolio which the Fund's Portfolio Management
Agent believes
provides attractive long-term growth potential while striving to
maintain an
attractive current yield.
GROWTH FUND
The Growth Fund seeks to provide capital appreciation and,
secondarily,
current income. The Fund seeks to achieve its investment objective
by investing,
under normal market conditions, primarily in common stocks and
convertible
securities of companies that the Fund's Portfolio Management Agent
believes
offer above-average growth potential. The Fund's investment
management discipline
emphasizes growth in sales, earnings and asset values.
The Growth Fund seeks
to provide
capital appreciation
and,
secondarily, current
income.
SMALL-CAP FUND
The Small-Cap Fund seeks to provide long term capital
appreciation. The
Fund seeks to achieve its investment objective by investing, under
normal market
conditions, primarily in equity securities of smaller to medium
capitalization
companies (i.e. companies with market capitalizations between $100
million and
$2.5 billion).
The Small-Cap Fund
seeks to provide
long- term capital
appreciation
by investing primarily
in equity
securities of smaller
to medium
capitalization
companies.
The investment management discipline of the Fund searches for
companies offering
above-average earnings, sales, and asset value growth.
<PAGE>
INDEX FUND
The Index Fund seeks to provide the return and risk
characteristics of the
Standard & Poor's 500 Index (the "S&P 500 Index" or the "Index"),
an index which
emphasizes large capitalization companies. As of December 31,
1994, the Index
represented approximately 76% of the market capitalization of
publicly owned
stocks in the United States. The Fund seeks to achieve its
investment objective
by investing, under normal market conditions, primarily in
securities of companies
that comprise the S&P 500 Index.
The Index Fund seeks
to provide
the return and risk
character-
istics of the S&P 500
Index.
The Fund seeks to match closely the weight of each security in the
portfolio
approximating its weight in the S&P 500 Index. Although the Fund
may
not hold all 500 issues included in the Index, it will generally
hold at least
90% of such issues. In addition, the Fund may maintain positions
in S&P
500 Stock Index futures contracts in an effort to ensure adequate
liquidity
and to reduce transaction costs.
Standard & Poor's Corporation ("S&P") makes no representation or
warranty,
expressed or implied, to the purchasers of the Index Fund or any
member of the
public regarding the advisability of investing in either the Index
Fund or the
ability of the S&P 500 Index to track general stock market
performance. The
Fund is not sponsored, endorsed, sold or promoted by S&P. S&P does
not guarantee
the accuracy and/or completeness of its index or any data included
therein.
Furthermore, S&P makes no warranty, express or implied, as to the
results to
be obtained by the Index Fund, owners of the Fund, any person or
any entity
from the use of the index sponsored by S&P or any data included
therein. S&P
makes no express or implied warranties and expressly disclaims all
such warranties
of merchantability or fitness for a particular purpose for use
with respect
to its index or any data included therein.
INTERNATIONAL FUND
The International Fund seeks to provide international
diversification and
capital appreciation. Current income is a secondary objective. The
Fund seeks
to achieve its investment objective by investing, under normal
market conditions,
primarily in securities of foreign companies (i.e., companies
organized outside
the United States or whose principal trading market is outside the
United States).
The Fund seeks to manage risk through the diversification of its
investments.
The International Fund
seeks to
provide international
diversi-
fication and capital
appreciation
by investing primarily
in common
stocks of foreign
companies.
Current income is a
secondary
objective.
The International Fund also may invest in exchange rate-related
securities,
securities convertible into or exchangeable for foreign equity
securities, and
custodial receipts for U.S. Treasury securities. In addition, the
Fund may engage
in the purchase and sale of foreign currency for hedging purposes.
BALANCED FUND
The Balanced Fund seeks to provide current income and capital
appreciation
by investing in a balanced portfolio of fixed income and equity
securities.
The Fund seeks to achieve its investment objective by utilizing an
active asset
allocation approach. Under normal market conditions, equity
securities are
expected to comprise between 40% and 65% of the Fund's total
assets and fixed
income securities are expected to comprise at least 25% of the
Fund's total
assets.
The Balanced Fund
seeks to provide
current income and
capital
appreciation through a
balanced
portfolio of fixed
income and
equity securities.
<PAGE>
CONVERTIBLE SECURITIES FUND
The Convertible Securities Fund seeks to provide capital
appreciation and
current income. The Fund intends, under normal market conditions,
to invest
primarily in convertible securities, that is, securities including
bonds,
debentures, notes or preferred stock that are convertible into
common stock,
or warrants that provide the owner the right to purchase shares of
common stock
at a specified price. The Fund may also invest in equity
securities of U.S.
corporations. The Fund seeks to diversify among issuers in a
manner that will
enable the Fund to minimize the volatility of the Fund's net asset
value in
erratic or declining markets.
The Convertible
Securities Fund
seeks to provide
capital
appreciation and
current income.
Under normal market conditions, the Convertible Securities Fund
will invest
without limitation in convertible securities of U.S. corporations
and in Eurodollar
securities convertible into common stocks of U.S. corporations
that are rated
"B" or better by S&P or "B" ("b" in the case of preferred stocks)
or better
by Moody's Investors Service, Inc. ("Moody's") at the time of
purchase, or,
if not rated, considered by the Portfolio Management Agent to be
of comparable
quality, except that investment in securities rated "B-" by S&P or
Moody's will
be limited to 15% of its total assets. Up to 5% of the Convertible
Securities
Fund's total assets may be invested in convertible securities that
are rated
"CCC" by S&P or "Caa" by Moody's at the time of purchase.
Securities that are
rated "BB" or below by S&P or "Ba" or below by Moody's are "high
yield securities",
commonly known as junk bonds. By their nature, convertible
securities may be
more volatile in price than higher rated debt obligations.
The Convertible Securities Fund may also invest up to 35% of its
total assets
in "synthetic convertibles" created by combining separate
securities that possess
the two principal characteristics of a true convertible security,
i.e., fixed
income and the right to acquire equity securities. In addition,
the Convertible
Securities Fund may invest: up to 15% of its total assets in
convertible securities
offered in "private placements" and other illiquid securities; up
to 15% of
its total assets in common stocks; and up to 5% of its net assets
in warrants.
The Convertible Securities Fund may purchase and sell index and
interest rate
futures contracts and covered put and call options on securities
and on indices.
In periods of unusual market conditions, when the Portfolio
Management Agent
believes that convertible securities would not best serve the
Fund's objectives,
the Convertible Securities Fund may for defensive purposes invest
part or all
of its total assets in: (a) Government Securities; (b) non-
convertible debt
obligations of domestic corporations, including bonds, debentures,
notes or
preferred stock rated "BBB" or better by S&P or "Baa" or better by
Moody's at
the time of purchase, which ordinarily are less volatile in price
than convertible
securities and serve to increase diversification of risk; and (c)
short-term
money market instruments, including U.S. Government, bank and
commercial
obligations with remaining maturities of thirteen months or less.
During such
periods, the Convertible Securities Fund will continue to seek
current income
but will put less emphasis on capital appreciation.
SPECIAL CONSIDERATIONS RELATING TO LOW-RATED AND COMPARABLE
UNRATED SECURITIES.
Low-rated and comparable unrated securities (a) will likely have
some quality
and protective characteristics that, in the judgment of the rating
organization,
are outweighed by large uncertainties or major risk exposures to
adverse conditions
and (b) are predominantly speculative with respect to the issuer's
capacity
to pay interest and repay principal in accordance with the terms
of the obligation.
<PAGE>
The market values of low-rated and comparable unrated securities
are less sensitive
to interest rate changes but more sensitive to economic changes or
individual
corporate developments than higher-rated securities; they present
a higher degree
of credit risk and their yields will fluctuate over time. During
economic downturns
or sustained periods of rising interest rates, the ability of
highly leveraged
issuers to service debt obligations may be impaired.
The existence of limited or no established trading markets for
low-rated and
comparable unrated securities may result in thin trading of such
securities
and diminish the Convertible Securities Fund's ability to dispose
of such securities
or to obtain accurate market quotations for valuing such
securities and calculating
net asset value. The responsibility of the Trust's Board of
Trustees to value
such securities becomes greater and judgment plays a greater role
in valuation
because there is less reliable objective data available. In
addition, adverse
publicity and investor perceptions may decrease the values and
liquidity of
low-rated and comparable unrated securities bonds, especially in a
thinly traded
market.
A major economic recession would likely disrupt the market for
such securities,
adversely affect their value and the ability of issuers to repay
principal and
pay interest, and result in a higher incidence of defaults.
The ratings of Moody's and S&P represent the opinions of those
organizations
as to the quality of securities. Such ratings are relative and
subjective, not
absolute standards of quality and do not evaluate the market risk
of the securities.
Although the Convertible Securities Fund's Portfolio Management
Agent uses these
ratings as a criterion for the selection of securities for the
Convertible Securities
Fund, it also relies on its independent analysis to evaluate
potential investments
for the Convertible Securities Fund. The Convertible Securities
Fund's achievement
of its investment objective may be more dependent on the Portfolio
Management
Agent's credit analysis of low-rated and unrated securities than
would be the
case for a portfolio of high-rated securities.
INTERMEDIATE BOND FUND
The Intermediate Bond Fund, formerly known as Harris Insight
Managed Fixed
Income Fund, seeks to provide a high level of total return,
including a competitive
level of current income, by investing primarily in investment
grade debt securities
with an intermediate term average maturity. The Fund seeks to
achieve its objective
by utilizing a number of investment disciplines, including the
assessment of
yield advantages among different classes of bonds and among
different maturities,
the independent review by the Fund's Portfolio Management Agent of
the credit
quality of individual issues, and the analysis by the Fund's
Portfolio Management
Agent of economic and market conditions affecting the fixed income
markets.
The Intermediate Bond Fund may invest in a broad range of fixed
income obligations.
The Fund may invest in fixed and variable rate bonds, debentures,
Government
Securities, and Government Stripped Mortgage-Backed Securities.
The Fund also
may invest in U.S. Treasury or agency securities placed into
irrevocable trusts
and evidenced by a trust receipt.
The Intermediate Bond
Fund seeks
to provide a high
level of total
return, including a
competitive
level of current
income, by
investing primarily in
investment
grade debt securities
with an
intermediate term
average
maturity.
Although the Portfolio Management Agent anticipates that a
significant portion
of the bonds acquired by the Intermediate Bond Fund will normally
have intermediate
term average (weighted) maturities, the Fund may also hold short-
term U.S.
Government Obligations, "high-quality" money market instruments
(i.e., those
within the two highest rating categories or, if unrated,
determined by the Portfolio
Management Agent to be comparable in quality to instruments so
rated) and cash.
Such obligations may include those issued by foreign banks and
foreign branches
of U.S. banks. These investments may be in such proportions as, in
the Portfolio
Management Agent's opinion, existing circumstances warrant.
<PAGE>
BOND FUND
The Bond Fund seeks to provide a high level of total return,
including a
competitive level of current income, by investing primarily in
investment grade
debt securities of varying maturities. The Fund seeks to achieve
its objective
by utilizing a highly-disciplined, quantitatively-based process to
identify
fixed income securities which the Fund's Portfolio Management
Agent believes
are undervalued and are positioned to offer the best relative
value to enable
the Fund to benefit from anticipated changes in interest rates.
Under normal
market conditions, at least 65% of the Bond Fund's total assets
will be invested
in bonds. For purposes of this 65% limitation, the term "bond"
shall include
debt obligations such as bonds and debentures, Government
Securities, debt
obligations of domestic and foreign corporations, debt obligations
of foreign
governments and their political subdivisions, asset-backed
securities, various
mortgage-related securities (including those issued or
collateralized by U.S.
Government agencies and inverse floating rate mortgage-backed
securities), other
floating/variable rate obligations, municipal obligations and zero
coupon
securities.
The Bond Fund seeks to
provide a
high level of total
return,
including a
competitive level of
current income, by
investing
primarily in
investment grade debt
securities of varying
maturities.
GOVERNMENT FUND
The Government Fund seeks to provide a high level of current
income, consistent
with preservation of capital. The Fund seeks to achieve its
investment objective
by investing primarily in Government Securities, including
mortgage- backed
securities, having an intermediate term average maturity. Under
normal market
conditions, at least 65% of the Fund's total assets will be
invested in Government
Securities and in repurchase agreements collateralized by
Government Securities.
The average portfolio maturity (or average life with respect to
mortgage-related
securities) generally will be between three and ten years.
The Government Fund
seeks to
provide a high level
of current
income, consistent
with preser-
vation of capital.
In addition, the Fund may also invest in asset-backed securities
collateralized
by the U.S. Treasury and certain U.S. Government agencies. It may
also hold
foreign debt securities guaranteed by the U.S. Government, its
agencies or
instrumentalities (with respect to 10% of its total assets).
Further, the Government
Fund may invest in covered put and call options on securities and
on indices.
<PAGE>
INTERMEDIATE TAX-EXEMPT FUND
The Intermediate Tax-Exempt Fund seeks to provide a high level
of current
income that is exempt from federal income tax. As a matter of
fundamental policy,
the Fund seeks to achieve its investment objective by investing at
least 80%
of its assets, under normal market conditions, in a broad range of
municipal
bonds and other obligations issued by state and local governments
to finance
their operations or special projects. These securities, which are
of varying
maturities, make interest payments that are exempt from federal
income tax.
The average portfolio maturity (or average life with respect to
mortgage-related
securities) generally will be between three and ten years.
The Intermediate Tax-
Exempt Fund
seeks a high level of
current income
that is exempt from
federal income
tax.
The Fund's selection of individual securities is based on a number
of factors,
including anticipated changes in interest rates, the assessment of
the yield
advantages of different classes of bonds, and an independent
analysis of credit
quality of individual issues by the Fund's Portfolio Management
Agent or the
Investment Adviser.
The Intermediate Tax-Exempt Fund may also invest in letters of
credit and
U.S. Government Obligations. In addition, the Fund may purchase
and sell covered
put and call options on securities and on indices.
TAX-EXEMPT FUND
The Tax-Exempt Fund seeks to provide a high level of current
income that
is exempt from federal income tax. The Fund seeks to achieve its
objective by
anticipating changes in interest rates, analyzing yield
differentials for different types of bonds, and analyzing credit
for specific issues.
As a matter of fundamental policy, the Fund seeks to achieve
its investment objective by investing at least 80% of its assets,
under normal
market conditions, in a broad range of municipal bonds and other
obligations
issued by state and local governments to finance their operations
or special
projects. These securities make interest payments that are exempt
from federal
income tax.
The Tax-Exempt Fund
seeks to
provide a high level
of current
income that is exempt
from federal
income tax.
The Tax-Exempt Fund may also invest in letters of credit and U.S.
Government
Obligations. Further, the Fund may purchase and sell covered put
and call options
on securities and on indices.
THE MONEY MARKET FUNDS
The investment objective of each of the Money Market Funds is
to provide
investors with as high a level of current income (which, in the
case of the
Tax-Exempt Money Fund, is exempt from federal income taxes) as is
consistent
with its investment policies and with preservation of capital and
liquidity.
Current income provided by the securities in which the Money
Market Funds invest
is not likely to be as high as that provided by securities with
longer maturities
or lower quality, which may involve greater risk and price
volatility. Each
Money Market Fund will invest in U.S. dollar-denominated
securities with maturities
of thirteen months or less. The Money Fund will not purchase a
security (other
than Government Securities) unless the security is rated by at
least two nationally
recognized rating agencies (such as S&P or Moody's) within the two
highest ratings
assigned to short-term debt securities (or, if not rated or rated
only by one
rating agency, is determined to be of comparable quality), and not
more than
5% of the total assets of the Fund would be invested in securities
bearing the
second highest rating. The Tax-Exempt Money Fund will not purchase
a security
(other than a Government Security) unless the security is rated by
at least
two such rating agencies within the two highest ratings assigned
to short-term
debt securities (or, if not rated or rated by only one rating
agency, is determined
to be of comparable quality). Determinations of comparable quality
shall be
made in accordance with procedures established by the Company's
Board of Directors.
Each Money Market Fund will maintain a dollar-weighted average
maturity of 90
days or less in an effort to maintain a net asset value per share
of $1.00.
There is no assurance that the net asset value per share of the
Money Market
Funds will be maintained at $1.00.
GOVERNMENT MONEY FUND
The Government Money Fund, formerly known as Harris Insight
Government Assets
Fund, invests exclusively in Government Securities that have
remaining maturities
not exceeding thirteen months and certain repurchase agreements
described below.
The Government Money
Fund invests
in obligations issued
or
guaranteed by the U.S
Government,
its agencies,
instrumentalities
or sponsored
enterprises, and that
have remaining
maturities of
thirteen months or
less.
The Government Money Fund invests in obligations of U.S.
Government agencies
and instrumentalities only when the Portfolio Management Agent is
satisfied
that the credit risk with respect to the issuer is minimal.
<PAGE>
MONEY FUND
The Money Fund, formerly known as Harris Insight Cash
Management Fund, invests
in a broad range of short-term money market instruments that have
remaining
maturities not exceeding thirteen months, including Government
Securities and
bank and commercial obligations.
The Money Fund invests
in
short-term money
market instru-
ments, including U.S.
Government,
bank and commercial
obligations
with remaining
maturities of
thirteen months or
less.
The commercial paper purchased by the Money Fund will consist of
U.S.
dollar-denominated direct obligations of domestic and foreign
corporate issuers,
including bank holding companies.
The Money Fund may also invest in guaranteed investment contracts
("GICs") issued
by U.S. and Canadian insurance companies, and convertible and non-
convertible
debt securities of domestic corporations and of foreign
corporations and
governments that are denominated, and pay interest, in U.S.
dollars. In addition,
the Money Fund may invest in tax-exempt municipal obligations in
which the Tax-Exempt
Money Fund may invest, described below, when the yields on such
obligations
are higher than the yields on taxable investments. All securities
acquired by
the Fund will have remaining maturities of thirteen months or less
and will
be subject to the applicable quality requirements described above.
TAX-EXEMPT MONEY FUND
The Tax-Exempt Money Fund, formerly known as Harris Insight
Tax-Free Money
Market Fund, invests primarily in high-quality municipal
obligations that have
remaining maturities not exceeding thirteen months and meet the
applicable quality
requirements described above. Municipal obligations are debt
obligations issued
by or on behalf of states, cities, municipalities and other public
authorities.
Except for temporary investments in taxable obligations described
below, the
Tax-Exempt Money Fund will invest only in municipal obligations
that are exempt
from federal income taxes in the opinion of bond counsel. Such
obligations include
municipal bonds, municipal notes and municipal commercial paper.
The Tax-Exempt Money
Fund invests
in debt instruments
issued by or
for states, cities,
municipali-
ties and other public
authorities
and that provide
interest income
exempt from federal
income tax.
From time to time, the Tax-Exempt Money Fund may invest 25% or
more of its
assets in municipal obligations that are related in such a way
that an economic,
business or political development or change affecting one of these
obligations
would also affect the other obligations, for example, municipal
obligations
the interest on which is paid from revenues of similar type
projects or municipal
obligations whose issuers are located in the same state.
Under ordinary market conditions, the Tax-Exempt Money Fund
will maintain
as a fundamental policy at least 80% of the value of its total
assets in obligations
that are exempt from federal income tax and not subject to the
alternative minimum
tax. The Tax-Exempt Money Fund may, pending the investment of
proceeds of sales
of its shares or proceeds from the sale of portfolio securities,
in anticipation
of redemptions, or to maintain a "defensive" posture when, in the
opinion of
the Investment Adviser, it is advisable to do so because of market
conditions,
elect to hold temporarily up to 20% of the current value of its
total assets
in cash reserves or invest in taxable securities in which the
Money Fund may
invest.
ALL FUNDS; ALL EQUITY AND FIXED INCOME FUNDS
Each Fund may invest in the securities of other investment
companies,
when-issued securities and forward commitments, floating/variable
rate
obligations (and inverse floating rate obligations with respect to
the fixed
income Funds), as well as commercial paper, short-term money
market instruments
and cash equivalents, such as certificates of deposit, demand and
time deposits
and banker's acceptance notes. In addition, each Fund may enter
into repurchase
agreements.
<PAGE>
Each equity and fixed income Fund may lend its portfolio
securities with
respect to up to one-third of its net assets and may enter into
reverse repurchase
agreements.
Each equity and fixed income Fund may invest in securities
convertible into
or exchangeable for common stocks or preferred stocks, as well as
Government
Securities and debt obligations of domestic corporations rated
"Baa" or better
by Moody's, "BBB" or better by S&P or an equivalent rating by
another nationally
recognized statistical rating organization at the time of purchase
or, if not
rated are considered by the portfolio management agent to be of
comparable quality.
(The Convertible Securities Fund may also invest in lower rated
securities,
as described above.) Debt obligations rated "BBB" by S&P, "Baa" by
Moody's or
the equivalent by such other rating organization may have
speculative
characteristics, and changes in economic conditions or other
circumstances are
more likely to lead to a weakened capacity to make principal and
interest payments
than is the case with higher grade bonds. In addition, each equity
Fund may
invest in securities purchased in an initial public offering. Each
equity Fund
also may invest in American Depositary Receipts, European
Depositary Receipts
and, with respect to 10% (100% for the International Fund) of
total assets,
debt and equity securities of foreign issuers. Further, each
equity Fund may
purchase and sell covered put and call options on securities,
index and interest
rate futures contracts and options on futures contracts.
Portfolio securities of each Fund are kept under continuing
supervision
and changes may be made whenever, in the opinion of the Portfolio
Management
Agent, a security no longer seems to meet the objective of the
Fund. Portfolio
changes also may be made to increase or decrease investments in
anticipation
of changes in security prices in general or to provide funds
required for
redemptions, distributions to shareholders or other corporate
purposes. Neither
the length of time a security has been held nor the rate of
turnover of a Fund's
portfolio is considered a limiting factor on such changes.
Each Fund may purchase debt obligations that are not rated if,
in the opinion
of the Portfolio Management Agent, they are of investment quality
at least comparable
to other rated investments that may be purchased by the Fund.
After purchase
by a Fund, a security may cease to be rated or its rating may be
reduced below
the minimum required for purchase by the Fund. Neither event will
require a
Fund (other than a Money Market Fund) to sell such security unless
the amount
of such security exceeds permissible limits. However, the
Portfolio Management
Agent will reassess promptly whether the security presents minimal
credit risks
and determine whether continuing to hold the security is in the
best interests
of the Fund. To the extent that the ratings given by Moody's, S&P
or another
nationally recognized statistical rating organization for
securities may change
as a result of changes in the rating systems or due to corporate
reorganization
of such rating organizations, a Fund will attempt to use
comparable ratings
as standards for its investments in accordance with the investment
objectives
and policies of the Fund. The ratings of Moody's and S&P are more
fully described
in the Appendix to the Statement of Additional Information. A
Money Market Fund
may be required to sell a security downgraded below the minimum
required for
purchase, absent a specific finding by the Company's Board of
Directors that
a sale is not in the best interests of the Fund.
<PAGE>
INVESTMENT STRATEGIES
ASSET-BACKED SECURITIES. All of the equity Funds as well as
the Intermediate
Bond Fund, the Bond Fund, the Government Fund, the Intermediate
Tax-Exempt Fund,
the Tax-Exempt Fund and the Money Fund may purchase asset-backed
securities,
which represent a participation in, or are secured by and payable
from, a stream
of payments generated by particular assets, most often a pool of
assets similar
to one another. With respect to asset-backed securities purchased
by the equity
Funds, the Intermediate Bond Fund and the Bond Fund, assets
generating payments
will consist of motor vehicle installment purchase obligations,
credit card
receivables and home equity loans, equipment leases, manufactured
housing loans
and marine loans. The asset-backed securities purchased by the
Intermediate
Tax-Exempt Fund, the Tax-Exempt Fund and the Tax-Exempt Money Fund
represent
units of beneficial interest in pools of purchasing contracts,
financing leases
and sales agreements entered into by municipalities. The
Government Fund may
invest in asset-backed trusts collateralized by the U.S. Treasury
or certain
other U.S. government agencies and instrumentalities. In
accordance with
guidelines established by the Boards of Trustees and Directors, as
the case
may be, asset-backed securities may be considered illiquid
securities and,
therefore, may be subject to a Fund's 15% (or, in the case of the
Intermediate
Bond Fund, the Equity Fund and the Money Market Funds, 10%)
limitation on such
investments.
BANK INVESTMENT CONTRACTS. The Intermediate Bond Fund, the
Bond Fund
and the Money Fund may invest in bank investment contracts
("BICs") which are debt
obligations issued by banks. BICs require a Fund to make cash
contributions
to a deposit account at a bank in exchange for payments at
negotiated, floating
or fixed interest rates. A BIC is a general obligation of the
issuing bank.
In accordance with guidelines established by the Board of Trustees
or the Board
of Directors, as the case may be, BICs may be considered illiquid
securities
and, therefore, subject to each Fund's 10% (15% with respect to
the Bond Fund)
limitation on such investments. All purchases of BICs will be
subject to the
applicable quality requirements described under "Investment
Objectives and
Policies."
BANK OBLIGATIONS. Bank obligations include negotiable
certificates of
deposit, bankers' acceptances and fixed time deposits. The Money
Fund limits
its investments in domestic bank obligations to obligations of
U.S. banks (including
foreign branches and thrift institutions) that have more than $1
billion in
total assets at the time of investment and are members of the
Federal Reserve
System, are examined by the Comptroller of the Currency or whose
deposits are
insured by the Federal Deposit Insurance Corporation ("U.S.
banks"). The Money
Fund limits its investments in foreign bank obligations to U.S.
dollar-denominated
obligations of foreign banks (including U.S. branches): (a) which
banks at the
time of investment (i) have more than $10 billion, or the
equivalent in other
currencies, in total assets and (ii) are among the 100 largest
banks in the
world, as determined on the basis of assets, and have branches or
agencies in
the U.S.; and (b) which obligations, in the opinion of the
Portfolio Management
Agent, are of an investment quality comparable to obligations of
U.S. banks
that may be purchased by the Money Fund. Each of the Intermediate
Bond Fund
and the Money Fund may invest more than 25% of the current value
of its total
assets in obligations (including repurchase agreements) of: (a)
U.S. banks;
(b) U.S. branches of foreign banks that are subject to the same
regulation as
U.S. banks by the U.S. Government or its agencies or
instrumentalities; or (c)
foreign branches of U.S. banks if the U.S. banks would be
unconditionally liable
in the event the foreign branch failed to pay on such obligations
for any reason.
Obligations of foreign banks involve somewhat different investment
risks from
those associated with obligations of U.S. banks. See "Foreign
Securities."
<PAGE>
CONVERTIBLE SECURITIES. All of the equity Funds, the
Convertible Securities
Fund and the Bond Fund may invest in convertible securities.
Appropriate ratings
and types of convertible securities for each of these Funds are
provided in
the description of each Fund starting on page above. Because
convertible
securities have the characteristics of both fixed-income
securities and common
stock, they sometimes are called "hybrid" securities. Convertible
bonds,
debentures and notes are debt obligations offering a stated
interest rate;
convertible preferred stocks are senior securities offering a
stated dividend
rate. Because a convertible security provides an option to the
holder to exchange
the security for either a specified number of the issuer's common
shares at
a stated price per share or the cash value of such common shares,
the security
market price will tend to fluctuate in relation to the price of
the common shares
into which it is convertible. Thus, convertible securities
ordinarily will provide
opportunities both for producing current income and longer term
capital
appreciation. Because convertible securities are usually viewed by
the issuer
as future common stock, they are generally subordinated to other
senior securities
and therefore are rated one category lower than the issuer's non-
convertible
debt obligations or preferred stock.
EXCHANGE RATE-RELATED SECURITIES. The International Fund may
invest in
securities for which the principal repayment at maturity, while
paid in U.S.
dollars, is determined by reference to the exchange rate between
the U.S. dollar
and the currency of one or more foreign countries ("Exchange Rate-
Related
Securities"). The interest payable on these securities is
denominated in U.S.
dollars and is not subject to foreign currency risk and, in most
cases, is paid
at rates higher than most other similarly rated securities in
recognition of
the foreign currency risk component of Exchange Rate-Related
Securities.
Investments in Exchange Rate-Related Securities entail certain
risks. There
is the possibility of significant changes in rates of exchange
between the U.S.
dollar and any foreign currency to which an Exchange Rate-Related
Security is
linked. In addition, there is no assurance that sufficient trading
interest
to create a liquid secondary market will exist for a particular
Exchange Rate-Related
Security due to conditions in the debt and foreign currency
markets. Illiquidity
in the forward foreign exchange market and the high volatility of
the foreign
exchange market may, from time to time, combine to make it
difficult to sell
an Exchange Rate-Related Security prior to maturity without
incurring a significant
price loss.
FLOATING AND VARIABLE RATE INSTRUMENTS. All of the Funds may
purchase
instruments (municipal obligations in the case of the Intermediate
Tax-Exempt
Fund and the Tax-Exempt Fund and instruments issued by the U.S.
Treasury or
certain U.S. Government agencies or instrumentalities in the case
of the Government
Fund) having a floating or variable rate of interest. These
obligations bear
interest at rates that are not fixed, but vary with changes in
specified market
rates or indices, such as the prime rate, or at specified
intervals. Certain
of these obligations may carry a demand feature that would permit
the holder
to tender them back to the issuer at par value prior to maturity.
The Money
Market Funds may each invest in a floating or variable rate
obligation even
if it carries a stated maturity in excess of thirteen months upon
compliance
with certain conditions contained in a rule of the Commission, in
which case
such obligation will be treated as having a maturity not exceeding
thirteen
months. Each Fund will limit its purchases of floating and
variable rate obligations
to those of the same quality as it otherwise is allowed to
purchase.
A floating or variable rate instrument may be subject to the
Fund's percentage
limitation on illiquid investments if there is no reliable trading
market for
the investment or if the Fund may not demand payment of the
principal amount
within seven days.
<PAGE>
FOREIGN SECURITIES. The International Fund may invest up to
100% of its
total assets, and each of the remaining equity Funds may invest up
to 10% of
total assets in dollar-denominated foreign equity and debt
securities. Each
equity Fund may also invest in American Depositary Receipts
("ADRs") and European
Depositary Receipts. ADRs are certificates issued by a U.S.
depository (usually
a bank) and represent a specified quantity of shares of an
underlying non-U.S.
stock on deposit with a custodian bank as collateral. European
Depository Receipts
are typically issued by foreign banks and trust companies
(although they may
also be issued by U.S. banks or trust companies) and evidence
ownership of underlying
securities issued by either a foreign or a U.S. corporation.
The Intermediate Bond Fund and the Bond Fund (each with
respect to 20% of
its total assets) as well as the Money Fund may invest in non-
convertible (and
convertible in the case of the Bond Fund) debt obligations of
foreign banks,
foreign corporations and foreign governments which obligations are
denominated
in and pay interest in U.S. dollars. The Convertible Securities
Fund may invest
in dollar-denominated Eurodollar securities convertible into the
common stock
of domestic corporations. The Government Fund may invest in
dollar-denominated
Eurodollar securities that are guaranteed by the U.S. Government
or its agencies
or instrumentalities. Investments in foreign securities involve
certain
considerations that are not typically associated with investing in
domestic
securities. For example, investments in foreign securities
typically involve
higher transaction costs than investments in U.S. securities.
Foreign investments
may have risks associated with currency exchange rates, political
instability,
less complete financial information about the issuers and less
market liquidity
than domestic securities. Future political and economic
developments, possible
imposition of withholding taxes on income, seizure or
nationalization of foreign
holdings, establishment of exchange controls or the adoption of
other governmental
restrictions might adversely affect the payment of principal and
interest on
foreign obligations. In addition, foreign banks and foreign
branches of domestic
banks may be subject to less stringent reserve requirements and to
different
accounting, auditing and recordkeeping requirements than domestic
banks.
FORWARD CONTRACTS. All equity Funds may enter into forward
foreign currency
exchange contracts for the purchase and sale of a fixed quantity
of a foreign
currency at a future date ("Forward Contracts"). These Funds may
enter into
Forward Contracts for hedging purposes as well as non-hedging
purposes. By entering
into transactions in Forward Contracts, however, a Fund may be
required to forego
the benefits of advantageous changes in exchange rates and, in the
case of Forward
Contracts entered into for non-hedging purposes, the Fund may
sustain losses
which will reduce its gross income. A Fund may also enter into a
Forward Contract
on one currency in order to hedge against risk of loss arising
from fluctuations
in the value of a second currency (referred to as a "cross hedge")
if, in the
judgment of the Portfolio Management Agent, a reasonable degree of
correlation
can be expected between movements in the values of the two
currencies. Forward
Contracts are traded over-the-counter, and not on organized
commodities or
securities exchanges. As a result, such contracts operate in a
manner distinct
from exchange-traded instruments, and their use involves certain
risks beyond
those associated with transactions in futures contracts or options
traded on
exchanges. Each equity Fund has established procedures consistent
with statements
of the Securities and Exchange Commission and its staff regarding
the use of
Forward Contracts by registered investment companies, which
require use of
segregated assets or "cover" in connection with the purchase and
sale of such
contracts.
GOVERNMENT SECURITIES. Government Securities consist of
obligations issued
or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored
enterprises.
<PAGE>
GUARANTEED INVESTMENT CONTRACTS. The Intermediate Bond Fund,
the Bond Fund
and the Money Fund may invest in guaranteed investment contracts
("GICs") issued
by U.S. and Canadian insurance companies. GICs require a Fund to
make cash
contributions to a deposit fund of an insurance company's general
account. The
insurance company then makes payments to the Fund based on
negotiated, floating
or fixed interest rates. A GIC is a general obligation of the
issuing insurance
company and not a separate account. The purchase price paid for a
GIC becomes
part of the general assets of the insurance company, and the
contract is paid
from the insurance company's general assets. In accordance with
guidelines
established by the Trust's Board of Trustees (or the Company's
Board of Directors
with respect to the Money Fund), GICs may be considered illiquid
securities
and, therefore, subject to the Intermediate Bond Fund's, the Bond
Fund's 15%
and the Money Fund's 10% limitation on such investments. All
purchases of GICs
by the Fund will be subject to the applicable quality requirements
described
under "Investment Objectives and Policies."
ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% in
the case of
the Equity Fund, the Intermediate Bond Fund and the Money Market
Funds) of the
value of its net assets in securities that are considered
illiquid. Repurchase
agreements and time deposits that do not provide for payment to
the Fund within
seven days after notice or which have a term greater than seven
days are deemed
illiquid securities for this purpose, unless such securities are
variable amount
master demand notes with maturities of nine months or less or
unless the Portfolio
Management Agent or Investment Adviser has determined under the
supervision
and direction of the Trust's Board of Trustees or the Company's
Board of Directors,
as the case may be, that an adequate trading market exists for
such securities
or that market quotations are readily available.
Each Fund may also purchase Rule 144A securities sold to
institutional investors
without registration under the Securities Act of 1933 and
commercial paper issued
in reliance upon the exemption in Section 4(2) of the Securities
Act of 1933.
These securities may be determined to be liquid in accordance with
guidelines
established by the Portfolio Management Agent or Investment
Adviser and approved
by the Trust's Board of Trustees or the Company's Board of
Directors, as the
case may be. The Board of Trustees or Directors will monitor the
Portfolio Management
Agent's or Investment Adviser's implementation of these guidelines
on a periodic
basis.
INDEX AND INTEREST RATE FUTURES CONTRACTS; OPTIONS. All equity
Funds, the
Convertible Securities Fund, the Bond Fund, the Government Fund,
the Intermediate
Tax-Exempt Fund and the Tax-Exempt Fund may attempt to reduce the
risk of investments
in securities by hedging a portion of its portfolio through the
use of futures
contracts on indices and options on such indices traded on
national securities
exchanges. All equity Funds, the Convertible Securities Fund, the
Bond Fund,
the Government Fund, the Intermediate Tax-Exempt Fund and the Tax-
Exempt Fund
may attempt to reduce the risk of investment in debt securities by
hedging a
portion of its portfolio through the use of interest rate futures
and options
on such futures contracts. Each such Fund will use futures
contracts and options
on such futures contracts only as a hedge against anticipated
changes in the
values of securities held in its portfolio or in the values of
securities that
it intends to purchase.
All equity Funds, the Convertible Securities Fund, the Bond
Fund, the Government
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund may
invest in
covered put and covered call options and may write covered put and
covered call
options on securities in which they may invest directly and that
are traded
on registered domestic security exchanges or over-the-counter.
See "Investment Strategies" in the Statement of Additional
Information.
<PAGE>
INVERSE FLOATING RATE OBLIGATIONS. All fixed income Funds may
invest in
so called "inverse floating rate obligations" or "residual
interest" bonds,
or other related obligations or certificates structured to have
similar features.
Such obligations generally have floating or variable interest
rates that move
in the opposite direction of short-term interest rates and
generally increase
or decrease in value in response to changes in short-term interest
rates at
a rate which is a multiple (typically two) of the rate at which
fixed-rate,
long-term, tax-exempt securities increase or decrease in response
to such changes.
As a result, such obligations have the effect of providing
investment leverage
and may be more volatile than long-term, fixed-rate, tax-exempt
obligations.
The Bond Fund, the Intermediate Bond Fund and the Government
Fund may invest
in mortgage-backed securities (see description of "mortgage-
related securities"
below) that have an inverse floating rate.
INVESTMENT COMPANY SECURITIES. In connection with the
management of its
daily cash positions, each Fund may invest in securities issued by
investment
companies that invest in short-term debt securities (which may
include municipal
obligations that are exempt from federal income taxes) and which
seek to maintain
a $1.00 net asset value per share. To the extent that the Tax-
Exempt Money Fund
invests in such investment companies, it will invest in investment
companies
that invest primarily in municipal obligations that are exempt
from federal
income taxes. Each Fund, other than the Equity Fund and the
Intermediate Bond
Fund, may also invest in securities issued by investment companies
that invest
in securities in which such Fund could invest directly. Securities
of investment
companies may be acquired by any of the Funds within the limits
prescribed by
the Investment Company Act of 1940, as amended (the "1940 Act").
These limit
each such Fund so that: (i) not more than 5% of the value of its
total assets
will be invested in the securities of any one investment company;
(ii) not more
than 10% of the value of its total assets will be invested in the
aggregate
in securities of investment companies as a group; and (iii) not
more than 3%
of the outstanding voting stock of any one investment company will
be owned
by the Fund or by the Trust or the Company as a whole. As a
shareholder of another
investment company, a Fund would bear, along with other
shareholders, its pro
rata portion of the other investment company's expenses, including
advisory
fees. These expenses would be in addition to the advisory and
other expenses
that a Fund bears directly in connection with its own operations.
LETTERS OF CREDIT. Debt obligations, including municipal
obligations,
certificates of participation, commercial paper and other short-
term obligations,
may be backed by an irrevocable letter of credit of a bank. Only
banks that,
in the opinion of the Portfolio Management Agent, are of
investment quality
comparable to other permitted investments of a Fund, may be used
for letter
of credit-backed investments.
LOANS OF PORTFOLIO SECURITIES. Each of the Funds (except the
Money Market
Funds) may lend to brokers, dealers and financial institutions
securities from
its portfolio representing up to one third of the Fund's net
assets. However,
such loans may be made only if cash or cash equivalent collateral,
including
letters of credit, marked-to-market daily and equal to at least
100% of the
current market value of the securities loaned (including accrued
interest and
dividends thereon) plus the interest payable to the Fund with
respect to the
loan is maintained by the borrower with the Fund in a segregated
account. In
determining whether to lend a security to a particular broker,
dealer or financial
institution, the Portfolio Management Agent or Investment Sub-
Adviser will
consider all relevant facts and circumstances, including the
creditworthiness
of the broker, dealer or financial institution. No Fund will enter
into any
<PAGE>
portfolio security lending arrangement having a duration longer
than one year.
Any securities that a Fund may receive as collateral will not
become part of
the Fund's portfolio at the time of the loan and, in the event of
a default
by the borrower, the Fund will, if permitted by law, dispose of
such collateral
except for such part thereof that is a security in which the Fund
is permitted
to invest. During the time securities are on loan, the borrower
will pay the
Fund any accrued income on those securities, and the Fund may
invest the cash
collateral and earn additional income or receive an agreed upon
fee from a borrower
that has delivered cash equivalent collateral. Loans of securities
by a Fund
will be subject to termination at the Fund's or the borrower's
option. Each
Fund may pay reasonable administrative and custodial fees in
connection with
a securities loan and may pay a negotiated fee to the borrower or
the placing
broker. Borrowers and placing brokers may not be affiliated,
directly or indirectly,
with the Trust, the Company, the Investment Adviser, the
Investment Sub-Adviser,
the Portfolio Management Agent or the Distributor.
MORTGAGE-RELATED SECURITIES. All equity Funds, the
Intermediate Bond Fund,
the Bond Fund, and the Government Fund may invest in mortgage-
backed securities,
including collateralized mortgage obligations ("CMOs") and
Government Stripped
Mortgage-Backed Securities. The Government Fund may purchase such
securities
only if they represent interests in an asset-backed trust
collateralized by
the Government National Mortgage Association ("GNMA"), the Federal
National
Mortgage Association ("FNMA"), or the Federal Home Loan Mortgage
Corporation
("FHLMC").
Government Stripped Mortgage-Backed Securities are mortgage-
backed
securities issued or guaranteed by GNMA, FNMA or FHLMC. These
securities represent
beneficial ownership interests in either periodic principal
distributions
("principal-only") or interest distributions ("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as the
case may
be. The certificates underlying the Government Stripped Mortgage-
Backed
Securities represent all or part of the beneficial interest in
pools of mortgage
loans.
CMOs are types of bonds secured by an underlying pool of
mortgages or mortgage
pass-through certificates that are structured to direct payments
on underlying
collateral to different series or classes of obligations. To the
extent that
CMOs are considered to be investment companies, investment in such
CMOs will
be subject to the percentage limitations described under
"Investment Company
Securities."
The average life of a mortgage-backed instrument, in
particular, is likely
to be substantially less than the original maturity of the
mortgage pools underlying
the securities as the result of scheduled principal payments and
mortgage
prepayments. The rate of such mortgage prepayments, and hence the
life of the
certificates, will be primarily a function of current market rates
and current
conditions in the relevant housing markets. In calculating the
average weighted
maturity of the fixed income Funds, the maturity of mortgage-
backed instruments
will be based on estimates of average life.
MUNICIPAL LEASES. The Intermediate Tax-Exempt Fund and the
Tax-Exempt Fund
may each invest in municipal leases, which are generally
participations in
intermediate- and short-term debt obligations issued by
municipalities and
consisting of leases or installment purchase contracts for
property or equipment.
Although lease obligations do not constitute general obligations
of the
municipality for which the municipality's taxing power is pledged,
a lease
obligation is ordinarily backed by the municipality's covenant to
budget for,
appropriate and make the payments due under the lease obligation.
However, certain
lease obligations contain "non-appropriation" clauses which
provide that the
municipality has no obligation to make lease or
<PAGE>
installment purchase payments in future years unless money is
appropriated for such
purpose on a yearly basis. Although "non-appropriation" lease
obligations are secured
by the leased property, disposition of the property in the event
of foreclosure may
prove difficult. See "Investment Strategies -- Municipal Leases"
in the Statement
of Additional Information.
MUNICIPAL OBLIGATIONS. The Balanced Fund, the Intermediate
Bond Fund, the
Bond Fund, the Intermediate Tax-Exempt Fund, the Tax-Exempt Fund
and the Tax-Exempt
Money Fund may purchase municipal obligations. As a matter of
fundamental policy,
the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund will
invest primarily
(i.e., at least 80% of assets under normal circumstances) in
municipal obligations.
Municipal bonds generally have a maturity at the time of issuance
of up to 30
years. (The Tax-Exempt Money Fund may invest only in short-term
municipal
obligations that have remaining maturities not exceeding thirteen
months.)
Municipal notes generally have maturities at the time of issuance
of three years
or less. These notes are generally issued in anticipation of the
receipt of
tax funds, the proceeds of bond placements or other revenues. The
ability of
an issuer to make payments is therefore dependent on these tax
receipts, proceeds
from bond sales or other revenues, as the case may be. Municipal
commercial
paper is a debt obligation with an effective maturity or put date
of 270 days
or less that is issued to finance seasonal working capital needs
or as short-term
financing in anticipation of longer-term debt.
The two principal classifications of municipal obligations are
"general
obligation" securities and "revenue" securities. General
obligation securities
are secured by the issuer's pledge of its full faith, credit and
taxing power
for the payment of principal and interest. Revenue securities are
payable only
from the revenues derived from a particular facility or class of
facilities
or, in some cases, from the proceeds of a special excise tax or
from other specific
revenue sources such as the user of the facility being financed.
Revenue securities
include private activity bonds (also known as industrial revenue
bonds), which
may be purchased only by the Intermediate Tax-Exempt Fund and the
Tax-Exempt
Fund and which are not payable from the unrestricted revenues of
the issuer.
Consequently, the credit quality of private activity bonds is
usually directly
related to the credit standing of the corporate user of the
facility involved.
Certain other of the municipal obligations in which the Funds
may invest
are:
TANS. The Intermediate Tax-Exempt Fund and the Tax-Exempt Fund
may invest
in tax anticipation notes ("TANs"). The possible inability or
failure of a municipal
issuer to raise taxes as a result of such events as a decline in
its tax base
or a rise in delinquencies could adversely affect the issuer's
ability to meet
its obligations on outstanding TANs. Furthermore, some municipal
issuers include
mix various tax proceeds in a general fund that is used to meet
obligations
other than those of the outstanding TANs. Use of such a general
fund to meet
various obligations could affect the likelihood of making payments
on TANs.
BANS. The Intermediate Tax-Exempt Fund and the Tax-Exempt Fund
may invest
in bond anticipation notes ("BANs"). The ability of a municipal
issuer to meet
its obligations on its BANs is primarily dependent on the issuer's
adequate
access to the longer term municipal bond market and the likelihood
that the
proceeds of such bond sales will be used to pay the principal of,
and interest
on, BANs.
RANS. The Intermediate Tax-Exempt Fund and the Tax-Exempt Fund
may invest
in revenue anticipation notes ("RANs"). A decline in the receipt
of certain
revenues, such as anticipated revenues from another level of
government, could
<PAGE>
adversely affect an issuer's ability to meet its obligations on
outstanding
RANs. In addition, the possibility that the revenues would, when
received, be
used to meet other obligations could adversely affect the ability
of the issuer
to pay the principal of, and interest on, RANs.
See "Investment Strategies" in the Statement of Additional
Information.
REPURCHASE AGREEMENTS. Each of the Funds may purchase
portfolio securities
subject to the seller's agreement to repurchase them at a mutually
agreed upon
time and price, which includes an amount representing interest on
the purchase
price. Each of the Funds may enter into repurchase agreements only
with respect
to obligations that could otherwise be purchased by the Fund. The
seller will
be required to maintain in a segregated account for the Fund cash
or cash equivalent
collateral equal to at least 100% of the repurchase price
(including accrued
interest). Default or bankruptcy of the seller would expose a Fund
to possible
loss because of adverse market action, delays in connection with
the disposition
of the underlying obligations or expenses of enforcing its rights.
REVERSE REPURCHASE AGREEMENTS. All equity and fixed income
Funds may borrow
funds for temporary purposes by selling portfolio securities to
financial
institutions such as banks and broker/dealers and agreeing to
repurchase them
at a mutually specified date and price ("reverse repurchase
agreements"). Reverse
repurchase agreements involve the risk that the market value of
the securities
sold by a Fund may decline below the repurchase price. A Fund
would pay interest
on amounts obtained pursuant to a reverse repurchase agreement.
A Fund may not enter into a repurchase agreement or reverse
repurchase agreements
if, as a result, more than 15% (10% with respect to the Equity
Fund, the Intermediate
Bond Fund and the Money Market Funds) of the market value of the
Fund's total
net assets would be invested in repurchase agreements or reverse
repurchase
agreements with a maturity of more than seven days and in other
illiquid securities.
The Funds will enter into repurchase agreements and reverse
repurchase agreements
only with registered broker/dealers and commercial banks that meet
guidelines
established by the Trust's Board of Trustees or the Company's
Board of Directors,
as the case may be.
SECURITIES WITH PUTS. In order to maintain liquidity, all
equity Funds,
the Intermediate Bond Fund, the Bond Fund, the Government Fund,
the Intermediate
Tax-Exempt Fund, the Tax-Exempt Fund, the Government Money Fund,
the Money Fund
and the Tax-Exempt Money Fund may enter into puts with respect to
portfolio
securities with banks or broker/dealers that, in the opinion of
the Portfolio
Management Agent or, the Investment Adviser with respect to the
Tax-Exempt Money
Market Fund or, with respect to the International Fund, the
Investment Sub-Adviser,
present minimal credit risks. The ability of these Funds to
exercise a put will
depend on the ability of the bank or broker/dealer to pay for the
underlying
securities at the time the put is exercised. In the event that a
bank or broker/dealer
defaults on its obligation to repurchase an underlying security,
the Fund might
be unable to recover all or a portion of any loss sustained from
having to sell
the security elsewhere.
STAND-BY COMMITMENTS. The Balanced Fund, the Intermediate Tax-
Exempt Fund
and the Tax-Exempt Fund may acquire "stand-by commitments" with
respect to
obligations held by it. Under a stand-by commitment, a dealer
agrees to purchase,
at the Fund's option, specified obligations at a specified price.
The acquisition
of a stand-by commitment may increase the cost, and thereby reduce
the yield,
of the obligations to which the commitment relates. These Funds
will acquire
stand-by commitments solely to facilitate portfolio liquidity and
do not intend
to exercise their rights thereunder for trading purposes.
<PAGE>
STRIPPED SECURITIES. The International Fund and the Money
Market Funds may
purchase participations in trusts that hold U.S. Treasury and
agency securities
(such as TIGRs and CATs) and also may purchase Treasury receipts
and other stripped
securities, which represent beneficial ownership interests in
either future
interest payments or the future principal payments on the
securities held by
the trust. These instruments are issued at a discount from their
"face value"
and may (particularly in the case of stripped mortgage-backed
securities) exhibit
greater price volatility than ordinary debt securities because of
the manner
in which their principal and interest are returned to investors.
Participations
in TIGRs, CATs and other similar trusts are not considered U.S.
Government
securities. Stripped securities will normally be considered
illiquid investments
and will be acquired subject to the limitations on illiquid
investments unless
determined to be liquid under guidelines established by the Boards
of Trustees
and Directors.
U.S. GOVERNMENT OBLIGATIONS. U.S. Government Obligations
consist of bills,
notes and bonds issued by the U.S. Treasury. They are direct
obligations of
the U.S. Government and differ primarily in the length of their
maturities.
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY OBLIGATIONS.
Obligations of the
U.S. Government agencies and instrumentalities are debt securities
issued by
U.S. Government-sponsored enterprises and federal agencies. Some
of these
obligations are supported by: (a) the full faith and credit of the
U.S. Treasury
(such as Government National Mortgage Association participation
certificates);
(b) the limited authority of the issuer to borrow from the U.S.
Treasury (such
as securities of the Federal Home Loan Bank); (c) the authority of
the U.S.
Government to purchase certain obligations of the issuer (such as
securities
of the Federal National Mortgage Association); or (d) the credit
of the issuer
only. In the case of obligations not backed by the full faith and
credit of
the U.S., the investor must look principally to the agency issuing
or guaranteeing
the obligation for ultimate repayment.
VARIABLE AMOUNT MASTER DEMAND NOTES. The Intermediate Bond
Fund and the
Money Fund may invest in variable amount master demand notes and
in convertible
and non-convertible debt securities of domestic corporations and
of foreign
corporations and governments that are denominated in and pay
interest in U.S.
dollars, consisting of notes, bonds and debentures (i) in the case
of the Money
Fund, that have thirteen months or less remaining to maturity and
(ii) in the
case of the remaining Funds, that are rated "Baa" or better by
Moody's or "BBB"
or better by S&P. Such securities must meet the applicable quality
standards
described under "Investment Objectives and Policies". Variable
amount master
demand notes differ from ordinary commercial paper in that they
are issued pursuant
to a written agreement between the issuer and the holder. Their
amounts may
from time to time be increased by the holder (subject to an agreed
maximum)
or decreased by the holder or the issuer; they are payable on
demand or after
an agreed-upon notice period, e.g., seven days; and the rates of
interest vary
pursuant to an agreed-upon formula. Generally, master demand notes
are not rated
by a rating agency. However, a Fund may invest in these
obligations if, in the
opinion of the Portfolio Management Agent, they are of an
investment quality
comparable to rated securities in which the Fund may invest. The
Portfolio Management
Agent monitors the creditworthiness of issuers of master demand
notes on a daily
basis. Transfer of these notes is usually restricted by the
issuer, and there
is no secondary trading market for these notes. A Fund may not
invest in a master
demand note with a demand notice period of more than seven days,
if, as a result,
more than 15% (10% in the case of the Intermediate Bond fund and
Money Fund)
of the value of the Fund's total net assets would be invested in
these notes,
together with other illiquid securities.
<PAGE>
WARRANTS. Each of the Growth Fund, the Equity Fund, the Equity
Income Fund,
the Small-Cap Fund, the International Fund, the Balanced Fund and
the Convertible
Securities Fund may invest up to 5% of its respective net assets
at the time
of purchase, and the Index Fund may invest without such
limitation, in warrants
(other than those that have been acquired in units or attached to
other securities)
on securities in which it may invest directly. Warrants represent
rights to
purchase securities at a specific price valid for a specific
period of time.
WHEN-ISSUED SECURITIES. Each of the Funds may purchase
securities (including
securities issued pursuant to an initial public offering) on a
when-issued basis,
in which case delivery and payment normally take place within 45
days after
the date of the commitment to purchase. The Funds will make
commitments to purchase
securities on a when-issued basis only with the intention of
actually acquiring
the securities, but may sell them before the settlement date, if
deemed advisable.
The purchase price and the interest rate that will be received are
fixed at
the time of the commitment. When-issued securities are subject to
market fluctuation
and no income accrues to the purchaser prior to issuance.
Purchasing a security
on a when-issued basis can involve a risk that the market price at
the time
of delivery may be lower than the agreed upon purchase price.
ZERO COUPON SECURITIES. Each of the Funds except the
Convertible Securities
Fund and the Money Market Funds may invest in zero coupon
securities. These
securities are debt obligations that do not entitle the holder to
any periodic
payments of interest prior to maturity and are issued and traded
at a discount.
The values of zero coupon securities are subject to greater
fluctuations than
are the values of income securities that distribute income
regularly. Zero coupon
securities (which are not issued or guaranteed by the U.S.
Government) may be
created by separating the interest and principal component of
government securities
or securities issued by private corporate issuers.
INVESTMENT LIMITATIONS
Unless otherwise noted, the foregoing investment objectives and
related
policies and activities of each of the Funds are not fundamental
and may be
changed by the Trust's Board of Trustees or the Company's Board of
Directors,
as the case may be, without the approval of shareholders, provided
that, with
respect to the Intermediate Bond, Equity and Money Market Funds,
the policy
relating to investment company securities is a fundamental
investment policy.
If there is a change in a Fund's investment objective,
shareholders should consider
whether the Fund remains an appropriate investment in light of
their then current
financial position and needs.
This section outlines
each Fund's
policies that only may
be changed
by a majority vote of
shareholders.
As matters of fundamental policy, which only may be changed with
approval by
the vote of the holders of a majority of the Fund's outstanding
voting securities,
as described in the Statement of Additional Information, no Fund
may: (1) purchase
the securities of issuers conducting their principal business
activity in the
same industry if, immediately after the purchase and as a result
thereof, the
value of its investments in that industry would exceed 25% of the
current value
of its total assets, provided that there is no limitation with
respect to investments
(a) in municipal obligations (for the purpose of this restriction,
private activity
bonds shall not be deemed municipal obligations if the payment of
principal
and interest on such bonds is the ultimate responsibility of non-
governmental
users); (b) in obligations of the U.S. Government, its agencies or
instrumentalities; or (c) in the case of the Money Fund, in
certain bank obligations
in which the Fund may invest, as set forth in this Prospectus; (2)
invest more
than 5% of the current value of its total assets in the securities
of any one
issuer, other than obligations of the U.S.
<PAGE>
Government, its agencies or instrumentalities, except that up to
25% of the
value of the total assets of a Fund (other than the Money Fund)
may be invested
without regard to this limitation; (3) purchase securities of an
issuer if, as a result,
with respect to 75% of its total assets, it would own more than
10% of the voting
securities of such issuer; or (4) borrow from banks, except that a
Fund may borrow
up to 10% of the current value of its total assets for temporary
purposes only in order
to meet redemptions, and these borrowings may be secured by the
pledge of up to
10% of the current value of the Fund's net assets (but investments
may not be
purchased while borrowings are in excess of 5%). It is also a
fundamental policy
that each Fund may make loans of portfolio securities, and, with
respect to
the Equity Fund, the Intermediate Bond Fund and the Money Market
Funds, invest
up to 10% of the current value of its net assets in repurchase
agreements having
maturities of more than seven days, variable amount master demand
notes having
notice periods of more than seven days, fixed time deposits
subject to withdrawal
penalties having maturities of more than seven days, and
securities that are
not readily marketable. Although not a matter of fundamental
policy, the Funds
consider the securities of foreign governments to be a separate
industry for
purposes of the 25% asset limitation on investments in the
securities of issuers
conducting their principal business activity in the same industry.
With respect to the second investment limitation set forth
above, the Money
Fund may invest more than 5% of its total assets in the securities
of a single
issuer for a period of up to three business days after the
purchase thereof,
so long as it does not make more than one such investment at any
one time.
MANAGEMENT
The Trust and the Company are managed under the direction of
their governing
Boards of Trustees and Directors, respectively. Each individual
listed below
is a member of both the Trust's Board of Trustees and the
Company's Board of
Directors. The principal occupation of each individual is also
listed below.
TRUSTEES AND DIRECTORS
Edgar R. Fiedler Vice President and Economic Counsellor,
The Conference
Board.
C. Gary Gerst Chairman of the Board of Directors and
Trustees; Chairman
Emeritus, La Salle Partners, Ltd. (Real
Estate
Developer and Manager).
John W. McCarter, Jr. Senior Vice President, Booz-Allen &
Hamilton, Inc.
(Consulting Firm); Director of W.W.
Grainger, Inc.
and A.M. Castle, Inc.
Ernest M. Roth Consultant; Retired Senior Vice President
and Chief
Financial Officer, Commonwealth Edison
Company.
INVESTMENT ADVISER
The Trust and the Company have each entered into Advisory
Contracts with
Harris Trust with respect to each of the Funds. Harris Trust,
located at 111
West Monroe Street, Chicago, Illinois, is the successor to the
investment banking
firm of N.W. Harris & Co. that was organized in 1882 and was
incorporated in
1907 under the present name of the bank. It is an Illinois state-
chartered bank
and a member of the Federal Reserve System. At December 31, 1994,
Harris Trust
had assets of more than $13 billion and was the largest of 14
banks owned by
Harris Bankcorp, Inc. Harris Bankcorp, Inc. is a wholly-owned
subsidiary of
Bankmont Financial Corp., which is a wholly-owned subsidiary of
Bank of Montreal,
a publicly traded Canadian banking institution.
<PAGE>
This section high-
lights the
experience, services
offered, and
compensation of the
Funds'
Adviser.
As of December 31, 1994, Harris Trust managed more than $8
billion in personal
trust assets, and acted as custodian of more than $151 billion in
assets.
With respect to the Tax-Exempt Money Fund, the Advisory
Contract provides
that Harris Trust shall make investments for the Fund in
accordance with its
best judgment. With respect to the remaining Funds, the Advisory
Contracts provide
that Harris Trust is responsible for the supervision and oversight
of the Portfolio
Management Agent's performance (as discussed below).
For all its services under the Advisory Contracts with the
Funds, Harris
Trust is entitled to receive monthly advisory fees at the
following annual rates:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
<S> <C>
Equity Fund 0.70%
Equity Income Fund 0.70%
Growth Fund 0.90%
Small-Cap Fund 1.00%
Index Fund 0.25%
International Fund 1.05%
Balanced Fund 0.60%
Convertible Securities Fund 0.70%
Intermediate Bond Fund 0.70%
Bond Fund 0.40%
Government Fund 0.30%
Intermediate Tax-Exempt Fund 0.60%
Tax-Exempt Fund 0.60%
Government Money Fund* *0.14% of first $100m
of
Money Fund* average daily net
Tax-Exempt Money Fund* assets, plus 0.10% of
average daily net
assets
over $100m.
</TABLE>
For the fiscal year ended December 31, 1994, Harris Trust
received fees,
after waivers, at the effective rate of 0.69% and 0.37% of the
average daily
net assets of the Equity Fund and the Intermediate Bond Fund,
respectively.
Harris Trust expects to receive, after waivers, an advisory fee at
the annual
rate of 0.69% and 0.37% of the average daily net assets of the
Equity Fund and
the Intermediate Bond Fund, respectively, for the current fiscal
year.
Harris Trust has entered into an Investment Sub-Advisory
Contract with Dunedin
Fund Managers, Limited ("Dunedin"), pursuant to which Dunedin
provides
sub-advisory services for the International Fund. Dunedin is
located at 181
West Madison Street, Chicago, Illinois 60602. At June 30, 1995,
Dunedin had
assets under management of over $8.4 billion.
For Dunedin's services under the Investment Sub-Advisory
Contract, Harris
Trust pays Dunedin, from the portfolio management fees HIM
receives for its
services to the International Fund, a monthly fee at the annual
rate of 0.35%
of the first $10 million of the Fund's average daily net assets,
plus 0.30%
of the next $15 million in such assets, plus 0.25% of such net
assets in excess
of $25 million.
PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into Portfolio Management Contracts
with Harris
Investment Management, Inc. ("HIM" or the "Portfolio Management
Agent") under
which HIM undertakes to furnish investment guidance and policy
direction in
connection with the daily portfolio management of all of the Funds
except the
Tax-Exempt Money Fund. For the services provided by HIM, Harris
Trust will pay
to HIM the advisory fees it receives from the Funds. As of June
30, 1995, HIM
managed an estimated $13.8 billion in assets.
<PAGE>
Purchase and sale orders of the securities held by each of the
Funds may
be combined with other accounts that HIM manages, and for which it
has brokerage
placement authority, in the interest of seeking the most favorable
overall net
results. When HIM determines that a particular security should be
bought or
sold for any of the Funds and other accounts managed by HIM, HIM
undertakes
to allocate those transactions among the participants equitably.
PORTFOLIO MANAGEMENT
The organizational arrangements of the Investment Adviser, the
Investment
Sub-Adviser and the Portfolio Management Agent require that all
investment
decisions be made by a committee and no one person is responsible
for making
recommendations to that committee.
GLASS-STEAGALL ACT
The Glass-Steagall Act, among other things, generally
prohibits federally
chartered or supervised banks from engaging to any extent in the
business of
issuing, underwriting, selling or distributing securities,
although subsidiaries
of bank holding companies such as Harris Trust and HIM are
permitted to purchase
and sell securities upon the order and for the account of their
customers.
It is the position of Harris Trust and HIM that they may
perform the services
contemplated by the Advisory Contracts, the Portfolio Management
Contracts and
this Prospectus without violation of the Glass-Steagall Act or
other applicable
federal banking laws or regulations. It is noted, however, that
there are no
controlling judicial or administrative interpretations or
decisions and that
future judicial or administrative interpretations of, or decisions
relating
to, present federal statutes and regulations relating to the
permissible activities
of banks and their subsidiaries or affiliates, as well as future
changes in
federal statutes or regulations and judicial or administrative
decisions or
interpretations thereof, could prevent Harris Trust or HIM from
continuing to
perform, in whole or in part, such services. If Harris Trust or
HIM were prohibited
from performing any of such services, it is expected that the
Boards of Trustees
and Directors of the Trust and the Company, respectively, would
recommend to
the Funds' shareholders that they approve new agreements with
another entity
or entities qualified to perform such services and selected by the
Boards of
Trustees and Directors.
To the extent permitted by the Commission, the Funds may pay
brokerage
commissions to certain affiliated persons. No such commission
payments were
made during the last fiscal year by the Equity Fund, the
Intermediate Bond Fund
or the Money Market Funds.
ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. formerly known as
(The Shareholder
Services Group, Inc.) ("First Data" or the "Administrator") and
PFPC Inc. ("PFPC"
or the "Administrator and Accounting Services Agent")
(collectively, the
"Administrators") serve as the administrators of the Funds. In
such capacity,
the Administrators generally assist the Funds in all aspects of
their administration
and operation. PFPC also serves as the transfer and dividend
disbursing agent
of the Funds (the "Transfer Agent").
These service
providers are
responsible for
maintaining the
books and records of
the Funds,
handling compliance
and regula-
tory issues,
processing buy/ sell
orders, customer
service and the
safekeeping of
securities.
PNC Bank, N.A. (the "Custodian") serves as custodian of the assets
of the
Funds. PFPC and the Custodian are indirect, wholly-owned
subsidiaries of PNC
Bank Corp.
<PAGE>
As compensation for their services, the Administrators, the
Custodian, and
the Transfer Agent are entitled to receive a combined fee based on
the aggregate
average daily net assets of the Funds and the Trust's and the
Company's other
investment portfolios, payable monthly at an annual rate of .17%
of the first
$300 million of average daily net assets; .15% of the next $300
million; and
.13% of average net assets in excess of $600 million. In addition,
a separate
fee is charged by PFPC for certain retail transfer agent services
and for various
custody transactional charges.
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") has entered into a
Distribution
Agreement with the Trust (and, with respect to the Equity Fund,
the Intermediate
Bond Fund and the Money Market Funds, the Company) pursuant to
which it has
the responsibility for distributing shares of the Funds. The
Distributor bears
the cost of printing and mailing prospectuses to potential
investors and any
advertising expenses incurred by it in connection with the
distribution of shares.
The Distributor
underwrites the
Funds' shares which
are then
available for purchase
or
redemption.
See "Management" and "Custodian" in the Statement of Additional
Information
for additional information regarding the Funds' Investment
Adviser, Investment
Sub-Adviser, Portfolio Management Agent, Administrators,
Custodian, Transfer
Agent and Distributor.
EXPENSES
Except for certain expenses borne by the Distributor, Harris
Trust, HIM,
Dunedin, the Trust and the Company each bears all costs of its
operations, including
the compensation of its Trustees or Directors who are not
affiliated with Harris
Trust, HIM or the Distributor or any of their affiliates; advisory
and administration
fees; payments pursuant to any Service Plan (with respect to only
Class A Shares
and in the case of the Money Market Funds, Class A and Class B
Shares); interest
charges; taxes; fees and expenses of its independent accountants,
legal counsel,
transfer agent and dividend disbursing agent; expenses of
preparing and printing
prospectuses (except the expense of printing and mailing
prospectuses used for
promotional purposes, unless otherwise payable pursuant to a
Service Plan),
shareholders' reports, notices, proxy statements and reports to
regulatory
agencies; insurance premiums and certain expenses relating to
insurance coverage;
trade association membership dues; brokerage and other expenses
connected with
the execution of portfolio securities transactions; fees and
expenses of the
Funds' custodian including those for keeping books and accounts
and calculating
the net asset value per share of the Funds; expenses of
shareholders' meetings
and meetings of Boards of Trustees and Directors; expenses
relating to the issuance,
registration and qualification of shares of the Funds; pricing
services;
organizational expenses; and any extraordinary expenses. Expenses
attributable
to each Fund are charged against the assets of that Fund. Other
general expenses
of the Trust and the Company are allocated among the Funds in an
equitable manner
as determined by the Boards of Trustees and Directors.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Fund is determined on each
day that the
New York Stock Exchange ("NYSE") and the Federal Reserve Bank of
Philadelphia
(the "Fed") are open for trading. For a list of the days on which
the net asset
value will not be determined, see "Determination of Net Asset
Value" in the
Statement of Additional Information. The net asset value per share
of each of
the Funds is determined by dividing the value of the total assets
of a Fund
less all of its liabilities by the total number of outstanding
shares of that
Fund.
<PAGE>
The Net Asset Value
(NAV) is the
price or value of one
share of a
Fund.
The net asset value per share of each of the Funds that are not
Money Market
Funds (the "Non-Money Market Funds") is determined at the close of
regular trading
on the NYSE on each day the Funds are open for business. The value
of securities
of the Non-Money Market Funds (other than bonds and debt
obligations maturing
in 60 days or less) is determined based on the last sale price on
the principal
exchange on which the securities are traded as of the close of
regular trading
on the NYSE (which is currently 4:00 P.M., New York City time). In
the absence
of any sale on the valuation date, the securities are valued at
the closing
bid price. Securities traded only on over-the-counter markets are
valued at
closing over-the-counter bid prices. Bonds are valued at the mean
of the last
bid and asked prices. Portfolio securities which are primarily
traded on foreign
securities exchanges are generally valued at the preceding closing
values of
such securities on their respective exchanges, except when an
occurrence subsequent
to the time a value was so established is likely to have changed
such value.
In such an event and in those instances where prices of securities
are not readily
available, the fair value of those securities will be determined
in good faith
by the Board of Trustees or Directors, as the case may be. Prices
used for valuations
of securities are provided by independent pricing services. Debt
obligations
with remaining maturities of 60 days or less are valued at
amortized cost when
the Trust's Board of Trustees or the Company's Board of Directors,
as the case
may be, has determined that amortized cost valuation represents
fair value.
The net asset value per share of each of the Money Market Funds is
determined
at 12:00 Noon, New York City time. Each of the Funds uses the
amortized cost
method to value its portfolio securities and each attempts to
maintain a constant
net asset value of $1.00 per share. The amortized cost method
involves valuing
a security at its cost and amortizing any discount or premium over
the period
until maturity, regardless of the impact of fluctuating interest
rates on the
market value of the security.
PURCHASE OF SHARES
Institutional shares are sold to fiduciary and discretionary
accounts of
institutions, "institutional investors", Directors, Trustees,
officers and
employees of the Company, the Trust, the Investment Adviser, the
Portfolio
Management Agent, the Investment Sub-Adviser, and the Distributor
and the Adviser's
investment advisory clients. "Institutional investors" may include
financial
institutions (such as banks, savings institutions and credit
unions); pension
and profit sharing and employee benefit plans and trusts;
insurance companies;
investment companies; investment advisers; and broker/dealers
acting for their
own accounts or for the accounts of such institutional investors.
Contact your broker,
financial
institution or service
agent for
answers to any
questions you may
have about purchasing
shares.
The Trust, or the Company as the case may be, reserves the right
to reject
any purchase order. All funds will be invested in full and
fractional shares.
Checks will be accepted for the purchase of any Fund's shares
subject to collection
at full face value in U.S. dollars. Inquiries may be directed to
the Funds at
the address and telephone number on the cover of this Prospectus.
Purchase orders for shares of the Fund received in good order
by the Distributor
prior to the close of regular trading (4:00 P.M., New York City
time) on the
NYSE (on or before 12:00 Noon, New York City time, in the case of
the Money
Market Funds) will be executed at the net asset value next
determined on that
day. The net asset value of shares of the Money Market Funds is
expected to
remain constant at $1.00. Orders placed with the Distributor must
be paid for
by check or bank wire on the next business day for Funds other
than the Money
Market Funds. Orders for the Money Market Funds placed with the
Distributor
must be paid for by check or bank wire on the order date.
<PAGE>
No sales charge will be assessed on purchases of shares of the
Funds. Neither
the Company nor the Trust imposes any minimum initial or
subsequent investment
limitations.
There is no sales
charge by the
Funds for purchases of
shares.
Depending upon the terms of the particular customer account,
financial services
institutions, including Harris Trust and HIM, may charge account
fees for automatic
investment and other cash management services which they provide,
including,
for example, account maintenance fees, compensating balance
requirements, or
fees based upon account transactions, assets, or income. This
Prospectus should
be read in connection with any information received from financial
institutions.
Each Fund also offers Class A Shares and, in addition, each Money
Market Fund
offers another class of shares which are known as Class B Shares
but the terms
of which differ from the Institutional Shares offered in this
Prospectus. Different
classes of shares of a single portfolio may bear different sales
charges and
other expenses which may affect their relative performance.
Investors may call
1-800-982-8782 to obtain more information concerning other classes
of the Funds.
<PAGE>
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset
value after receipt
of a proper request by the Distributor. Shares held by an
institution on behalf
of its customers must be redeemed in accordance with instructions
and limitations
pertaining to the account at the institution. See page .
There is no charge by
the Funds
for redemptions,
although
Institutions may
charge an
account- based service
fee.
There is no charge for redemption transactions, but an
institution may charge
an account-based service fee. Redemption orders received by an
institution before
the close of the NYSE with respect to shares of a Fund and
received by the Distributor
before the close of business on the same day will be executed at
the Fund's
net asset value per share next determined on that day. Redemption
orders received
by an institution after the close of the NYSE, or not received by
the Distributor
prior to the close of business, will be executed at the Fund's net
asset value
next determined on the next business day.
Redemption orders for a Non-Money Market Fund that are
received in good
order by 4:00 P.M. New York City time, or 12:00 Noon in the case
of the Money
Market Funds, will normally be remitted within five business days
but not more
than seven days. In the case of a redemption request made shortly
after a recent
purchase, the redemption proceeds will be distributed upon the
clearance of
the shareholder's check used to purchase the Fund's shares which
may take up
to 15 days or more after the investment. The proceeds may be more
or less than
cost and, therefore, a redemption may result in a gain or loss for
federal income
tax purposes. Payment of redemption proceeds may be made in
readily marketable
securities.
REDEMPTION THROUGH INSTITUTIONS
Proceeds of redemptions made through authorized institutions
will be credited
to the shareholder's account with the institution. A redeeming
shareholder may
request a check from the institution or may elect to retain the
redemption proceeds
in such shareholder's account. The institution may benefit from
the use of the
redemption proceeds prior to the clearance of a check issued to a
redeeming
shareholder for the proceeds or prior to disbursement or
reinvestment of the
proceeds on behalf of the shareholder.
<PAGE>
REDEMPTION BY EXPEDITED REDEMPTION SERVICE
If shares of the Money Market Funds are held directly by the
Transfer Agent
in book credit form and the Expedited Redemption Service has been
elected on
the Purchase Application on file with the Transfer Agent,
redemption of shares
may be requested by telephone, on any day the Company and the
Transfer Agent
are open for business. The Company and its Transfer Agent will
attempt to confirm
that telephone instructions are genuine and will use such
procedures as are
considered reasonable. In this regard the Company and its Transfer
Agent require
personal identification information before accepting telephonic
redemption
instructions. The shareholder will bear the risk of loss due to
fraud, although
the Company and its agents may have a risk of loss if reasonable
procedures
are not used. The Distributor can be reached by calling (800) 982-
8782.
<PAGE>
Upon request, proceeds of Expedited Redemptions of $1,000 or
more will be
wired to the shareholder's bank indicated in the Purchase
Application. If an
Expedited Redemption request is received by the Transfer Agent by
12:00 Noon
(New York City time) on a day the Company and the Transfer Agent
are open for
business, the redemption proceeds will be transmitted to the
shareholder's bank
that same day. A check for the proceeds of less than $1,000 will
be mailed to
the shareholder's address of record, except that, in the case of
investments
in the Company that have been effected through Institutions, the
full amount
of the redemption proceeds will be transmitted by wire.
Due to the high cost of maintaining small accounts, the Trust, or
the Company
as the case may be, reserves the right to redeem accounts
involuntarily on behalf
of shareholders whose share balances fall below $500 unless this
balance condition
results from a decline in the market value of a Fund's assets.
Prior to such
a redemption, a shareholder will be notified in writing and
permitted 30 days
to make additional investments to raise the account balance to the
specified
minimum.
EXCHANGE PRIVILEGE
Institutional Shares of any of the Funds that have been held for
seven days
or more may be exchanged at their respective net asset values for
Institutional
Shares of any other Harris Insight Fund in an identically
registered account,
provided shares of the Harris Insight Fund to be acquired are
registered for
sale in the shareholder's state of residence.
Once you have held
shares for 7
days or more, you can
exchange these
shares for other
eligible Harris
Insight Fund
Institutional Shares
Procedures applicable to redemption of a Fund's shares are also
applicable to
exchanging shares. The Trust or the Company, as the case may be,
reserves the
right to limit the number of times shares may be exchanged between
the Harris
Insight Funds, to reject any telephone exchange order or otherwise
to modify
or discontinue exchange privileges at any time upon 60 days
written notice.
A capital gain or loss for tax purposes may be realized upon an
exchange, depending
upon the cost or other basis of shares redeemed.
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of the Intermediate Bond
Fund, the
Bond Fund, the Government Fund, the Bond Fund, the Intermediate
Tax- Exempt
Fund and the Tax-Exempt Fund are declared daily and paid monthly.
Dividends
from the Convertible Securities Fund, the Equity Fund, the Equity
<PAGE>
Income Fund, the Growth Fund, the Index Fund and the Balanced Fund
are declared
and paid quarterly. Dividends from the Small-Cap Fund and the
International Fund are
declared and paid semi-annually. Dividends from net investment
income from each
of the Money Market Funds are declared at the close of each
business day to
shareholders of record at 12:00 Noon (New York City time) on the
day of declaration
and paid monthly. Shares purchased will begin earning dividends on
the day the
purchase order is executed and shares redeemed will earn dividends
through the
previous day, except that, with respect to the Check Redemption
Service, shares
redeemed will cease to earn dividends on the day the check is
charged to the
Custodian's account at its Federal Reserve Bank. Net investment
income for a
Saturday, Sunday or holiday will be declared as a dividend on the
previous business
day to shareholders of record at 12:00 Noon (New York City time)
on that day.
Each Fund's net taxable capital gains, if any, will be
distributed at least
annually (to the extent required to avoid imposition of the 4%
excise tax described
below). Dividends and distributions paid by any of the Funds will
be invested
in additional shares of the same Fund at net asset value and
credited to the
shareholder's account on the payment date or, at the shareholder's
election,
paid in cash. Dividend checks and Statements of Account will be
mailed approximately
two business days after the payment date. Each Fund will forward
to the Transfer
Agent the monies for dividends to be paid in cash on the payment
date.
Shareholders who redeem all their shares of any of the Funds
prior to a
dividend payment will receive, in addition to the redemption
proceeds, dividends
declared but unpaid. Shareholders who redeem only a portion of
their shares
will be entitled to all dividends declared but unpaid on such
shares on the
next dividend payment date.
FEDERAL INCOME TAXES
Each Fund will be treated as a separate entity for tax
purposes and thus
the provisions of the Internal Revenue Code (the "Code") generally
will be applied
to each Fund separately, rather than to the Trust or the Company,
as the case
may be, as a whole. As a result, net capital gains, net investment
income, and
operating expenses will be determined separately for each Fund.
The Trust or
the Company, as the case may be, intends to qualify each Fund as a
regulated
investment company under Subchapter M of the Code. As a portfolio
of a regulated
investment company, each Fund will not be subject to federal
income taxes with
respect to net investment income and net capital gains distributed
to its
shareholders, as long as it distributes 90% or more of its net
investment income
(including net short-term capital gains) each year.
Dividends from net investment income (including net short-term
capital gains),
except "exempt-interest dividends" (described below), will be
taxable as ordinary
income.
Because more than 50% of the value of the total assets of each
of the Tax-Exempt
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Money
Fund at the
close of each quarter of its taxable year is expected to consist
of obligations
the interest on which is exempt from federal income tax, these
Funds expect
to qualify under the Code to pay "exempt-interest dividends."
Dividends distributed
by each of these Funds that are attributable to interest from tax-
exempt securities
will be designated by the Fund as an "exempt-interest dividend,"
and, as such,
will generally be exempt from federal income tax.
<PAGE>
Because substantially all of the income of each Fund except
the equity Funds
will arise from interest, no part of the distributions to
shareholders of these
Funds is expected to qualify for the dividends-received deduction
allowed to
Corporations under the Code.
Distributions of net long-term capital gains, if any, will be
taxable as
long-term capital gains, whether received in cash or reinvested in
additional
shares, regardless of how long the shareholder has held the
shares, and will
not qualify for the dividends-received deductions.
A taxable gain or loss may also be realized by a holder of
Shares in a Fund
upon the redemption or transfer of shares depending on the tax
basis of the
shares and their price at the time of the transaction.
In the case of the shareholders of each of the Tax-Exempt
Fund, the Intermediate
Tax-Exempt Fund or the Tax-Exempt Money Fund, interest on
indebtedness incurred
or continued to purchase or carry shares of the Fund will not be
deductible
to the extent that the Fund's distributions are exempt from
federal income tax.
In addition, the portion of an exempt-interest dividend allocable
to certain
tax-exempt obligations will be treated as a preference item for
purposes of
the alternative minimum tax imposed on both individuals and
corporations. Persons
who may be "substantial users" (or "related persons" of
substantial users) of
facilities financed by private activity bonds should consult their
tax advisers
before purchasing shares in the Tax-Exempt Fund, the Intermediate
Tax-Exempt
Fund or the Tax-Exempt Money Fund.
The exemption of exempt-interest dividends paid by each of the
Tax-Exempt
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Money
Fund for federal
income tax purposes may not result in similar exemptions under the
tax law of
state and local authorities. In general, only interest earned on
obligations
issued by the state or locality in which the investor resides will
be exempt
from state and local taxes. Shareholders should consult their
advisers about
the status of dividends from these Funds in their own states and
localities.
Each year the Trust or the Company, as the case may be, will
notify shareholders
of the tax status of distributions.
Any loss realized on a sale or exchange of shares of a Fund will
be disallowed
to the extent shares are acquired within the 61-day period
beginning 30 days
before and ending 30 days after the disposition of shares.
The Trust or the Company, as the case may be, will be required
to withhold,
subject to certain exemptions, currently at a rate of 31%, a
portion of dividends
paid or credited to individual shareholders and of redemption
proceeds, if a
correct taxpayer identification number, certified when required,
is not on file
with the Trust or the Company, as the case may be, or Transfer
Agent.
ACCOUNT SERVICES
Shareholders receive a Statement of Account whenever a share
transaction,
dividend or capital gain distribution is effected in the accounts,
or at least
annually. Shareholders can write or call the Funds at the address
and telephone
number on page one of this Prospectus with any questions relating
to their investment
in shares of the Funds.
<PAGE>
ORGANIZATION AND CAPITAL STOCK
The Trust is a diversified open-end management investment
company which
was organized on , 1995 as a business trust under the
laws of The
Commonwealth of Massachusetts. The Trust offers shares of
beneficial interest,
$.001 par value, for sale to the public. Currently, the Trust has
twelve portfolios
in operation. The Trust's Board has authorized each of the twelve
Funds which
are portfolios of the Trust to issue two classes of shares, Class
A and Institutional
Shares.
The Company, which was incorporated in Maryland on September
16, 1987, is
a diversified, open-end management investment company. The
authorized capital
stock of the Company consists of 10,000,000,000 shares having a
par value of
$.001 per share. Currently, the Company has six portfolios in
operation. The
Company's Board has authorized the Money Market Funds to issue
three classes
of shares, Class A, Class B and Institutional Shares and the
remaining Funds
(the "Company's Non-Money Market Funds") to issue two classes of
shares, Class
A and Institutional Shares.
In the future, the Board of Trustees of the Trust and the
Board of Directors
of the Company may authorize the issuance of shares of additional
investment
portfolios and additional classes of shares of any portfolio.
Different classes
of shares of a single portfolio may bear different sales charges
and other expenses
which may affect their relative performance. Information regarding
other classes
of shares may be obtained by calling the Funds at the telephone
number shown
on the cover page of this Prospectus or from any institution which
makes available
shares of the Funds. All shares of the Trust and all shares of the
Company have
equal voting rights and will be voted in the aggregate, and not by
class, except
where voting by class is required by law or where the matter
involved affects
only one class. A more detailed statement of the voting rights of
shareholders
is contained in the Statement of Additional Information. All
shares of the Trust
and all shares of the Company, when issued, will be fully paid and
non-assessable.
As of November 15, 1995, the holders of record of 25% or more
of the outstanding
shares of the Funds were as follows: Integra Trust Services held
of record 1,271,807
shares, equal to 29.8% of the outstanding shares of the Equity
Fund and Harris
Trust held of record 1,285,028 shares, equal to 30.1% of the
outstanding shares
of the Equity Fund; 3,764,340 shares, equal to 76.0% of the
Intermediate Bond
Fund; 452,400,831 shares, equal to 95.4% of the outstanding shares
of the Money
Market Fund -- Class A Shares; 212,568,017 shares, equal to 99.9%
of the Money
Market Fund -- Institutional Shares; 353,369,130 shares, equal to
93.8% of the
Government Money Market Fund -- Class A Shares; 46,202,467 shares,
equal to
99.9% of the outstanding shares of the Government Market Fund --
Institutional
Shares; 147,351,701 shares, equal to 90.2% of the outstanding
shares of the
Tax-Exempt Money Market Fund -- Class A Shares; and 257,818,062
shares, equal
to 99.9% of the outstanding shares of the Tax Exempt Money Market
Fund --
Institutional Shares. Harris Trust has indicated that it holds its
shares on
behalf of various client accounts and not as beneficial owner.
The Trust and the Company may dispense with annual meetings of
shareholders
in any year in which Trustees and Directors are not required to be
elected by
shareholders. The Board of Trustees of the Trust and the Board of
Directors
of the Company, when requested by at least 10% of the Trust's or
the Company's
outstanding shares, will call a meeting of shareholders for the
purpose of voting
upon the question of removal of a Trustee or Trustees or of a
Director or Directors
and will assist in communications with other shareholders as
required by Section
16(c) of the 1940 Act.
<PAGE>
There is a possibility that the Trust might become liable for
any misstatement,
inaccuracy or incomplete disclosure in this Prospectus concerning
the Company.
There is a possibility that the Company might become liable for
any misstatement,
inaccuracy or incomplete disclosure in this Prospectus concerning
the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of both the Trust and the Company ends on
December 31. Each
of the Trust and the Company, as the case may be, will send to its
shareholders
a semi-annual report showing the investments held by each of the
Funds and other
information (including unaudited financial statements) pertaining
to the Trust
or the Company, as appropriate. An annual report, containing
financial statements
audited by independent accountants, is also sent to shareholders.
CALCULATION OF YIELD AND TOTAL RETURN
From time to time each of the Funds may advertise its yield,
effective yield,
tax-equivalent yield and "total return" with respect to the
Institutional Shares.
"Total return" refers to the amount an investment in Institutional
Shares of
a Fund would have earned, including any increase or decrease in
net asset value,
over a specified period of time and assumes reinvestment of all
dividends and
distributions.
The total return of
each Fund shows
what an investment in
Institu-
tional Shares of the
Fund would
have earned over a
specific period
of time.
The total return of each Fund shows what an investment in the Fund
would have
earned over a specified period of time (such as one, five or ten
years or the
period of time since commencement of operations, if shorter)
assuming the payment
of the maximum sales loads (if any) when the investment was first
made and
reinvestment of all distributions and dividends by the Fund on
their reinvestment
dates during the period less all recurring fees.
The yield of each Fund refers to the income generated by an
investment in
Institutional Shares of the Fund over a 30-day period (which
period will be
stated in the advertisement). This income is then "annualized."
That is, the
amount of income generated by the investment during the 30-day
period is assumed
to be earned and reinvested at a constant rate and compounded
semi-annually.
The annualized income is then shown as a percentage of the
investment.
The effective yield is calculated similarly but, when
annualized, the income
earned by an investment in Institutional Shares of the Fund is
assumed to be
reinvested. The effective yield will be slightly higher than the
yield because
of the compounding effect of this assumed reinvestment. The "tax-
equivalent
yield", which will be calculated only for the Intermediate Tax-
Exempt Fund,
the Tax- Exempt Fund and the Tax-Exempt Money Fund, refers to the
yield on a
taxable investment necessary to produce an after-tax yield equal
to a Fund's
tax-free yield, and is calculated by increasing the yield shown
for the Fund
to the extent necessary to reflect the payment of specified tax
rates. Thus,
the tax-equivalent yield for a Fund will always exceed that Fund's
yield.
From time to time the Money Market Funds advertise "30-day
average yield"
and "monthly average yield." Such yields refer to the average
daily income generated
by an investment in such Fund over a 30-day or monthly period, as
appropriate
(which period will be stated in the advertisement).
A Fund's performance figures for a class of shares represent
past performance,
will fluctuate and should not be considered as representative of
future results.
The yield of any investment is generally a function of portfolio
quality and
maturity, type of instrument and operating expenses.
<PAGE>
INVESTMENT ADVISER
Harris Trust & Savings Bank
111 West Monroe Street
Chicago, Illinois 60603
PORTFOLIO MANAGEMENT AGENT
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603
INVESTMENT SUB-ADVISER
Dunedin Fund Managers, Ltd.
181 West Madison Street
Suite 3525
Chicago, Illinois 60602
ADMINISTRATORS
First Data Investor Services Group, Inc.
53 State Street
Boston, Massachusetts 02109
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809
DISTRIBUTOR
Funds Distributor, Inc.
One Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
PNC Bank, N.A.
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19885
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Philadelphia, Pennsylvania
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
HARRIS INSIGHT FUNDS EQUITY FUNDS
One Exchange Place, Boston, Massachusetts 02109 Telephone: (800) 982-8782
The Harris Insight Funds Trust (the "Trust") is an open-end,
diversified management investment company that currently offers a selection
of eleven investment portfolios. HT Insight Funds, Inc. (the "Company")
is an open-end, diversified management investment company that currently
offers six investment portfolios. (The eleven portfolios of the Trust and
five of the six portfolios of the Company are collectively referred to
herein as the "Harris Insight Funds" or the "Funds.") This Prospectus
describes one class of shares ("Class A Shares" or "Shares") of each of six
investment portfolios offered by the Trust and the Class A Shares of the
Harris Insight Equity Fund, a portfolio offered by the Company. The Funds are
as follows:
o Harris Insight Equity Fund (the "Equity Fund")
o Harris Insight Equity Income Fund (the "Equity Income Fund")
o Harris Insight Growth Fund (the "Growth Fund")
o Harris Insight Small-Cap Opportunity Fund (the "Small-Cap Fund")
o Harris Insight Index Fund (the "Index Fund")
o Harris Insight International Fund (the "International Fund")
o Harris Insight Balanced Fund (the "Balanced Fund")
Harris Trust & Savings Bank is the Investment Adviser to the
Funds and Harris Investment Management, Inc., a subsidiary of Harris
Bankcorp, Inc., acts as each Fund's Portfolio Management Agent. Dunedin Fund
Managers, Limited, acts as Investment Sub-Adviser to the International
Fund. Shares of each Fund are offered by Funds Distributor, Inc., the
distributor for the Trust and the Company.
This Prospectus sets forth concisely information a prospective
investor should know before investing in the Funds. Please read and retain it
for future reference. A Statement of Additional Information dated
____________, 1995, containing more detailed information about the Funds
has been filed with the Securities and Exchange
Commission and (together with any supplements thereto) is incorporated
by reference into this Prospectus. The Statement of Additional Information
and separate Prospectuses for the other investment portfolios offered by the
Trust or the Company may be obtained without charge by writing or calling
the Harris Insight Funds at the address and telephone number printed above.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS
AFFILIATES, AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN
INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.
- - - -----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________, 1995
<PAGE>
TABLE OF CONTENTS
Page Expense
Table..........................................................
Highlights...................................................
Financial Highlights...................................................
Investment Objectives and Policies.....................................
Equity Fund........................................................ Equity
Income Fund................................................. Growth
Fund........................................................ Small-Cap
Fund..................................................... Index
Fund......................................................... International
Fund................................................. Balanced
Fund...................................................... All
Funds.......................................................... Investment
Strategies.................................................. Investment
Limitations..................................................
Management.............................................................
Determination of Net Asset Value.......................................
Purchase of Shares.....................................................
Redemption of Shares...................................................
Exchange Privilege.....................................................
Service Plans..........................................................
Dividends and Distributions............................................
Federal Income Taxes...................................................
Account Services.......................................................
Organization and Capital Stock.................................
Reports to Shareholders................................................
Calculation of Yield and Total Return..................................
No person has been authorized to give any information or to
make any representations other than those contained in this Prospectus, the
Statement of Additional Information and/or in the Funds' official sales
literature in connection with the offering of the Funds' shares and, if
given or made, such other information or representations must not be
relied upon as having been authorized by the Trust, the Company or the
Distributor. This Prospectus does not constitute an offer in any state in
which, or to any person to whom, such offer may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain information
concerning shareholder transaction expenses and projected annual fund
operating expenses for Class A Shares of the Funds during the current fiscal
year.
Expenses and fees payable by shareholders are summarized in this table and
expressed as a percentage of average net assets.
<TABLE>
<CAPTION>
EQUITY SMALL- INTER-NATIONAL
EQUITY INCOME GROWTH CAP INDEX FUND
BALANCED
FUND
FUND FUND FUND FUND FUND
<S> <C>
<C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases 4.50% 4.50% 4.50%
4.50% 4.50% 4.50% 4.50%
Annual Fund Operating Expenses*:
(as a percentage of average net assets)
Advisory Fees 0.69%+ 0.70%
0.90% 1.00% 0.25% 1.05% 0.60%
Rule 12b-1 Fees 0.25% 0.25% 0.25%
0.25% 0.25% 0.25% 0.25%
Other Expenses 0.21% 0.23% 0.20%
0.20% 0.20% 0.27% 0.28%
----- -----
----- ----- ----- ----- -----
Total Fund Operating Expenses 1.15%+ 1.18%
1.35% 1.45% 0.70% 1.57% 1.13%
==== =====
===== ===== ===== ===== =====
- - - ----------------------------------------
*Customers of a financial institution, such as Harris Trust &
Savings Bank, may also be charged certain fees and expenses by their
institution. These fees may vary depending on the capacity in which the
institution provides fiduciary and investment services to the particular
client (e.g., personal trust, estate settlement, advisory and custodian
services).
+Reflects advisory fees after waivers. Without waivers, the
ratio of total fund operating expenses to average net assets would be
1.17%. The investment adviser has voluntarily agreed to waive a portion of
its advisory fees and will not increase its advisory fees without prior
approval of the Company's Board of Directors and 30 days' prior notice to
shareholders.
With respect to each Fund, other than the Equity Fund, the
amount of "Other Expenses" in the table above is based on estimated expenses
and projected assets for the current fiscal year. With respect to the Equity
Fund, the amount of "Other Expenses" is based on amounts incurred during the
most recent fiscal year.
</TABLE>
<PAGE>
EXAMPLE
You would pay the following expenses on a $1,000 investment in
Class A Shares, assuming (1) a hypothetical 5% gross annual return and (2)
redemption at the end of each time period:
<TABLE>
<CAPTION>
EQUITY
EQUITY INCOME GROWTH SMALL-CAP INDEX
INTERNATIONAL BALANCED
FUND FUND FUND FUND FUND FUND FUND
- - - ---- ---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C>
<C> <C> <C>
1 year $56 $56 $58 $59
$52 $60 $56
3 years 80 81 86
89 66 92 79
5 years 105 107 116 121
82 127 104
10 years 178 182 200 211
128 223 176
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR PERFORMANCE WHICH MAY BE MORE OR LESS THAN THOSE
SHOWN.
The purpose of the expense table is to assist the
investor in understanding the various costs and expenses that an investor
in a Fund will bear directly or indirectly. For more information concerning
the various costs and expenses, see "Management."
<PAGE>
HIGHLIGHTS
The following seven investment portfolios are described in this Prospectus:
EQUITY FUND - seeks to provide capital appreciation and current income
by investing primarily in common stocks.
EQUITY INCOME FUND - seeks to provide current income and, secondarily,
capital appreciation by investing primarily in common stocks and convertible
securities.
GROWTH FUND - seeks to provide capital appreciation and, secondarily,
current income by investing primarily in common stocks and convertible
securities of companies with above-average growth potential.
SMALL-CAP FUND - seeks to provide long term capital growth by
investing primarily in equity securities of smaller to medium capitalization
companies.
INDEX FUND - seeks to provide the return and risk characteristics of the S&P
500 Index, by investing primarily in securities of companies that
comprise that index.
INTERNATIONAL FUND - seeks to provide international diversification and
capital appreciation by investing primarily in common stocks of foreign
companies. Current income is a secondary objective.
BALANCED FUND - seeks to provide current income and capital appreciation
by investing in a balanced portfolio of fixed income and equity securities.
See page ______ below.
WHO MANAGES EACH FUND'S INVESTMENTS?
Harris Trust & Savings Bank ("Harris Trust" or the
"Investment Adviser") is the investment adviser for each Fund. Harris
Trust has provided investment management service to clients for over 100
years. Harris Trust provides investment services for pension,
profit-sharing and personal portfolios. As of June 30, 1995, assets under
management total approximately $23 billion. See page _______.
Harris Investment Management, Inc. ("HIM" or the "Portfolio
Management Agent") provides daily portfolio management services for the
Funds. HIM and its predecessors have managed client assets for over 100
years. HIM has a staff of 96, including 64 professionals, providing
investment expertise to the management of the Harris Insight Funds and for
<PAGE>
pension, profit-sharing and institutional portfolios. As of June 30,
1995, assets under management are estimated to exceed $13 billion.
See page --------------.
Harris Trust and HIM are subsidiaries of Harris Bankcorp., Inc.
Dunedin Fund Managers, Limited ("Dunedin" or the
"Investment Sub-Adviser") acts as the Investment Sub-Adviser for the
International Fund. Dunedin has been providing international advisory
services for United States mutual funds for six years. At June 30, 1995,
assets under management totaled over $8.4 billion.
WHAT ADVANTAGES DO THE FUNDS OFFER?
The Funds are designed for individual and institutional
investors. A single investment in shares of the Funds gives the investor
benefits customarily available only to large investors, such as
diversification of investment, greater liquidity and professional
management, block purchases of securities, relief from bookkeeping,
safekeeping of securities and other administrative details.
WHEN ARE DIVIDENDS PAID?
Dividends from each of the Equity, Equity Income, Growth,
Index and Balanced Funds are declared and paid quarterly. Dividends from the
Small-Cap and International Funds are declared and paid semi-annually. Any
net capital gains will be declared and paid annually. See page ______.
HOW ARE SHARES REDEEMED?
Shares may be redeemed at their next determined net asset value
after receipt of a proper request by the Registered Representative
servicing your account, the Distributor, or through any Service Agent. See
page _______.
WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?
Each Fund's performance and price per share will change daily
based on many factors, including the quality of the Fund's investments,
U.S. and international economic conditions, general market conditions and
international exchange rates. The Funds may invest in securities of
foreign issuers that involve risks not typically associated with U.S.
issuers. There is no assurance that any Fund will achieve its
investment objective. See "Investment Strategies."
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the ten months ended
October 31, 1995 are derived from the unaudited financial statements of the
Company dated October 31, 1995. All other data presented are derived
from the financial statements of the Company for the year of ended December
31, 1994 audited by Price Waterhouse LLP, independent accountants. This
information should be read in conjunction with the financial statements and
notes thereto that appear in the Statement of Additional Information and
which are incorporated by reference in this Prospectus. Only the Equity Fund
was in operation during the periods shown. As of ________, 1996, all
outstanding shares of the Equity Fund were renamed Class A Shares. No fees
for distribution and support services under the Equity Fund's Service Plan
were paid by that Fund for the periods through June 30, 1995.
This table shows the total return on one Class A Share of the Equity Fund for
each period illustrated.
<TABLE>
<CAPTION>
EQUITY FUND TEN
MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR YEAR 2/26/88*
10/31/95 ENDED ENDED ENDED ENDED ENDED ENDED TO
(UNAUDITED) 12/31/94(0) 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
12/31/88
<S> <C> <C> <C>
<C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 11.28 $ 12.86 $ 11.57 $
12.08 $ 10.05 $ 11.22 $ 10.58 $ 10.00 ------- ------- --
- - - ----- ------- ------- ------- ------- -------
Income From Investment Operations:
Net Investment Income .190 .263 .197 .267 .282
.323 .347 .265
Net Realized and
Unrealized Gain
(Loss)on Investments 3.233 (.514) 1.904 .703 2.418
(1.203) 2.573 .555
- - - ----- ------ ----- ---- ----- ------- ----- ----
Total from Investment
Operations 3.423 (.251) 2.101 .970 2.700 (.880)
2.920 .820
----- ------ -----
---- ----- ------ ----- ----
Less Distributions:
Net Investment Income (.173) (.263) (.204)
(.290) (.280) (.290) (.450) (.240)
Net Realized Gains ---- (1.066) (.607)
(1.190) (.390) ---- (1.830) ----
---- ------- ------
------- ------ ---- ------- ----
Total Distributions (.173) (1.329) (.811)
(1.480) (.670) (.290) (2.280) (.240)
------ -------
------ ------- ------ ------ ------- ------
Net Asset Value, End
of Period $ 14.53 $ 11.28 $ 12.86 $
11.57 $ 12.08 $ 10.05 $ 11.22 $ 10.58 ======= =======
======= ======= ======= ======= ======= =======
Total Return(4) 30.51% (2.05)% 18.23%
8.19% 27.29% (7.78)% 27.81% 8.23%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period $(000) 59,240 38,920 47,241
31,809 34,150 24,649 15,885 24,524
Ratio of Expenses to
Average Net Assets(1) 0.96%(2) 0.90% 0.93% 0.96% 0.98%
1.00% 1.00% 1.00%(2)
Ratio of Net Investment
Income to Average
Net Assets 1.78%(2) 1.94% 1.59% 2.16% 2.52%
3.29% 2.95% 3.03%(2)
Portfolio Turnover Rate 64.86% 87.83%
57.31% 63.79% 77.85% 52.27% 42.00% 33.03%
- - - ----------------------------
(0)Restated
*Date commenced operations.
(1) Reflects expenses after waivers of advisory fees and other expenses based
on
net expenses incurred during the most recent fiscal year. Without the
voluntary
waiver of fees, the expense ratios for the ten months ended October 31,
1995,
the years ended December 31, 1994, 1993, 1992, 1991, 1990 and 1989 and
the
period ended December 31, 1988, would have been 0.97%, 0.92%, 0.96%,
0.98%,
1.01%, 1.21%, 1.47% and 1.41% (annualized).
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Sales load is not reflected in total return.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and policies of
each of the Funds. Those investments that may be made by all of the Funds are
listed on page __ following the specific description of each Fund. Each
Fund may also invest in securities described in "Investment Strategies"
below and the Statement of Additional Information.
EQUITY FUND
The Equity Fund seeks to provide investors with capital
appreciation and current income. The Fund seeks to attain its
investment
objective by investing, under normal market conditions, at least 65% of its
total assets in common stocks of larger capitalization
companies, (i.e. companies with market capitalization in excess of
$500 million). The Fund's portfolio is generally comprised of at
least approximately 50 different issues. Risk is tempered by
diversification of investments.
Primarily, the Equity Fund seeks to provide capital appreciation and current
income.
The Fund's investment process considers valuation and
improving fundamentals. The Fund's investments are expected to encompass all
major sectors of the market resulting in a diversified portfolio. The
Fund's Portfolio Management Agent believes that an investment process which
combines carefully monitored risk control with an emphasis on value and
fundamental research is better suited for long-term equity investing.
EQUITY INCOME FUND
The Equity Income Fund seeks to provide current income
and, secondarily, capital appreciation. The Fund seeks to achieve
its
investment objective by investing, under normal market conditions, at least
65% of its total assets in common stocks and convertible
securities that the Fund's Portfolio Management Agent believes offer good
value, an attractive yield and dividend growth potential.
The Equity Income Fund seeks to provide current income and, secondarily,
capital appreciation.
The Fund is managed with a disciplined investment process which
seeks to maintain a diversified portfolio of high quality equity securities.
The Fund generally emphasizes securities with higher than average dividend
yields and/or stronger than average growth characteristics. The result of
this investment process is a diversified portfolio which the Fund's
Portfolio Management Agent believes provides attractive long-term growth
potential while striving to maintain an attractive current yield.
<PAGE>
GROWTH FUND
The Growth Fund seeks to provide capital appreciation and,
secondarily, current income. The Fund seeks to achieve its investment
objective by investing, under normal market conditions, primarily in
common stocks and convertible securities of companies that the Fund's
Portfolio Management Agent believes offer above-average growth potential.
The Fund's investment management discipline emphasizes growth in sales,
earnings and asset values.
The Growth Fund seeks to provide capital appreciation and, secondarily,
current income.
SMALL-CAP FUND
The Small-Cap Fund seeks to provide long term capital
appreciation. The Fund seeks achieve its investment objective by investing,
under normal market conditions, primarily in equity securities of smaller to
medium capitalization companies (i.e. companies with capitalizations
between $100 million and $2.5 billion.)
The Small-Cap Fund seeks to provide longterm capital appreciation by investing
primarily in equity securities of smaller to medium capitalization companies.
The investment management discipline of the Fund searches for
companies offering above-average earnings, sales and asset value growth.
INDEX FUND
The Index Fund seeks to provide the return and risk
characteristics of the Standard & Poor's 500 Index (the "S&P 500 Index" or the
"Index"), an index which emphasizes large capitalization companies. As of
December 31, 1994, the Index represented approximately 76% of the market
capitalization of publicly owned stocks in the United States. The Fund
seeks to achieve its investment objective by investing, under normal market
conditions, primarily in securities of companies that comprise the S&P 500
Index.
The Index Fund seeks to provide the return and risk characteristics of the
S&P 500 Index.
The Fund seeks to closely match the weight of each security
in the portfolio approximating its weight in the S&P 500 Index. Although
the Fund may not hold all 500 issues included in the Index, it will generally
hold at least 90% of such issues. In addition, the Fund may maintain
positions in S&P 500 Stock Index futures contracts in an effort to ensure
adequate liquidity and to reduce transaction costs.
Standard & Poor's Corporation ("S&P") makes no
representation or warranty, expressed or implied, to the purchasers of
the Index Fund or any member of the public regarding the advisability of
investing in either the Index Fund or the ability of the S&P 500 Index
to track general stock market performance. The Fund is not sponsored,
endorsed, sold or
<PAGE>
promoted by S&P. S&P does not guarantee the accuracy and/or completeness of
its index or any data included therein. Furthermore, S&P makes no warranty,
express or implied, as to the results to be obtained by the Index Fund,
owners of the Fund, any person or any entity from the use of the index
sponsored by S&P or any data included therein. S&P makes no express or
implied warranties and expressly disclaims all such warranties of
merchantability or fitness for a particular purpose for use with respect to
its index or any data included therein.
INTERNATIONAL FUND
The International Fund seeks to provide international
diversification and capital appreciation. Current income is a secondary
objective. The Fund seeks to achieve its investment objective by
investing, under normal market conditions, primarily in securities of
foreign companies (i.e., companies organized outside the United States or
whose principal trading market is outside the United States). The Fund seeks
to manage risk through the diversification of its investments.
The International Fund seeks to provide international diversification and
capital appreciation by investing primarily in common stocks of foreign
companies. Current income is a secondary objective.
The International Fund also may invest in exchange rate-
related securities, securities convertible into or exchangeable for
foreign equity securities, and custodial receipts for Treasury securities.
In addition, the Fund may engage in the purchase and sale of foreign
currency for hedging purposes.
BALANCED FUND
The Balanced Fund seeks to provide current income and
capital appreciation by investing in a balanced portfolio of fixed income
and equity securities. The Fund seeks to achieve its investment objective by
utilizing an active asset allocation approach. Under normal market
conditions, equity securities are expected to comprise between 40% to
65% of the Fund's total assets and fixed income securities are expected to
comprise at least 25% of the Fund's total assets.
The Balanced Fund seeks to provide current income and capital appreciation
through a balanced portfolio of fixed income and equity securities.
ALL FUNDS
Each Fund may invest in securities convertible into or
exchangeable for common stocks or preferred stocks, as well as Government
Securities and debt obligations of domestic corporations rated "Baa" or
better by Moody's Investors Services, Inc. ("Moody's") or "BBB" or better by
S&P, or an equivalent rating by another nationally recognized statistical
rating organization at the time of purchase or, if not rated are considered
by the Portfolio Management Agent to be of
<PAGE>
comparable quality. Debt obligations rated "BBB" by S&P, "Baa" by Moody's
or the equivalent by such other rating organization may have speculative
characteristics, and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. In addition, each Fund
may invest in asset-backed securities, securities of other investment
companies, securities with puts, warrants (not representing more than 5% of
net assets), when-issued securities and forward commitments, forward
foreign currency exchange contracts, mortgage-related securities, zero
coupon securities, securities purchased in an initial public offering,
floating/variable rate obligations, commercial paper, short-term money market
instruments and cash equivalents, such as certificates of deposit, demand
and time deposits and banker's acceptance notes. Each Fund also may invest
in American Depositary Receipts, European Depository Receipts and, with
respect to 10% (100% for the International Fund) of total assets, debt and
equity securities of foreign issuers. Further, each Fund may purchase and
sell covered put and call options on securities, index and interest rate
futures contracts and options on futures contracts as well as enter into
repurchase agreements and reverse repurchase agreements. In addition, each
Fund may lend its portfolio securities with respect to up to one-third of its
net assets.
- - - ----------------------------
Portfolio securities of each Fund are kept under continuing
supervision and changes may be made whenever, in the judgment of the
Portfolio Management Agent, a security no longer meets the objective of the
Fund. Portfolio changes also may be made to increase or decrease
investments in anticipation of changes in security prices in general or to
provide funds required for redemptions, distributions to shareholders or
other corporate purposes. Neither the length of time a security has been held
nor the rate of turnover of a Fund's portfolio is considered a limiting
factor on such changes.
- - - ----------------------------
Each Fund may purchase debt obligations that are not rated if,
in the opinion of the Portfolio Management Agent, they are of investment
quality at least comparable to other rated investments that may be purchased
by the Fund. After purchase by a Fund, a security may cease to be rated or
its rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the Fund to sell the security unless the amount of
the security exceeds permissible limits. However, the Portfolio
Management Agent will reassess promptly whether the security presents
minimal credit risks and determine whether
<PAGE>
continuing to hold the security is in the best interests of the Fund. To the
extent that the ratings given by Moody's, S&P or another nationally
recognized statistical rating organization for securities may change as
a result of changes in the rating systems or due to corporate reorganization
of such rating organizations, each Fund will attempt to use comparable
ratings as standards for its investments in accordance with the
investment objectives and policies of that Fund. The ratings of Moody's and
S&P are more fully described in the Appendix to the Statement of Additional
Information.
INVESTMENT STRATEGIES
ASSET-BACKED SECURITIES. Each Fund may purchase asset-
backed securities, which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool of assets similar to one another. Assets generating such
payments will consist of motor vehicle installment purchase obligations,
credit card receivables, home equity loans, equipment leases, manufactured
housing loans and marine loans. In accordance with guidelines established by
the Boards of Trustees and Directors, asset-backed securities may be
considered illiquid securities and, therefore, may be subject to a Fund's
15% (10% with respect to the Equity Fund) limitation on such investments.
CONVERTIBLE SECURITIES. Each Fund may invest in convertible
securities. Because convertible securities have the characteristics of
both fixed-income securities and common stocks, they sometimes are called
"hybrid" securities. Convertible bonds, debentures and notes are debt
obligations offering a stated interest rate; convertible preferred stocks
are senior securities offering a stated dividend rate. Because a
convertible security provides an option to the holder to exchange the
security for either a specified number of the issuer's common shares at a
stated price per share or the cash value of such common shares, the
security's market price will tend to fluctuate in relation to the price of
the common shares into which it is convertible. Thus, convertible
securities ordinarily will provide opportunities for both producing
current income and longer term capital appreciation. Convertible
securities are generally subordinate to other senior securities and
therefore may be rated lower than the issuer's nonconvertible debt obligations
or preferred stock.
EXCHANGE RATE-RELATED SECURITIES. The International Fund may
invest in securities for which the principal repayment at maturity, while
paid in U.S. dollars, is determined by reference to the exchange rate between
the U.S. dollar and the currency of one or more foreign countries
("Exchange Rate-Related Securities"). The interest payable on these
<PAGE>
securities is denominated in U.S. dollars and is not subject to foreign
currency risk and, in most cases, is paid at rates higher than most
other similarly rated securities in recognition of the foreign currency
risk component of Exchange Rate-Related Securities.
Investments in Exchange Rate-Related Securities entail certain
risks. There is the possibility of significant changes in rates of exchange
between the U.S. dollar and any foreign currency to which an Exchange Rate-
Related Security is linked. In addition, there is no assurance that
sufficient trading interest to create a liquid secondary market will
exist for a particular Exchange Rate-Related Security due to conditions
in the debt and foreign currency markets. Illiquidity in the forward
foreign exchange market and the high volatility of the foreign exchange
market may, from time to time, combine to make it difficult to sell an
Exchange Rate-Related Security prior to maturity without incurring a
significant price loss.
FLOATING AND VARIABLE RATE INSTRUMENTS. Each Fund may
purchase instruments having a floating or variable rate of interest. These
obligations bear interest at rates that are not fixed, but vary with
changes in specified market rates or indices, such as the prime rate, or at
specified intervals. Certain of these obligations may carry a demand
feature that would permit the holder to tender them back to the issuer at par
value prior to maturity. Each Fund will limit its purchases of floating and
variable rate obligations to those of the same quality as it otherwise is
allowed to purchase.
A floating or variable rate instrument may be subject to the
Fund's percentage limitation on illiquid investments if there is no reliable
trading market for the instrument or if the Fund may not demand payment of the
principal amount within seven days.
FOREIGN SECURITIES. The International Fund may invest
in
dollar-denominated and non-dollar-denominated foreign equity and
debt securities. Each other Fund may invest up to 10% of its total assets in
dollar denominated foreign equity and debt securities. Each Fund also may
invest in American Depositary Receipts ("ADRs") and European Depositary
Receipts. ADRs are certificates issued by a U.S. depository (usually a
bank) and represent a specified quantity of shares of an underlying non-
U.S. stock on deposit with a custodian bank as collateral. European
Depository Receipts are typically issued by foreign banks and trust companies
(although they may also be issued by U.S. banks or trust companies) and
evidence ownership of underlying securities issued by either a foreign or a
U.S. corporation.
<PAGE>
Investments in foreign securities involve certain considerations
that are not typically associated with investing in domestic securities. For
example, investments in foreign securities typically involve higher
transaction costs than investments in U.S. securities. Foreign
investments may have risks associated with currency exchange rates,
political instability, less complete financial information about the
issuers and less market liquidity. Future political and economic
developments, possible imposition of withholding taxes on income, seizure or
nationalization of foreign holdings, establishment of exchange controls
or the adoption of other governmental restrictions might adversely
affect the payment of principal and interest on foreign obligations. In
addition, foreign banks and foreign branches of domestic banks may be subject
to less stringent reserve requirements than and to different
accounting, auditing and recordkeeping requirements from domestic banks.
FORWARD CONTRACTS. Each Fund may enter into forward foreign
currency exchange contracts for the purchase and sale of a fixed quantity
of a foreign currency at a future date ("Forward Contracts"). A Fund may
enter into Forward Contracts for hedging purposes as well as non-hedging
purposes. By entering into transactions in Forward Contracts, however, a Fund
may be required to forego the benefits of advantageous changes in exchange
rates and, in the case of Forward Contracts entered into for non-hedging
purposes, the Fund may sustain losses which will reduce its gross
income. A Fund may also enter into a Forward Contract on one currency in
order to hedge against risk of loss arising from fluctuations in the value
of a second currency (referred to as a "cross hedge") if, in the judgment of
the Portfolio Management Agent, a reasonable degree of correlation can be
expected between movements in the values of the two currencies.
Forward Contracts are traded over-the-counter, and not on organized
commodities or securities exchanges. As a result, such contracts operate in
a manner distinct from exchange-traded instruments, and their use involves
certain risks beyond those associated with transactions in futures contracts
or options traded on exchanges. Each Fund has established procedures
consistent with statements of the Securities and Exchange Commission and its
staff regarding the use of Forward Contracts by registered investment
companies, which require use of segregated assets or "cover" in connection
with the purchase and sale of such contracts.
GOVERNMENT SECURITIES. Government Securities consist of
obligations issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or sponsored enterprises.
<PAGE>
ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% with
respect to the Equity Fund) of its net assets in securities that are
considered illiquid. Repurchase agreements and time deposits that do not
provide for payment to the Fund within seven days after notice or which have
a term greater than seven days are deemed illiquid securities for this
purpose unless such securities are variable amount master demand notes
with maturities of nine months or less or unless the Portfolio Management
Agent or Investment Adviser has determined under the supervision and
direction of the Trust's Board of Trustees (or, with respect to the Equity
Fund, the Company's Board of Directors) that an adequate trading market
exists for such securities or that market quotations are readily available.
Each Fund may also purchase Rule 144A securities sold to
institutional investors without registration under the Securities Act of
1933 and commercial paper issued in reliance upon the exemption in Section
4(2) of the Securities Act of 1933. These securities may be determined to be
liquid in accordance with guidelines established by the Portfolio Management
Agent or Investment Adviser and approved by the Trust's Board of Trustees
(or, with respect to the Equity Fund, the Company's Board of Directors). The
Board of Trustees or Directors will monitor the Portfolio Management Agent's
or Investment Adviser's implementation of these guidelines on a periodic
basis.
INDEX FUTURES CONTRACTS; OPTIONS ON INDICES; OPTIONS ON
SECURITIES. Each Fund may attempt to reduce the risk of investment in equity
securities by hedging a portion of its portfolio through the use of
futures contracts on indices and options on such indices traded on
national securities exchanges. Each Fund also may attempt to reduce the risk
of investment in debt securities by hedging a portion of its portfolio
through the use of interest rate futures and options on such futures
contracts. A Fund will use futures contracts and options on such futures
contracts only as a hedge against anticipated changes in the values of
securities held in its portfolio or in the values of securities that it
intends to purchase.
Each Fund may invest in covered put and covered call options
and may write covered put and covered call options on securities in
which they may invest directly and that are traded on registered domestic
securities exchanges or over-the-counter.
See "Investment Strategies" in the Statement of Additional Information.
<PAGE>
INVESTMENT COMPANY SECURITIES. In connection with the management
of its daily cash positions, each Fund may invest in securities issued by
investment companies that invest in short-term, debt securities (which
may include municipal obligations that are exempt from federal income taxes)
and which seek to maintain a $1.00 net asset value per share. Each Fund,
other than the Equity Fund, may also invest in securities issued by
investment companies that invest in securities in which such Fund could
invest directly. Securities of investment companies may be acquired by any of
the Funds within the limits prescribed by the Investment Company Act of
1940, as amended (the "1940 Act"). These limit each such Fund so that:
(i) not more than 5% of its total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of its total
assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting
stock of any one investment company will be owned by the Fund or by the
Trust or the Company as a whole. As a shareholder of another investment
company, a Fund would bear, along with other shareholders, its pro rata
portion of the other investment company's expenses, including advisory
fees. These expenses would be in addition to the advisory and other
expenses that a Fund bears directly in connection with its own operations.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend to brokers,
dealers and financial institutions securities from its portfolio
representing up to one-third of the Fund's net assets. However, such loans
may be made only if cash or cash equivalent collateral, including letters
of credit, marked-to-market daily and equal to at least 100% of the current
market value of the securities loaned (including accrued interest and
dividends thereon) plus the interest payable to the Fund with respect to the
loan is maintained by the borrower in a segregated account. In determining
whether to lend a security to a particular broker, dealer or financial
institution, the Portfolio Management Agent or the Investment Sub-Adviser
will consider all relevant facts and circumstances, including the
creditworthiness of the broker, dealer or financial institution. No Fund
will enter into any portfolio security lending arrangement having a
duration longer than one year. Any securities that a Fund may receive
as collateral will not become part of the Fund's portfolio at the time of the
loan and, in the event of a default by the borrower, the Fund will, if
permitted by law, dispose of such collateral except for such part thereof
that is a security in which the Fund is permitted to invest. During the
time securities are on loan, the borrower will pay the Fund any accrued
income on those securities, and the Fund may invest the cash collateral and
earn additional income or receive an agreed upon fee from the borrower. Loans
of securities by a Fund will be subject to termination at the Fund's or
the borrower's option. Each Fund may pay reasonable administrative and
<PAGE>
custodial fees in connection with a securities loan and may pay a negotiated
fee to the borrower or the placing broker. Borrowers and placing brokers may
not be affiliated, directly or indirectly, with the Trust, the Company, the
Investment Adviser, the Investment Sub-Adviser, the Portfolio Management
Agent or the Distributor.
MORTGAGE-RELATED SECURITIES. Each Fund may invest in mortgage-
backed securities, including collateralized mortgage obligations
("CMOs") and Government Stripped Mortgage-Backed Securities. CMOs are types
of bonds secured by an underlying pool of mortgages or mortgage pass-through
certificates that are structured to direct payments on underlying collateral
to different series or classes of obligations. To the extent that CMOs
are considered to be investment companies, investment in such CMOs will be
subject to the percentage limitations described above under "Investment
Company Securities."
Government Stripped Mortgage-Backed Securities are mortgage-
backed securities issued or guaranteed by Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA"), or
Federal Home Loan Mortgage Corporation ("FHLMC"). These securities represent
beneficial ownership interests in either periodic principal distributions
("principal-only") or interest distributions ("interest-only") on mortgage-
backed certificates issued by GNMA, FNMA or FHLMC, as the case may be. The
certificates underlying the Government Stripped Mortgage-Backed
Securities represent all or part of the beneficial interest in pools of
mortgage loans.
MUNICIPAL OBLIGATIONS. The Balanced Fund may purchase
municipal obligations. Municipal bonds generally have a maturity at the time
of issuance of up to 30 years. Municipal notes generally have maturities
at the time of issuance of three years or less. These notes are
generally issued in anticipation of the receipt of tax funds, the proceeds
of bond placements or other revenues. The ability of an issuer to make
payments is therefore dependent on these tax receipts, proceeds from bond
sales or other revenues, as the case may be. Municipal commercial paper
is a debt obligation with an effective maturity or put date of 270 days or
less that is issued to finance seasonal working capital needs or as short-
term financing in anticipation of longer-term debt.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. Each
Fund may purchase portfolio securities subject to the seller's agreement to
repurchase them at a mutually agreed upon time and price, which
includes an amount representing interest on the purchase price. A Fund may
enter into repurchase agreements only with respect to obligations that could
otherwise be purchased by the Fund. The seller will
<PAGE>
be required to maintain in a segregated account for the Fund cash or
cash equivalent collateral equal to at least 100% of the repurchase price
(including accrued interest). Default or bankruptcy of the seller would
expose a Fund to possible loss because of adverse market action, delays in
connection with the disposition of the underlying obligations or expenses of
enforcing its rights.
Each Fund may borrow funds for temporary purposes by selling
portfolio securities to financial institutions such as banks and broker/
dealers and agreeing to repurchase them at a mutually specified date and
price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
A Fund may not enter into a repurchase agreement or reverse
repurchase agreements if, as a result, more than 15% (10% with respect to the
Equity Fund) of the Fund's net assets would be invested in repurchase
agreements or reverse repurchase agreements with a maturity of more than
seven days and in other illiquid securities. The Funds will enter into
repurchase agreements and reverse repurchase agreements only with registered
broker/dealers and commercial banks that meet guidelines established by
the Trust's Board of Trustees or the Company's Board of Directors.
SECURITIES WITH PUTS. In order to maintain liquidity, each
Fund may enter into puts with respect to portfolio securities with
banks or broker/dealers that, in the opinion of the Portfolio Management
Agent, or, with respect to the International Fund, the Investment Sub-
Adviser, present minimal credit risks. The ability of these Funds to
exercise a put will depend on the ability of the bank or broker/dealer to pay
for the underlying securities at the time the put is exercised. In the event
that a bank or broker/dealer defaults on its obligation to repurchase an
underlying security, the Fund might be unable to recover all or a portion of
any loss sustained by having to sell the security elsewhere.
STAND-BY COMMITMENTS. The Balanced Fund may acquire
"stand-by commitments" with respect to obligations held by it. Under
a stand-by commitment, a dealer agrees to purchase, at the Fund's
option, specified obligations at a specified price. The acquisition of a
stand-by commitment may increase the cost, and thereby reduce the yield, of
the obligations to which the commitment relates. The Balanced Fund will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
<PAGE>
STRIPPED SECURITIES. The International Fund may purchase
participations in trusts that hold U.S. Treasury and agency securities (such
as TIGRs and CATs) and also may purchase Treasury receipts and other
stripped securities, which represent beneficial ownership interests in
either future interest payments or the future principal payments on the
securities held by the trust. These instruments are issued at a
discount from their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. Participations in TIGRs, CATs and
other similar trusts are not considered U.S. Government securities.
Stripped securities will normally be considered illiquid investments and will
be acquired subject to the limitations on illiquid investments unless
determined to be liquid under guidelines established by the Board of Trustees.
U.S. GOVERNMENT OBLIGATIONS. Each of the Funds may invest in
U.S. Government Obligations which consist of bills, notes and bonds issued
by the U.S. Treasury. They are direct obligations of the U.S. Government
and differ primarily in the length of their maturities.
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY OBLIGATIONS. Each
of the Funds may invest in obligations of the U.S. Government
agencies and instrumentalities, which are debt securities issued by U.S.
Government-sponsored enterprises and federal agencies. Some of these
obligations are supported by: (a) the full faith and credit of the U.S.
Treasury (such as Government National Mortgage Association participation
certificates); (b) the limited authority of the issuer to borrow from the
U.S. Treasury (such as securities of the Federal Home Loan Bank); (c) the
authority of the U.S. Government to purchase certain obligations of the
issuer (such as securities of the Federal National Mortgage Association);
or (d) the credit of the issuer only. In the case of obligations not backed
by the full faith and credit of the U.S., the investor must look
principally to the agency issuing or guaranteeing the obligation for
ultimate repayment.
WARRANTS. Each Fund (except the Index Fund) may invest up to 5%
of its net assets at the time of purchase, and the Index Fund may invest
without such limitation, in warrants on securities in which they may
invest directly. Warrants that have been acquired in units or attached to
other securities are not subject to the percentage limitation. Warrants
represent rights to purchase securities at a specific price during a specified
period of time.
<PAGE>
WHEN-ISSUED SECURITIES. Each Fund may purchase securities
(including securities issued pursuant to an initial public offering) on a
when-issued basis, in which case delivery and payment normally take place
within 45 days after the date of the commitment to purchase. A Fund will
make a commitment to purchase securities on a when-issued basis only with
the intention of actually acquiring the securities, but may sell them
before the settlement date, if deemed advisable. The purchase price and the
interest rate that will be received are fixed at the time of the commitment.
When-issued securities are subject to market fluctuation and no income
accrues to the purchaser prior to issuance. Purchasing a security on a when-
issued basis can involve a risk that the market price at the time of delivery
may be lower than the agreed upon purchase price.
ZERO COUPON SECURITIES. Each Fund may invest in zero coupon
securities. These securities are debt obligations that do not entitle the
holder to any periodic payments of interest prior to maturity and are issued
and traded at a discount. The values of zero coupon securities are
subject to greater fluctuations than are the values of income securities
that distribute income regularly. Zero coupon securities (which are not
issued or guaranteed by the U.S. Government) may be created by separating
the interest and principal component of Government Securities or
securities issued by private corporate issuers.
INVESTMENT LIMITATIONS
Unless otherwise noted, the foregoing investment objectives and
related policies and activities of each of the Funds are not fundamental
and may be changed by the Board of Trustees of the Trust (or, with respect
to the Equity Fund, the Board of Directors of the Company) without
the approval of shareholders, provided that, with respect to the
Equity Fund, the policy relating to investment company securities is a
fundamental investment policy. If there is a change in a Fund's investment
objective, shareholders should consider whether the Fund remains an
appropriate investment in light of their then current financial position
and needs.
This section outlines each Fund's policies that may be changed only by a
majority vote of shareholders.
As matters of fundamental policy, which may be changed only
with approval by the vote of the holders of a majority of the Fund's
outstanding voting securities, as described in the Statement of Additional
Information, no Fund may: (1) purchase the securities of issuers
conducting their principal business activity in the same industry if,
immediately after the purchase and as a result thereof, the value of its
investments in that industry would exceed 25% of the current value of its
total assets, provided that there is no limitation with respect to
investments (a) in municipal obligations (for the purpose of this
restriction, private activity bonds shall not be deemed municipal
obligations if the payment of
<PAGE>
principal and interest on such bonds is the ultimate responsibility
of non-governmental users) and (b) in obligations of the U.S. Government,
its agencies or instrumentalities; (2) invest more than 5% of the current
value of its total assets in the securities of any one issuer, other than
obligations of the U.S. Government, its agencies or instrumentalities, except
that up to 25% of the value of the total assets of a Fund may be invested
without regard to this limitation; (3) purchase securities of an issuer if,
as a result, with respect to 75% of its total assets, it would own more than
10% of the voting securities of such issuer; or (4) borrow from banks,
except that a Fund may borrow up to 10% of the current value of its total
assets for temporary purposes only in order to meet redemptions, and these
borrowings may be secured by the pledge of up to 10% of the current value of
the Fund's net assets (but investments may not be purchased while borrowings
are in excess of 5%). It is also a fundamental policy that each Fund may make
loans of portfolio securities. In addition, it is a fundamental policy that
the Equity Fund may only invest up to 10% of the current value of its net
assets in repurchase agreements having maturities of more than seven days,
variable amount master demand notes having notice periods of more than seven
days, fixed time deposits subject to withdrawal penalties having
maturities of more than seven days, and securities that are not readily
marketable. Although not a matter of fundamental policy, the Funds consider
the securities of foreign governments to be a separate industry for purposes
of the 25% asset limitation on investments in the securities of issuers
conducting their principal business activity in the same industry.
MANAGEMENT
The Trust and the Company are managed under the direction of
their governing Boards of Trustees and Directors, respectively. Each
individual listed below is a member of both the Trust's Board of Trustees and
the Company's Board of Directors. The principal occupation of each individual
is also listed below.
TRUSTEES AND DIRECTORS
Edgar R. Fiedler Vice President and Economic
Counsellor, The Conference Board.
C. Gary Gerst Chairman of the Board of Directors
and Trustees; Chairman Emeritus, La Salle Partners, Ltd. (Real
Estate Developer and Manager).
<PAGE>
John W. McCarter, Jr. Senior Vice President, Boozo Allen &
Hamilton, Inc. (Consulting Firm); Director of W.W. Grainger,
Inc. and A.M. Castle, Inc.
Ernest M. Roth Consultant; Retired Senior Vice
President and Chief Financial Officer, Commonwealth Edison
Company.
INVESTMENT ADVISER
The Trust and the Company have each entered into an Advisory
Contract with Harris Trust with respect to each of the Funds. Harris Trust,
located at 111 West Monroe Street, Chicago, Illinois, is the successor to
the investment banking firm of N.W. Harris & Co. that was organized in 1882
and incorporated in 1907 under the present name of the bank. It is an Illinois
state-chartered bank and a member of the Federal Reserve System. At December
31, 1994, Harris Trust had assets of more than $13 billion and was the
largest of 14 banks owned by Harris Bankcorp, Inc. Harris Bankcorp, Inc.
is a wholly-owned subsidiary of Bankmont Financial Corp., which is a
wholly-owned subsidiary of Bank of Montreal, a publicly traded Canadian
banking institution.
This section highlights the experience, services offered, and compensation of
the Funds' Adviser.
As of December 31, 1994, Harris Trust managed more than $8
billion in personal trust assets, and acted as custodian of more than
$151 billion in assets.
With respect to the Funds, the Advisory Contracts provide that
Harris Trust is responsible for the supervision and oversight of the
Portfolio Management Agent's performance (as discussed below).
For all its services under the Advisory Contracts with the
Funds, Harris Trust is entitled to receive monthly advisory fees at the
annual rate of 0.70%, 0.70%, 0.90%, 1.00%, 0.25%, 1.05% and 0.60% of the
average daily net assets of the Equity Fund, the Equity Income Fund, the
Growth Fund, the Small-Cap Fund, the Index Fund, the International Fund
and the Balanced Fund, respectively. For the fiscal year ended December 31,
1994, Harris Trust received fees, after waivers, at the effective rate of
0.69% of the average daily net assets of the Equity Fund. Harris Trust
expects to receive, after waivers, an advisory fee at the annual rate of
0.69% of the average daily net assets of the Equity Fund for the current
fiscal year.
<PAGE>
PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into Portfolio Management Contracts
with Harris Investment Management, Inc. ("HIM" or the "Portfolio Management
Agent") under which HIM undertakes to furnish investment guidance and policy
direction in connection with the daily portfolio management of the Funds. For
the services provided by HIM, Harris Trust will pay to HIM the advisory fees
it receives from the Funds. As of June 30, 1995, HIM managed an estimated $13
billion in assets.
Purchase and sale orders of the securities held by each of the
Funds may be combined with those of other accounts that HIM manages, and for
which it has brokerage placement authority, in the interest of seeking the
most favorable overall net results. When HIM determines that a particular
security should be bought or sold for any of the Funds and other accounts
managed by HIM, HIM undertakes to allocate those transactions among the
participants equitably.
INVESTMENT SUB-ADVISER
HIM has entered into an Investment Sub-Advisory Contract with
Dunedin Fund Managers, Limited ("Dunedin"), pursuant to which Dunedin
provides sub-advisory services for the International Fund. Dunedin is located
at 181 West Madison Street, Chicago, Illinois 60602. At June 30, 1995,
Dunedin had assets under management of over $8.4 billion.
For Dunedin's services under the Investment Sub-Advisory
Contract, HIM pays Dunedin, from the portfolio management fees HIM receives
for its services to the International Fund, a monthly fee at the annual
rate of 0.35% of the first $10 million of the Fund's average daily net assets,
plus 0.30% of the next $15 million in such assets, plus 0.25% of such net
assets in excess of $25 million.
PORTFOLIO MANAGEMENT
The organizational arrangements of the Investment Adviser,
the Investment Sub-Adviser and the Portfolio Management Agent require
that all investment decisions be made by a committee and no one person is
responsible for making recommendations to that committee.
<PAGE>
GLASS-STEAGALL ACT
The Glass-Steagall Act, among other things, generally
prohibits federally chartered or supervised banks from engaging to any
extent in the business of issuing, underwriting, selling or distributing
securities, although subsidiaries of bank holding companies such as
Harris Trust and HIM are permitted to purchase and sell securities upon the
order and for the account of their customers.
It is the position of Harris Trust and HIM that they may
perform the services contemplated by the Advisory Contracts, the
Portfolio Management Contracts and this Prospectus without violation of the
Glass-Steagall Act or other applicable federal banking laws or regulations.
It is noted, however, that there are no controlling judicial or administrative
interpretations or decisions and that future judicial or administrative
interpretations of, or decisions relating to, present federal statutes
and regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as future changes in federal statutes or
regulations and judicial or administrative decisions or interpretations
thereof, could prevent Harris Trust or HIM from continuing to perform, in
whole or in part, such services. If Harris Trust or HIM were prohibited
from performing any of such services, it is expected that the Boards of
Trustees and Directors of the Trust and the Company, respectively, would
recommend to the Funds' shareholders that they approve new agreements with
another entity or entities qualified to perform such services and selected
by the Boards of Trustees and Directors.
To the extent permitted by the Commission, the Funds may pay
brokerage commissions to certain affiliated persons. No such commission
payments were made during the last fiscal year by the Equity Fund.
<PAGE>
ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. (formerly known
as The Shareholder Services Group, Inc.) ("First Data" or the "Administrator")
and PFPC Inc. ("PFPC" or the "Administrator and Accounting
Services Agent") (collectively, the "Administrators") serve as the
administrators of the Funds. In such capacity, the Administrators generally
assist the Funds in all aspects of their administration and operation.
PFPC also serves as the transfer and dividend disbursing agent of the Funds
(the "Transfer Agent").
These service providers are responsible for maintaining the books and records
of the Funds, handling compliance and regulatory issues, processing buy/sell
orders, customer service and the safekeeping of securities.
PNC Bank, N.A. (the "Custodian") serves as custodian of the
assets of the Funds. PFPC and the Custodian are indirect, wholly-owned
subsidiaries of PNC Bank Corp.
As compensation for their services, the Administrators, the
Custodian, and the Transfer Agent are entitled to receive a combined fee
based on the aggregate average daily net assets of the Funds and the
Trust's and the Company's other investment portfolios, payable monthly at an
annual rate of .17% of the first $300 million of average daily net assets;
.15% of the next $300 million; and .13% of average net assets in excess of
$600 million. In addition, a separate fee is charged by PFPC for certain
retail transfer agent services and for various custody transactional charges.
Distributor
Funds Distributor, Inc. (the "Distributor") has entered
into a Distribution Agreement with the Trust (and, with respect to the Equity
Fund, the Company) pursuant to which it has the responsibility for
distributing shares of the Funds. The Distributor bears the cost of printing
and mailing prospectuses to potential investors and any advertising expenses
incurred by it in connection with the distribution of Shares, subject to
the terms of the Service Plans described below, if implemented pursuant to
contractual arrangements between the Trust and the Distributor or the Company
and the Distributor and approved by the Board of Trustees of the Trust (or,
with respect to the Equity Fund, the Board of Directors of the Company).
The Distributor underwrites the Funds' shares which are then available for
purchase or redemption.
See "Management" and "Custodian" in the Statement of
Additional Information for additional information regarding the Funds'
Investment Adviser, Investment Sub-Adviser, Portfolio Management Agent,
Administrators, Custodian, Transfer Agent and Distributor.
<PAGE>
EXPENSES
Except for certain expenses borne by the Distributor, Harris
Trust, HIM and Dunedin, the Trust and the Company each bears all costs of its
operations, including the compensation of its Trustees or Directors who are
not affiliated with Harris Trust, HIM, Dunedin or the Distributor or any of
their affiliates; advisory and administration fees; payments pursuant
to any Service Plan; interest charges; taxes; fees and expenses of its
independent accountants, legal counsel, transfer agent and dividend disbursing
agent; expenses of preparing and printing prospectuses (except the expense
of printing and mailing prospectuses used for promotional purposes, unless
otherwise payable pursuant to a Service Plan), shareholders' reports,
notices, proxy statements and reports to regulatory agencies; insurance
premiums and certain expenses relating to insurance coverage; trade
association membership dues; brokerage and other expenses connected with
the execution of portfolio securities transactions; fees and expenses of the
Funds' custodian including those for keeping books and accounts and
calculating the net asset value per share of the Funds; expenses of
shareholders' meetings and meetings of Boards of Trustees and
Directors; expenses relating to the issuance, registration and qualification
of shares of the Funds; pricing services; organizational expenses; and
any extraordinary expenses. Expenses attributable to each Fund are charged
against the assets of the Fund. Other general expenses of the Trust and the
Company are allocated among the Funds in an equitable manner as determined
by the Boards of Trustees and Directors.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Fund is determined on each day
that the New York Stock Exchange ("NYSE") and the Federal Reserve
Bank of Philadelphia (the "Fed") are open for trading. For a list of the
days on which the net asset value will not be determined, see
"Determination of Net Asset Value" in the Statement of Additional
Information. The net asset value per share of each of the Funds is determined
by dividing the value of the total assets of a Fund less all of its
liabilities by the total number of outstanding shares of that Fund.
The Net Asset Value (NAV) is the price or value of one share of a Fund.
The net asset value per share of each of the Funds is determined
at the close of regular trading on the NYSE on each day the Funds are
open for business. The value of securities of the Funds (other than
bonds and debt obligations maturing in 60 days or less) is determined based
on the last sale price on the principal exchange on which the securities
are traded as of the close of regular trading on the NYSE (which is
currently 4:00 P.M., New York City time). In the absence of any sale on the
valuation date, the securities are valued at the closing bid price.
Securities
<PAGE>
traded only on over-the-counter markets are valued at closing over-the-
counter bid prices. Portfolio securities which are primarily traded
on foreign securities exchanges are generally valued at the closing
values of such securities on their respective exchanges, except when an
occurrence subsequent to the time a value was so established is likely to have
changed such value. In such an event, the fair value of those securities will
be determined through the consideration of other factors by or under the
direction of the Boards of Trustees and Directors. Bonds are valued at the
mean of the last bid and asked prices. In the event that such prices are not
readily available, securities are valued at fair value as determined in
good faith by the Board of Trustees or Directors, as the case may be.
Prices used for valuations of securities are provided by independent
pricing services. Debt obligations with remaining maturities of 60 days
or less are valued at amortized cost when the Trust's Board of Trustees or
the Company's Board of Directors, as the case may be, has determined that
amortized cost valuation represents fair value.
PURCHASE OF SHARES
Shares of any of the Funds may be purchased through
authorized broker/dealers, financial institutions and service agents
("Institutions") on any day the NYSE and the Fed are open for business.
Individual investors will purchase all shares directly through Institutions
which will transmit purchase orders directly to the Distributor. Institutions
are responsible for the prompt transmission of purchase, exchange or
redemption orders, and may independently establish and charge additional fees
to their customers for such services, which would reduce the customers' yield
or return. No minimum initial or subsequent investment limitations have
been imposed. Each Institution through which shares may be purchased may
establish its own terms with respect to the requirement of a minimum initial
investment and minimum subsequent investments.
Contact your broker, financial institution or service agent for answers to any
questions you may have about purchasing shares.
The Trust (or the Company with respect to the Equity Fund)
reserves the right to reject any purchase order. All funds, net of sales
charge, if any, will be invested in full and fractional shares. Checks
will be accepted for the purchase of any Fund's shares subject to
collection at full face value in U.S. dollars. Inquiries may be directed to
the Funds at the address and telephone number on the cover of this
Prospectus.
Purchase orders for shares of the Fund received in good order
by the Distributor prior to the close of regular trading (4:00 P.M., New
York City time) on the NYSE will be executed at the offering price, which
includes a sales charge, next determined on that day. Orders placed directly
with the Distributor must be paid for by check or bank wire on the next
business day. Payment for the shares purchased through an Institution
<PAGE>
will not be due until settlement date, normally three business days after
the order has been executed.
When Class A Shares of the Funds are purchased through an
Institution, the Distributor reallows a portion of the sales charge. No sales
charge will be assessed on the reinvestment of distributions.
Although Class A Shares of the Funds are sold with a sales load of up to
4.50%, there are a number of ways to reduce the salesload.
Sales charges for Class A Shares of the Funds are as follows:
<TABLE>
<CAPTION>
SALES SALES CHARGE
AS % OF DEALER ALLOWANCE AS
AMOUNT OF PURCHASE CHARGE NET
AMOUNT INVESTED % OF OFFERING PRICE
- - - ------------------ ------- ------------------
- - - --- -------------------
<S> <C>
<C> <C>
Less than $100,000 4.50%
4.71% 4.25%
$100,000 up to (but less than) $200,000 4.00
4.17 3.75
$200,000 up to (but less than) $400,000 3.50
3.63 3.25
$400,000 up to (but less than) $600,000 2.50
2.56 2.25
$600,000 up to (but less than) $800,000 2.00
2.04 1.75
$800,000 up to (but less than) $1,000,000 1.00
1.01 0.75
$1,000,000 and over .00
.00 .00
</TABLE>
No sales charge will be assessed on purchases by (a) any bank,
trust company, or other institution acting on behalf of its fiduciary
customer accounts or any other trust account (including a pension, profit-
sharing or other employee benefit trust created pursuant to a plan qualified
under Section 401 of the Internal Revenue Code of 1986, as amended (the
"Code")); (b) individuals with an investment account or relationship with
HIM; (c) directors and officers of the Company; (d) directors, current and
retired employees of Harris Bankcorp, Inc. or any of its affiliates and the
immediate family members of such individuals (spouses and children under 21);
(e) brokers, dealers, and agents who have a sales agreement with the
Distributor, and their employees (and the immediate family members of
such individuals); and (f) financial institutions, financial
planners, employee benefit plan consultants or registered investment
advisers acting for the accounts of their clients.
Depending upon the terms of the particular customer account,
financial services institutions, including Harris Trust and HIM, may charge
account fees for automatic investment and other cash management services
which they provide, including, for example, account maintenance fees,
compensating balance requirements, or fees based upon account transactions,
assets, or income. This Prospectus should be read in connection with any
information received from financial services institutions.
<PAGE>
The Right of Accumulation allows an investor to combine the
amount being invested in Class A Shares of the non-money market funds of the
Trust and the Company with the total net asset value of Class A Shares
currently being purchased or already owned of such funds to determine
reduced sales charges in accordance with the above sales charge schedule. To
obtain such discount, the purchaser must provide sufficient information at
the time of purchase to permit verification that the purchase qualifies for
the reduced sales charge, and confirmation of the order is subject to
such verification. The Right of Accumulation may be modified or
discontinued at any time by the Funds with respect to all Class A Shares
purchased thereafter.
A Letter of Intent allows an investor to purchase Class A Shares
of the non-money market funds of the Trust and the Company over a 13-month
period at reduced sales charges based on the total amount intended to be
purchased plus the total net asset value of Class A Shares already owned
pursuant to the terms of the letter of such fund. Each investment made during
the period receives the reduced sales charge applicable to the total amount of
the intended investment. If such amount is not invested within the period,
the investor must pay the difference between the sales charges applicable
to the purchases made and the charges previously paid.
Each Fund also offers Institutional Shares. Different classes of
shares of a single portfolio may bear different sales charges and other
expenses which may affect their relative performance. Investors may call
1-800-982-8782 to obtain more information concerning Institutional Shares of
the Funds.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value
after receipt of a proper request by the Distributor directly or
through any Institution.
There is no charge for redemption transactions, but an
Institution may charge an account-based service fee. Redemption orders
received by an Institution before the close of the NYSE with respect to
shares of a Fund and received by the Distributor before the close of business
on the same day will be executed at the Fund's net asset value per share next
determined on that day. Redemption orders received by an Institution after
the close of the NYSE, or not received by the Distributor prior to the close
of business, will be executed at the Fund's net asset value next determined
on the next business day.
There is no charge by the Funds for redemptions, although Institutions may
charge an accountbased service fee.
<PAGE>
Redemption orders for a Fund that are received in good order by
4:00 P.M. (New York City time) will normally be remitted within five
business days but not more than seven days. In the case of a redemption
request made shortly after a recent purchase, the redemption proceeds will
be distributed upon the clearance of the shareholder's check used to
purchase the Fund's shares which may take up to 15 days or more after the
investment. The proceeds may be more or less than cost and, therefore, a
redemption may result in a gain or loss for federal income tax purposes.
Payment of redemption proceeds may be made in readily marketable
securities.
REDEMPTION THROUGH INSTITUTIONS
Proceeds of redemptions made through authorized Institutions
will be credited to the shareholder's account with the Institution. A
redeeming shareholder may request a check from the Institution or may elect
to retain the redemption proceeds in such shareholder's account. The
Institution may benefit from the use of the redemption proceeds prior to the
clearance of a check issued to a redeeming shareholder for the proceeds
or prior to disbursement or reinvestment of the proceeds on behalf of the
shareholder.
Because of the high cost of maintaining small accounts, the
Trust (or the Company with respect to the Equity Fund) reserves the right to
involuntarily redeem accounts on behalf of shareholders whose share balances
fall below $500 unless this balance condition results from a decline in the
market value of a Fund's assets. Prior to such a redemption, a shareholder
will be notified in writing and permitted 30 days to make additional
investments to raise the account balance to the specified minimum.
EXCHANGE PRIVILEGE
Class A Shares of any of the Funds that have been held for seven
days or more may be exchanged for shares of any other fund in the Harris
Insight Funds in an identically registered account, provided Class A Shares
of the Fund to be acquired are registered for sale in the shareholder's state
of residence, on the following terms: Class A Shares of the non-money
market funds of the Trust and the Company may be exchanged for Class A Shares
of one another and for Class A Shares of each of the money market funds
of the Company, all at respective net asset values. In addition, Class A
Shares of a Fund that have been exchanged pursuant to these privileges may
be re-exchanged at respective net asset values of Class A Shares of the
Fund in which they were originally invested upon notification.
Once you have held shares for 7 days or more, you can exchange these shares
for other eligible Harris Insight Fund Class A Shares.
<PAGE>
Procedures applicable to redemption of a Fund's shares are
also applicable to exchanging shares. The Trust (or the Company with respect
to the Equity Fund) reserves the right to limit the number of times
shares may be exchanged between the Harris Insight Funds, to reject any
telephone exchange order or otherwise to modify or discontinue exchange
privileges at any time upon 60 days written notice. A capital gain or loss
for tax purposes may be realized upon an exchange, depending upon the cost or
other basis of shares redeemed.
SERVICE PLANS
Under each Fund's Service Plan relating to Class A Shares, each
Fund bears the costs and expenses in connection with advertising and
marketing the Fund's shares and pays the fees of financial institutions
(which may include banks), securities dealers and other industry
professionals, such as investment advisers, accountants and estate planning
firms (collectively, "Service Agents") for servicing activities, as described
below, at a rate up to 0.25% per annum of the average daily net asset value of
the Fund's Class A Shares. However, Harris Trust or HIM, in lieu of a Fund,
from time to time in its sole discretion, may volunteer to bear the costs
of such fees to certain Service Agents. The Administrators and the
Distributor may act as Service Agents and receive fees under a Service Plan.
In addition to such fees, up to 0.05% per annum of the average daily net
asset value of the Class A Shares may be paid to Service Agents for such
services by the Administrators out of their administration fee, past profits
or any other sources available to it or them. In addition to the fees paid
by a Fund, the Fund may, pursuant to the Service Plan, defray all or part of
the cost of preparing and printing brochures and other promotional
materials and of delivering prospectuses and those materials to
prospective shareholders of the Fund by paying on an annual basis up to
the greater of $100,000 or 0.05% of the net asset value of the Fund's
Class A Shares (but not in any case greater than such costs). For more
information concerning expenses pursuant to the Service Plans, see
"Management."
The Service Plans for the Funds allow these Funds to pay Service Agents for
certain servicing activities provided to their customers.
Servicing activities provided by Service Agents to their
customers investing in the Funds may include, among other things, one or
more of the following: establishing and maintaining shareholder accounts
and records; processing purchase and redemption transactions; answering
customer inquiries regarding the Funds; assisting customers in changing
dividend options, account designations and addresses; performing sub-
accounting; investing customer cash account balances automatically in Fund
Shares; providing periodic statements showing a customer's account balance
and integrating such statements with those of other transactions and balances
in the customer's other accounts serviced by the Service
<PAGE>
Agent; arranging for bank wires, distribution and such other services as a
Fund may request, to the extent the Service Agent is permitted to do so by
applicable statute, rule or regulation.
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of each of the Equity,
Equity Income, Growth, Index and Balanced Funds will be declared and paid
quarterly. Dividends from net investment income of each of the Small-Cap and
International Funds will be declared and paid semi-annually. Each Fund's net
taxable capital gains, if any, will be distributed at least annually (to the
extent required to avoid imposition of the 4% excise tax described
below). Dividends and distributions paid by any of the Funds will be
invested in additional shares of the same Fund at net asset value and
credited to the shareholder's account on the payment date or, at the
shareholder's election, paid in cash. Dividend checks and Statements of
Account will be mailed approximately two business days after the payment
date. Each Fund will forward to the Transfer Agent the monies for dividends
to be paid in cash on the payment date.
The Equity, Growth, Index and Balanced Funds declare and pay dividends
quarterly; the Small-Cap and International Funds declare and pay dividends
semi-annually.
FEDERAL INCOME TAXES
Each Fund (and each of the other Harris Insight Funds) will be
treated as a separate entity for tax purposes and thus the provisions of
the Internal Revenue Code (the "Code") generally will be applied to each
Fund separately, rather than to the Trust or the Company as a whole. As a
result, net capital gains, net investment income, and operating
expenses will be determined separately for each Fund. The Trust (or the
Company with respect to the Equity Fund) intends to qualify each Fund as a
regulated investment company under Subchapter M of the Code. As a portfolio
of a regulated investment company, each Fund will not be subject to federal
income taxes with respect to net investment income and net capital gains
distributed to its shareholders, as long as it distributes 90% or more of
its net investment income (including net short-term capital gains) each
year.
Dividends from net investment income (including net short-term
capital gains) will be taxable as ordinary income.
Distributions of net long-term capital gains, if any, will be
taxable as long-term capital gains, whether received in cash or reinvested in
additional shares, regardless of how long the shareholder has held the shares,
and will not qualify for the dividends-received deductions.
<PAGE>
A taxable gain or loss may also be realized by a holder of shares
in a Fund upon the redemption or transfer of shares depending on the tax basis
of the shares and their price at the time of the transaction.
Any loss realized on a sale or exchange of shares of a Fund
will be disallowed to the extent shares are acquired within the 61-day period
beginning 30 days before and ending 30 days after disposition of the shares.
The Trust (or the Company with respect to the Equity Fund)
will be required to withhold, subject to certain exemptions, a portion
(currently 31%), from dividends paid or credited to individual shareholders
and from redemption proceeds, if a correct taxpayer identification number,
certified when required, is not on file with the Trust (or the Company with
respect to the Equity Fund) or Transfer Agent.
ACCOUNT SERVICES
Shareholders receive a Statement of Account whenever a
share transaction, dividend or capital gain distribution is effected in the
accounts, or at least annually. Shareholders can write or call the Funds at
the address and telephone number on page one of this Prospectus with any
questions relating to their investment in shares of the Funds.
ORGANIZATION AND CAPITAL STOCK
The Trust is a diversified open-end management investment company
which was organized on ___________, 1995 as a business trust under the
laws of The Commonwealth of Massachusetts. The Trust offers shares of
beneficial interest, $.001 par value, for sale to the public. Currently,
the Trust has eleven portfolios in operation. The Board has authorized each
of the eleven Funds which are portfolios of the Trust to issue two
classes of shares, Class A and Institutional Shares.
The Company, which was incorporated in Maryland on September 16,
1987, is a diversified, open-end management investment company. The authorized
capital stock of the Company consists of 10,000,000,000 shares having a
par value of $.001 per share. Currently, the Company has six portfolios in
operation. The Board has authorized the Equity Fund to issue two classes of
shares, Class A and Institutional Shares.
Institutional Shares of the Fund, which are offered only to
certain classes of investors, do not bear any sales, marketing or distribution
expenses. In the future, the Board of Trustees of the Trust and the Board of
Directors of the Company may authorize the issuance of shares of
<PAGE>
additional investment portfolios and additional classes of shares of
any portfolio. Different classes of shares of a single portfolio may bear
different sales charges and other expenses which may affect their relative
performance. Information regarding other classes of shares may be obtained
by calling the Funds at the telephone number shown on the cover page of this
Prospectus or from any institution which makes available shares of the
Funds. All shares of the Trust and all shares of the Company have equal
voting rights and will be voted in the aggregate, and not by class, except
where voting by class is required by law or where the matter involved
affects only one class. A more detailed statement of the voting rights of
shareholders is contained in the Statement of Additional Information. All
shares of the Trust and all shares of the Company, when issued, will be fully
paid and non-assessable.
As of November 15, 1995, Integra Trust Services held of
record 1,271,807 shares, equal to 29.8% of the outstanding shares of the
Equity Fund and Harris Trust held of record 1,285,028 shares, equal to
30.1% of the outstanding shares of the Equity Fund. Harris Trust has
indicated that it holds its shares on behalf of various client accounts and
not as beneficial owner.
The Trust and the Company may dispense with annual
meetings of shareholders in any year in which Trustees and Directors are not
required to be elected by shareholders. The Board of Trustees of the Trust
and the Board of Directors of the Company, when requested by at least 10% of
the Trust's or the Company's outstanding shares, will call a meeting of
shareholders for the purpose of voting upon the question of removal of a
Trustee or Trustees or of a Director or Directors and will assist in
communications with other shareholders as required by Section 16(c) of the
1940 Act.
There is a possibility that the Trust might become liable
for any misstatement, inaccuracy or incomplete disclosure in this Prospectus
concerning the Company. There is a possibility that the Company might become
liable for any misstatement, inaccuracy or incomplete disclosure in this
Prospectus concerning the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of both the Trust and the Company ends on
December 31. Each of the Trust and the Company will send to its shareholders
a semi-annual report showing the investments held by each of the Funds and
other information (including unaudited financial statements) pertaining
to the Trust or the Company, as the case may be. An annual
<PAGE>
report, containing financial statements audited by independent accountants,
is also sent to shareholders.
CALCULATION OF YIELD AND TOTAL RETURN
From time to time each of the Funds may advertise its "total
return" and yield. "Total return" refers to the amount an investment in a
Fund would have earned, including any each Fund shows increase or decrease
in net asset value, over a specified period of time and assumes the payment
of the maximum sales load and the reinvestment of all dividends and
distributions.
The total return of each Fund shows what an investment in the Fund would have
earned over a specific period of time.
The total return of each Fund shows what an investment in
Class A Shares of the Fund would have earned over a specified period of
time (such as one, five or ten years or the period of time since commencement
of operations, if shorter) assuming the payment of the maximum sales loads
when the investment was first made and that all distributions and
dividends by the Fund were reinvested on their reinvestment dates during
the period less all recurring fees. When a Fund compares its total return
to that of other mutual funds or relevant indices, its total return may also
be computed without reflecting the sales load so long as the sales load is
stated separately in connection with the comparison.
The yield of each Fund refers to the income generated by an
investment in Class A Shares of the Fund over a 30-day period (which period
will be stated in the advertisement). This income is then "annualized." That
is, the amount of income generated by the investment during the 30-day
period is assumed to be earned and reinvested at a constant rate and
compounded semi-annually. The annualized income is then shown as a
percentage of the investment.
A Fund's performance figures for a class of shares represent
past performance, will fluctuate and should not be considered as
representative of future results. The yield of any investment is generally a
function of portfolio quality and maturity, type of instrument and operating
expenses.
<PAGE>
INVESTMENT ADVISER DISTRIBUTOR
Harris Trust & Savings Bank Funds Distributor, Inc.
111 West Monroe Street One Exchange Place
Chicago, Illinois 60603 Boston, Massachusetts
02109
PORTFOLIO MANAGEMENT AGENT CUSTODIAN
Harris Investment Management, Inc. PNC Bank, N.A.
190 South LaSalle Street Broad and Chestnut
Streets
Chicago, Illinois 60603 Philadelphia,
Pennsylvania 19101
INVESTMENT SUB-ADVISER TRANSFER AGENT AND
Dunedin Fund Managers, Ltd. DIVIDEND DISBURSING
AGENT
181 West Madison Street PFPC Inc.
Suite 3525 P.O. Box 8950
Chicago, Illinois 60602 Wilmington, Delaware
19885
ADMINISTRATORS INDEPENDENT ACCOUNTANTS
First Data Investor Services Group, Inc. Price Waterhouse LLP
53 State Street Philadelphia,
Pennsylvania
Boston, Massachusetts 02109
LEGAL COUNSEL PFPC
INC. Bell, Boyd & Lloyd
103 Bellevue Parkway Chicago, Illinois
Wilmington, Delaware 19809
HARRIS INSIGHT FUNDS
FIXED INCOME FUNDS
One Exchange Place, Boston, Massachusetts 02109
Telephone: (800) 982-8782
The Harris Insight Funds Trust (the "Trust") is
an open-end,
diversified management investment company that currently offers
a selection of
eleven investment portfolios. HT Insight Funds, Inc. (the
"Company") is an
open-end, diversified management investment company that
currently offers six
investment portfolios. (The eleven portfolios of the Trust and
five of the six
portfolios of the Company are collectively referred to herein
as the "Harris
Insight Funds" or the "Funds") This Prospectus describes one
class of shares
("Class A Shares" or "Shares") of each of five investment
portfolios offered by
the Trust and the Class A Shares of the Harris Insight
Intermediate Bond Fund, a
portfolio offered by the Company. The Funds are as follows:
o Harris Insight Convertible Securities Fund (the
"Convertible
Securities Fund")
o Harris Insight Intermediate Bond Fund (the
"Intermediate Bond Fund")
o Harris Insight Bond Fund (the "Bond Fund")
o Harris Insight Intermediate Government Bond Fund
(the "Government
Fund")
o Harris Insight Intermediate Tax-Exempt Bond Fund (the
"Intermediate
Tax-Exempt Fund")
o Harris Insight Tax-Exempt Bond Fund (the "Tax-Exempt
Fund")
Harris Trust & Savings Bank is the Investment Adviser to
the Funds and
Harris Investment Management, Inc., a subsidiary of Harris
Bankcorp, Inc., acts
as each Fund's Portfolio Management Agent. Shares of each Fund
are offered by
Funds Distributor, Inc., the distributor for the Trust and the
Company.
This Prospectus sets forth concisely the information
a prospective
investor should know before investing in the Funds. Please read
and retain it
for future reference. A Statement of Additional Information dated
____________,
1995, containing more detailed information about the Funds has
been filed with
the Securities and Exchange Commission and (together with
any supplements
thereto) is incorporated by reference into this Prospectus.
The Statement of
Additional Information and separate Prospectuses for the
other investment
portfolios offered by the Trust or the Company may be obtained
without charge by
writing or calling the Harris Insight Funds at the address and
telephone number
printed above.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED
OR ENDORSED BY HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS
AFFILIATES, AND ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE
FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES
COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL
OFFENSE.
________________, 1995
<PAGE>
TABLE OF CONTENTS
Page
Expense
Table.............................................................
.
Highlights.......................................................
Financial
Highlights.......................................................
Investment Objectives and
Policies.........................................
Convertible Securities
Fund............................................
Intermediate Bond
Fund.................................................
Bond
Fund..............................................................
Government
Fund........................................................
Intermediate Tax-Exempt
Fund...........................................
Tax-Exempt
Fund........................................................
All
Funds.............................................................
.
Investment
Strategies......................................................
Investment
Limitations......................................................
Management........................................................
.........
Determination of Net Asset
Value...........................................
Purchase of
Shares.........................................................
Redemption of
Shares.......................................................
Exchange
Privilege.........................................................
Service
Plans.............................................................
.
Dividends and
Distributions................................................
Federal Income
Taxes.......................................................
Account
Services..........................................................
.
Organization and Capital
Stock.....................................
Reports to
Shareholders....................................................
Calculation of Yield and Total
Return......................................
No person has been authorized to give any information
or to make any
representations other than those contained in this Prospectus,
the Statement of
Additional Information and/or in the Funds' official sales
literature in
connection with the offering of the Funds' shares and, if given
or made, such
other information or representations must not be relied upon
as having been
authorized by the Trust, the Company or the Distributor. This
Prospectus does
not constitute an offer in any state in which, or to any person
to whom, such
offer may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain information
concerning shareholder
transaction expenses and projected annual fund operating
expenses for Class
A Shares of the Funds during the current fiscal year.
Expenses
and fees
payable
by share-
holders
are summarized
in this
table and
expressed as a
percentage of
average
net assets.
<TABLE>
<CAPTION>
CONVERTIBLE INTERMEDIATE
INTERMEDIATE
SECURITIES BOND
BOND GOVERNMENT TAX-EXEMPT TAX-EXEMPT
FUND FUND
FUND FUND FUND FUND
<S> <C> <C>
<C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on 4.50% 4.50%
4.50% 4.50% 4.50% 4.50%
Purchases
ANNUAL FUND OPERATING EXPENSES*:
(as a percentage of average net
assets)
Advisory Fees 0.70% 0.37%+
0.40% 0.30% 0.60% 0.60%
Rule 12b-1 Fees 0.25% 0.25%
0.25% 0.25% 0.25% 0.25%
Other Expenses 0.22% 0.23%
0.20% 0.20% 0.20% 0.20%
----- -----
- - - ----- ----- ----- -----
Total Fund Operating Expenses 1.17% 0.85%+
0.85% 0.75% 1.05% 1.05%
===== ======
===== ===== ===== =====
- - - --------------------------------
</TABLE>
*Customers of a financial institution, such as Harris
Trust & Savings
Bank, may be charged certain fees and expenses by their
institution. These fees
may vary depending on the capacity in which the institution
provides fiduciary
and investment services to the particular client (e.g.,
trust, estate
settlement, advisory and custodian services).
+Reflects advisory fees after waivers. Without waivers,
the ratio of
total fund operating expenses to average net assets would
be 1.18%. The
investment adviser has voluntarily agreed to waive a portion of
its advisory
fees and will not increase its advisory fee without prior
approval of the
Company's Board of Directors and 30 days' prior notice to
shareholders.
With respect to each Fund, other than the Intermediate
Bond Fund, the
amount of "Other Expenses" in the table above is based on
estimated expenses and
projected assets for the current fiscal year. With respect to the
Intermediate
Bond Fund, the amount of "Other Expenses" is based on amounts
incurred during
the most recent fiscal year.
<PAGE>
EXAMPLE
You would pay the following expenses on a $1,000 investment in
Class A Shares,
assuming (1) a hypothetical 5% gross annual return and (2)
redemption at the end
of each time period:
<TABLE>
<CAPTION>
CONVERTIBLE
INTERMEDIATE
SECURITIES INTERMEDIATE
GOVERNMENT TAX-EXEMPT TAX-EXEMPT
FUND BOND FUND BOND FUND
FUND FUND FUND
<C> <C> <C> <C>
<C> <C> <C>
1 year $56 $53 $53
$52 $55 $55
3 years 80 68 71
68 77 77
5 years 106 86 90
85 100 100
10 years 181 136 145
134 167 167
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE
EXPENSES OR PERFORMANCE WHICH MAY BE MORE OR LESS THAN THOSE
SHOWN.
The purpose of the expense table is to assist the investor in
understanding the
various costs and expenses that an investor in a Fund will
bear directly or
indirectly. For more information concerning the various costs and
expenses, see
"Management."
<PAGE>
HIGHLIGHTS
The following six investment portfolios are described in this
Prospectus:
CONVERTIBLE SECURITIES FUND - seeks to provide capital
appreciation and current
income by investing primarily in securities such as bonds,
debentures, notes,
preferred stocks or warrants that are convertible into common
stocks.
INTERMEDIATE BOND FUND - seeks to provide a high level of
total return,
including a competitive level of current income, by investing
primarily in
investment grade debt securities with an intermediate term average
maturity.
BOND FUND - seeks to provide a high level of total return,
including a
competitive level of current income, by investing primarily in
investment grade
debt securities of varying maturities.
GOVERNMENT FUND - seeks to provide a high level of current
income, consistent
with preservation of capital, by investing primarily in
Government Securities
having an intermediate term average maturity.
INTERMEDIATE TAX-EXEMPT FUND - seeks to provide a high level of
current income
that is exempt from federal income tax by investing, under
normal market
conditions, at least 80% of its assets in municipal
obligations with an
intermediate term average maturity.
TAX-EXEMPT FUND - seeks to provide a high level of current income
that is exempt
from federal income tax by investing, under normal market
conditions, at least
80% of its assets in municipal obligations of varying maturities.
See page 10 below.
WHO MANAGES EACH FUND'S INVESTMENTS?
Harris Trust & Savings Bank ("Harris Trust" or
the "Investment
Adviser") is the investment adviser for each Fund. Harris
Trust has provided
investment management service to clients for over 100 years.
Harris Trust
provides investment services for pension, profit-sharing
and personal
portfolios. As of June 30, 1995, assets under management total
approximately
$23 billion. See page __.
Harris Investment Management, Inc. ("HIM" or the
"Portfolio Management
Agent") provides daily portfolio management services for the
Funds, other than
the Tax-Exempt Money Fund. HIM and its predecessors have managed
client assets
for over 100 years. HIM has a staff of 96, including 64
professionals, providing
investment expertise to the management of Harris Insight Funds
and for pension,
profit-sharing and institutional portfolios. As of June 30, 1995,
assets under management
are estimated to exceed $13 billion. See page __.
<PAGE>
Harris Trust and HIM are subsidiaries of Harris
Bankcorp., Inc.
WHAT ADVANTAGES DO THE FUNDS OFFER?
The Funds are designed for individual and institutional
investors. A
single investment in shares of the Funds gives the investor
benefits customarily
available only to large investors, such as diversification
of investment,
greater liquidity and professional management, block purchases
of securities,
relief from bookkeeping, safekeeping of securities and other
administrative
details.
WHEN ARE DIVIDENDS PAID?
Dividends from each of the Funds, except the
Convertible Securities
Fund, are declared daily and paid monthly. Dividends from
the Convertible
Securities Fund are declared and paid quarterly. Any net capital
gains will be
declared and paid annually. See page ______.
HOW ARE SHARES REDEEMED?
Shares may be redeemed at their next determined net
asset value after
receipt of a proper request by the Registered Representative
servicing your
account, the Distributor, or through any Service Agent. See page
_______.
WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?
Each Fund's performance and price per share will change
daily based on
many factors, including the quality of the Fund's
investments, U.S. and
international economic conditions, general market conditions and
international
exchange rates. There is no assurance that any Fund will achieve
its investment
objective. See "Investment Strategies."
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the ten months
ended October 31,
1995 are derived from the unaudited financial statements of the
Company dated
October 31, 1995. All other data presented are derived from
the financial
statements of the Company for the year ended December 31, 1994
audited by Price
Waterhouse LLP, independent accountants. This information
should be read in
conjunction with the financial statements and notes thereto that
appear in the
Statement of Additional Information and which are incorporated
by reference in
this Prospectus. Only the Intermediate Bond Fund, formerly
known as Harris
Insight Managed Fixed Income Fund, was in operation during the
period shown. As
of __________, 1996, all outstanding shares of the Intermediate
Bond Fund were
renamed Class A Shares. No fees for distribution and support
services under the
Intermediate Bond Fund's Service Plan were paid by that Fund
for the periods
through October 31, 1995.
This
table shows the
total
return on one
share
of the
Intermediate
Bond
Fund for
each
period
illustrated.
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
TEN MONTHS YEAR
YEAR YEAR 04/01/91*
ENDED 10/31/95 ENDED
ENDED ENDED TO
(UNAUDITED)
12/31/94 12/31/93 12/31/92 12/31/91
<S> <C> <C>
<C> <C> <C>
Net Asset Value, Beginning
of Period $ 9.66 $ 10.34
$ 10.22 $ 10.57 $ 10.00
------ -------
- - - ------- ------- -------
Income From Investment
Operations:
Net Investment Income .496 .559
.563 .630 .474
Net Realized and Unrealized
Gain (Loss) on .573 (.694)
.435 (.087) .601
---- ------
- - - ---- ------ ----
Investments
Total from Investment
Operations 1.069 (.135)
.998 .543 1.075
----- ------
- - - ---- ---- -----
Less Distributions:
Net Investment Income (.469) (.545)
(.564) (.631) (.475)
Net Realized Gains ------- -------
(.314) (.262) (.030)
------- -------
- - - ------ ------ ------
Total distributions (.270) (.545)
(.878) (.893) (.505)
------- -------
- - - ------ ------ ------
Net Asset Value, End of Period $ 10.26 $ 9.66
$ 10.34 $ 10.22 $ 10.57
======= ======
======= ======= =======
Total return(4) 11.28%(3) (1.29)%
9.91% 5.28% 11.04%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period $(000) 50,285 44,333
74,057 71,848 44,313
Ratios of Expenses to Average
Net Assets(1) 0.60%(2) 0.60%
0.60% 0.60% 0.60%(2)
Ratios of Net Investment
Income to Average Net Assets 5.97%(2) 5.29%
5.32% 6.07% 6.60%(2)
Portfolio Turnover Rate 169.15% 140.99%
215.07% 133.78% 108.70%
</TABLE>
- - - ----------------------------
(1) Reflects expenses after waivers of advisory fees and other
expenses based on
net expenses incurred during the most recent fiscal year. Without
the voluntary
waiver of fees, the expense ratios for the ten months ended
October 31, 1995,
the years ended December 31, 1994, 1993, and 1992, and the period
ended December
31, 1991, would have been 0.97%, 0.92%, 0.94%, 0.93%, and 1.01%
(annualized) for
the Intermediate Bond Fund.
(2) Annualized.
(3) Total returns for periods of less than one year are not
annualized.
(4) Sales load is not reflected in total return.
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
Set forth below are the investment objectives and
policies of each of
the Funds. Those investments that may be made by all of the Funds
are listed on
page ____ following the specific description of each Fund. Each
Fund may also
invest in securities described in "Investment Strategies"
below and the
Statement of Additional Information.
CONVERTIBLE SECURITIES FUND
The Convertible Securities Fund seeks to provide capital
appreciation
and current income. The Fund intends, under normal market
conditions, to invest
primarily in convertible securities, that is, securities
including bonds,
debentures, notes or preferred stock that are convertible into
common stock, or
warrants that provide the owner the right to purchase shares of
common stock at
a specified price. The Fund may also invest in equity
securities of U.S.
corporations. The Fund seeks to diversify among issuers in a
manner that will
enable the Fund to minimize the volatility of the Fund's net
asset value in
erratic or declining markets.
The
Convertible Securities
Fund seeks to
provide
capital
appreciation
and current
income.
Under normal market conditions, the Convertible
Securities Fund will
invest without limitation in convertible securities of U.S.
corporations and in
Eurodollar securities convertible into common stocks of U.S.
corporations which
securities are rated "B" or better by Standard & Poor's
Corporation ("S&P") or
"B" ("b" in the case of preferred stocks) or better by
Moody's Investors
Service, Inc. ("Moody's") at the time of purchase, or, if not
rated, considered
by the Portfolio Management Agent to be of comparable
quality, except that
investment in securities rated "B-" by S&P or Moody's will be
limited to 15% of
its total assets. Up to 5% of the Convertible Securities Fund's
total assets may
be invested in convertible securities that are rated "CCC" by
S&P or "Caa" by
Moody's at the time of purchase. Securities that are rated "BB"
or below by S&P
or "Ba" or below by Moody's are "high yield securities", commonly
known as junk
bonds. By their nature, convertible securities may be more
volatile in price
than higher rated debt obligations.
The Convertible Securities Fund may also invest up to
35% of its total
assets in "synthetic convertibles" created by combining separate
securities that
possess the two principal characteristics of a true convertible
security, i.e.,
fixed income and the right to acquire equity securities. In
addition, the
Convertible Securities Fund may invest: up to 15% of its
total assets in
convertible securities offered in "private placements" and
other illiquid
securities; up to 15% of its total assets in common stocks; and
up to 5% of its
net assets in warrants. The Convertible Securities Fund may
purchase and sell
index and interest rate futures contracts and covered put and
call options on
securities and on indices.
<PAGE>
In periods of unusual market conditions, when the
Portfolio Management
Agent believes that convertible securities would not best
serve the Fund's
objectives, the Convertible Securities Fund may for defensive
purposes invest
part or all of its total assets in: (a) Government
Securities; (b)
non-convertible debt obligations of domestic corporations,
including bonds,
debentures, notes or preferred stock rated "BBB" or better by
S&P or "Baa" or
better by Moody's at the time of purchase, which ordinarily are
less volatile in
price than convertible securities and serve to increase
diversification of risk;
and (c) short-term money market instruments, including U.S.
Government, bank and
commercial obligations with remaining maturities of thirteen
months or less.
During such periods, the Convertible Securities Fund will
continue to seek
current income but will put less emphasis on capital appreciation.
SPECIAL CONSIDERATIONS RELATING TO LOW-RATED AND
COMPARABLE UNRATED
SECURITIES. Low-rated and comparable unrated securities (a)
will likely have
some quality and protective characteristics that, in the judgment
of the rating
organization, are outweighed by large uncertainties or major
risk exposures to
adverse conditions and (b) are predominantly speculative with
respect to the
issuer's capacity to pay interest and repay principal in
accordance with the
terms of the obligation.
The market values of low-rated and comparable unrated
securities are
less sensitive to interest rate changes but more sensitive to
economic changes
or individual corporate developments than those of higher-rated
securities; they
present a higher degree of credit risk and their yields will
fluctuate over
time. During economic downturns or sustained periods of rising
interest rates,
the ability of highly leveraged issuers to service debt
obligations may be
impaired.
The existence of limited or no established trading
markets for
low-rated and comparable unrated securities may result in thin
trading of such
securities, diminish the Convertible Securities Fund's ability
to dispose of
such securities or to obtain accurate market quotations for
valuing such
securities and calculating net asset value. The responsibility
of the Trust's
Board of Trustees to value such securities becomes greater and
judgment plays a
greater role in valuation because there is less reliable
objective data
available. In addition, adverse publicity and investor
perceptions may decrease
the values and liquidity of low-rated and comparable unrated
securities bonds,
especially in a thinly traded market.
A major economic recession would likely disrupt the
market for such
securities, adversely affect their value and the ability of
issuers to repay
principal and pay interest, and result in a higher incidence of
defaults.
The ratings of Moody's and S&P represent the
opinions of those
organizations as to the quality of securities. Such ratings
are relative and
subjective, not absolute standards of quality and do not
evaluate the market
risk
<PAGE>
of the securities. Although the Convertible Securities
Fund's Portfolio
Management Agent uses these ratings as a criterion for the
selection of
securities for the Convertible Securities Fund, it also
relies on its
independent analysis to evaluate potential investments for
the Convertible
Securities Fund. The Convertible Securities Fund's achievement of
its investment
objective may be more dependent on the Portfolio Management
Agent's credit
analysis of low-rated and unrated securities than would be
the case for a
portfolio of high-rated securities.
INTERMEDIATE BOND FUND
The Intermediate Bond Fund, formerly known as Harris
Insight Managed
Fixed Income Fund, seeks to provide a high level of total
return, including a
competitive level of current income, by investing primarily in
investment grade
debt securities with an intermediate term average maturity. The
Fund seeks to
achieve its objective by utilizing a number of investment
disciplines, including
the assessment of yield advantages among different classes of
bonds and among
different maturities, the independent review by the Fund's
Portfolio Management
Agent of the credit quality of individual issues and the analysis
by the Fund's
Portfolio Management Agent of economic and market conditions
affecting the fixed
income market. The Intermediate Bond Fund may invest in a broad
range of fixed
income obligations. The Fund may invest in fixed and variable
rate bonds,
debentures, Government Securities, and Government Stripped
Mortgage-Backed
Securities. The Fund also may invest in U.S. Treasury or
agency securities
placed into irrevocable trusts and evidenced by a trust receipt.
The
Intermediate Bond
Fund
seeks to provide a
high
level of total
return,
including
a
competitive level of
current
income,
by
investing primarily
in
investment grade
debt
securities with
an
intermediate term
average
maturity.
The Intermediate Bond Fund may invest more than 25%
of the current
value of its total assets in obligations (including repurchase
agreements) of:
(a) U.S. banks; (b) U.S. branches of foreign banks that are
subject to the same
regulation as U.S. banks by the U.S. Government or its
agencies or
instrumentalities; or (c) foreign branches of U.S. banks if the
U.S. banks would
be unconditionally liable in the event the foreign branch failed
to pay on such
obligation for any reason. Obligations of foreign banks
involve somewhat
different investment risks from those associated with obligations
of U.S. banks.
See "Investment Strategies -- Foreign Securities."
Although the Portfolio Management Agent anticipates that
a significant
portion of the bonds acquired by the Intermediate Bond Fund will
normally have
intermediate term average (weighted) maturities, the Fund
may also hold
short-term U.S. Government Obligations, "high-quality" money
market instruments
(i.e., those within the two highest rating categories or, if
unrated, determined
by the Portfolio Management Agent to be comparable in quality to
instruments so
rated) and cash. Such obligations may include those issued by
foreign banks and
foreign branches of U.S. banks. These investments may be in
<PAGE>
such proportions as, in the Portfolio Management Agent's
opinion, existing
circumstances warrant.
BOND FUND
The Bond Fund seeks to provide a high level of total
return, including
a competitive level of current income, by investing primarily
in investment
grade debt securities of varying maturities. The Fund seeks
to achieve its
objective by utilizing a highly-disciplined, quantitatively-
based process to
identify fixed income securities which the Fund's Portfolio
Management Agent
believes are undervalued and are positioned to offer the best
relative value to
enable the Fund to benefit from anticipated changes in interest
rates. Under
normal market conditions, at least 65% of the Bond Fund's total
assets will be
invested in bonds. For purposes of this 65% limitation, the
term "bond" shall
include debt obligations such as bonds and debentures,
Government Securities,
debt obligations of domestic and foreign corporations, debt
obligations of
foreign governments and their political subdivisions, asset-
backed securities,
various mortgage-related securities (including those issued or
collateralized by
U.S. Government agencies and inverse floating rate mortgage-backed
securities),
other floating/variable rate obligations, municipal obligations
and zero coupon
securities.
The Bond
Fund
seeks to
provide a
high
level of total
return,
including a
competitive level of
current
income,
by
investing primarily
in
investment
grade
debt securities
of
varying maturities.
GOVERNMENT FUND
The Government Fund seeks to provide a high level of
current income,
consistent with preservation of capital. The Fund seeks to
achieve its
investment objective by investing primarily in Government
Securities, including
mortgage-backed securities, having an intermediate term average
maturity. Under
normal market conditions, the Fund's total assets will be
primarily invested in
Government Securities and in repurchase agreements collateralized
by Government
Securities. The average portfolio maturity (or average life
with respect to
mortgage-related securities) generally will be between three and
ten years.
The
Government Fund
seeks
to provide a
high
level of current
income,
consistent
with
preservation
of
capital.
In addition, the Fund may also invest in asset-
backed securities
collateralized by the U.S. Treasury and certain U.S. Government
agencies. It may
also hold foreign debt securities guaranteed by the U.S.
Government, its
agencies or instrumentalities (with respect to 10% of its
total assets).
Further, the Government Fund may invest in covered put and
call options on
securities and on indices.
<PAGE>
INTERMEDIATE TAX-EXEMPT FUND
The Intermediate Tax-Exempt Fund seeks to provide a
high level of
current income that is exempt from federal income tax. As
a matter of
fundamental policy, the Fund seeks to achieve its investment
objective by
investing at least 80% of its assets, under normal market
conditions, in a broad
range of municipal bonds and other obligations issued by
state and local
governments to finance their operations or special projects.
These securities,
which are of varying maturities, make interest payments that
are exempt from
federal income tax. The average portfolio maturity (or average
life with respect
to mortgage-related securities) generally will be between three
and ten years.
The
Intermediate
Tax-
Exempt Fund
seeks
to provide
a
high level
of
current income
that
is exempt from
federal income tax.
The Fund's selection of individual securities is based
on a number of
factors, including anticipated changes in interest rates, the
assessment of the yield
advantages of different classes of bonds, and an independent
analysis of credit
quality of individual issues by the Fund's Portfolio Management
Agent or the
Investment Adviser.
The Intermediate Tax-Exempt Fund may also invest in
letters of credit
and U.S. Government Obligations. In addition, the Fund may
purchase and sell
covered put and call options on securities and on indices.
TAX-EXEMPT FUND
The Tax-Exempt Fund seeks to provide a high level of
current income
that is exempt from federal income tax. The Fund seeks to achieve
its objective
by anticipating changes in interest rates, analyzing yield
differentials for different types of bonds, and analyzing credit
for specific issues.
The Tax-Exempt
Fund seeks to
provide a high
level of current
income that is
exempt from
federal income
tax.
The Tax-Exempt Fund may also invest in letters of
credit and U.S.
Government Obligations and zero coupon securities. Further,
the Fund may
purchase and sell covered put and call options on securities and
on indices.
ALL FIXED INCOME FUNDS
Each Fund may invest in securities of other
investment companies,
when-issued securities and forward commitments,
floating/variable rate
<PAGE>
obligations (in the case of the Government Fund, if issued
by the U.S.
Government or certain government agencies) and inverse
floating rate
obligations. Further, each Fund may enter into repurchase
agreements and reverse
repurchase agreements. In addition, each Fund may lend its
portfolio securities
with respect to up to one-third of its net assets.
Each Fund other than the Convertible Securities Fund may
invest only in
securities that are rated "BBB" or better by S&P, "Baa" or better
by Moody's or
an equivalent rating by another nationally recognized
statistical rating
organization at the time of purchase, or, if not rated, are
considered by the
Portfolio Management Agent to be of comparable quality. Debt
obligations rated
"BBB" by S&P, "Baa" by Moody's, or the equivalent by such
other rating
organization may have speculative characteristics and changes
in economic
conditions or other circumstances are more likely to lead to a
weakened capacity
to make principal and interest payments than is the case with
higher grade
bonds.
----------------------------
Portfolio securities of each Fund are kept under
continuing supervision
and changes may be made whenever, in the opinion of the
Portfolio Management
Agent, a security no longer seems to meet the objective of the
Fund. Portfolio
changes also may be made to increase or decrease investments in
anticipation of
changes in security prices in general or to provide funds
required for
redemptions, distributions to shareholders or other corporate
purposes. Neither
the length of time a security has been held nor the rate of
turnover of a Fund's
portfolio is considered a limiting factor on such changes.
-----------
Each Fund may purchase debt obligations that are not
rated if, in the
opinion of the Portfolio Management Agent, they are of
investment quality at
least comparable to other rated investments that are
permitted by the Fund.
After purchase by a Fund, a security may cease to be rated or its
rating may be
reduced below the minimum required for purchase by the Fund.
Neither event will
require the Fund to sell such security unless the amount of
such security
exceeds permissible limits. However, the Portfolio
Management Agent will
reassess promptly whether the security presents minimal
credit risks and
determine whether continuing to hold the security is in the best
interests of
the Fund. To the extent that the ratings given by Moody's,
S&P or another
nationally recognized statistical rating organization for
securities may change
as a result of changes in the rating systems or because
of corporate
reorganization of such rating organizations, a Fund will
attempt to use
comparable ratings as standards for its investments in
accordance with the
investment objectives and policies of the Fund. The ratings of
Moody's and S&P
are more fully described in the Appendix to the Statement
of Additional
Information.
<PAGE>
INVESTMENT STRATEGIES
ASSET-BACKED SECURITIES. The Intermediate Bond Fund, the
Bond Fund, the
Government Fund, the Intermediate Tax-Exempt Fund and the Tax-
Exempt Fund may
purchase asset-backed securities, which represent a
participation in, or are
secured by and payable from, a stream of payments generated
by particular
assets, most often a pool of assets similar to one another.
With respect to
asset-backed securities purchased by the Intermediate Bond
Fund and the Bond
Fund, assets generating payments will include motor vehicle
installment purchase
obligations, credit card receivables and home equity loans,
equipment leases,
manufactured housing loans and marine loans. The asset-
backed securities
purchased by the Intermediate Tax-Exempt Fund and the Tax-Exempt
Fund represent
units of beneficial interest in pools of purchasing contracts,
financing leases
and sales agreements entered into by municipalities. The
Government Fund may
invest in asset-backed trusts collateralized by the U.S.
Treasury or certain
other U.S. Government agencies and instrumentalities. In
accordance with
guidelines established by the Boards of Trustees and Directors,
asset-backed
securities may be considered illiquid securities and, therefore,
may be subject
to a Fund's 15% (10% with respect to the Intermediate Bond Fund)
limitation on
such investments.
BANK INVESTMENT CONTRACTS. The Intermediate Bond Fund and
the Bond Fund
may invest in bank investment contracts ("BICs") which are
debt obligations
issued by banks. BICs require a Fund to make cash contributions
to a deposit
account at a bank in exchange for payments at negotiated,
floating or fixed
interest rates. A BIC is a general obligation of the issuing bank.
In accordance
with guidelines established by the Board of Trustees (or the Board
of Directors,
in the case of the Intermediate Bond Fund), BICs may be
considered illiquid
securities and, therefore, subject to each Fund's 15% (or 10% in
the case of the
Intermediate Bond Fund) limitation on such investments. All
purchases of BICs
will be subject to the applicable quality requirements
described under
"Investment Objectives and Policies."
CONVERTIBLE SECURITIES. The Convertible Securities and
the Bond Funds
may invest in convertible securities. Appropriate ratings for
the convertible
securities purchased by each of these Funds are provided
under "Investment
Objectives and Policies". Because convertible
securities have the
characteristics of both fixed-income securities and common stock,
they sometimes
are called "hybrid" securities. Convertible bonds, debentures and
notes are debt
obligations offering a stated interest rate; convertible
preferred stocks are
senior securities offering a stated dividend rate. Because
a convertible
security provides an option to the holder to exchange the
security for either a
specified number of the issuer's common shares at a stated
price per share or
the cash value of such common shares, the security's market
price will tend to
fluctuate in relation to the price of the common shares
into which it is
convertible. Thus, convertible securities ordinarily will provide
opportunities
for both producing
<PAGE>
current income and longer term capital appreciation.
Because convertible
securities are usually viewed by the issuer as future common
stock, they are
generally subordinated to other senior securities and therefore
are rated one
category lower than the issuer's non-convertible debt
obligations or preferred
stock.
FLOATING AND VARIABLE RATE INSTRUMENTS. Each of the
Funds may purchase
instruments (municipal obligations in the case of the
Intermediate Tax-Exempt
Fund and the Tax-Exempt Fund and instruments issued by the
U.S. Treasury or
certain U.S. Government agencies or instrumentalities in the
case of the
Government Fund) having a floating or variable rate of
interest. These
obligations bear interest at rates that are not fixed, but vary
with changes in
specified market rates or indices, such as the prime rate, or
at specified
intervals. Certain of these obligations may carry a demand
feature that would
permit the holder to tender them back to the issuer at par
value prior to
maturity. Each Fund will limit its purchases of floating and
variable rate
obligations to those of the same quality as it otherwise is
allowed to purchase.
A floating or variable rate instrument may be subject
to the Fund's
percentage limitation on illiquid investments if there is no
reliable trading
market for the investment or if the Fund may not demand payment of
the principal
amount within seven days.
FOREIGN SECURITIES. The Intermediate Bond Fund (with
respect to 20% of
its total assets), the Bond Fund (with respect to 20% of its
total assets) and
the Government Fund (with respect to 10% of its total assets)
may invest in
non-convertible (and convertible in the case of the Bond Fund)
debt obligations
of foreign banks, foreign corporations and foreign
governments, which
obligations are denominated in and pay interest in U.S. dollars.
The Convertible
Securities Fund may invest in dollar-denominated
Eurodollar securities
convertible into the common stock of domestic corporations. The
Government Fund
may invest in dollar-denominated Eurodollar securities that are
guaranteed by
the U.S. Government or its agencies or instrumentalities.
Investments in foreign securities involve certain
considerations that
are not typically associated with investing in domestic
securities. For example,
investments in foreign securities typically involve higher
transaction costs
than investments in U.S. securities. Foreign investments
may have risks
associated with currency exchange rates, political instability,
less complete
financial information about the issuers and less market liquidity
than domestic
securities. Future political and economic developments, possible
imposition of
withholding taxes on income, seizure or nationalization of
foreign holdings,
establishment of exchange controls or the adoption of other
governmental
restrictions might adversely affect the payment of principal
and interest on
foreign obligations. In addition, foreign banks and foreign
branches of domestic
banks may be subject
<PAGE>
to less stringent reserve requirements than and to
different accounting,
auditing and recordkeeping requirements from domestic banks.
GOVERNMENT SECURITIES. Government Securities consist
of obligations
issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or
sponsored enterprises.
GUARANTEED INVESTMENT CONTRACTS. The Intermediate
Bond Fund and the
Bond Fund may invest in guaranteed investment contracts ("GICs")
issued by U.S.
and Canadian insurance companies. GICs require a Fund to make cash
contributions
to a deposit fund of an insurance company's general account.
The insurance
company then makes payments to the Fund based on negotiated,
floating or fixed
interest rates. A GIC is a general obligation of the issuing
insurance company
and not a separate account. The purchase price paid for a GIC
becomes part of
the general assets of the insurance company, and the contract is
paid from the
insurance company's general assets. In accordance with guidelines
established by
the Trust's Board of Trustees, GICs may be considered illiquid
securities and,
therefore, subject to the Fund's 15% (10% in the case of the
Intermediate Bond
Fund) limitation on such investments. All purchases of GICs by
the Fund will be
subject to the applicable quality requirements described
under "Investment
Objectives and Policies."
ILLIQUID SECURITIES. Each Fund may invest up to 15% (10%
in the case of
the Intermediate Bond Fund) of the value of its net assets in
securities that
are considered illiquid. Repurchase agreements and time
deposits that do not
provide for payment to the Fund within seven days after notice
or which have a
term greater than seven days are deemed illiquid securities for
this purpose,
unless such securities are variable amount master demand notes
with maturities
of nine months or less or unless the Portfolio Management Agent
or Investment
Adviser has determined under the supervision and direction of the
Trust's Board
of Trustees (or, with respect to the Intermediate Bond Fund, the
Company's Board
of Directors) that an adequate trading market exists for such
securities or that
market quotations are readily available.
Each Fund may also purchase Rule 144A securities sold to
institutional
investors without registration under the Securities Act of 1933
and commercial
paper issued in reliance upon the exemption in Section 4(2) of
the Securities
Act of 1933. These securities may be determined to be liquid in
accordance with
guidelines established by the Portfolio Management Agent or
Investment Adviser
and approved by the Trust's Board of Trustees (or, with
respect to the
Intermediate Bond Fund, the Company's Board of Directors). The
Board of Trustees
or Directors will monitor the Portfolio Management Agent's
or Investment
Adviser's implementation of these guidelines on a periodic basis.
<PAGE>
INDEX AND INTEREST RATE FUTURES CONTRACTS; Options.
The Convertible
Securities Fund, the Bond Fund, the Government Fund, the
Intermediate Tax-Exempt
Fund and the Tax-Exempt Fund may attempt to reduce the risk of
investments in
fixed income securities by hedging a portion of their
respective portfolio
through the use of futures contracts on indices and options on
such indices
traded on national securities exchanges. Each of these Funds
may attempt to
reduce the risk of investment in debt securities by hedging a
portion of its
portfolio through the use of interest rate futures. Each such
Fund will use
futures contracts and options on such futures contracts only as a
hedge against
anticipated changes in the values of securities held in its
portfolio or in the
values of securities that it intends to purchase.
Each of the Funds (except the Intermediate Bond Fund)
may invest in
covered put and covered call options and may write covered put
and covered call
options on securities in which they may invest directly and that
are traded on
registered domestic security exchanges or over-the-counter.
See "Investment Strategies" in the Statement of
Additional Information.
INVERSE FLOATING RATE OBLIGATIONS. Each Fund may
invest in so called
"inverse floating rate obligations" or "residual interest"
bonds, or other
related obligations or certificates structured to have similar
features. Such
obligations generally have floating or variable interest rates
that move in the
opposite direction from short-term interest rates and
generally increase or
decrease in value in response to changes in short-term interest
rates at a rate
which is a multiple (typically two) of the rate at which fixed-
rate, long-term,
tax-exempt securities increase or decrease in response to such
changes. As a
result, such obligations have the effect of providing investment
leverage and
may be more volatile than long-term, fixed-rate, tax-exempt
obligations.
The Bond Fund, the Intermediate Bond Fund and the
Government Fund may
invest in mortgage-backed securities (see description of
"mortgage-related
securities" below) that have an inverse floating rate.
INVESTMENT COMPANY SECURITIES. In connection with the
management of its
daily cash positions, each Fund may invest in securities issued
by investment
companies that invest in short-term debt securities (which may
include municipal
obligations that are exempt from federal income taxes) and
which seek to
maintain a $1.00 net asset value per share. Each Fund,
other than the
Intermediate Bond Fund, may also invest in securities issued
by investment
companies that invest in securities in which such Fund could
invest directly.
Securities of investment companies may be acquired by any of
the Funds within
the limits prescribed by the Investment Company Act of 1940,
as amended (the
"1940 Act"). These limit each such Fund so that: (i) not more
than 5% of the
value of its total assets will be invested in the
securities of any one
investment company; (ii) not more than 10% of the value of its
total assets will
be invested
<PAGE>
in the aggregate in securities of investment companies as a group;
and (iii) not
more than 3% of the outstanding voting stock of any one
investment company will
be owned by the Fund or by the Trust or the Company as a whole. As
a shareholder
of another investment company, the Fund would bear,
along with other
shareholders, its pro rata portion of the other investment
company's expenses,
including advisory fees. These expenses would be in addition to
the advisory and
other expenses that the Fund bears directly in connection
with its own
operations.
LETTERS OF CREDIT. Debt obligations, including municipal
obligations,
certificates of participation, commercial paper and other short-
term obligations
may be backed by an irrevocable letter of credit of a bank. Only
banks that, in
the opinion of the Portfolio Management Agent, are of
investment quality
comparable to other permitted investments of a Fund, may be used
for letter of
credit-backed investments.
LOANS OF PORTFOLIO SECURITIES. Each Fund may lend to
brokers, dealers
and financial institutions securities from its portfolio
representing up to
one-third of the Fund's net assets. However, such loans may be
made only if cash
or cash equivalent collateral, including letters of credit,
marked-to-market
daily and equal to at least 100% of the current market value of
the securities
loaned (including accrued interest and dividends thereon)
plus the interest
payable to the Fund with respect to the loan is maintained by the
borrower with
the Fund in a segregated account. In determining whether to lend a
security to a
particular broker, dealer or financial institution, the
Portfolio Management
Agent will consider all relevant facts and circumstances,
including the
creditworthiness of the broker, dealer or financial institution.
No Fund will
enter into any portfolio security lending arrangement having a
duration longer
than one year. Any securities that a Fund may receive as
collateral will not
become part of the Fund's portfolio at the time of the loan and,
in the event of
a default by the borrower, the Fund will, if permitted by law,
dispose of such
collateral except for such part thereof that is a security in
which the Fund is
permitted to invest. During the time securities are on loan, the
borrower will
pay the Fund any accrued income on those securities, and the Fund
may invest the
cash collateral and earn additional income or receive an agreed
upon fee from a
borrower that has delivered cash equivalent collateral. Loans of
securities by a
Fund will be subject to termination at the Fund's or the
borrower's option. Each
Fund may pay reasonable administrative and custodial fees in
connection with a
securities loan and may pay a negotiated fee to the borrower
or the placing
broker. Borrowers and placing brokers may not be affiliated,
directly or
indirectly, with the Trust, the Company, the Investment Adviser,
the Portfolio
Management Agent or the Distributor.
MORTGAGE-RELATED SECURITIES. The Intermediate Bond Fund,
the Bond Fund
and the Government Fund may invest in mortgage-backed
securities, including
collateralized mortgage obligations ("CMOs") and
Government
<PAGE>
Stripped Mortgage-Backed Securities. The Government Fund may
purchase such
securities only if they represent interests in an asset-
backed trust
collateralized by the Government National Mortgage Association
("GNMA"), the
Federal National Mortgage Association ("FNMA") or the Federal Home
Loan Mortgage
Corporation ("FHLMC").
CMOs are types of bonds secured by an underlying pool
of mortgages or
mortgage pass-through certificates that are structured to
direct payments on
underlying collateral to different series or classes of
obligations. To the
extent that CMOs are considered to be investment companies,
investment in such
CMOs will be subject to the percentage limitations described
under "Investment
Company Securities."
Government Stripped Mortgage-Backed Securities are
mortgage-backed
securities issued or guaranteed by GNMA, FNMA or FHLMC.
These securities
represent beneficial ownership interests in either
periodic principal
distributions ("principal-only") or interest distributions
("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as
the case may be.
The certificates underlying the Government Stripped Mortgage-
Backed Securities
represent all or part of the beneficial interest in pools of
mortgage loans.
To the extent that a Fund purchases mortgage-related or
mortgage-backed
securities at a premium, mortgage foreclosures and prepayments
of principal by
mortgagors (which may be made at any time without penalty) may
result in loss of
the Fund's principal investment to the extent of the premium
paid. Yield may be
affected by reinvestment of prepayments at higher or lower
rates than the
original investment. Like other debt securities, the value of
mortgage-related
securities will generally fluctuate in response to market
interest rates. The
average life of a mortgage-backed instrument, in particular,
is likely to be
substantially less than the original maturity of the mortgage
pools underlying
the securities as the result of scheduled principal payments
and mortgage
prepayments. The rate of such mortgage prepayments, and hence
the life of the
certificates, will be primarily a function of current market
rates and current
conditions in the relevant housing markets. In calculating the
average weighted
maturity of the Funds, the maturity of mortgage-backed instruments
will be based
on estimates of average life. Government Stripped Mortgage-Backed
Securities are
currently traded in an over-the-counter market maintained by
several large
investment banking firms. There can be no assurance that a Fund
will be able to
effect a trade of a Government Stripped Mortgage-Backed Security
at a time when
it wishes to do so. A Fund will acquire Government Stripped
Mortgage-Backed
Securities only if a liquid secondary market for the securities
exists at the
time of acquisition.
MUNICIPAL LEASES. The Intermediate Tax-Exempt Fund and
the Tax-Exempt
Fund may invest in municipal leases, which are generally
participations in
intermediate- and short-term debt obligations issued by
municipalities and
<PAGE>
consisting of leases or installment purchase contracts for
property or
equipment. Although lease obligations do not constitute general
obligations of
the municipality for which the municipality's taxing power is
pledged, a lease
obligation is ordinarily backed by the municipality's covenant
to budget for,
appropriate and make the payments due under the lease
obligation. However,
certain lease obligations contain "non-appropriation" clauses
which provide that
the municipality has no obligation to make lease or
installment purchase
payments in future years unless money is appropriated for
such purpose on a
yearly basis. Although "non-appropriation" lease obligations are
secured by the
leased property, disposition of the property in the event of
foreclosure may
prove difficult. See "Investment Strategies - Municipal Leases" in
the Statement
of Additional Information.
MUNICIPAL OBLIGATIONS. The Intermediate Bond Fund, the
Bond Fund, the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund may each
purchase municipal
obligations. As a matter of fundamental policy, the Intermediate
Tax-Exempt Fund
and the Tax-Exempt Fund will invest at least 80% of assets under
normal market
conditions in municipal obligations. Municipal bonds generally
have a maturity
at the time of issuance of up to 30 years. Municipal notes
generally have
maturities at the time of issuance of three years or less.
These notes are
generally issued in anticipation of the receipt of tax funds,
the proceeds of
bond placements or other revenues. The ability of an issuer to
make payments is
therefore dependent on these tax receipts, proceeds from bond
sales or other
revenues, as the case may be. Municipal commercial paper is a
debt obligation
with an effective maturity or put date of 270 days or less
that is issued to
finance seasonal working capital needs or as short-term
financing in
anticipation of longer-term debt.
The two principal classifications of municipal
obligations are "general
obligation" securities and "revenue" securities. General
obligation securities
are secured by the issuer's pledge of its full faith, credit
and taxing power
for the payment of principal and interest. Revenue securities
are payable only
from the revenues derived from a particular facility or class of
facilities or,
in some cases, from the proceeds of a special excise tax or from
other specific
revenue source such as the user of the facility being
financed. Revenue
securities include private activity bonds (also known as
industrial revenue
bonds), which may be purchased only by the Intermediate Tax-
Exempt Fund and the
Tax-Exempt Fund and which are not payable from the unrestricted
revenues of the
issuer. Consequently, the credit quality of private activity
bonds is usually
directly related to the credit standing of the corporate user
of the facility
involved.
Certain other of the municipal obligations in which
the Funds may
invest are:
<PAGE>
TANs. The Intermediate Tax-Exempt Fund and the Tax-
Exempt Fund may
invest in tax anticipation notes ("TANs"). The possible inability
or failure of
a municipal issuer to raise taxes as a result of such events as a
decline in its
tax base or a rise in delinquencies could adversely affect the
issuer's ability
to meet its obligations on outstanding TANs. Furthermore, some
municipal issuers
include various tax proceeds in a general fund that is used to
meet obligations
other than those of the outstanding TANs. Use of such a general
fund to meet
various obligations could affect the likelihood of making payments
on TANs.
BANs. The Intermediate Tax-Exempt Fund and the Tax-
Exempt Fund may
invest in bond anticipation notes ("BANs"). The ability of a
municipal issuer to
meet its obligations on its BANs is primarily dependent on the
issuer's adequate
access to the longer term municipal bond market and the
likelihood that the
proceeds of such bond sales will be used to pay the principal
of, and interest
on, BANs.
RANs. The Intermediate Tax-Exempt Fund and the Tax-
Exempt Fund may
invest in revenue anticipation notes ("RANs"). A decline in
the receipt of
certain revenues, such as anticipated revenues from another level
of government,
could adversely affect an issuer's ability to meet its
obligations on
outstanding RANs. In addition, the possibility that the
revenues would, when
received, be used to meet other obligations could adversely
affect the ability
of the issuer to pay the principal of, and interest on, RANs.
See "Investment Strategies" in the Statement of
Additional Information.
REPURCHASE AGREEMENTS. Each of the Funds may
purchase portfolio
securities subject to the seller's agreement to repurchase them
at a mutually
agreed upon time and price, which includes an amount
representing interest on
the purchase price. Each of these Funds may enter into
repurchase agreements
only with respect to obligations that could otherwise be
purchased by the Fund.
The seller will be required to maintain in a segregated
account for the Fund
cash or cash equivalent collateral equal to at least 100% of
the repurchase
price (including accrued interest). Default or bankruptcy of
the seller would
expose a Fund to possible loss because of adverse market
action, delays in
connection with the disposition of the underlying obligations
or expenses of
enforcing its rights.
REVERSE REPURCHASE AGREEMENTS. Each Fund may borrow funds
for temporary
purposes by selling portfolio securities to financial institutions
such as banks
and broker/dealers and agreeing to repurchase them at a mutually
specified date
and price ("reverse repurchase agreements"). Reverse
repurchase agreements
involve the risk that the market value of the securities sold
by a Fund may
decline below the repurchase price. A Fund would pay
interest on amounts
obtained pursuant to a reverse repurchase agreement.
<PAGE>
A Fund may not enter into a repurchase agreement or
reverse repurchase
agreements if, as a result, more than 15% (10% with respect to
the Intermediate
Bond Fund) of the market value of the Fund's total net assets
would be invested
in repurchase agreements or reverse repurchase agreements with
a maturity of
more than seven days and in other illiquid securities. The Funds
will enter into
repurchase agreements and reverse repurchase agreements only
with registered
broker/dealers and commercial banks that meet guidelines
established by the
Trust's Board of Trustees or the Company's Board of Directors.
SECURITIES WITH PUTS. In order to maintain liquidity,
the Intermediate
Bond Fund, the Bond Fund, the Government Fund, the Intermediate
Tax-Exempt Fund
and the Tax-Exempt Fund may enter into puts with respect to
portfolio securities
with banks or broker/dealers that, in the opinion of the
Portfolio Management
Agent, present minimal credit risks. The ability of these Funds
to exercise a
put will depend on the ability of the bank or broker/dealer
to pay for the
underlying securities at the time the put is exercised. In the
event that a bank
or broker/dealer defaults on its obligation to repurchase
an underlying
security, the Fund might be unable to recover all or a
portion of any loss
sustained by having to sell the security elsewhere.
STAND-BY COMMITMENTS. The Intermediate Tax-Exempt
Fund and the
Tax-Exempt Fund may acquire "stand-by commitments" with respect
to obligations
held by it. Under a stand-by commitment, a dealer agrees to
purchase, at the
Fund's option, specified obligations at a specified price. The
acquisition of a
stand-by commitment may increase the cost, and thereby reduce the
yield, of the
obligations to which the commitment relates. The Funds will
acquire stand-by
commitments solely to facilitate portfolio liquidity and do
not intend to
exercise their rights thereunder for trading purposes.
U.S. GOVERNMENT OBLIGATIONS. U.S. Government
Obligations consist of
bills, notes and bonds issued by the U.S. Treasury. They are
direct obligations
of the U.S. Government and differ primarily in the length of their
maturities.
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY OBLIGATIONS.
Obligations of
U.S. Government agencies and instrumentalities are debt
securities issued by
U.S. Government-sponsored enterprises and federal agencies.
Some of these
obligations are supported by: (a) the full faith and credit of the
U.S. Treasury
(such as Government National Mortgage Association participation
certificates);
(b) the limited authority of the issuer to borrow from the U.S.
Treasury (such
as securities of the Federal Home Loan Bank); (c) the
authority of the U.S.
Government to purchase certain obligations of the issuer (such as
securities of
the Federal National Mortgage Association); or (d) the credit
of the issuer
only. In the case of obligations not backed by the full faith and
credit of the
U.S. Government, the investor must look principally to the
agency issuing or
guaranteeing the obligation for ultimate repayment.
<PAGE>
VARIABLE AMOUNT MASTER DEMAND NOTES. The Intermediate
Bond Fund may
purchase and sell variable amount master demand notes,
which differ from
ordinary commercial paper in that they are issued pursuant
to a written
agreement between the issuer and the holder. Their amounts may
from time to time
be increased by the holder (subject to an agreed maximum) or
decreased by the
holder or the issuer; they are payable on demand or after an
agreed-upon notice
period, e.g., seven days; and the rates of interest vary
pursuant to an
agreed-upon formula. Generally, master demand notes are not
rated by a rating
agency. However, the Fund may invest in these obligations if, in
the opinion of
the Portfolio Management Agent, they are of an investment quality
comparable to
rated securities in which the Fund may invest. The Portfolio
Management Agent
monitors the creditworthiness of issuers of master demand
notes on a daily
basis. Transfer of these notes is usually restricted by the
issuer, and there is
no secondary trading market for these notes. The Intermediate
Bond Fund may not
invest in a master demand note with a demand notice period of
more than seven
days if, as a result, more than 10% of the value of the Fund's
total net assets
would be invested in these notes, together with other illiquid
securities.
WARRANTS. The Convertible Securities Fund may invest
up to 5% of its
net assets at the time of purchase in warrants (other than those
that have been
acquired in units or attached to other securities) on securities
in which it may
invest directly. Warrants represent rights to purchase securities
at a specific
price valid for a specific period of time.
WHEN-ISSUED SECURITIES. Each of the Funds may
purchase securities
(including securities issued pursuant to an initial public
offering) on a
when-issued basis, in which case delivery and payment normally
take place within
45 days after the date of the commitment to purchase. The
Funds will make
commitments to purchase securities on a when-issued basis
only with the
intention of actually acquiring the securities, but may sell
them before the
settlement date, if deemed advisable. The purchase price and the
interest rate
that will be received are fixed at the time of the
commitment. When-issued
securities are subject to market fluctuation and no income
accrues to the
purchaser prior to issuance. Purchasing a security on a when-
issued basis can
involve a risk that the market price at the time of delivery may
be lower than
the agreed upon purchase price.
ZERO COUPON SECURITIES. Each of the Funds except
the Convertible
Securities Fund may invest in zero coupon securities. These
securities are debt
obligations that do not entitle the holder to any periodic
payments of interest
prior to maturity and are issued and traded at a discount. The
values of zero
coupon securities are subject to greater fluctuations than are
the values of
income securities that distribute income regularly. Zero coupon
securities may
be created by separating the interest and principal component
of Government
Securities or securities issued by private corporate issuers.
<PAGE>
INVESTMENT LIMITATIONS
Unless otherwise noted, the foregoing investment
objectives and related
policies and activities of each of the Funds are not
fundamental and may be
changed by the Board of Trustees of the Trust (or, with
respect to the
Intermediate Bond Fund, the Board of Directors of the
Company) without the
approval of shareholders, provided that, with respect to the
Intermediate Bond
Fund, the policy relating to investment company securities is
a fundamental
investment policy. If there is a change in a Fund's
investment objective,
shareholders should consider whether the Fund remains an
appropriate investment
in light of their then current financial position and needs.
This section
outlines
each Fund's
policies that
may be
changed only by
a majority
vote of
shareholders.
As matters of fundamental policy, which may be
changed only with
approval by the vote of the holders of a majority of the
Fund's outstanding
voting securities, as described in the Statement of Additional
Information, no
Fund may: (1) purchase the securities of issuers conducting
their principal
business activity in the same industry if, immediately after the
purchase and as
a result thereof, the value of its investments in that industry
would exceed 25%
of the current value of its total assets, provided that there is
no limitation
with respect to investments in municipal obligations (for the
purpose of this
restriction, private activity bonds shall not be deemed municipal
obligations if
the payment of principal and interest on such bonds is
the ultimate
responsibility of non-governmental users) and in obligations
of the U.S.
Government, its agencies or instrumentalities; (2) invest more
than 5% of the
current value of its total assets in the securities of any one
issuer, other
than obligations of the U.S. Government, its agencies or
instrumentalities,
except that up to 25% of the value of the total assets of a Fund
may be invested
without regard to this limitation; (3) purchase securities of an
issuer if, as a
result, with respect to 75% of its total assets, it would own
more than 10% of
the voting securities of such issuer; or (4) borrow from banks,
except that a
Fund may borrow up to 10% of the current value of its total assets
for temporary
purposes only in order to meet redemptions, and these borrowings
may be secured
by the pledge of up to 10% of the current value of the Fund's
net assets (but
investments may not be purchased while borrowings are in excess
of 5%). It is
also a fundamental policy that each Fund may make loans of
portfolio securities.
In addition, it is a fundamental policy that the Intermediate Bond
Fund may only
invest up to 10% of the current value of its net assets in
repurchase agreements
having maturities of more than seven days, variable amount
master demand notes
having notice periods of more than seven days, fixed time
deposits subject to
withdrawal penalties having maturities of more than seven days,
and securities
that are not readily marketable. Although not a matter of
fundamental policy,
the Funds consider the securities of foreign governments to
be a separate
industry for purposes of the 25% asset limitation on
investments in the
securities of issuers conducting their principal business
activity in the same
industry.
<PAGE>
MANAGEMENT
The Trust and the Company are managed under the
direction of their
governing Boards of Trustees and Directors, respectively. Each
individual listed
below is a member of both the Trust's Board of Trustees and the
Company's Board
of Directors. The principal occupation of each individual is also
listed below.
Trustees and Directors
Edgar R. Fiedler Vice President and Economic
Counsellor, The
Conference Board.
C. Gary Gerst Chairman of the Board of Directors
and Trustees;
Chairman Emeritus, La Salle
Partners, Ltd. (Real
Estate Developer and Manager).
John W. McCarter, Jr. Senior Vice President, Boozo
Allen & Hamilton,
Inc. (Consulting Firm); Director of
W.W. Grainger,
Inc. and A.M. Castle, Inc.
Ernest M. Roth Consultant; Retired Senior Vice
President and Chief
Financial Officer, Commonwealth
Edison Company.
INVESTMENT ADVISER
The Trust and the Company have each entered into
Advisory Contracts
with Harris Trust with respect to each of the Funds. Harris
Trust, located at
111 West Monroe Street, Chicago, Illinois, is the successor to
the investment
banking firm of N.W. Harris & Co. that was organized in
1882 and was
incorporated in 1907 under the present name of the bank. It
is an Illinois
state-chartered bank and a member of the Federal Reserve System.
At December 31,
1994, Harris Trust had assets of more than $13 billion and was the
largest of 14
banks owned by Harris Bankcorp, Inc. Harris Bankcorp, Inc. is
a wholly-owned
subsidiary of Bankmont Financial Corp., which is a wholly-owned
subsidiary of
Bank of Montreal, a publicly traded Canadian banking institution.
This
section high-
lights
the
experience, services
offered, and
compensation of the
Funds'
Adviser.
As of December 31, 1994, Harris Trust managed more than
$8 billion in
personal trust assets, and acted as custodian of more than
$151 billion in
assets.
With respect to the Funds, the Advisory Contracts
provide that Harris
Trust is responsible for the supervision and oversight of
the Portfolio
Management Agent's performance (as discussed below).
<PAGE>
For all its services under the Advisory Contracts
with the Funds,
Harris Trust is entitled to receive monthly advisory fees at the
annual rate of
0.70%, 0.70%, 0.40%, 0.30%, 0.60% and 0.60% of the average daily
net assets of
the Convertible Securities Fund, the Intermediate Bond Fund, the
Bond Fund, the
Government Fund, the Intermediate Tax-Exempt Fund and the
Tax-Exempt Fund,
respectively. For the fiscal year ended December 31, 1994, Harris
Trust received
fees, after waivers, at the effective rate of 0.37% of the
average daily net
assets of the Intermediate Bond Fund. Harris Trust expects to
receive, after
waivers, an advisory fee at the annual rate of 0.37% of the
average daily net
assets of the Intermediate Bond Fund for the current fiscal year.
PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into Portfolio Management
Contracts with
Harris Investment Management, Inc. ("HIM" or the "Portfolio
Management Agent")
under which HIM undertakes to furnish investment guidance and
policy direction
in connection with the daily portfolio management of the Funds.
For the services
provided by HIM, Harris Trust will pay to HIM the advisory fees it
receives from
the Funds. As of June 30, 1995, HIM managed an estimated $13.8
billion in assets.
Purchase and sale orders of the securities held by
each of the Funds
may be combined with those of other accounts that HIM manages,
and for which it
has brokerage placement authority, in the interest of seeking the
most favorable
overall net results. When HIM determines that a particular
security should be
bought or sold for any of the Funds and other accounts managed
by HIM, HIM
undertakes to allocate those transactions among the participants
equitably.
PORTFOLIO MANAGEMENT
The organizational arrangements of the Investment
Adviser and the
Portfolio Management Agent require that all investment
decisions be made by a
committee and no one person is responsible for making
recommendations to that
committee.
GLASS-STEAGALL ACT
The Glass-Steagall Act, among other things,
generally prohibits
federally chartered or supervised banks from engaging to any
extent in the
business of issuing, underwriting, selling or distributing
securities, although
subsidiaries of bank holding companies such as Harris
Trust and HIM are
permitted to purchase and sell securities upon the order and for
the account of
their customers.
<PAGE>
It is the position of Harris Trust and HIM that they
may perform the
services contemplated by the Advisory Contracts, the
Portfolio Management
Contracts and this Prospectus without violation of the Glass-
Steagall Act or
other applicable federal banking laws or regulations. It is noted,
however, that
there are no controlling judicial or administrative
interpretations or decisions
and that future judicial or administrative interpretations of,
or decisions
relating to, present federal statutes and regulations
relating to the
permissible activities of banks and their subsidiaries or
affiliates, as well as
future changes in federal statutes or regulations and judicial or
administrative
decisions or interpretations thereof, could prevent Harris
Trust or HIM from
continuing to perform, in whole or in part, such services. If
Harris Trust or
HIM were prohibited from performing any of such services, it is
expected that
the Boards of Trustees and Directors of the Trust and the Company,
respectively,
would recommend to the Funds' shareholders that they approve new
agreements with
another entity or entities qualified to perform such services
and selected by
the Boards of Trustees and Directors.
To the extent permitted by the Commission, the Funds may
pay brokerage
commissions to certain affiliated persons. No such commission
payments were made
during the last fiscal year by the Intermediate Bond Fund.
ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. (formerly
known as The
Shareholder Services Group, Inc.) ("First Data" or the
"Administrator") and PFPC
Inc. ("PFPC" or the "Administrator and Accounting
Services Agent")
(collectively, the "Administrators") serve as the administrators
of the Funds.
In such capacity, the Administrators generally assist the Funds
in all aspects
of their administration and operation. PFPC also serves as the
transfer and
dividend disbursing agent of the Funds (the "Transfer Agent").
These
service
providers are
responsible for
maintaining the
books
and records
of
the Funds, hand-
ling
compliance and
regulatory issues,
processing buy/sell
orders, customer
service and the
safekeeping of
securities.
PNC Bank, N.A. (the "Custodian") serves as custodian of
the assets of
the Funds. PFPC and the Custodian are indirect, wholly-owned
subsidiaries of PNC
Bank Corp.
As compensation for their services, the Administrators,
the Custodian,
and the Transfer Agent are entitled to receive a combined
fee based on the
aggregate average daily net assets of the Funds and the
Trust's and the
Company's other investment portfolios, payable monthly at an
annual rate of .17%
of the first $300 million of average daily net assets; .15% of
the next $300
million; and .13% of average net assets in excess of $600
million. In addition,
a separate fee is charged by PFPC for certain retail transfer
agent services and
for various custody transactional charges.
<PAGE>
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") has
entered into a
Distribution Agreement with the Trust (and, with respect to the
Intermediate
Bond Fund, the Company) pursuant to which it has the
responsibility for
distributing shares of the Funds. The Distributor bears the cost
of printing and
mailing prospectuses to potential investors and any
advertising expenses
incurred by it in connection with the distribution of Shares,
subject to the
terms of the Service Plans described below, pursuant to
contractual arrangements
between the Trust and the Distributor or the Company and the
Distributor and
approved by the Board of Trustees of the Trust (or, with
respect to the
Intermediate Bond Fund, the Board of Directors of the Company).
The
Distributor under-
writes
the Funds'
shares
which are
then
available
for
purchase or
redemption.
See "Management" and "Custodian" in the Statement
of Additional
Information for additional information regarding the Funds'
Investment Adviser,
Portfolio Management Agent, Administrators, Custodian,
Transfer Agent and
Distributor.
EXPENSES
Except for certain expenses borne by the Distributor,
Harris Trust and
HIM, the Trust and the Company each bears all costs of its
operations, including
the compensation of its Trustees or Directors who are not
affiliated with Harris
Trust, HIM or the Distributor or any of their affiliates;
advisory and
administration fees; payments pursuant to any Service Plan;
interest charges;
taxes; fees and expenses of its independent accountants, legal
counsel, transfer
agent and dividend disbursing agent; expenses of preparing
and printing
prospectuses (except the expense of printing and mailing
prospectuses used for
promotional purposes, unless otherwise payable pursuant to a
Service Plan),
shareholders' reports, notices, proxy statements and reports
to regulatory
agencies; insurance premiums and certain expenses relating
to insurance
coverage; trade association membership dues; brokerage and
other expenses
connected with the execution of portfolio securities
transactions; fees and
expenses of the Funds' custodian including those for keeping
books and accounts
and calculating the net asset value per share of the Funds;
expenses of
shareholders' meetings and meetings of Boards of Trustees
and Directors;
expenses relating to the issuance, registration and
qualification of shares of
the Funds; pricing services; organizational expenses; and any
extraordinary
expenses. Expenses attributable to each Fund are charged against
the assets of
the Fund. Other general expenses of the Trust and the Company
are allocated
among the Funds in an equitable manner as determined by the
Boards of Trustees
and Directors.
<PAGE>
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Fund is determined on
each day that
the New York Stock Exchange ("NYSE") and the Federal
Reserve Bank of
Philadelphia (the "Fed") are open for trading. For a list of the
days on which
the net asset value will not be determined, see "Determination
of Net Asset
Value" in the Statement of Additional Information. The net asset
value per share
of each of the Funds is determined by dividing the value of the
total assets of
a Fund less all of its liabilities by the total number of
outstanding shares of
that Fund.
The Net
Asset Value
(NAV)
is the price or
value
of one share of
a Fund.
The net asset value per share of each of the Funds is
determined at the
close of regular trading on the NYSE on each day the Funds
are open for
business. The value of securities of the Funds (other than
bonds and debt
obligations maturing in 60 days or less) is determined based on
the last sale
price on the principal exchange on which the securities are
traded as of the
close of regular trading on the NYSE (which is currently 4:00
P.M., New York
City time). In the absence of any sale on the valuation date, the
securities are
valued at the closing bid price. Securities traded only on
over-the-counter
markets are valued at closing over-the-counter bid prices. Bonds
are valued at
the mean of the last bid and asked prices. Portfolio
securities which are
primarily traded on foreign securities exchanges are generally
valued at the
preceding closing values of such securities on their
respective exchanges,
except when an occurrence subsequent to the time a value was so
established is
likely to have changed such value. In such an event as
well as in those
instances where prices of securities are not readily available,
the fair value
of those securities will be determined in good faith by or under
the direction
of the Board of Trustees or Directors, as the case may be.
Prices used for
valuations of securities are provided by independent pricing
services. Debt
obligations with remaining maturities of 60 days or less are
valued at amortized
cost when the Trust's Board of Trustees or the Company's Board of
Directors, as
the case may be, has determined that amortized cost valuation
represents fair
value.
<PAGE>
PURCHASE OF SHARES
Shares of any of the Funds may be purchased
through authorized
broker/dealers, financial institutions and service agents
("Institutions") on
any day the NYSE and the Fed are open for business. Individual
investors will
purchase all shares directly through Institutions which will
transmit purchase
orders directly to the Distributor. Institutions are responsible
for the prompt
transmission of purchase, exchange or redemption orders, and may
independently
establish and charge additional fees to their customers for such
services, which
would reduce the customers' yield or return. No minimum initial
or subsequent
investment limitations have been imposed. Each Institution
through which shares
may be purchased may establish its own terms with respect to the
requirement of
a minimum initial investment and minimum subsequent investments.
Contact
your broker,
financial
institution
or service
agent for
answers to
any questions
you may
have about
purchasing
shares.
The Trust (or the Company with respect to the
Intermediate Bond Fund)
reserves the right to reject any purchase order. All funds, net of
sales charge,
if any, will be invested in full and fractional shares. Checks
will be accepted
for the purchase of any Fund's shares subject to collection at
full face value
in U.S. dollars. Inquiries may be directed to the Funds at
the address and
telephone number on the cover of this Prospectus.
Purchase orders for shares of a Fund received in
good order by the
Distributor prior to the close of regular trading (4:00 P.M.,
New York City
time) on the NYSE will be executed at the offering price, which
includes a sales
charge, next determined on that day. Orders placed directly with
the Distributor
must be paid for by check or bank wire on the next business day.
Payment for the
shares purchased through an Institution will not be due until
settlement date,
normally three business days after the order has been executed.
When Class A Shares of the Funds are purchased through
an Institution,
the Distributor reallows a portion of the sales charge. No sales
charge will be
assessed on the reinvestment of distributions.
Although Class A
Shares
of the Funds
are
sold with a sales
load of
up to 4.50%,
there
are a number of
ways to
reduce the
sales
load.
<PAGE>
Sales charges for Class A Shares of the Funds are as
follows:
<TABLE>
<CAPTION>
SALES
SALES CHARGE AS % OF DEALER ALLOWANCE AS
AMOUNT OF PURCHASE CHARGE
NET AMOUNT INVESTED % OF OFFERING PRICE
------------------ ------ --
- - - ----------------- -------------------
<S> <C>
<C> <C>
Less than $100,000 4.50%
4.71% 4.25%
$100,000 up to (but less than) $200,000 4.00
4.17 3.75
$200,000 up to (but less than) $400,000 3.50
3.63 3.25
$400,000 up to (but less than) $600,000 2.50
2.56 2.25
$600,000 up to (but less than) $800,000 2.00
2.04 1.75
$800,000 up to (but less than) $1,000,000 1.00
1.01 0.75
$1,000,000 and over .00
.00 .00
</TABLE>
No sales charge will be assessed on purchases by (a)
any bank, trust
company, or other institution acting on behalf of its
fiduciary customer
accounts or any other trust account (including a pension,
profit-sharing or
other employee benefit trust created pursuant to a plan qualified
under Section
401 of the Internal Revenue Code of 1986, as amended (the
"Code")); (b)
individuals with an investment account or relationship with HIM;
(c) directors
and officers of the Company; (d) directors, current and retired
employees of
Harris Bankcorp, Inc. or any of its affiliates and the immediate
family members
of such individuals (spouses and children under 21); (e) brokers,
dealers, and
agents who have a sales agreement with the Distributor, and their
employees (and
the immediate family members of such individuals); and
(f) financial
institutions, financial planners, employee benefit plan
consultants or
registered investment advisers acting for the accounts of their
clients.
Depending upon the terms of the particular customer
account, financial
services institutions, including Harris Trust and HIM, may
charge account fees
for automatic investment and other cash management services which
they provide,
including, for example, account maintenance fees,
compensating balance
requirements, or fees based upon account transactions, assets,
or income. This
Prospectus should be read in connection with any information
received from
financial services institutions.
The Right of Accumulation allows an investor to
combine the amount
being invested in Class A Shares of the non-money market funds of
the Trust and
the Company with the total net asset value of Class A Shares
currently being
purchased or already owned of such funds to determine reduced
sales charges in
accordance with the above sales charge schedule. To obtain such
discount, the
purchaser must provide sufficient information at the time of
purchase to permit
verification that the purchase qualifies for the reduced sales
charge, and
confirmation of the order is subject to such verification.
The Right of
Accumulation may be modified or discontinued at any time by
the Funds with
respect to all Class A Shares purchased thereafter.
<PAGE>
A Letter of Intent allows an investor to purchase Class A
Shares of the
non-money market funds of the Trust and the Company over a 13-
month period at
reduced sales charges based on the total amount intended to be
purchased plus
the total net asset value of Class A Shares already owned
pursuant to the terms
of the letter of such Fund. Each investment made during the
period receives the
reduced sales charge applicable to the total amount of the
intended investment.
If such amount is not invested within the period, the investor
must pay the
difference between the sales charges applicable to the purchases
made and the
charges previously paid.
Each Fund also offers Institutional Shares. Different
classes of shares
of a single portfolio may bear different sales charges (if
any) and other
expenses which may affect their relative performance.
Investors may call
1-800-982-8782 to obtain more information concerning Institutional
Shares of the
Funds.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net
asset value after
receipt of a proper request by the Distributor directly or
through any
Institution. See page _______
There is no charge for redemption transactions, but an
Institution may
charge an account-based service fee. Redemption orders
received by an
Institution before the close of the NYSE with respect to shares
of a Fund and
received by the Distributor before the close of business on the
same day will be
executed at the Fund's net asset value per share next determined
on that day.
Redemption orders received by an Institution after the close of
the NYSE, or not
received by the Distributor prior to the close of business, will
be executed at
the Fund's net asset value next determined on the next business
day.
There is
no charge
by the
Funds for
redemptions, although
Institutions may
charge
an account-
based
service fee.
Redemption orders for a Fund that are received in good
order by 4:00
P.M. (New York City time) will normally be remitted within five
business days
but not more than seven days. In the case of a redemption
request made shortly
after a recent purchase, the redemption proceeds will be
distributed upon the
clearance of the shareholder's check used to purchase the Fund's
shares which
may take up to 15 days or more after the investment. The proceeds
may be more or
less than cost and, therefore, a redemption may result in a
gain or loss for
federal income tax purposes. Payment of redemption proceeds
may be made in
readily marketable securities.
REDEMPTION THROUGH INSTITUTIONS
Proceeds of redemptions made through authorized
Institutions will be
credited to the shareholder's account with the Institution.
A redeeming
shareholder may request a check from the Institution or may elect
to retain the
redemption proceeds in such shareholder's account. The
Institution may benefit
<PAGE>
from the use of the redemption proceeds prior to the clearance of
a check issued
to a redeeming shareholder for the proceeds or prior to
disbursement or
reinvestment of the proceeds on behalf of the shareholder.
Because of the high cost of maintaining small accounts,
the Trust (or
the Company with respect to the Intermediate Bond Fund)
reserves the right to
involuntarily redeem accounts on behalf of shareholders whose
share balances
fall below $500 unless this balance condition results from a
decline in the
market value of a Fund's assets. Prior to such a redemption, a
shareholder will
be notified in writing and permitted 30 days to make additional
investments to
raise the account balance to the specified minimum.
EXCHANGE PRIVILEGE
Class A Shares of any of the Funds that have been held
for seven days
or more may be exchanged for shares of any other fund in the
Harris Insight
Funds in an identically registered account, provided Class A
Shares of the Fund
to be acquired are registered for sale in the shareholder's state
of residence,
on the following terms: Class A Shares of the non-money
market funds of the
Trust and the Company may be exchanged for shares of one another
and for Class A
Shares of each of the money market funds of the Company, all at
respective net
asset values. In addition, Class A Shares of a Fund that have
been exchanged
pursuant to these privileges may be re-exchanged at respective
net asset values
of Class A Shares of the Fund in which they were originally
invested upon
notification.
Once you have
held
shares for 7
days or more,
you can
exchange these
shares for
other eligible
Harris
Insight Fund Class A
Shares
Procedures applicable to redemption of a Fund's
shares are also
applicable to exchanging shares. The Trust (or the Company with
respect to the
Intermediate Bond Fund) reserves the right to limit the number
of times shares
may be exchanged between the Harris Insight Funds, to reject
any telephone
exchange order or otherwise to modify or discontinue exchange
privileges at any
time upon 60 days written notice. A capital gain or loss for tax
purposes may be
realized upon an exchange, depending upon the cost or other
basis of shares
redeemed.
<PAGE>
SERVICE PLANS
Under each Fund's Service Plan relating to Class A
Shares, each Fund
bears the costs and expenses in connection with advertising and
marketing the
Fund's shares and pays the fees of financial institutions
(which may include
banks), securities dealers and other industry professionals, such
as investment
advisers, accountants and estate planning firms (collectively,
"Service Agents")
for servicing activities, as described below, at a rate up to
0.25% per annum of
the average daily net asset value of the Fund's Class A Shares.
However, Harris
Trust or HIM, in lieu of a Fund, from time to time in its sole
discretion, may
volunteer to bear the costs of such fees to certain Service
Agents. The
Administrators and the Distributor may act as Service Agents
and receive fees
under a Service Plan.
The Service
Plans for the
Funds allow
these Funds
to pay Service
Agents
for certain
servicing
activities
provided to their
customers.
In addition to such fees, up to 0.05% per annum of the
average daily
net asset value of the Class A Shares may be paid to Service
Agents for such
services by the Administrators out of their administration fee,
past profits or
any other sources available to them. In addition to the fees paid
by a Fund, the
Fund may, pursuant to the Service Plan, defray all or part
of the cost of
preparing and printing brochures and other promotional
materials and of
delivering prospectuses and those materials to prospective
shareholders of the
Fund by paying on an annual basis up to the greater of $100,000
or 0.05% of the
net asset value of the Fund's Class A Shares (but not in any case
greater than
such costs). For more information concerning expenses pursuant
to the Service
Plans, see "Management."
Servicing activities provided by Service Agents to
their customers
investing in the Funds may include, among other things, one
or more of the
following: establishing and maintaining shareholder accounts
and records;
processing purchase and redemption transactions; answering
customer inquiries
regarding the Funds; assisting customers in changing dividend
options, account
designations and addresses; performing sub-accounting; investing
customer cash
account balances automatically in Fund Shares; providing
periodic statements
showing a customer's account balance and integrating such
statements with those
of other transactions and balances in the customer's other
accounts serviced by
the Service Agent; arranging for bank wires, distribution
and such other
services as a Fund may request, to the extent the Service Agent
is permitted to
do so by applicable statute, rule or regulation.
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of each of the
Funds, except the
Convertible Securities Fund, will be declared daily and paid
monthly. Dividends
from net investment income of the Convertible Securities Fund
will be declared
and paid quarterly. Each Fund's net taxable capital gains, if
any, will be
distributed at least annually (to the extent required to avoid
imposition of the
4% excise tax described below). Dividends and distributions paid
by any of the
Funds will be invested in additional shares of the same Fund at
net asset value
and credited to the shareholder's account on the payment
date or, at the
shareholder's election, paid in cash. Dividend checks and
Statements of Account
will be mailed approximately two business days after the payment
date. Each Fund
will forward to the Transfer Agent the monies for dividends to
be paid in cash
on the payment date.
All Funds, except
the
Convertible
Securities Fund,
declare and pay
dividends monthly,
while the
Convertible Securities
Fund declares and
pays
dividends
quarterly.
FEDERAL INCOME TAXES
Each Fund (and each of the other Harris Insight Funds)
will be treated
as a separate entity for tax purposes and thus the provisions
of the Internal
Revenue Code (the "Code") generally will be applied to each
Fund separately,
rather than to the Trust or the Company as a whole. As a
result, net capital
gains, net investment income, and operating expenses will
be determined
separately for each Fund. The Trust (or the Company with
respect to the
Intermediate Bond Fund) intends to qualify each Fund as a
regulated investment
company under Subchapter M of the Code. As a portfolio of a
regulated investment
company, each Fund will not be subject to federal income taxes
with respect to
net investment income and net capital gains distributed to its
shareholders, as
long as it distributes 90% or more of its net investment income
(including net
short-term capital gains) each year.
Because substantially all of the income of each Fund
will arise from
interest, no part of the distributions to shareholders is
expected to qualify
for the dividends-received deduction allowed to Corporations under
the Code.
Distributions of net long-term capital gains, if any,
will be taxable
as long-term capital gains, whether received in cash or reinvested
in additional
shares, regardless of how long the shareholder has held the
shares, and will not
qualify for the dividends-received deductions.
A taxable gain or loss may also be realized by a holder
of shares in a
Fund upon the redemption or transfer of shares depending on the
tax basis of the
shares and their price at the time of the transaction.
Because more than 50% of the value of the total assets
of each of the
Tax-Exempt Fund and the Intermediate Tax-Exempt Fund at the
close of each
quarter of its taxable year is expected to consist of obligations
the interest
on
<PAGE>
which is exempt from federal income tax, these Funds expect to
qualify under the
Code to pay "exempt-interest dividends." Dividends distributed by
each of these
Funds that are attributable to interest from tax-exempt
securities will be
designated by the Fund as an "exempt-interest dividend," and,
as such, will
generally be exempt from federal income tax.
In the case of the shareholders of each of the Tax-
Exempt Fund or the
Intermediate Tax-Exempt Fund, interest on indebtedness incurred
or continued to
purchase or carry shares of the Fund will not be deductible to
the extent that
the Fund's distributions are exempt from federal income tax. In
addition, the
portion of an exempt-interest dividend allocable to
certain tax-exempt
obligations will be treated as a preference item for purposes of
the alternative
minimum tax imposed on both individuals and corporations.
Persons who may be
"substantial users" (or "related persons" of substantial users)
of facilities
financed by private activity bonds should consult their tax
advisers before
purchasing shares in the Tax-Exempt Fund or the Intermediate Tax-
Exempt Fund.
The exemption of exempt-interest dividends paid by
each of the
Tax-Exempt Fund and the Intermediate Tax-Exempt Fund for
federal income tax
purposes may not result in similar exemptions under the tax
law of state and
local authorities. In general, only interest earned on obligations
issued by the
state or locality in which the investor resides will be exempt
from state and
local taxes. Shareholders should consult their advisers about
the status of
dividends from these Funds in their own states and localities.
Each year the
Trust will notify shareholders of the tax status of distributions.
Any loss realized on a sale or exchange of shares of
a Fund will be
disallowed to the extent shares are acquired within the 61-day
period beginning
30 days before and ending 30 days after disposition of the shares.
The Trust (or the Company with respect to the
Intermediate Bond Fund)
will be required to withhold, subject to certain
exemptions, a portion
(currently, 31%) from dividends paid or credited to individual
shareholders and
of redemption proceeds, if a correct taxpayer identification
number, certified
when required, is not on file with the Trust (or the Company with
respect to the
Intermediate Bond Fund) or Transfer Agent.
ACCOUNT SERVICES
Shareholders receive a Statement of Account whenever a
share transaction,
dividend or capital gain distribution is effected in the accounts,
or at least
annually. Shareholders can write or call the Funds at the address
and telephone
number on page one of this Prospectus with any questions relating
to their
investment in shares of the Funds.
<PAGE>
ORGANIZATION AND CAPITAL STOCK
The Trust is a diversified open-end management investment
company which
was organized on ___________, 1995 as a business trust under
the laws of The
Commonwealth of Massachusetts. The Trust offers shares of
beneficial interest,
$.001 par value, for sale to the public. Currently the
Trust has eleven
portfolios in operation. The Board has authorized each of the
eleven Funds which
are portfolios of the Trust to issue two classes of
shares, Class A and
Institutional Shares.
The Company, which was incorporated in Maryland on
September 16, 1987,
is a diversified, open-end management investment company. The
authorized capital
stock of the Company consists of 10,000,000,000 shares having
a par value of
$.001 per share. Currently, the Company has six portfolios in
operation. The
Board has authorized the Intermediate Bond Fund to issue two
classes of shares,
Class A and Institutional Shares.
Institutional Shares of the Funds, which are offered
only to certain
classes of investors, do not bear any sales, marketing or
distribution expenses.
In the future, the Board of Trustees of the Trust and the Board
of Directors of
the Company may authorize the issuance of shares of
additional investment
portfolios and additional classes of shares of any portfolio.
Different classes
of shares of a single portfolio may bear different sales
charges and other
expenses which may affect their relative performance.
Information regarding
other classes of shares may be obtained by calling the Funds at
the telephone
number shown on the cover page of this Prospectus or from any
institution which
makes available shares of the Funds. All shares of the Trust and
all shares of
the Company have equal voting rights and the shares of each will
be voted in the
aggregate, and not by class, except where voting by class is
required by law or
where the matter involved affects only one class. A more detailed
statement of
the voting rights of shareholders is contained in the Statement
of Additional
Information. All shares of the Trust and all shares of the
Company, when issued,
will be fully paid and non-assessable.
As of November 15, 1995, Harris Trust held of record
3,764,340 shares,
equal to 76.0% of the outstanding shares of the Intermediate
Bond Fund. Harris
Trust has indicated that it holds its shares on behalf of
various client
accounts and not as beneficial owner.
<PAGE>
The Trust and the Company may dispense with annual
meetings of
shareholders in any year in which Trustees and Directors are not
required to be
elected by shareholders. The Board of Trustees of the Trust
and the Board of
Directors of the Company, when requested by at least 10% of the
Trust's or the
Company's outstanding shares, will call a meeting of
shareholders for the
purpose of voting upon the question of removal of a Trustee or
Trustees or of a
Director or Directors and will assist in communications with
other shareholders
as required by Section 16(c) of the 1940 Act.
There is a possibility that the Trust might become
liable for any
misstatement, inaccuracy or incomplete disclosure in this
Prospectus concerning
the Company. There is a possibility that the Company might become
liable for any
misstatement, inaccuracy or incomplete disclosure in this
Prospectus concerning
the Trust.
REPORTS TO SHAREHOLDERS
The fiscal year of both the Trust and the Company ends
on December 31.
Each of the Trust and the Company will send to its shareholders
a semi-annual
report showing the investments held by each of the Funds and
other information
(including unaudited financial statements) pertaining to the
Trust or the
Company, as the case may be. An annual report, containing
financial statements
audited by independent accountants, is also sent to shareholders.
CALCULATION OF YIELD AND TOTAL RETURN
From time to time each of the Funds may
advertise its yield,
tax-equivalent yield and "total return." "Total return" refers to
the amount an
investment in Class A Shares of a Fund would have earned,
including any increase
or decrease in net asset value, over a specified period of time
and assumes the
payment of the maximum sales load and the reinvestment of all
dividends and
distributions. The total return of each Fund shows what an
investment in Class A
Shares of the Fund would have earned over a specified period of
time (such as
one, five or ten years or the period of time since commencement
of operations,
if shorter) assuming the payment of the maximum sales loads when
the investment
was first made and that all distributions and dividends by
the Fund were
reinvested on their reinvestment dates during the period less
all recurring
fees. When a Fund compares its total return to that of other
mutual funds or
relevant indices, its total return may also be computed without
reflecting the
sales load so long as the sales load is stated separately in
connection with the
comparison.
The yield of each Fund refers to the income generated by
an investment
in Class A Shares of the Fund over a 30-day period (which period
will be stated
in the advertisement). This income is then "annualized." That is,
the amount of
<PAGE>
income generated by the investment during the 30-day period is
assumed to be
earned and reinvested at a constant rate and compounded semi-
annually. The
annualized income is then shown as a percentage of the investment.
The "tax-equivalent yield", which will be calculated
only for the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund, refers to
the yield on a
taxable investment necessary to produce an after-tax yield
equal to a Fund's
tax-free yield, and is calculated by increasing the yield shown
for the Fund to
the extent necessary to reflect the payment of specified tax
rates. Thus, the
tax-equivalent yield for a Fund will always exceed that Fund's
yield.
A Fund's performance figures for a class of shares
represent past
performance, will fluctuate and should not be considered as
representative of
future results. The yield of any investment is generally a
function of portfolio
quality and maturity, type of instrument and operating expenses.
<PAGE>
Investment Adviser Distributor
Harris Trust & Savings Bank Funds Distributor,
Inc.
111 West Monroe Street One Exchange Place
Chicago, Illinois 60603 Boston,
Massachusetts 02109
Portfolio Management Agent Custodian
Harris Investment Management, Inc. PNC Bank, N.A.
190 South LaSalle Street Broad and Chestnut
Streets
Chicago, Illinois 60603 Philadelphia,
Pennsylvania 19101
Administrators Transfer Agent and
First Data Investor Services Group, Inc. Dividend
Disbursing Agent
53 State Street PFPC Inc.
Boston, Massachusetts 02109 P.O. Box 8950
Wilmington,
Delaware 19885
PFPC Inc.
103 Bellevue Parkway Independent
Accountants
Wilmington, Delaware 19809 Price Waterhouse
LLP
Philadelphia,
Pennsylvania
Legal Counsel
Bell, Boyd & Lloyd
Chicago, Illinois
HARRIS INSIGHT FUNDS
MONEY MARKET FUNDS
One Exchange Place, Boston, Massachusetts 02109
Telephone: (800) 982-8782
HT Insight Funds, Inc. (the "Company") currently offers shares
representing interests in six mutual funds. This Prospectus describes one class
of shares ("Class A Shares" or "Shares") of each of the Company's three Money
Market Funds (the "Funds"):
o Harris Insight Government Money Market Fund (the "Government
Money Fund")
o Harris Insight Money Market Fund (the "Money Fund")
o Harris Insight Tax-Exempt Money Market Fund (the "Tax-Exempt
Money Fund")
Harris Trust & Savings Bank is the Investment Adviser to the Funds and
Harris Investment Management, Inc., a subsidiary of Harris Bankcorp, Inc., acts
as Portfolio Management Agent for two of the Funds. Shares of each Fund are
offered by Funds Distributor, Inc., the Company's distributor.
SHARES OF THE MONEY MARKET FUNDS ARE NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. ALTHOUGH EACH MONEY MARKET FUND IS ACTIVELY MANAGED TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE, THERE IS NO ASSURANCE THAT
IT WILL BE ABLE TO DO SO.
This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Funds. Please read and retain it
for future reference. A Statement of Additional Information dated _________,
1995, containing more detailed information about the Funds has been filed with
the Securities and Exchange Commission and (together with any supplements
thereto) is incorporated by reference into this Prospectus. The Statement of
Additional Information and the most recent financial statements may be obtained
without charge by writing or calling the Company at the address and telephone
number printed above. Separate Prospectuses for the other investment portfolios
offered by the Company may be obtained without charge by writing or calling the
Company at the address and telephone number printed above.
<PAGE>
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS AFFILIATES, AND ARE
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
_____________, 1995
<PAGE>
TABLE OF CONTENTS
Page
Expense Table............................................................
Highlights...............................................................
Financial Highlights.....................................................
Investment Objectives and Policies.......................................
Government Money Fund................................................
Money Fund...........................................................
Tax-Exempt Money Fund................................................
Investment Strategies....................................................
Management...............................................................
Determination of Net Asset Value.........................................
Purchase of Shares.......................................................
Redemption of Shares.....................................................
Service Plan.............................................................
Dividends and Distributions..............................................
Federal Income Taxes.....................................................
Account Services.........................................................
Organization and Capital Stock...........................................
Reports to Shareholders..................................................
Calculation of Yield.....................................................
Additional Information...................................................
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information and/or in the Funds' official sales literature in
connection with the offering of the Funds' shares and, if given or made, such
other information or representations must not be relied upon as having been
authorized by the Company or the Distributor. This Prospectus does not
constitute an offer in any state in which, or to any person to whom, such offer
may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table illustrates the expenses and fees expected to be
incurred by an investment in Class A Shares of each of the Funds. Class A Shares
of each Fund represent equal, pro rata interests in that Fund. Class A Shares
bear expenses payable (at the rate of up to 0.35% per annum) to organizations
for the services they provide to the beneficial owners of Class A Shares. See
"Service Plan".
Expenses and fees
payable by Class A
shareholders are
summarized in this
table and expressed
as a percentage of
average net assets.
<TABLE>
<CAPTION>
GOVERNMENT MONEY TAX-EXEMPT
MONEY FUND FUND MONEY FUND
CLASS A CLASS A CLASS A
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases None None None
ANNUAL FUND OPERATING EXPENSES*:
(as a percentage of average net assets
after voluntary fee waivers)
Advisory Fees 0.11% 0.11% 0.11%
Rule 12b-1 Fees 0.31% 0.26% 0.26%
Other Expenses 0.18% 0.18% 0.17%
----- ----- -----
Total Fund Operating Expenses 0.60% 0.55% 0.54%
===== ===== =====
*Without any fee waivers, total operating expenses for the ten months
ended October 31, 1995 and the fiscal year ended December 31, 1994 (i) for the
Government Money Fund would have been 0.66% and 0.66%, (ii) for the Money Fund
would have been 0.66% and 0.65%, and (iii) for the Tax-Exempt Money Fund would
have been 0.65% and 0.65%. Customers of a financial institution, such as Harris
Trust & Savings Bank, may be charged certain fees and expenses by their
institution. These fees may vary depending on the capacity in which the
institution provides fiduciary and investment services to the particular client
(e.g., trust, estate settlement, advisory and custodian services).
With respect to each Fund, the amount of "Other Expenses" in the table
above is based on amounts incurred during the most recent fiscal year.
</TABLE>
<PAGE>
EXAMPLE
You would pay the following expenses on a $1,000 investment in Class A Shares,
assuming (1) a hypothetical 5% gross annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
GOVERNMENT MONEY MONEY TAX-EXEMPT MONEY
FUND FUND FUND
<C> <C> <C> <C>
1 year $ 6 $ 6 $ 6
3 years 19 18 17
5 years 33 31 30
10 years 75 69 68
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
The purpose of the expense table is to assist the investor in understanding the
various costs and expenses that an investor in a Fund will bear directly or
indirectly. For more information concerning the various costs and expenses, see
"Management."
</TABLE>
HIGHLIGHTS
The following three investment Portfolios are described in this Prospectus:
GOVERNMENT MONEY FUND - a money market fund that invests in short-term
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and certain repurchase agreements.
MONEY FUND - a money market fund that invests in a broad range of short-term
money market instruments.
TAX-EXEMPT MONEY FUND - a money market fund that invests primarily in
high-quality, short-term municipal obligations.
The investment objective of each Fund is to provide investors with as high a
level of current income (exempt from federal income tax, in the case of the
Tax-Exempt Money Fund) as is consistent with its investment policies and with
preservation of capital and liquidity.
WHO MANAGES EACH FUND'S INVESTMENTS?
Harris Trust & Savings Bank ("Harris Trust" or the "Investment
Adviser") is the investment adviser for each Fund. Harris Trust has provided
investment management services to clients for over 100 years. Harris Trust
provides investment services for pension,
<PAGE>
profit-sharing and personal portfolios. As of June 30, 1995, assets under
management total $23 billion. See page ____.
Harris Investment Management, Inc. ("HIM" or the "Portfolio Management
Agent") provides daily portfolio management services for the Government Money
Fund and the Money Fund. HIM and its predecessors have managed client assets for
over 100 years. HIM has a staff of 96, including 64 professionals, providing
investment expertise to the management of Harris Insight Funds and for pension,
profit-sharing and institutional portfolios. As of June 30, 1995, assets under
management are estimated to exceed $13 billion. See page ____.
Harris Trust and HIM are subsidiaries of Harris Bankcorp, Inc.
WHAT ADVANTAGES DO THE FUNDS OFFER?
The Funds are designed for individual and institutional investors. A
single investment in shares of the Harris Insight Funds gives the investor
benefits customarily available only to large investors, such as diversification
of investment, greater liquidity and professional management, block purchases of
securities, relief from bookkeeping, safekeeping of securities and other
administrative details.
WHEN ARE DIVIDENDS PAID?
Dividends from each of the Funds are declared daily and paid monthly.
See page ____.
HOW ARE SHARES REDEEMED?
Shares may be redeemed at their next determined net asset value after
receipt of a proper request by the Registered Representative servicing your
account, the Distributor, or through any Service Agent. See page _____.
WHAT RISKS ARE ASSOCIATED WITH EACH FUND?
Each Fund's performance may change daily based on many factors,
including the quality of the Fund's investments, economic conditions and general
market conditions. There is no assurance that any Fund will achieve its
investment objective. See "Investment Strategies".
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the ten months ended October 31,
1995 are derived from the unaudited financial statements of the Company dated
October 31, 1995. All other data presented is derived from the financial
statements of the Company for the year ended December 31, 1994 audited by Price
Waterhouse LLP, independent accountants. This information should be read in
conjunction with the financial statements and notes thereto that appear in the
Statement of Additional Information and which are incorporated by reference in
this Prospectus.
This table shows the
total return on one
Class A share
for each
period illustrated.
<TABLE>
<CAPTION>
Government Money Market Fund
TEN MONTHS
ENDED YEAR ENDED YEAR YEAR YEAR YEAR YEAR 2/11/88*
10/31/95 12/31/94 ENDED ENDED ENDED ENDED ENDED TO
(UNAUDITED) 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .045 .037 .026 .033 .055 .075 .084 .061
---- ---- ---- ---- ---- ---- ---- ----
Total from Investment
Operations .045 .037 .026 .033 .055 .075 .084 .061
---- ---- ---- ---- ---- ---- ---- ----
Less Distributions:
Net Investment Income (.045) (.037) (.026) (.033) (.055) (.075) (.084) (.061)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (.045) (.037) (.026) (.033) (.055) (.075) (.084) (.061)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ======
Total return 4.61%(3) 3.72% 2.62% 3.42% 5.67% 7.78% 8.80% 6.27%(3)
Ratios/Supplemental Data:
Net Assets, End of Period
$(000) 304,071 229,619 263,909 140,134 632,663 87,098 35,751 43,870
Ratios of Expenses to Average
Net Assets(1) 0.57%(2) 0.60% 0.61% 0.66% 0.71% 0.52% 0.40% 0.54%(2)
Ratios of Net Investment
Income to Average Net Assets 5.41%(2) 3.62% 2.57% 3.34% 5.45% 7.49% 8.45% 7.24%(2)
- - - ------------------------------
*Date commenced operations.
(1) Reflects expenses after waivers of advisory fees and other expenses based on
net expenses incurred during the most recent fiscal year. Without the voluntary
waiver of fees, the expense ratios for the Government Money Fund for the period
ended October 31, 1995, the years ended December 31, 1994, 1993, 1992, 1991,
1990 and 1989 and the period ended December 31, 1988, would have been 0.67%,
0.66%, 0.70%, 0.70%, 0.78%, 0.83%, 0.88% and 0.99% (annualized) for the
Government Money Fund.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CASH MANAGEMENT FUND
TEN MONTHS
ENDED YEAR ENDED YEAR YEAR YEAR YEAR YEAR 2/10/88*
10/31/95 12/31/94 ENDED ENDED ENDED ENDED ENDED TO
(UNAUDITED) 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .045 .037 .027 .034 .057 .077 .086 .064
---- ---- ---- ---- ---- ---- ---- ----
Total from Investment
Operations .045 .037 .027 .034 .057 .077 .086 .064
---- ---- ---- ---- ---- ---- ---- ----
Less Distributions:
Net Investment Income (.045) (.037) (.027) (.034) (.057) (.077) (.086) (.064)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (.045) (.037) (.027) (.034) (.057) (.077) (.086) (.064)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ======
Total return 4.64%(3) 3.79% 2.69% 3.41% 5.87% 7.94% 9.01% 6.59%(3)
Ratios/Supplemental Data:
Net Assets, End of Period
$(000) 438,581 530,366 348,984 383,280 263,419 153,934 172,439 112,144
Ratios of Expenses to Average
Net Assets(1) 0.56%(2) 0.55% 0.57% 0.60% 0.71% 0.67% 0.58% 0.46%(2)
Ratios of Net Investment
Income to Average Net 5.46%(2) 3.79% 2.66% 3.34% 5.69% 7.66% 8.60% 7.15%(2)
Assets
- - - ------------------------------
*Date commenced operations.
(1)Without the voluntary waiver of fees, the expense ratios for the Government
Money Fund for the period ended October 31, 1995, the years ended December 31,
1994, 1993, 1992, 1991, 1990 and 1989 and the period ended December 31, 1988,
would have been 0.65%, 0.65%, 0.72%, 0.73%, 0.74%, 0.78%, 0.85% and 0.87%
(annualized) for the Government Money Fund.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
TEN MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR YEAR 2/10/88*
10/31/95 ENDED ENDED ENDED ENDED ENDED ENDED TO
(UNAUDITED) 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .045 .037 .027 .034 .057 .077 .086 .064
---- ---- ---- ---- ---- ---- ---- ----
Total from Investment
Operations .045 .037 .027 .034 .057 .077 .086 .064
---- ---- ---- ---- ---- ---- ---- ----
Less Distributions:
Net Investment Income (.045) (.037) (.027) (.034) (.057) (.077) (.086) (.064)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.45) (.037) (.027) (.034) (.057) (.077) (.086) (.064)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ======
Total return 4.64%(3) 3.79% 2.69% 3.41% 5.87% 7.94% 9.01% 6.59%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period $(000) 438,581 530,366 348,984 383,280 263,419 153,934 172,439 112,144
Ratios of Expenses to Average
Net Assets(1) 0.56%(2) 0.55% 0.57% 0.60% 0.71% 0.67% 0.58% 0.46%(2)
Ratios of Net Investment
Income to Average Net 5.46%(2) 3.79% 2.66% 3.34% 5.69% 7.66% 8.60% 7.15%(2)
Assets
- - - -----------------------------
*Date commenced operations.
(1) Reflects expenses after waivers of advisory fees and other expenses based on
net expenses incurred during the most recent fiscal year. Without the voluntary
waiver of fees, the expense ratios for the period ended October 31, 1995, the
years ended December 31, 1994, 1993, 1992, 1991, 1990 and 1989 and the period
for the Money Fund ended December 31, 1988, would have been 0.65%, 0.65%, 0.72%,
0.73%, 0.74%, 0.78%, 0.85% and 0.87% (annualized).
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND
TEN MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR YEAR 2/09/88*
10/31/95 ENDED ENDED ENDED ENDED ENDED ENDED TO
(UNAUDITED) 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .029 .023 .020 .025 .041 .053 .058 .043
---- ---- ---- ---- ---- ---- ---- ----
Total from Investment
Operations .029 .023 .020 .025 .041 .053 .058 .043
--- ---- ---- ---- ---- ---- ---- ----
Less Distributions:
Net Investment Income (.029) (.023) (.020) (.025) (.041) (.053) (.058) (.043)
------ ------ ------ ------ ------ ------ ------ ------
Total distributions (.029) (.023) (.020) (.025) (.041) (.053) (.058) (.043)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ====== ====== ======
Total return 2.74%(3) 2.30% 1.99% 2.54% 4.16% 5.51% 5.91% 4.39%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period $(000) 157,000 123,501 168,440 152,821 157,693 136,117 112,674 103,192
Ratios of Expenses to Average
Net Assets(1) 0.56%(2) 0.54% 0.54% 0.62% 0.49% 0.47% 0.43% 0.51%(2)
Ratios of Net Investment
Income to Average Net 3.34%(2) 2.20% 1.97% 2.50% 4.08% 5.38% 5.76% 4.81%(2)
Assets
-----------------------------
*Date commenced operations.
(1) Reflects expenses after waivers of advisory fees and other expenses based on
net expenses incurred during the most recent fiscal year. Without the voluntary
waiver of fees, the expense ratios for the Tax-Exempt Money Fund for the period
ended October 31, 1995, the years ended December 31, 1994, 1993, 1992, 1991,
1990 and 1989 and the period ended December 31, 1988, would have been 0.65%,
0.65%, 0.71%, 0.73%, 0.75%, 0.78%, 0.82% and 0.85%.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is to provide investors with as
high a level of current income (which, in the case of the Tax-Exempt Money Fund,
is exempt from federal income taxes) as is consistent with its investment
policies and with preservation of capital and liquidity. Current income provided
by the securities in which the Funds invest is not likely to be as high as that
provided by securities with longer maturities or lower quality, which may
involve greater risk and price volatility. Each Fund will invest in U.S.
dollar-denominated securities with maturities of thirteen months or less. The
Money Fund will not purchase a security (other than a Government Security)
unless the security is rated by at least two nationally recognized rating
agencies (such as Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's")) within the two highest ratings assigned to short-term
debt securities (or, if not rated or rated only by one rating agency, is
determined to be of comparable quality), and not more than 5% of the total
assets of the Fund would be invested in securities bearing the second highest
rating. The Tax-Exempt Money Fund will not purchase a security (other than a
Government Security) unless the security is rated by at least two such rating
agencies within the two highest ratings assigned to short-term debt securities
(or, if not rated or rated by only one rating agency, is determined to be of
comparable quality). Determinations of comparable quality shall be made in
accordance with procedures established by the Board of Directors. Each Fund will
maintain a dollar-weighted average maturity of 90 days or less in an effort to
maintain a net asset value per share of $1.00. There is no assurance that the
net asset value per share of the Funds will be maintained at $1.00.
This section describes
some of the securities
that the Funds may
purchase and certain
investment techniques
which the Funds may
use to pursue their
investment objectives.
GOVERNMENT FUND
The Government Money Fund, formerly known as Harris Insight Government
Assets Fund, invests exclusively in obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("Government Securities") that
have remaining maturities not exceeding thirteen months and in certain
repurchase agreements described below.
The Government Money
Fund invests in
obligations issued or
guaranteed by the U.S
Government or its
agencies or
instrumentalities
that have remaining
maturities of thirteen
months or less.
The Government Money Fund invests in obligations of U.S. Government
agencies and instrumentalities only when the Portfolio Management Agent is
satisfied that the credit risk with respect to the issuer is minimal.
A further description of these obligations is included under
"Investment Strategies."
<PAGE>
MONEY FUND
The Money Fund, formerly known as Harris Insight Cash Management Fund,
invests in a broad range of short-term money market instruments that have
remaining maturities not exceeding thirteen months, including Government
Securities and bank and commercial obligations.
The Money Fund invests
in short-term money
market instruments,
including U.S. Govern-
ment, bank and
commercial obliga-
tions with remaining
maturities of thirteen
months or less.
Bank obligations include negotiable certificates of deposit, bankers'
acceptances and fixed time deposits. The Money Fund limits its investments in
domestic bank obligations to obligations of U.S. banks (including foreign
branches and thrift institutions) that have more than $1 billion in total assets
at the time of investment and are members of the Federal Reserve System or are
examined by the Comptroller of the Currency, or whose deposits are insured by
the Federal Deposit Insurance Corporation ("U.S. banks"). The Money Fund limits
its investments in foreign bank obligations to U.S. dollar-denominated
obligations of foreign banks (including U.S. branches): (a) which banks at the
time of investment (i) have more than $10 billion, or the equivalent in other
currencies, in total assets and (ii) are among the 100 largest banks in the
world, as determined on the basis of assets, and have branches or agencies in
the U.S.; and (b) which obligations, in the opinion of the Portfolio Management
Agent, are of an investment quality comparable to obligations of U.S. banks that
may be purchased by the Money Fund. The Money Fund may invest more than 25% of
the current value of its total assets in obligations (including repurchase
agreements) of: (a) U.S. banks; (b) U.S. branches of foreign banks that are
subject to the same regulation as U.S. banks by the U.S. Government agencies or
(c) foreign branches of U.S. banks if the U.S. banks would be unconditionally
liable in the event the foreign branch failed to pay on such obligations for any
reason.
Obligations of foreign banks involve somewhat different investment
risks from those affecting obligations of U.S. banks. See "Investment Strategies
- - - - Foreign Securities."
The commercial paper purchased by the Money Fund will consist of U.S.
dollar-denominated direct obligations of domestic and foreign corporate issuers,
including bank holding companies.
The Money Fund may also invest in bank investment contracts ("BICs"),
asset-backed securities, guaranteed investment contracts ("GICs") issued by U.S.
and Canadian insurance companies, convertible and non-convertible debt
securities of domestic corporations and of foreign corporations and governments
that are denominated, and pay interest, in U.S. dollars, and variable amount
master demand notes.
In addition, the Money Fund may invest in tax-exempt municipal
obligations in which the Tax-Exempt Money Fund may invest, described below, when
the yields on such obligations are higher than the yields on taxable
investments. The Money Fund may also invest
<PAGE>
in certain other obligations as described in "Investment Strategies" below
and in the Statement of Additional Information.
All securities acquired by the Fund will have remaining maturities of
thirteen months or less and will be subject to the applicable quality
requirements described above.
TAX-EXEMPT MONEY FUND
The Tax-Exempt Money Fund, formerly known as Harris Insight Tax-Free
Money Market Fund, invests primarily in high-quality municipal obligations that
have remaining maturities not exceeding thirteen months and meet the applicable
quality requirements described above. Municipal obligations are debt obligations
issued by or on behalf of states, cities, municipalities and other public
authorities. Except for temporary investments in taxable obligations described
below, the Tax-Exempt Money Fund will invest only in municipal obligations that
are exempt from federal income taxes in the opinion of bond counsel. Such
obligations include municipal bonds, municipal notes and municipal commercial
paper.
The Tax-Exempt Money
Fund invests in debt
instruments issued by or
for states, cities,
municipalities and other
public authorities that
provide interest income
exempt from federal
income tax.
From time to time, the Tax-Exempt Money Fund may invest 25% or more of
its assets in municipal obligations that are related in such a way that an
economic, business or political development or change affecting one of these
obligations would also affect the other obligations, for example, municipal
obligations the interest on which is paid from revenues of similar type projects
or municipal obligations whose issuers are located in the same state.
Under ordinary market conditions, the Tax-Exempt Money Fund will
maintain as a fundamental policy at least 80% of the value of its total assets
in obligations that are exempt from federal income tax and not subject to the
alternative minimum tax. The Tax-Exempt Money Fund may, pending the investment
of proceeds of sales of its shares or proceeds from the sale of portfolio
securities, in anticipation of redemptions, or to maintain a "defensive" posture
when, in the opinion of the Investment Adviser, it is advisable to do so because
of market conditions, elect to hold temporarily up to 20% of the current value
of its total assets in cash reserves or invest in taxable securities in which
the Money Fund may invest.
-----------
Each Fund may purchase debt obligations that are not rated if, in the
opinion of the Portfolio Management Agent, or the Investment Adviser with
respect to the Tax-Exempt Money Fund, they are of investment quality comparable
to other rated investments that may be purchased by the Fund. After purchase by
a Fund, a security may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. A Fund may be required to sell a
security downgraded below the minimum required for purchase, absent a specific
finding by the Board of Directors that a sale is not in the best interests of
the Fund. The ratings of Moody's and S&P are more fully described in the
Appendix to the Statement of Additional Information.
<PAGE>
INVESTMENT STRATEGIES
ASSET-BACKED SECURITIES. The Money Fund may purchase asset-backed
securities, which represent a participation in, or are secured by and payable
from, a stream of payments generated by particular assets, most often a pool of
assets similar to one another. Assets generating such payments will consist of
motor vehicle installment purchase obligations, credit card receivables and home
equity loans, equipment leases, manufactured housing loans and marine loans. In
accordance with guidelines established by the Board of Directors, asset-backed
securities may be considered illiquid securities and, therefore, subject to the
Fund's 10% limitation on such investments.
BANK INVESTMENT CONTRACTS. The Money Fund may invest in bank investment
contracts ("BICs") which are debt obligations issued by banks. BICs require the
Fund to make cash contributions to a deposit account at a bank in exchange for
payments at negotiated, floating or fixed interest rates. A BIC is a general
obligation of the issuing bank. In accordance with guidelines established by the
Board of Directors, BICs may be considered illiquid securities and, therefore,
subject to the Fund's 10% limitation on such investments. All purchases of BICs
will be subject to the applicable quality requirements described under
"Investment Objectives and Policies."
FLOATING AND VARIABLE RATE INSTRUMENTS. The Funds may purchase
instruments having a floating or variable rate of interest. These obligations
bear interest at rates that are not fixed, but vary with changes in specified
market rates or indices, such as the prime rate, or at specified intervals.
Certain of these obligations may carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to maturity. The
Funds may each invest in a floating or variable rate obligation even if it
carries a stated maturity in excess of thirteen months upon compliance with
certain conditions contained in a rule of the Commission, in which case such
obligation will be treated as having a maturity not exceeding thirteen months.
Each Fund will limit its purchases of floating and variable rate obligations to
those of the same quality as it otherwise is allowed to purchase.
A floating or variable rate instrument may be subject to the Fund's
percentage limitation on illiquid investments if there is no reliable trading
market for the investment or if the Fund may not demand payment of the principal
amount within seven days.
FOREIGN SECURITIES. The Money Fund may invest in non-convertible debt
obligations of foreign banks, foreign corporations and foreign governments which
obligations are denominated in and pay interest in U.S. dollars. Investment in
foreign securities involve certain considerations that are not typically
associated with investing in domestic securities. Investments in foreign
securities typically involve higher transaction costs than investments in U.S.
securities. Foreign investments may have risks associated with currency exchange
rates, political liability, less complete financial information about the
issuers and less market liquidity. Future political and economic developments,
possible imposition of withholding taxes on income, seizure or nationalization
of foreign holdings, establishment of exchange controls or the adoption of other
governmental restrictions might adversely affect the payment
<PAGE>
of principal and interest on foreign obligations. In addition, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements than and to different accounting, auditing and recordkeeping
requirements from domestic banks.
GUARANTEED INVESTMENT CONTRACTS. The Money Fund may invest in
guaranteed investment contracts ("GICs") issued by U.S. and Canadian insurance
companies. GICs require the Fund to make cash contributions to a deposit fund of
an insurance company's general account. The insurance company then makes
payments to the Fund based on negotiated, floating or fixed interest rates. A
GIC is a general obligation of the issuing insurance company and not a separate
account. The purchase price paid for a GIC becomes part of the general assets of
the insurance company, and the contract is paid from the insurance company's
general assets. In accordance with guidelines established by the Company's Board
of Directors, GICs may be considered illiquid securities and, therefore, subject
to the Fund's 10% limitation on such investments. All purchases of GICs by the
Fund will be subject to the applicable quality requirements described under
"Investment Objectives and Policies."
ILLIQUID SECURITIES. A Fund will not invest more than 10% of the value
of its net assets in securities that are considered illiquid. Repurchase
agreements and time deposits that do not provide for payment to the Fund within
seven days after notice or which have a term greater than seven days are deemed
illiquid securities for this purpose (unless such securities are variable amount
master demand notes with maturities of nine months or less or unless the
Portfolio Management Agent or Investment Adviser has determined under the
supervision and direction of the Company's Board of Directors that an adequate
trading market exists for such securities or that market quotations are readily
available).
Each Fund may also purchase Rule 144A securities sold to institutional
investors without registration under the Securities Act of 1933 and commercial
paper issued in reliance upon the exemption in Section 4(2) of the Securities
Act of 1933. These securities may be determined to be liquid in accordance with
guidelines established by the Portfolio Management Agent or Investment Adviser
and approved by the Company's Board of Directors. The Board of Directors will
monitor the Portfolio Management Agent's or Investment Adviser's implementation
of these guidelines on a periodic basis.
INVESTMENT COMPANY SECURITIES. In connection with the management of its
daily cash positions, each Fund may invest in securities issued by investment
companies that invest in short-term, debt securities and which seek to maintain
a $1.00 net asset value per share. To the extent that the Tax-Exempt Fund
invests in such investment companies, it will invest in investment companies
that invest primarily in municipal obligations that are exempt from federal
income taxes. Securities of investment companies will be acquired by a Fund
within the limits prescribed by the Investment Company Act of 1940, as amended
(the "1940 Act"). These limit each Fund so that: (i) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (ii) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of investment companies as a group;
and (iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund or by the Company as a whole. As a shareholder
of
<PAGE>
another investment company, a Fund would bear, along with other shareholders,
its pro rata portion of the other investment company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that a Fund bears directly in connection with its own operations.
MUNICIPAL OBLIGATIONS. The Tax-Exempt Money Fund may invest in
short-term tax-exempt obligations issued by or on behalf of states, territories
and possessions of the U.S., the District of Columbia, and their respective
authorities, agencies, instrumentalities and political subdivisions that have
remaining maturities not exceeding thirteen months. Such Municipal Obligations
include municipal bonds, municipal notes and municipal commercial paper.
Municipal bonds generally have a maturity at the time of issuance of up to 30
years. Municipal notes generally have maturities at the time of issuance of
three years or less. These notes are generally issued in anticipation of the
receipt of tax funds, the proceeds of bond placements or other revenues. The
ability of an issuer to make payments is therefore dependent on these tax
receipts, proceeds from bond sales or other revenues, as the case may be.
Municipal commercial paper is a debt obligation with an effective maturity or
put date of 270 days or less that is issued to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term debt.
OTHER SHORT-TERM CORPORATE OBLIGATIONS INCLUDING VARIABLE AMOUNT MASTER
DEMAND NOTES. The Money Fund may invest in convertible and non-convertible debt
securities of domestic corporations and of foreign corporations and governments
that are denominated in and pay interest in U.S. dollars, consisting of notes,
bonds and debentures that have thirteen months or less remaining to maturity and
meet the applicable quality standards described under "Investment Objectives and
Policies," and in variable amount master demand notes. Variable amount master
demand notes differ from ordinary commercial paper in that they are issued
pursuant to a written agreement between the issuer and the holder. Their amounts
may from time to time be increased by the holder (subject to an agreed maximum)
or decreased by the holder or the issuer; they are payable on demand or after an
agreed-upon notice period, e.g., seven days; and the rates of interest vary
pursuant to an agreed-upon formula. Generally, master demand notes are not rated
by a rating agency. However, the Fund may invest in these obligations if, in the
opinion of the Portfolio Management Agent, they are of an investment quality
comparable to rated securities in which the Fund may invest. The Portfolio
Management Agent monitors the creditworthiness of issuers of master demand notes
on a daily basis. Transfer of these notes is usually restricted by the issuer,
and there is no secondary trading market for these notes. The Fund may not
invest in a master demand note with a demand notice period of more than seven
days, if, as a result, more than 10% of the value of the Fund's total net assets
would be invested in these notes, together with other illiquid securities.
REPURCHASE AGREEMENTS. Each Fund may purchase portfolio securities
subject to the seller's agreement to repurchase them at a mutually agreed upon
time and price, which includes an amount representing interest on the purchase
price. Each Fund may enter into repurchase agreements only with respect to
obligations that could otherwise be purchased by the Fund. The seller will be
required to maintain in a segregated account for the Fund cash or
<PAGE>
cash equivalent collateral equal to at least 100% of the repurchase price (incl
uding accrued interest). Default or bankruptcy of the seller would expose a
Fund to possible loss because of adverse market action, delays in connection
with the disposition of the underlying obligations or expenses of enforcing its
rights.
A Fund may not enter into a repurchase agreement if, as a result, more
than 10% of the market value of that Fund's total net assets would be invested
in repurchase agreements with a maturity of more than seven days and in other
illiquid securities. The Funds will enter into repurchase agreements only with
registered broker/dealers and commercial banks that meet guidelines established
by the Company's Board of Directors.
SECURITIES WITH PUT RIGHTS. To maintain liquidity, the Funds may enter
into puts with respect to portfolio securities with banks or broker/dealers
that, in the opinion of the Portfolio Management Agent, or Investment Adviser
with respect to the Tax-Exempt Money Fund, present minimal credit risks. The
ability of the Funds to exercise a put will depend on the ability of the bank or
broker/dealer to pay for the underlying securities at the time the put is
exercised. In the event that a bank or broker/dealer defaults on its obligation
to repurchase an underlying security, the Fund might be unable to recover all or
a portion of any loss sustained by having to sell the security elsewhere.
STRIPPED SECURITIES. The Funds may purchase participations in trusts
that hold U.S. Treasury and agency securities (such as TIGRs and CATs) and also
may purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or the future
principal payments on the securities held by the trust. These instruments are
issued at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors. Participations in TIGRs, CATs and other
similar trusts are not considered U.S. Government securities. Stripped
securities will normally be considered illiquid investments and will be acquired
subject to the limitation on illiquid investments unless determined to be liquid
under guidelines established by the Board of Directors.
STRIPPED SECURITIES. The Funds may purchase participations in trusts
that hold U.S. Treasury and agency securities (such as TIGRs and CATs) and also
may purchase Treasury receipts and other stripped securities, which represent
beneficial ownership interests in either future interest payments or the future
principal payments on the securities held by the trust. These instruments are
issued at a discount to their "face value" and may (particularly in the case of
stripped mortgage-backed securities) exhibit greater price volatility than
ordinary debt securities because of the manner in which their principal and
interest are returned to investors.
U.S. GOVERNMENT OBLIGATIONS. U.S. Government Obligations consist of
bills, notes and bonds issued by the U.S. Treasury. They are direct obligations
of the U.S. Government and differ primarily in the length of their maturities.
<PAGE>
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY OBLIGATIONS. Obligations of
the U.S. Government agencies and instrumentalities are debt securities issued by
U.S. Government-sponsored enterprises and federal agencies. Some of these
obligations are supported by: (a) the full faith and credit of the U.S. Treasury
(such as Government National Mortgage Association participation certificates);
(b) the limited authority of the issuer to borrow from the U.S. Treasury (such
as securities of the Federal Home Loan Bank); (c) the authority of the U.S.
Government to purchase certain obligations of the issuer (such as securities of
the Federal National Mortgage Association); or (d) the credit of the issuer
only. In the case of obligations not backed by the full faith and credit of the
U.S., the investor must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment.
WHEN-ISSUED SECURITIES. Each Fund may purchase securities on a
when-issued basis, in which case delivery and payment normally take place within
45 days after the date of the commitment to purchase. The Funds will make
commitments to purchase securities on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date, if deemed advisable. The purchase price and the interest rate
that will be received are fixed at the time of the commitment. When-issued
securities are subject to market fluctuation and no income accrues to the
purchaser prior to issuance. Purchasing a security on a when-issued basis can
involve a risk that the market price at the time of delivery may be lower than
the agreed upon purchase price.
Each Fund will establish a segregated account in which it will maintain
liquid assets in an amount at least equal in value to the Fund's commitments to
purchase when-issued securities. If the value of these assets declines, the Fund
will place additional liquid assets in the account on a daily basis so that the
value of the assets in the account is equal to the amount of the Fund's
commitments.
INVESTMENT LIMITATIONS
Unless otherwise noted, the foregoing investment objectives and related
policies and activities of each of the Funds are not fundamental and may be
changed by the Board of Directors of the Company without the approval of the
shareholders, provided that the policy relating to investment company securities
is a fundamental investment policy. If there is a change in a Fund's investment
objective, shareholders should consider whether the Fund remains an appropriate
investment in light of their then current financial position and needs.
As matters of fundamental policy, which may be changed only with
approval by the vote of the holders of a majority of the Fund's outstanding
voting securities, as described in the Statement of Additional Information, no
Fund may: (1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of its investments in that industry would exceed 25%
of the current value of its total assets, provided that there is no limitation
with respect to investments (a) in the case of the Tax-Exempt Money Fund, in
municipal obligations (for the purpose of this restriction, private activity
bonds shall not be deemed municipal obligations if the payment of principal and
interest on such bonds is the ultimate responsibility of
<PAGE>
non-governmental users), (b) in obligations of the U.S. Government, its agencies
or instrumentalities, or (c) in the case of the Money Fund, certain bank
obligations in which the Fund may invest, as set forth in this Prospectus; (2)
invest more than 5% of the current value of its total assets in the securities
of any one issuer, other than obligations of the U.S. Government, its agencies
or instrumentalities, except that up to 25% of the value of the total assets of
a Fund (other than the Money Fund) may be invested without regard to this
limitation; (3) purchase securities of an issuer if, as a result, with respect
to 75% of its total assets, it would own more than 10% of the voting securities
of such issuer; or (4) borrow from banks, except that it may borrow up to 10% of
the current value of its total assets for temporary purposes only in order to
meet redemptions, and these borrowings may be secured by the pledge of up to 10%
of the current value of the Fund's net assets (but investments may not be
purchased while borrowings are in excess of 5%). It is also a fundamental policy
that each Fund may make loans of portfolio securities, and invest up to 10% of
the current value of its net assets in repurchase agreements having maturities
of more than seven days, variable amount master demand notes having notice
periods of more than seven days, fixed time deposits subject to withdrawal
penalties having maturities of more than seven days, and securities that are not
readily marketable. Although not a matter of fundamental policy, the Funds
consider the securities of foreign governments to be a separate industry for
purposes of the 25% asset limitation on investments in the securities of issuers
conducting their principal business activity in the same industry.
With respect to the second investment limitation set forth above, the
Money Fund may invest more than 5% of its total assets in the securities of a
single issuer for a period of up to three business days after the purchase
thereof, so long as it does not make more than one such investment at any one
time.
MANAGEMENT
The Board of Directors has overall responsibility for the conduct of
the affairs of the Funds and Company. The members of the Board and their
principal occupations are as follows:
BOARD OF DIRECTORS
Edgar R. Fiedler Vice President and Economic Counsellor, The Conference
Board.
C. Gary Gerst Chairman of the Board of Directors and Trustees;
Chairman Emeritus, La Salle Partners, Ltd.(Real Estate
Developer and Manager).
John W. McCarter, Jr. Senior Vice President, Boozo Allen & Hamilton, Inc.
(Consulting Firm); Director of W.W. Grainger, Inc. and
A.M. Castle, Inc.
Ernest M. Roth Consultant; Retired Senior Vice President and Chief
Financial Officer, Commonwealth Edison Company.
<PAGE>
INVESTMENT ADVISER
The Company has entered into an Advisory Contract with Harris Trust
with respect to each of the Funds. Harris Trust, located at 111 West Monroe
Street, Chicago, Illinois, is the successor to the investment banking firm of
N.W. Harris & Co. that was organized in 1882 and was incorporated in 1907 under
the present name of the bank. It is an Illinois state-chartered bank and a
member of the Federal Reserve System. At December 31, 1994, Harris Trust had
assets of more than $13 billion and was the largest of 14 banks owned by Harris
Bankcorp, Inc. Harris Bankcorp, Inc. is a wholly-owned subsidiary of Bankmont
Financial Corp., which is a wholly-owned subsidiary of Bank of Montreal, a
publicly traded Canadian banking institution.
As of December 31, 1994, Harris Trust managed more than $8 billion in
personal trust assets, and acted as custodian of more than $151 billion in
assets.
With respect to the Tax-Exempt Money Fund, the Advisory Contract
provides that Harris Trust shall make investments for the Fund in accordance
with the Investment Adviser's best judgment. With respect to the Government
Money and Money Funds, the Advisory Contracts provide that Harris Trust is
responsible for the supervision and oversight of the Portfolio Management
Agent's performance (as discussed below).
Because the Funds entered into new Advisory Contracts with Harris Trust
on October 20, 1993, two Advisory Contracts and related fee schedules were in
effect during the fiscal year ended December 31, 1993. Under the Advisory
Contracts then in effect for the period from January 1, 1993 to October 19,
1993, Harris Trust was entitled to receive monthly advisory fees at the annual
rate of 0.50% of the average daily net assets of each of the Funds. Under the
Funds' existing Advisory Contracts which became effective October 20, 1993,
Harris Trust is entitled to receive monthly advisory fees at the annual rate of
0.14% of the first $100 million of each Fund's average daily net assets, plus
0.10% of each Fund's average daily net assets in excess of $100 million. The
following are the advisory fees calculated under the applicable Advisory
Contract, paid to Harris Trust for each Fund as a percentage of average daily
net assets for the six months ended June 30, 1995 and the fiscal year ended
December 31, 1994, respectively: the Government Money Fund, 0.11% and 0.11%; the
Money Fund, 0.10% and 0.11%; and the Tax-Exempt Money Fund, 0.11% and 0.11%.
The Investment Adviser had undertaken to waive the fees payable to it
by each of the Funds to the extent the payment of such fees would cause the
expense ratios of those Funds to exceed 0.75%; that undertaking terminated on
December 31, 1994. The Investment Adviser may continue to voluntarily waive a
portion of its fees. No investment advisory fees were waived for the six months
ended June 30, 1995 and the year ended December 31, 1994.
Purchase and sale orders of the securities held by the Tax-Exempt Money
Fund may be combined with those of other accounts that Harris Trust manages, and
for which it has brokerage placement authority, in the interest of seeking the
most favorable overall net results. When Harris Trust determines that a
particular security should be bought or sold for the Tax-
<PAGE>
Exempt Money Fund and other accounts managed by Harris Trust, Harris Trust
undertakes to allocate those transactions among the participants equitably.
PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into Portfolio Management Contracts with
Harris Investment Management, Inc. ("HIM" or the "Portfolio Management Agent")
under which HIM undertakes to furnish investment guidance and policy direction
in connection with the daily portfolio management of the Government Money and
Money Funds.
For the services provided by HIM, Harris Trust pays to HIM the advisory
fees it receives from the Funds other than the Tax-Exempt Money Fund. For the
ten months ended October 31, 1995 and the fiscal year ended December 31, 1994,
Harris Trust paid fees to HIM (i) at the rate of 0.11% and 0.11% of the average
daily net assets of the Government Money Fund, and (ii) at the rate of 0.11% and
0.11% of the average daily net assets of the Money Fund.
Purchase and sale orders of the securities held by each of the Funds
(other than the Tax-Exempt Money Fund) may be combined with those of other
accounts that HIM manages, and for which it has brokerage placement authority,
in the interest of seeking the most favorable overall net results. When HIM
determines that a particular security should be bought or sold for any of the
Funds and other accounts managed by HIM, HIM undertakes to allocate those
transactions among the participants equitably.
GLASS-STEAGALL ACT
The Glass-Steagall Act, among other things, generally prohibits
federally chartered or supervised banks from engaging to any extent in the
business of issuing, underwriting, selling or distributing securities, although
subsidiaries of bank holding companies such as Harris Trust and HIM are
permitted to purchase and sell securities upon the order and for the account of
their customers.
It is the position of Harris Trust and HIM that they may perform the
services contemplated by the Advisory Contracts, the Portfolio Management
Contracts and this Prospectus without violation of the Glass-Steagall Act or
other applicable federal banking laws or regulations. It is noted, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal statutes and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well as
future changes in federal statutes or regulations and judicial or administrative
decisions or interpretations thereof, could prevent Harris Trust or HIM from
continuing to perform, in whole or in part, such services. If Harris Trust or
HIM were prohibited from performing any of such services, it is expected that
the Board of Directors of the Company would recommend to the Funds' shareholders
that they approve new agreements with another entity or entities qualified to
perform such services and selected by the Board of Directors.
<PAGE>
To the extent permitted by the Commission, the Funds may pay brokerage
commissions to certain affiliated persons. No such commission payments have been
made during the last fiscal year.
ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc.) ("First Data" or the "Administrator") and PFPC
Inc. ("PFPC" or the "Administrator and Accounting Services Agent,"),
(collectively, the "Administrators") serve as the Company's administrators. In
such capacity, the Administrators generally assist the Company in all aspects of
its administration and operation. PFPC also serves as the transfer and dividend
disbursing agent of the Funds (the "Transfer Agent").
PNC Bank, N.A. (the "Custodian") serves as custodian of the assets of
the Funds. PFPC and the Custodian are indirect, wholly-owned subsidiaries of PNC
Bank Corp.
As compensation for their services, the Administrators, the Custodian,
and the Transfer Agent are entitled to receive a combined fee based on the
aggregate average daily net assets of the Funds and the Company's other
investment portfolios (Harris Insight Equity Fund, Intermediate Bond Fund and
Hemisphere Free Trade Fund ("Harris Non-Money Market Funds")), payable monthly
at an annual rate of .17% of the first $200 million of average daily net assets;
.15% of the next $300 million; and .13% of average net assets in excess of $600
million. In addition, a separate fee is charged by PFPC for certain retail
transfer agent services and for various custody transactional charges.
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") has entered into a
Distribution Agreement with the Company pursuant to which it has the
responsibility for distributing shares of the Funds. The Distributor bears the
cost of printing and mailing prospectuses to potential investors and any
advertising expenses incurred by it in connection with the distribution of
shares, subject to the terms of the Service Plans described below.
See "Management" and "Custodian" in the Statement of Additional
Information for additional information regarding the Company's Investment
Adviser, Portfolio Management Agent, Administrators, Custodian, Transfer Agent
and Distributor.
EXPENSES
Except for certain expenses borne by the Distributor, Harris Trust and
HIM, the Company bears all costs of its operations, including the compensation
of its directors who are not affiliated with Harris Trust, HIM or the
Distributor or any of their affiliates; advisory and administration fees;
payments pursuant to any Service Plan; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing
<PAGE>
agent; expenses of preparing and printing prospectuses (except the expense of
printing and mailing prospectuses used for promotional purposes, unless
otherwise payable pursuant to a Service Plan), shareholders' reports, notices,
proxy statements and reports to regulatory agencies; insurance premiums and
certain expenses relating to insurance coverage; trade association membership
dues; brokerage and other expenses connected with the execution of portfolio
securities transactions; fees and expenses of the Funds' custodian including
those for keeping books and accounts and calculating the net asset value per
share of the Funds; expenses of directors' and shareholders' meetings; expenses
relating to the issuance, registration and qualification of shares of the Funds;
pricing services; organizational expenses; and any extraordinary expenses.
Expenses attributable to each Fund are charged against the assets of that Fund.
Other general expenses of the Company are allocated among the Funds and the
Harris Non-Money Market Funds in an equitable manner as determined by the Board
of Directors.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for each Fund is determined on each day that
the New York Stock Exchange ("NYSE") and the Federal Reserve Bank of
Philadelphia (the "Fed") are open for trading. For a list of the days on which
the net asset value will not be determined, see "Determination of Net Asset
Value" in the Statement of Additional Information. The net asset value per share
of each of the Funds is determined by dividing the value of the total assets of
the Fund less all of its liabilities by the total number of outstanding shares
of the Fund.
The net asset value per share of each class of shares of the Funds is
determined at 12:00 Noon, New York City time. Each of the Funds uses the
amortized cost method to value its portfolio securities and each attempts to
maintain a constant net asset value of $1.00 per share. The amortized cost
method involves valuing a security at its cost and amortizing any discount or
premium over the period until maturity, regardless of the impact of fluctuating
interest rates on the market value of the security.
PURCHASE OF SHARES
Shares of any of the Funds may be purchased through authorized
broker/dealers, financial institutions and service agents ("Institutions") on
any day the NYSE and the Fed are open for business. Individual investors will
purchase all shares directly through Institutions which will transmit purchase
orders directly to the Distributor. Institutions are responsible for the prompt
transmission of purchase, exchange or redemption orders, and may independently
establish and charge additional fees to their customers for such services, which
would reduce the customers' yield or return. The Company does not impose any
minimum initial or subsequent investment limitations. Each Institution through
which shares may be purchased may establish its own terms with respect to the
requirement of a minimum initial investment and minimum subsequent investments.
<PAGE>
The Company reserves the right to reject any purchase order. All funds
will be invested in full and fractional shares. Checks will be accepted for the
purchase of any Fund's shares subject to collection at full face value in U.S.
dollars. Inquiries may be directed to the Company at the address and telephone
number on the cover of this Prospectus.
Purchase orders for shares of the Funds received in good order by the
Distributor before 12:00 Noon (New York City time) will be executed that day.
Institutions through which orders are placed may set earlier purchase deadlines.
Purchase orders received in good order after 12:00 Noon (New York City time)
will be executed on the next business day on which the net asset value is
calculated.
Shares of the Funds are offered continuously at the net asset value
next determined after a purchase order is effective; the net asset value is
expected to remain constant at $1.00. No sales charge is imposed.
A salesperson and any other person entitled to receive compensation for
selling or servicing shares of a Fund may receive different compensation for
selling or servicing shares of one class as compared with another class.
Orders for the shares of Funds will become effective when an investor's
bank wire order or check is converted into federal funds. Wires for purchases
will be accepted only in federal funds or other funds immediately available to
the Custodian. Wire transmissions may, however, be subject to delays of several
hours, in which event the effectiveness of the order will be delayed. Payments
transmitted by a bank wire other than the Federal Reserve Wire System may take
longer to be converted into federal funds. When payment for shares is by check
drawn on any member bank of the Federal Reserve System, federal funds normally
become available to the Fund on the business day after the check is deposited.
Checks drawn on a non-member bank or a foreign bank may take substantially
longer to be converted into federal funds and, accordingly, may delay the
execution of an order.
Depending upon the terms of the particular customer account, financial
services institutions, including Harris Trust and HIM, may charge account fees
for automatic investment and other cash management services which they provide,
including, for example, account maintenance fees, compensating balance
requirements, or fees based upon account transactions, assets, or income. This
Prospectus should be read in connection with any information received from
financial services institutions.
Each of the Funds offers two additional classes of shares, Class B
Shares and Class C Institutional Shares, in addition to the Class A Shares
described in this Prospectus. Class B Shares and Class C Institutional Shares
each have different expense levels which may affect performance. Investors may
call 1-800-982-8782 to obtain more information concerning Class B Shares and
Class C Institutional Shares of the Funds.
<PAGE>
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a proper request by the Distributor directly or through any
Institution. See page ____.
The Company makes no charge for redemption transactions, but an
Institution may charge an account-based service fee. Redemption orders received
by an Institution before 12:00 Noon, New York City time, (on each day that net
asset value is determined) with respect to shares of the Funds and received by
the Distributor before the close of business on the same day will be executed at
such Fund's net asset value per share next determined on that day. Redemption
orders received by an Institution after the close of the NYSE, or not received
by the Distributor prior to the close of business, will be executed at such
Fund's net asset value next determined on the next business day.
If a redemption order for shares of the Funds is received in good order
by the Distributor before 12:00 Noon (New York City time) payment will normally
be remitted the same day. In the case of a redemption request made shortly after
a recent purchase, the redemption proceeds will be distributed upon the
clearance of the shareholder's check used to purchase the Company's shares which
may take up to 15 days or more after the investment. The proceeds may be more or
less than cost and, therefore, a redemption may result in a gain or loss for
federal income tax purposes. Payment of redemption proceeds may be made in
readily marketable securities.
REDEMPTION THROUGH INSTITUTIONS
Proceeds of redemptions made through authorized Institutions will be
credited to the shareholder's account with the Institution. A redeeming
shareholder may request a check from the Institution or may elect to retain the
redemption proceeds in such shareholder's account. The Institution may benefit
from the use of the redemption proceeds prior to the clearance of a check issued
to a redeeming shareholder for the proceeds or prior to disbursement or
reinvestment of the proceeds on behalf of the shareholder.
REDEMPTION BY EXPEDITED REDEMPTION SERVICE
If shares of the Funds are held directly by the Transfer Agent in book
credit form and the Expedited Redemption Service has been elected on the
Purchase Application on file with the Transfer Agent, redemption of shares may
be requested by telephone, on any day the Company and the Transfer Agent are
open for business. The Company and its Transfer Agent will attempt to confirm
that telephone instructions are genuine and will use procedures as are
considered reasonable. In this regard the Company and its Transfer Agent require
personal identification information before accepting telephonic redemption
instructions. The shareholder will bear the risk of loss due to fraud, although
the Company and its agents may have a risk of loss if reasonable procedures are
not used. The Distributor can be reached by calling (800) 982-8782.
<PAGE>
Upon request, proceeds of Expedited Redemptions of $1,000 or more will
be wired to the shareholder's bank indicated in the Purchase Application. If an
Expedited Redemption request is received by the Transfer Agent by 12:00 Noon
(New York City time) on a day the Company and the Transfer Agent are open for
business, the redemption proceeds will be transmitted to the shareholder's bank
that same day. A check for the proceeds of less than $1,000 will be mailed to
the shareholder's address of record, except that, in the case of investments in
the Company that have been effected through Institutions, the full amount of the
redemption proceeds will be transmitted by wire.
-----------
Because of the high cost of maintaining small accounts, the Company
reserves the right to involuntarily redeem accounts on behalf of shareholders
whose share balances fall below $500 unless this balance conditions results a
decline in the market value of such Fund's assets. Prior to such a redemption, a
shareholder will be notified in writing and permitted 30 days to make additional
investments to raise the account balance to the specified minimum.
SERVICE PLAN
Under each Fund's Service Plan relating to Class A Shares, each Fund
will enter into a Servicing Agreement with institutions, such as banks, savings
and loan associations and other financial institutions ("Service
Organizations"), that require the Service Organization to provide certain
shareholder support services and distribution assistance in consideration of the
Fund's payment of up to 0.35% (on an annualized basis) of the average daily net
asset value of the Class A Shares, held by or for the benefit of customers of
the Service Organization ("Customers"). Services, which are provided by Service
Organizations, and are described more fully in the Statement of Additional
Information under "Service Plans - Money Market Funds," include aggregating and
processing purchase and redemption orders; processing dividend payments from the
Funds on behalf of Customers; arranging for the reinvestment of dividend
payments; providing information periodically to Customers showing their
positions in shares; arranging for bank wires; responding to Customer inquiries
relating to the services provided by the Service Organization and handling
correspondence; acting as shareholder of record and nominee; and providing
distribution assistance and support services. Under the terms of the Servicing
Agreements, Service Organizations are required to provide to their Customers a
schedule of any fees that they may charge Customers in connection with their
investments in Class A Shares.
DIVIDENDS AND DISTRIBUTIONS
The Company declares as a dividend on the outstanding shares of each
class of a Fund substantially all of such Fund's net investment income at the
close of each business day to shareholders of record at 12:00 Noon (New York
City time) on the day of declaration. Shares purchased will begin earning
dividends on the day the purchase order is executed and shares redeemed will
earn dividends through the previous day, except that with respect to the Check
Redemption Service, shares redeemed will cease to earn dividends on the day the
check is
<PAGE>
charged to the Custodian's account at its Federal Reserve Bank. Net investment
income for a Saturday, Sunday or holiday will be declared as a dividend on the
previous business day to shareholders of record at 12:00 Noon (New York City
time) on that day.
Investment income for any class of shares of a Fund includes, among
other things, interest income, market and original issue discount and premium.
Fund dividends declared in and attributable to the preceding month will be paid
on the first business day of each month. Dividends are determined in the same
manner and are paid in the same amount for each Fund share, except that Class A
and Class B Shares bear the expenses of fees paid to Service Organizations. As a
result, at any given time, the net yield of Class A Shares could be up to 0.35%
lower than the net yield of Class C Shares, and the net yield of Class B Shares
could be up to 0.25% lower than the net yield of Class C Shares of the Funds.
Each Fund's net taxable capital gains, if any, will be distributed at least
annually (except to the extent permitted to avoid imposition of the 4% excise
tax described below). Dividends and distributions paid by any of the Funds will
be invested in additional shares of the same Fund at net asset value and
credited to the shareholder's account on the payment date or, at the
shareholder's election, paid in cash. Dividend checks and Statements of Account
will be mailed approximately two business days after the payment date. Each Fund
forwards to the Transfer Agent the monies for dividends to be paid in cash on
the payment date.
Shareholders who redeem all their shares of any of the Funds prior to a
dividend payment will receive, in addition to the redemption proceeds, dividends
declared but unpaid. Shareholders who redeem only a portion of their shares will
be entitled to all dividends declared but unpaid on such shares on the next
dividend payment date.
FEDERAL INCOME TAXES
Each Fund (and each Harris Non-Money Market Fund) will be treated as a
separate entity for tax purposes and thus the provisions of the Internal Revenue
Code of 1986, as amended (the "Code") generally will be applied to each Fund
separately, rather than to the Company as a whole. As a result, net capital
gains, net investment income, and operating expenses will be determined
separately for each Fund. The Company intends to qualify each Fund as a
regulated investment company under Subchapter M of the Code. As portfolios of a
regulated investment company, each Fund will not be subject to federal income
taxes with respect to net investment income and net capital gains distributed to
its shareholders, as long as it distributes 90% or more of its net investment
income (including net short-term capital gains) each year and, in the case of
the Tax-Exempt Money Fund, as long as it distributes to its shareholders at
least 90% of its net tax-exempt income (including net short-term capital gains).
Dividends from net investment income (including net short-term capital
gains), except "exempt-interest dividends" (described below), will be taxable as
ordinary income. Because more than 50% of the value of the total assets of the
Tax-Exempt Money Fund at the close of each quarter of its taxable year is
expected to consist of obligations the interest on which is exempt from federal
income tax, the Tax-Exempt Money Fund expects to qualify under the Code to pay
"exempt-interest dividends." Dividends distributed by the Tax-Exempt Money
<PAGE>
Fund that are attributable to interest from tax-exempt securities will be
designated by the Fund as an "exempt-interest dividend," and, as such, will
generally be exempt from federal income tax.
Because substantially all of the income of each Fund will arise from
interest, no part of the distributions to shareholders is expected to qualify
for the dividends-received deduction allowed to corporations under the Code.
Distributions of net long-term capital gains, if any, will be taxable
as long-term capital gains, whether received in cash or reinvested in additional
shares, regardless of how long the shareholder has held the shares, and will not
qualify for the dividends received deductions.
In the case of the shareholders of the Tax-Exempt Money Fund, interest
on indebtedness incurred or continued to purchase or carry shares of the Fund
will not be deductible to the extent that the Fund's distributions are exempt
from federal income tax. In addition, the portion of an exempt-interest dividend
allocable to certain tax-exempt obligations will be treated as a preference item
for purposes of the alternative minimum tax imposed on both individuals and
corporations. Persons who may be "substantial users" (or "related persons" of
substantial users) of facilities financed by private activity bonds should
consult their tax advisers before purchasing shares in the Tax-Exempt Money
Fund.
The exemption of exempt-interest dividends paid by the Tax-Exempt Money
Fund for federal income tax purposes may not result in similar exemptions under
the tax law of state and local authorities. In general, only interest earned on
obligations issued by the state or locality in which the investor resides will
be exempt from state and local taxes. Shareholders should consult their advisers
about the status of dividends from the Tax-Exempt Money Fund in their own states
and localities. Each year the Company will notify shareholders of the tax status
of distributions.
Any loss realized on a sale or exchange of shares of the Fund will be
disallowed to the extent shares are acquired within the 61-day period beginning
30 days before and ending 30 days after disposition of the shares.
The Company will be required to withhold, subject to certain
exemptions, currently at a rate of 31%, from dividends paid or credited to
individual shareholders (except shareholders from the Tax-Exempt Money Fund to
the extent it distributes an exempt-interest dividend) and from redemption
proceeds, if a correct taxpayer identification number, certified when required,
is not on file with the Company or Transfer Agent.
ACCOUNT SERVICES
Shareholders receive a Statement of Account whenever a share
transaction, dividend or capital gain distribution is effected in the accounts,
or at least annually. Shareholders can write or call the Funds at the address
and telephone number on page one of this Prospectus with any questions relating
to their investment in shares of the Funds.
<PAGE>
ORGANIZATION AND CAPITAL STOCK
The Company was incorporated in Maryland on September 16, 1987 as an
open-end, diversified management investment company.
The authorized capital stock of the Company consists of 10,000,000,000
shares having a par value of $.001 per share. Currently the Company has six
portfolios in operation. The Board has authorized each of the three Money Market
Funds to issue three classes of shares, Class A, Class B and Institutional
Shares. Only Class A and Institutional Shares are in operation as of the date of
this Prospectus. In the future, the Board of Directors may authorize the
issuance of shares of additional investment portfolios and additional classes of
shares of a single portfolio may bear different sales charges and other expenses
which may affect their relative performance. Information regarding other classes
of shares may be obtained by calling the Company at the telephone number shown
on the cover page of this Prospectus or from any institution which makes
available shares of the Funds. All shares of the Company have equal voting
rights and will be voted in the aggregate, and not by class, except where voting
by class is required by law or where the matter involved affects only one class.
A more detailed statement of the voting rights of shareholders is contained in
the Statement of Additional Information. All shares of the Company, when issued,
will be fully paid and non-assessable. The Directors, when requested by at least
10% of the Company's outstanding shares, will call a meeting of shareholders for
the purpose of voting upon the question of removal of a director or directors
and will assist in communications with other shareholders as required by Section
16(c) of the 1940 Act.
As of November 15, 1995, the holders of record of 25% or more of the
outstanding shares of the Funds were as follows: Harris Trust held of record
452,400,831 shares, equal to 95.4% of the outstanding shares of the Money Market
Fund - Class A Shares; 212,568,017 shares, equal to 99.9% of the outstanding
shares of the Money Market Fund - Institutional Shares; 353,569,130 shares,
equal to 93.8% of the outstanding shares of the Government Money Market Fund -
Class A Shares; 46,202,467 shares, equal to 99.9% of the outstanding shares of
the Government Money Market Fund - Institutional Shares; 147,351,701 shares,
equal to 90.2% of the outstanding shares of the Tax-Exempt Money Market Fund -
Class A Shares; and 257,818,062 shares, equal to 99.9% of the outstanding shares
of the Tax-Exempt Money Market Fund - Institutional Shares.
<PAGE>
REPORTS TO SHAREHOLDERS
The fiscal year of the Company ends on December 31. The Company will
send to its shareholders a semi-annual report showing the investments held by
each of the Funds and other information (including unaudited financial
statements) pertaining to the Company. An annual report, containing financial
statements audited by the Company's independent accountants, will also be sent
to shareholders.
CALCULATION OF YIELD
From time to time the Funds advertise "yield," "effective yield" and
"total return" for Class A Shares. The Tax-Exempt Money Fund may also advertise
its "tax-equivalent yield" and "total return." "Total return" refers to the
amount an investment in Class A Shares of a Fund would have earned, including
any increase or decrease in net asset value, over a specified period of time and
assumes reinvestment of all dividends and distributions. The total return of a
Fund shows what an investment in the Fund would have earned over a specified
period of time (such as one, five or ten years or the period of time since
commencement of operations, if shorter) assuming the reinvestment of all
distributions and dividends by the Fund on their reinvestment dates during the
period less all recurring fees.
The yield of a class of shares in the Funds refers to the income
generated by an investment in the Fund over a seven-day period (which period
will be stated in the advertisement). The income is then "annualized." That is,
the amount of income generated by the investment during that week is assumed to
be generated each week over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield"
refers to the yield on a taxable investment necessary to produce an after-tax
yield equal to a Fund's tax-free yield, and is calculated by increasing the
yield shown for the Fund to the extent necessary to reflect the payment of
specified tax rates. Thus, the tax-equivalent yield for a Fund will always
exceed that Fund's yield.
From time to time the Funds advertise "30-day average yield" and
"monthly average yield." Such yields refer to the average daily income generated
by an investment in such Fund over a 30-day or monthly period, as appropriate
(which period will be stated in the advertisement).
A Fund's performance figures for a class of shares represent past
performance, will fluctuate and should not be considered as representative of
future results. The yield of any investment is generally a function of portfolio
quality and maturity, type of instrument and operating expenses.
<PAGE>
Investors who purchase and redeem shares of any Fund through Service
Agents may be subject to service fees imposed by those entities with respect to
the cash management and other services they provide. Such fees will have the
effect of reducing the return for those investors.
<PAGE>
INVESTMENT ADVISER DISTRIBUTOR
Harris Trust & Savings Bank Funds Distributor, Inc.
111 West Monroe Street One Exchange Place
Chicago, Illinois 60603 Boston, Massachusetts 02109
PORTFOLIO MANAGEMENT AGENT CUSTODIAN
Harris Investment Management, Inc. PNC Bank, N.A.
190 South LaSalle Street Broad and Chestnut Streets
Chicago, Illinois 60603 Philadelphia, Pennsylvania 19101
ADMINISTRATORS TRANSFER AGENT AND
First Data Investor Services DIVIDEND DISBURSING AGENT
Group, Inc. PFPC Inc.
53 State Street P.O. Box 8950
Boston, Massachusetts 02109 Wilmington, Delaware 19885
PFPC INC. INDEPENDENT ACCOUNTANTS
103 Bellevue Parkway Price Waterhouse LLP
Wilmington, Delaware 19809 Philadelphia, Pennsylvania
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
HARRIS INSIGHT FUNDS
HARRIS INSIGHT CONVERTIBLE FUND
One Exchange Place, Boston, Massachusetts 02109
Telephone: (800) 982-8782
HT Insight Funds, Inc. (the "Company") is an open-end, diversified
management investment company that currently offers six investment portfolios.
This Prospectus describes the Company's Harris Insight Convertible Fund (the
"Fund"). The Fund's investment objective is to provide investors with capital
appreciation and current income.
Harris Trust & Savings Bank is the Investment Adviser to the Fund and
Harris Investment Management, Inc., a subsidiary of Harris Bankcorp, Inc., acts
as the Fund's Portfolio Management Agent. Shares of the Fund are offered by
Funds Distributor, Inc., the Company's distributor.
This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Fund. Please read and retain it for
future reference. A Statement of Additional Information dated ____________,
1995, containing more detailed information about the Fund has been filed with
the Securities and Exchange Commission and (together with any supplements
thereto) is incorporated by reference into this Prospectus. The Statement of
Additional Information and separate Prospectuses and Statements of Additional
Information for the other investment portfolios offered by the Company may be
obtained without charge by writing or calling the Harris Insight Funds at the
address and telephone number printed above.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY HARRIS TRUST & SAVINGS BANK, OR ANY OF ITS AFFILIATES, AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUND INVOLVES
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
________________, 1995
<PAGE>
TABLE OF CONTENTS
Page
Expense Table.............................................................
Highlights................................................................
Financial Highlights......................................................
Investment Objective and Policies.........................................
Investment Strategies.....................................................
Investment Limitations....................................................
Management................................................................
Determination of Net Asset Value..........................................
Purchase of Shares........................................................
Redemption of Shares......................................................
Exchange Privilege........................................................
Service Plan..............................................................
Dividends and Distributions...............................................
Federal Income Taxes......................................................
Account Services..........................................................
Organization and Capital Stock............................................
Reports to Shareholders...................................................
Calculation of Yield and Total Return.....................................
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information and/or in the Fund's official sales literature in
connection with the offering of the Fund's shares and, if given or made, such
other information or representations must not be relied upon as having been
authorized by the Company or the Distributor. This Prospectus does not
constitute an offer in any state in which, or to any person to whom, such offer
may not lawfully be made.
<PAGE>
EXPENSE TABLE
The following table sets forth certain information concerning
shareholder transaction expenses and projected annual fund operating expenses
for the Fund during the current fiscal year.
Expenses and fees
payable by share-
holders are summarized
in this table and
expressed as a
percentage of
average net assets.
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on
Purchases 4.50%
Annual Fund Operating Expenses*:
(as a percentage of average net
assets after voluntary fee waivers)
Advisory Fees 0.27%
Other Expenses 0.53%
Total Fund Operating Expenses 0.80%
- - - --------------------------------
*Customers of a financial institution, such as Harris Trust & Savings
Bank, may be charged certain fees and expenses by their institution. These fees
may vary depending on the capacity in which the institution provides fiduciary
and investment services to the particular client (e.g., personal trust, estate
settlement, advisory and custodian services).
Without any fee and expense waivers, total operating expenses for the
fiscal year ended December 31, 1994 for the Fund would have been 1.26%. The
amount of "Other Expenses" is based on amounts incurred during the most recent
fiscal year.
</TABLE>
<PAGE>
EXAMPLE
You would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) a hypothetical 5% gross annual return and (2) redemption at the end
of each time period:
<TABLE>
<S> <C>
1 year $ 53
3 years 69
5 years 87
10 years 140
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR PERFORMANCE WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
The purpose of the expense table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. For more information concerning the various costs and expenses, see
"Management."
<PAGE>
HIGHLIGHTS
The Harris Insight Convertible Fund seeks to provide capital
appreciation and current income by investing, at least 65% of its assets in
securities securities such as bonds, debentures, notes, preferred stocks or
warrants that are convertible into common stocks. See page ______below.
WHO MANAGES THE FUND'S INVESTMENTS?
Harris Trust & Savings Bank ("Harris Trust" or the "Investment
Adviser") is the investment adviser for the Fund. Harris Trust has provided
investment management service to clients for over 100 years. Harris Trust
provides investment services for pension, profit-sharing and personal
portfolios. As of June 30, 1995, assets under management total approximately $23
billion. See page _______.
Harris Investment Management, Inc. ("HIM" or the "Portfolio Management
Agent") provides daily portfolio management services for the Fund. HIM and its
predecessors have managed client assets for over 100 years. HIM has a staff of
96, including 64 professionals, providing investment expertise to the management
of Harris Insight Funds and for pension, profit-sharing and institutional
portfolios. As of June 30, 1995, assets under management are estimated to exceed
$13 billion. See page ______________.
Harris Trust and HIM are subsidiaries of Harris Bankcorp., Inc.
WHAT ADVANTAGES DOES THE FUND OFFER?
The Fund is designed for individual and institutional investors. A
single investment in shares of the Fund gives the investor benefits customarily
available only to large investors, such as diversification of investment,
greater liquidity and professional management, block purchases of securities,
relief from bookkeeping, safekeeping of securities and other administrative
details.
WHEN ARE DIVIDENDS PAID?
Dividends from the Fund are declared and paid quarterly. Any net
capital gains will be declared and paid annually. See page ______.
HOW ARE SHARES REDEEMED?
Shares may be redeemed at their next determined net asset value after
receipt of a proper request by the Registered Representative servicing your
account, the Distributor, or through any Service Agent. See page _______.
<PAGE>
WHAT RISKS ARE ASSOCIATED WITH THE FUND?
The Fund's performance and price per share will change daily based on
many factors, including the quality of the Fund's investments, U.S. and
international economic conditions, general market conditions and international
exchange rates. There is no assurance that the Fund will achieve its investment
objective. See "Investment Strategies."
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the ten months ended October 31,
1995 are derived from the unaudited financial statements of the Company dated
October 31, 1995. All other data presented are derived from the financial
statements of the Company for the year ended December 31, 1994 audited by Price
Waterhouse LLP, independent accountants. This information should be read in
conjunction with the financial statements and notes thereto that appear in the
Statement of Additional Information and which are incorporated by reference in
this Prospectus.
This table shows the
total return on one
share of the
Fund for
each period
illustrated.
<TABLE>
<CAPTION>
CONVERTIBLE FUND
TEN MONTHS YEAR YEAR YEAR YEAR YEAR YEAR 2/24/88*
ENDED ENDED ENDED ENDED ENDED ENDED ENDED TO
10/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $8.78 $ 9.84 $ 9.16 $ 8.41 $ 7.18 $ 9.51 $10.05 $10.00
----- ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment Income .779 .669 .538 .487 .609 .788 .732 .616
Net Realized and Unrealized
Gain (Loss) on .558 (1.049) .680 .783 1.221 (2.378) .333 .070
Investments ---- ------- ---- ---- ----- ------- ---- ----
Total from Investment
Operations 1.367 (.380) 1.218 1.270 1.830 (1.590) 1.065 .686
----- ------ ----- ----- ----- ------- ----- ----
Less Distributions:
Net Investment Income (0.627) (.680) (.538) (.520) (.600) (.740) (.795) (.540)
Net Realized Gains --- --- --- --- --- --- (.810) (.096)
--- --- --- --- --- --- ------ ------
Total distributions (0.627) (.680) (.538) (.520) (.600) (.740) (1.605) (.636)
------- ------ ------ ------ ------ ------ ------- ------
Net Asset Value, End of Period --- $ 8.78 $ 9.84 $ 9.16 $ 8.41 $ 7.18 $ 9.51 $10.05
====== ====== ====== ====== ====== ====== ====== ======
Total return(4) 9.52%(3) (4.01)% 13.50% 15.40% 26.04% (17.12)% 10.58% 6.89%(3)
Ratios/Supplemental Data:
Net Assets, End of
Period $(000) 1,152 1,416 6,064 7,354 3,732 5,552 15,241 19,097
Ratios of Expenses to
Average Net Assets(1) 0.80%(2) 0.80% 0.80% 0.80% 0.80% 0.80% 0.78% 0.62%(2)
Ratios of Net Investment
Income to Average Net 5.82%(2) 5.21% 5.16% 5.83% 6.91% 8.813% 6.78% 7.09%(2)
Assets
Portfolio Turnover Rate 29.34% 31.63% 81.04% 21.27% 62.20% 48.20% 59.15% 22.80%
- - - ----------------------------
*Date commenced operations
(1) Reflects expenses after waivers of advisory fees and other expenses based on net expenses incurred
during the most recent fiscal year. Without the voluntary waiver of fees, the expense ratios for the
ten months ended October 31, 1995, the years ended December 31, 1994, 1993, 1992, 1991 and 1990, would
have been 2.49%, 1.26%, 1.20%, 1.26%, 1.66%, 1.40% and 1.44%, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not annualized.
(4) Sales load is not reflected in total return.
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide capital appreciation
and current income. The Fund intends, under normal market conditions, to invest
primarily in convertible securities, that is, securities including bonds,
debentures, notes or preferred stock that are convertible into common stock, or
warrants that provide the owner the right to purchase shares of common stock at
a specified price. Convertible securities are initially selected from a universe
of approximately 200 securities which are then assessed by HIM on the basis of
strict fundamental factors. The Portfolio Management Agent ultimately constructs
a portfolio of 25 to 100 convertible securities. The Portfolio Management Agent
purchases securities in an effort to establish the proper mix of convertible
securities which are positioned to benefit from yield discrepancies, variations
in the creditworthiness of issuers, and changes in economic conditions and the
outlook for particular companies. The Fund also seeks to diversify among issuers
in a manner that will enable the Fund to minimize the volatility of the Fund's
net asset value in erratic or declining markets.
The Fund seeks to provide
capital appreciation
and current income.
Under normal market conditions, the Fund will invest without limitation
in convertible securities of U.S. corporations and in Eurodollar securities
convertible into common stocks of U.S. corporations which securities are rated
"B" or better by Standard & Poor's Corporation ("S&P"), "B" ("b" in the case of
preferred stocks) or better by Moody's Investors Service, Inc. ("Moody's") or
the equivalent rating from another nationally recognized statistical rating
organization at the time of purchase, or, if not rated, considered by the
Portfolio Management Agent to be of comparable quality, except that investment
in securities rated "B-" by S&P or Moody's will be limited to 15% of its total
assets. Up to 5% of the Fund's total assets may be invested in convertible
securities that are rated "CCC" by S&P or "Caa" by Moody's at the time of
purchase. Securities that are rated "BB" or below by S&P or "Ba" or below by
Moody's are "high yield securities", commonly known as junk bonds. By their
nature, convertible securities may be more volatile in price than higher rated
debt obligations.
The Fund may also invest up to 35% of its total assets in "synthetic
convertibles" created by combining separate securities that possess the two
principal characteristics of a true convertible security, i.e., fixed income and
the right to acquire equity securities. In addition, the Fund may invest: up to
15% of its total assets in convertible securities offered in "private
placements" and other illiquid securities; up to 15% of its total assets in
common stocks; and up to 5% of its net assets in warrants. The Fund may purchase
and sell index and interest rate futures contracts and covered put and call
options on securities and on indices.
<PAGE>
In periods of unusual market conditions, when the Portfolio Management
Agent believes that convertible securities would not best serve the Fund's
objectives, the Fund may for defensive purposes invest part or all of its total
assets in: (a) Government Securities; (b) non-convertible debt obligations of
domestic corporations, including bonds, debentures, notes or preferred stock
rated "BBB" or better by S&P or "Baa" or better by Moody's at the time of
purchase, which ordinarily are less volatile in price than convertible
securities and serve to increase diversification of risk; and (c) short-term
money market instruments, including U.S. Government, bank and commercial
obligations with remaining maturities of thirteen months or less. During such
periods, the Fund will continue to seek current income but will put less
emphasis on capital appreciation.
SPECIAL CONSIDERATIONS RELATING TO LOW-RATED AND COMPARABLE UNRATED
SECURITIES. Low-rated and comparable unrated securities (a) will likely have
some quality and protective characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk exposures to
adverse conditions and (b) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation.
The market values of low-rated and comparable unrated securities are
less sensitive to interest rate changes but more sensitive to economic changes
or individual corporate developments than those of higher-rated securities; they
present a higher degree of credit risk and their yields will fluctuate over
time. During economic downturns or sustained periods of rising interest rates,
the ability of highly leveraged issuers to service debt obligations may be
impaired.
The existence of limited or no established trading markets for
low-rated and comparable unrated securities may result in thin trading of such
securities, diminish the Fund's ability to dispose of such securities or to
obtain accurate market quotations for valuing such securities and calculating
net asset value. The responsibility of the Company's Board of Directors to value
such securities becomes more difficult and judgment plays a greater role in
valuation because there is less reliable objective data available. In addition,
adverse publicity and investor perceptions may decrease the values and liquidity
of low-rated and comparable unrated securities bonds, especially in a thinly
traded market.
A major economic recession would likely disrupt the market for such
securities, adversely affect their value and the ability of issuers to repay
principal and pay interest, and result in a higher incidence of defaults.
The ratings of Moody's and S&P represent the opinions of those
organizations as to the quality of securities. Such ratings are relative and
subjective, not absolute standards of quality and do not evaluate the market
risk of the securities. Although the Fund's Portfolio Management Agent uses
these
<PAGE>
ratings as a criterion for the selection of securities for the Fund, it also
relies on its independent analysis to evaluate potential investments for the
Fund. The Fund's achievement of its investment objective may be more dependent
on the Portfolio Management Agent's credit analysis of low-rated and unrated
securities than would be the case for a portfolio of high-rated securities.
An issue of securities held by the Fund may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund. In
addition, it is possible that Moody's, S&P or another nationally recognized
statistical rating organization might not change their ratings in a particular
issue in a timely manner to reflect subsequent events. None of these events will
require the sale of the securities by the Fund, although the Portfolio
Management Agent will consider these events in determining whether the Fund
should continue to hold the securities. To the extent that the ratings given by
such rating organization for securities may change as a result of changes in the
ratings systems or due to corporate reorganization of such rating organization,
the Fund will attempt to use comparable ratings as standards for its investments
in accordance with the investment objectives and policies of the Fund. The
ratings of Moody's and S&P are more fully described in the Statement of
Additional Information.
The average distribution of investments (at market value) by the Fund
in portfolio securities, including corporate bonds and commercial paper by
ratings for the year ended December 31, 1994 was as follows: AAA, 1.3%; AA, 0%;
A, 16.4%; BBB/Baa, 40.7%; BB/Ba, 23.6%; B, 8.4%; CCC, 0.6%; and unrated
securities, 0.1%.
----------------------------
Portfolio securities of the Fund are kept under continuing supervision
and changes may be made whenever, in the opinion of the Portfolio Management
Agent, a security no longer seems to meet the objective of the Fund. Portfolio
changes also may be made to increase or decrease investments in anticipation of
changes in security prices in general or to provide funds required for
redemptions, distributions to shareholders or other corporate purposes. Neither
the length of time a security has been held nor the rate of turnover of the
Fund's portfolio is considered a limiting factor on such changes.
-----------
The Fund may purchase debt obligations that are not rated if, in the
opinion of the Portfolio Management Agent, they are of investment quality at
least comparable to other rated investments that are permitted by the Fund.
After purchase by the Fund, a security may cease to be rated or its rating may
be reduced below the minimum required for purchase by the Fund. Neither event
will require the Fund to sell such security unless the amount of such
<PAGE>
security exceeds permissible limits. However, the Portfolio Management Agent
will reassess promptly whether the security presents minimal credit risks and
determine whether continuing to hold the security is in the best interests of
the Fund.
INVESTMENT STRATEGIES
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities.
Appropriate ratings for the convertible securities purchased by the Fund are
provided under "Investment Objective and Policies." Because convertible
securities have the characteristics of both fixed-income securities and common
stock, they sometimes are called "hybrid" securities. Convertible bonds,
debentures and notes are debt obligations offering a stated interest rate;
convertible preferred stocks are senior securities offering a stated dividend
rate. Because a convertible security provides an option to the holder to
exchange the security for either a specified number of the issuer's common
shares at a stated price per share or the cash value of such common shares, the
security's market price will tend to fluctuate in relation to the price of the
common shares into which it is convertible. Thus, convertible securities
ordinarily will provide opportunities for both producing current income and
longer term capital appreciation. Because convertible securities are usually
viewed by the issuer as future common stock, they are generally subordinated to
other senior securities and therefore are rated one category lower than the
issuer's non-convertible debt obligations or preferred stock.
FLOATING AND VARIABLE RATE INSTRUMENTS. The Fund may purchase
instruments having a floating or variable rate of interest. These obligations
bear interest at rates that are not fixed, but vary with changes in specified
market rates or indices, such as the prime rate, or at specified intervals.
Certain of these obligations may carry a demand feature that would permit the
holder to tender them back to the issuer at par value prior to maturity. Each
Fund will limit its purchases of floating and variable rate obligations to those
of the same quality as it otherwise is allowed to purchase.
A floating or variable rate instrument may be subject to the Fund's
percentage limitation on illiquid investments if there is no reliable trading
market for the investment or if the Fund may not demand payment of the principal
amount within seven days.
FOREIGN SECURITIES. The Fund may invest in dollar-denominated
Eurodollar securities convertible into the common stock of domestic
corporations. Investments in foreign securities involve certain considerations
that are not typically associated with investing in domestic securities. For
example, investments in foreign securities typically involve higher transaction
costs than investments in U.S. securities. Foreign investments may have risks
associated with currency exchange rates, political instability, less complete
<PAGE>
financial information about the issuers and less market liquidity. Future
political and economic developments, possible imposition of withholding taxes on
income, seizure or nationalization of foreign holdings, establishment of
exchange controls or the adoption of other governmental restrictions might
adversely affect the payment of principal and interest on foreign obligations.
In addition, foreign banks and foreign branches of domestic banks may be subject
to less stringent reserve requirements and to different accounting, auditing and
recordkeeping requirements than domestic banks.
GOVERNMENT SECURITIES. Government Securities consist of obligations
issued or guaranteed by the U.S. Government, its agencies, instrumentalities or
sponsored enterprises.
ILLIQUID SECURITIES. The Fund may invest up to 10% of the value of its
net assets in securities that are considered illiquid. Repurchase agreements and
time deposits that do not provide for payment to the Fund within seven days
after notice or which have a term greater than seven days are deemed illiquid
securities for this purpose, unless such securities are variable amount master
demand notes with maturities of nine months or less or unless the Portfolio
Management Agent or Investment Adviser has determined under the supervision and
direction of the Company's Board of Directors that an adequate trading market
exists for such securities or that market quotations are readily available.
The Fund may also purchase Rule 144A securities sold to institutional
investors without registration under the Securities Act of 1933 and commercial
paper issued in reliance upon the exemption in Section 4(2) of the Securities
Act of 1933. These securities may be determined to be liquid in accordance with
guidelines established by the Portfolio Management Agent or Investment Adviser
and approved by the Company's Board of Directors. The Board of Directors will
monitor the Portfolio Management Agent's or Investment Adviser's implementation
of these guidelines on a periodic basis.
OPTIONS. The Fund may invest in covered put and covered call options
and may write covered put and covered call options on securities in which they
may invest directly and that are traded on registered domestic security
exchanges or over-the-counter.
See "Investment Strategies" in the Statement of Additional Information.
INVERSE FLOATING RATE OBLIGATIONS. The Fund may invest in so called
"inverse floating rate obligations" or "residual interest" bonds, or other
related obligations or certificates structured to have similar features. Such
obligations generally have floating or variable interest rates that move in the
opposite direction of short-term interest rates and generally increase or
decrease in value in response to changes in short-term interest rates at a rate
which is a multiple (typically two) of the rate at which fixed-rate, long-term,
tax-exempt securities
<PAGE>
increase or decrease in response to such changes. As a result, such obligations
have the effect of providing investment leverage and may be more volatile than
long-term, fixed-rate, tax-exempt obligations.
INVESTMENT COMPANY SECURITIES. In connection with the management of its
daily cash positions, the Fund may invest in securities issued by investment
companies that invest from short-term, debt securities (which may include
municipal obligations that are exempt from federal income taxes) and which seek
to maintain a $1.00 net asset value per share. Securities of investment
companies may be acquired by the Fund within the limits prescribed by the
Investment Company Act of 1940, as amended (the "1940 Act"). These limit the
Fund so that: (i) not more than 5% of the value of its total assets will be
invested in the securities of any one investment company; (ii) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of investment companies as a group; and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the Fund
or by the Company as a whole. As a shareholder of another investment company,
the Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations.
LETTERS OF CREDIT. Debt obligations, including municipal obligations,
certificates of participation, commercial paper and other short-term
obligations, may be backed by an irrevocable letter of credit of a bank. Only
banks that, in the opinion of the Portfolio Management Agent, are of investment
quality comparable to other permitted investments of the Fund, may be used for
letter of credit-backed investments.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to brokers, dealers
and financial institutions securities from its portfolio representing up to
one-third of the Fund's net assets. However, such loans may be made only if cash
or cash equivalent collateral, including letters of credit, marked-to-market
daily and equal to at least 100% of the current market value of the securities
loaned (including accrued interest and dividends thereon) plus the interest
payable to the Fund with respect to the loan is maintained by the borrower with
the Fund in a segregated account. In determining whether to lend a security to a
particular broker, dealer or financial institution, the Portfolio Management
Agent will consider all relevant facts and circumstances, including the
creditworthiness of the broker, dealer or financial institution. No Fund will
enter into any portfolio security lending arrangement having a duration longer
than one year. Any securities that the Fund may receive as collateral will not
become part of the Fund's portfolio at the time of the loan and, in the event of
a default by the borrower, the Fund will, if permitted by law, dispose of such
collateral except for such part thereof that is a security in which the Fund is
permitted to invest. During the time securities are on loan, the borrower will
pay the Fund any
<PAGE>
accrued income on those securities, and the Fund may invest the cash collateral
and earn additional income or receive an agreed upon fee from a borrower that
has delivered cash equivalent collateral. Loans of securities by the Fund will
be subject to termination at the Fund's or the borrower's option. The Fund may
pay reasonable administrative and custodial fees in connection with a securities
loan and may pay a negotiated fee to the borrower or the placing broker.
Borrowers and placing brokers may not be affiliated, directly or indirectly,
with the Company, the Investment Adviser, the Portfolio Management Agent or the
Distributor.
REPURCHASE AGREEMENTS. The Fund may purchase portfolio securities
subject to the seller's agreement to repurchase them at a mutually agreed upon
time and price, which includes an amount representing interest on the purchase
price. The Fund may enter into repurchase agreements only with respect to
obligations that could otherwise be purchased by the Fund. The seller will be
required to maintain in a segregated account for the Fund cash or cash
equivalent collateral equal to at least 100% of the repurchase price (including
accrued interest). Default or bankruptcy of the seller would expose the Fund to
possible loss because of adverse market action, delays in connection with the
disposition of the underlying obligations or expenses of enforcing its rights.
REVERSE REPURCHASE AGREEMENTS. The Fund may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker/dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by the Fund may
decline below the repurchase price. The Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.
The Fund may not enter into a repurchase agreement or reverse
repurchase agreements if, as a result, more than 10% of the market value of the
Fund's total net assets would be invested in repurchase agreements or reverse
repurchase agreements with a maturity of more than seven days and in other
illiquid securities. The Fund will enter into repurchase agreements and reverse
repurchase agreements only with registered broker/dealers and commercial banks
that meet guidelines established by the Company's Board of Directors.
U.S. GOVERNMENT OBLIGATIONS. U.S. Government Obligations consist of
bills, notes and bonds issued by the U.S. Treasury. They are direct obligations
of the U.S. Government and differ primarily in the length of their maturities.
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY OBLIGATIONS. Obligations of
U.S. Government agencies and instrumentalities are debt securities issued by
U.S. Government-sponsored enterprises and federal agencies. Some of these
obligations are supported by: (a) the full faith and credit of the U.S. Treasury
(such as Government National Mortgage Association
<PAGE>
participation certificates); (b) the limited authority of the issuer to borrow
from the U.S. Treasury (such as securities of the Federal Home Loan Bank); (c)
the authority of the U.S. Government to purchase certain obligations of the
issuer (such as securities of the Federal National Mortgage Association); or (d)
the credit of the issuer only. In the case of obligations not backed by the full
faith and credit of the U.S. Government, the investor must look principally to
the agency issuing or guaranteeing the obligation for ultimate repayment.
WARRANTS. The Fund may invest up to 5% of its net assets at the time of
purchase in warrants (other than those that have been acquired in units or
attached to other securities) on securities in which it may invest directly.
Warrants represent rights to purchase securities at a specific price valid for a
specific period of time.
WHEN-ISSUED SECURITIES. The Fund may purchase securities (including
securities issued pursuant to an initial public offering) on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of the commitment to purchase. The Fund will make commitments to
purchase securities on a when-issued basis only with the intention of actually
acquiring the securities, but may sell them before the settlement date, if
deemed advisable. The purchase price and the interest rate that will be received
are fixed at the time of the commitment. When-issued securities are subject to
market fluctuation and no income accrues to the purchaser prior to issuance.
Purchasing a security on a when-issued basis can involve a risk that the market
price at the time of delivery may be lower than the agreed upon purchase price.
INVESTMENT LIMITATIONS
Unless otherwise noted, the Fund's investment objective and related
policies and activities of the Fund are not fundamental and may be changed only
by the Board of Directors of the Company without the approval of shareholders,
provided that, the policy relating to investment company securities is a
fundamental investment policy. If there is a change in the Fund's investment of
objective, shareholders should consider whether the Fund remains an appropriate
investment in light of their then current financial position and needs.
This section outlines
the Fund's policies that
may be changed only by
a majority vote of
shareholders.
As matters of fundamental policy, which may be changed only with
approval by the vote of the holders of a majority of the Fund's outstanding
voting securities, as described in the Statement of Additional Information, the
Fund may not: (1) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of its investments in that industry would exceed 25%
of the current value of its total assets, provided that there is no limitation
with respect to investments in municipal obligations (for the purpose of this
restriction, private activity bonds shall not be deemed municipal obligations if
the payment of principal and interest on such bonds is the ultimate
responsibility
<PAGE>
of non-governmental users) and in obligations of the U.S. Government, its
agencies or instrumentalities; (2) invest more than 5% of the current value of
its total assets in the securities of any one issuer, other than obligations of
the U.S. Government, its agencies or instrumentalities, except that up to 25% of
the value of the total assets of the Fund may be invested without regard to this
limitation; (3) purchase securities of an issuer if, as a result, with respect
to 75% of its total assets, it would own more than 10% of the voting securities
of such issuer; or (4) borrow from banks, except that the Fund may borrow up to
10% of the current value of its total assets for temporary purposes only in
order to meet redemptions, and these borrowings may be secured by the pledge of
up to 10% of the current value of the Fund's net assets (but investments may not
be purchased while borrowings are in excess of 5%). It is also a fundamental
policy that the Fund may make loans of portfolio securities. In addition, it is
a fundamental policy that the Fund may only invest up to 10% of the current
value of its net assets in repurchase agreements having maturities of more than
seven days, variable amount master demand notes having notice periods of more
than seven days, fixed time deposits subject to withdrawal penalties having
maturities of more than seven days, and securities that are not readily
marketable. Although not a matter of fundamental policy, the Fund considers the
securities of foreign governments to be a separate industry for purposes of the
25% asset limitation on investments in the securities of issuers conducting
their principal business activity in the same industry.
MANAGEMENT
The Board of Directors has overall responsibility for the conduct of
the affairs of the Fund and Company. Each individual listed below is a member of
the Company's Board of Directors. The principal occupation of each individual is
also listed below.
Board of Directors
Edgar R. Fiedler Vice President and Economic Counsellor, The Conference
Board.
C. Gary Gerst Chairman of the Board of Directors and Trustees; Chair
man Emeritus, La Salle Partners, Ltd. (Real Estate
Developer and Manager).
John W. McCarter, Jr. Senior Vice President, Boozo Allen & Hamilton, Inc.
(Consulting Firm); Director of W.W. Grainger, Inc. and
A.M. Castle, Inc.
Ernest M. Roth Consultant; Retired Senior Vice President and Chief
Financial Officer, Commonwealth Edison Company.
<PAGE>
INVESTMENT ADVISER
The Fund has entered into an Advisory Contract with Harris Trust.
Harris Trust, located at 111 West Monroe Street, Chicago, Illinois, is the
successor to the investment banking firm of N.W. Harris & Co. that was organized
in 1882 and was incorporated in 1907 under the present name of the bank. It is
an Illinois state-chartered bank and a member of the Federal Reserve System. At
December 31, 1994, Harris Trust had assets of more than $13 billion and was the
largest of 14 banks owned by Harris Bankcorp, Inc. Harris Bankcorp, Inc. is a
wholly-owned subsidiary of Bankmont Financial Corp., which is a wholly-owned
subsidiary of Bank of Montreal, a publicly traded Canadian banking institution.
This section high-
lights the
experience, services
offered, and
compensation of the
Fund's Adviser.
As of December 31, 1994, Harris Trust managed more than $8 billion in
personal trust assets, and acted as custodian of more than $151 billion in
assets.
With respect to the Fund, the Advisory Contract provides that Harris
Trust is responsible for the supervision and oversight of the Portfolio
Management Agent's performance (as discussed below).
For all its services under the Advisory Contract with the Fund, Harris
Trust is entitled to receive a monthly advisory fees at the annual rate of
0.70%, of the average daily net assets of the Fund. For the fiscal year ended
December 31, 1994, Harris Trust received fees, after waivers, at the effective
rate of 0.27% of the average daily net assets of the Fund. Harris Trust expects
to receive, after waivers, an advisory fee at the annual rate of 0.27% of the
average daily net assets of the Fund for the current fiscal year.
PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into a Portfolio Management Contract with
Harris Investment Management, Inc. ("HIM" or the "Portfolio Management Agent")
under which HIM undertakes to furnish investment guidance and policy direction
in connection with the daily portfolio management of the Fund. For the services
provided by HIM, Harris Trust will pay to HIM the advisory fees it receives from
the Fund. As of June 30, 1995, HIM managed an estimated $13.8 billion in assets.
Purchase and sale orders of the securities held by the Fund may be
combined with those of other accounts that HIM manages, and for which it has
brokerage placement authority, in the interest of seeking the most favorable
overall net results. When HIM determines that a particular security should be
bought or sold for the Fund and other accounts managed by HIM, HIM undertakes to
allocate those transactions among the participants equitably.
<PAGE>
PORTFOLIO MANAGEMENT
The organizational arrangements of the Investment Adviser and the
Portfolio Management Agent require that all investment decisions be made by a
committee and no one person is responsible for making recommendations to that
committee.
GLASS-STEAGALL ACT
The Glass-Steagall Act, among other things, generally prohibits
federally chartered or supervised banks from engaging to any extent in the
business of issuing, underwriting, selling or distributing securities, although
subsidiaries of bank holding companies such as Harris Trust and HIM are
permitted to purchase and sell securities upon the order and for the account of
their customers.
It is the position of Harris Trust and HIM that they may perform the
services contemplated by the Advisory Contract, the Portfolio Management
Contract and this Prospectus without violation of the Glass-Steagall Act or
other applicable federal banking laws or regulations. It is noted, however, that
there are no controlling judicial or administrative interpretations or decisions
and that future judicial or administrative interpretations of, or decisions
relating to, present federal statutes and regulations relating to the
permissible activities of banks and their subsidiaries or affiliates, as well as
future changes in federal statutes or regulations and judicial or administrative
decisions or interpretations thereof, could prevent Harris Trust or HIM from
continuing to perform, in whole or in part, such services. If Harris Trust or
HIM were prohibited from performing any of such services, it is expected that
the Board of Directors of the Company would recommend to the Fund's shareholders
that they approve new agreements with another entity or entities qualified to
perform such services and selected by the Board of Directors.
To the extent permitted by the Commission, the Fund may pay brokerage
commissions to certain affiliated persons. No such commission payments were made
during the last fiscal year by the Fund.
<PAGE>
ADMINISTRATORS, CUSTODIAN AND TRANSFER AGENT
First Data Investor Services Group, Inc. (formerly known as The
Shareholder Services Group, Inc.) ("First Data" or the "Administrator") and PFPC
Inc. ("PFPC" or the "Administrator and Accounting Services Agent")
(collectively, the "Administrators") serve as the administrators of the Fund. In
such capacity, the Administrators generally assist the Fund in all aspects of
their administration and operation. PFPC also serves as the transfer and
dividend disbursing agent of the Funds (the "Transfer Agent").
These service
providers are
responsible for
maintaining the
books and records
of the Fund, hand-
ling compliance and
regulatory issues,
processing buy/sell
orders, customer
service and the
safekeeping of
securities.
PNC Bank, N.A. (the "Custodian") serves as custodian of the assets of
the Fund. PFPC and the Custodian are indirect, wholly-owned subsidiaries of PNC
Bank Corp.
As compensation for their services, the Administrators, the Custodian,
and the Transfer Agent are entitled to receive a combined fee based on the
aggregate average daily net assets of the Fund and certain other investment
portfolios managed by the Investment Adviser and Portfolio Management Agent,
payable monthly at an annual rate of .17% of the first $300 million of average
daily net assets; 15% of the next $300 million; and .13% of average net assets
in excess of $600 million. In addition, a separate fee is charged by PFPC for
certain retail transfer agent services and for various custody transactional
charges.
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") has entered into a
Distribution Agreement with the Company pursuant to which it has the
responsibility for distributing shares of the Fund. The Distributor bears the
cost of printing and mailing prospectuses to potential investors and any
advertising expenses incurred by it in connection with the distribution of the
Fund, subject to the terms of the Service Plan described below, pursuant to
contractual arrangements between the Company and the Distributor and approved by
the Board of Directors of the Company.
The Distributor under-
writes the Fund's
shares which are
then available
for purchase or
redemption.
See "Management" and "Custodian" in the Statement of Additional
Information for additional information regarding the Fund's Investment Adviser,
Portfolio Management Agent, Administrators, Custodian, Transfer Agent and
Distributor.
EXPENSES
Except for certain expenses borne by the Distributor, Harris Trust and
HIM, the Company each bears all costs of its operations, including the
compensation of its Directors who are not affiliated with Harris Trust, HIM or
<PAGE>
the Distributor or any of their affiliates; advisory and administration fees;
payments pursuant to the Service Plan; interest charges; taxes; fees and
expenses of its independent accountants, legal counsel, transfer agent and
dividend disbursing agent; expenses of preparing and printing prospectuses
(except the expense of printing and mailing prospectuses used for promotional
purposes, unless otherwise payable pursuant to the Service Plan), shareholders'
reports, notices, proxy statements and reports to regulatory agencies; insurance
premiums and certain expenses relating to insurance coverage; trade association
membership dues; brokerage and other expenses connected with the execution of
portfolio securities transactions; fees and expenses of the Fund's custodian
including those for keeping books and accounts and calculating the net asset
value per share of the Fund; expenses of shareholders' meetings and meetings of
Board of Directors; expenses relating to the issuance, registration and
qualification of shares of the Fund; pricing services; organizational expenses;
and any extraordinary expenses. Expenses attributable to the Fund are charged
against the assets of the Fund. Other general expenses of the Company are
allocated among the investment portfolios of the Company in an equitable manner
as determined by the Board of Directors.
DETERMINATION OF NET ASSET VALUE
Net asset value per share for the Fund is determined on each day that
the New York Stock Exchange ("NYSE") and the Federal Reserve Bank of
Philadelphia (the "Fed") are open for trading. For a list of the days on which
the net asset value will not be determined, see "Determination of Net Asset
Value" in the Statement of Additional Information. The net asset value per share
of the Fund is determined by dividing the value of the total assets of the Fund
less all of its liabilities by the total number of outstanding shares of the
Fund.
The Net Asset Value
(NAV) is the price or
value of one share of
the Fund.
The net asset value per share of the Fund is determined at the close of
regular trading on the NYSE on each day the Fund is open for business. The value
of securities of the Fund (other than bonds and debt obligations maturing in 60
days or less) is determined based on the last sale price on the principal
exchange on which the securities are traded as of the close of regular trading
on the NYSE (which is currently 4:00 P.M., New York City time). In the absence
of any sale on the valuation date, the securities are valued at the closing bid
price. Securities traded only on over-the-counter markets are valued at closing
over-the-counter bid prices. Bonds are valued at the mean of the last bid and
asked prices. Portfolio securities which are primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on their respective exchanges, except when an occurrence
subsequent to the time a value was so established is likely to have changed such
value. In such an event as well as in those instances where prices of securities
are not readily available, the fair value of those securities will be determined
in good faith by or under the direction of the Board of Directors. Prices used
for
<PAGE>
valuations of securities are provided by independent pricing services. Debt
obligations with remaining maturities of 60 days or less are valued at amortized
cost when the Company's Board of Directors has determined that amortized cost
valuation represents fair value.
PURCHASE OF SHARES
Shares of the Fund may be purchased through authorized broker/dealers,
financial institutions and service agents ("Institutions") on any day the NYSE
and the Fed are open for business. Individual investors will purchase all shares
directly through Institutions which will transmit purchase orders directly to
the Distributor. Institutions are responsible for the prompt transmission of
purchase, exchange or redemption orders, and may independently establish and
charge additional fees to their customers for such services, which would reduce
the customers' yield or return. No minimum initial or subsequent investment
limitations have been imposed. Each Institution through which shares may be
purchased may establish its own terms with respect to the requirement of a
minimum initial investment and minimum subsequent investments.
Contact your broker,
financial institution
or service agent for
answers to any questions
you may have about
purchasing shares.
The Company reserves the right to reject any purchase order. All funds,
net of sales charge, if any, will be invested in full and fractional shares.
Checks will be accepted for the purchase of the Fund's shares subject to
collection at full face value in U.S. dollars. Inquiries may be directed to the
Fund at the address and telephone number on the cover of this Prospectus.
Purchase orders for shares of the Fund received in good order by the
Distributor prior to the close of regular trading (4:00 P.M., New York City
time) on the NYSE will be executed at the offering price, which includes a sales
charge, next determined on that day. Orders placed directly with the Distributor
must be paid for by check or bank wire on the next business day. Payment for the
shares purchased through an Institution will not be due until settlement date,
normally three business days after the order has been executed.
When shares of the Fund are purchased through an Institution, the
Distributor reallows a portion of the sales charge. No sales charge will be
assessed on the reinvestment of distributions.
Although shares of the
Fund are sold with a sales
load of up to 4.50%,
there are a number of
ways to reduce the
sales load.
<PAGE>
Sales charges for shares of the Fund are as follows:
<TABLE>
<CAPTION>
SALES SALES CHARGE AS % OF DEALER ALLOWANCE AS %
AMOUNT OF PURCHASE CHARGE NET AMOUNT INVESTED OF OFFERING PRICE
------------------ ------ --------------- --------------
<S> <C> <C> <C>
Less than $100,000 4.50% 4.71% 4.25%
$100,000 up to (but less than) $200,000 4.00 4.17 3.75
$200,000 up to (but less than) $400,000 3.50 3.63 3.25
$400,000 up to (but less than) $600,000 2.50 2.56 2.25
$600,000 up to (but less than) $800,000 2.00 2.04 1.75
$800,000 up to (but less than) $1,000,000 1.00 1.01 0.75
$1,000,000 and over .00 .00 .00
</TABLE>
No sales charge will be assessed on purchases by (a) any bank, trust
company, or other institution acting on behalf of its fiduciary customer
accounts or any other trust account (including a pension, profit-sharing or
other employee benefit trust created pursuant to a plan qualified under Section
401 of the Internal Revenue Code of 1986, as amended (the "Code")); (b)
individuals with an investment account or relationship with HIM; (c) directors
and officers of the Company; (d) directors, current and retired employees of
Harris Bankcorp, Inc. or any of its affiliates and the immediate family members
of such individuals (spouses and children under 21); (e) brokers, dealers, and
agents who have a sales agreement with the Distributor, and their employees (and
the immediate family members of such individuals); and (f) financial
institutions, financial planners, employee benefit plan consultants or
registered investment advisers acting for the accounts of their clients.
Depending upon the terms of the particular customer account, financial
services institutions, including Harris Trust and HIM, may charge account fees
for automatic investment and other cash management services which they provide,
including, for example, account maintenance fees, compensating balance
requirements, or fees based upon account transactions, assets, or income. This
Prospectus should be read in connection with any information received from
financial services institutions.
The Right of Accumulation allows an investor to combine the amount
being invested in shares of the Fund, Class A Shares of the non-money market
funds of the Harris Insight Funds Trust and the Company with the total net asset
value of the Fund's shares and Class A Shares of such funds currently being
purchased or already owned to determine reduced sales charges in accordance with
the above sales charge schedule. To obtain such discount, the purchaser must
provide sufficient information at the time of purchase to permit verification
that the purchase qualifies for the reduced sales charge, and confirmation of
the order is subject to such verification. The Right of Accumulation may be
modified or discontinued at any time by the Fund with respect to all shares
purchased thereafter.
A Letter of Intent allows an investor to purchase shares of the Fund
and Class A Shares of the non-money market funds of the Harris Insight Funds
<PAGE>
Trust and the Company over a 13-month period at reduced sales charges based on
the total amount intended to be purchased plus the total net asset value of the
Fund's shares and Class A Shares of such funds already owned pursuant to the
terms of the letter. Each investment made during the period receives the reduced
sales charge applicable to the total amount of the intended investment. If such
amount is not invested within the period, the investor must pay the difference
between the sales charges applicable to the purchases made and the charges
previously paid.
REDEMPTION OF SHARES
Shares may be redeemed at their next determined net asset value after
receipt of a proper request by the Distributor directly or through any
Institution. See page _______
There is no charge for redemption transactions, but an Institution may
charge an account-based service fee. Redemption orders received by an
Institution before the close of the NYSE with respect to shares of the Fund and
received by the Distributor before the close of business on the same day will be
executed at the Fund's net asset value per share next determined on that day.
Redemption orders received by an Institution after the close of the NYSE, or not
received by the Distributor prior to the close of business, will be executed at
the Fund's net asset value next determined on the next business day.
There is no charge
by the Fund for
redemptions, although
Institutions may
charge an account-
based service fee.
Redemption orders for the Fund that are received in good order by 4:00
P.M. (New York City time) will normally be remitted within five business days
but not more than seven days. In the case of a redemption request made shortly
after a recent purchase, the redemption proceeds will be distributed upon the
clearance of the shareholder's check used to purchase the Fund's shares which
may take up to 15 days or more after the investment. The proceeds may be more or
less than cost and, therefore, a redemption may result in a gain or loss for
federal income tax purposes. Payment of redemption proceeds may be made in
readily marketable securities.
REDEMPTION THROUGH INSTITUTIONS
Proceeds of redemptions made through authorized Institutions will be
credited to the shareholder's account with the Institution. A redeeming
shareholder may request a check from the Institution or may elect to retain the
redemption proceeds in such shareholder's account. The Institution may benefit
from the use of the redemption proceeds prior to the clearance of a check issued
to a redeeming shareholder for the proceeds or prior to disbursement or
reinvestment of the proceeds on behalf of the shareholder.
Because of the high cost of maintaining small accounts, the Company
with reserves the right to involuntarily redeem accounts on behalf of
<PAGE>
shareholders whose share balances fall below $500 unless this balance condition
results from a decline in the market value of the Fund's assets. Prior to such a
redemption, a shareholder will be notified in writing and permitted 30 days to
make additional investments to raise the account balance to the specified
minimum.
EXCHANGE PRIVILEGE
Shares of the Fund that have been held for seven days or more may be
exchanged for Class A Shares of any other fund of the Company or the Harris
Insight Funds Trust in an identically registered account, provided the shares of
the fund to be acquired are registered for sale in the shareholder's state of
residence, on the following terms: Shares of the Fund and Class A Shares of
non-money market funds of the Harris Insight Funds Trust and the Company may be
exchanged for shares of one another and for Class A Shares of each of the money
market funds of the Company, all at respective net asset values. In addition,
shares of a fund that have been exchanged pursuant to these privileges may be
re-exchanged at respective net asset values of the class of shares of the fund
in which they were originally invested upon notification.
Once you have held
shares for 7 days or more,
you can exchange these
shares for other eligible
Harris Insight
Fund Shares
Procedures applicable to redemption of the Fund's shares are also
applicable to exchanging shares. The Company reserves the right to limit the
number of times shares may be exchanged, to reject any telephone exchange order
or otherwise to modify or discontinue exchange privileges at any time upon 60
days written notice. A capital gain or loss for tax purposes may be realized
upon an exchange, depending upon the cost or other basis of shares redeemed.
SERVICE PLAN
Under the Fund's Service Plan, the Fund bears the costs and expenses in
connection with advertising and marketing its shares and pays the fees of
financial institutions (which may include banks), securities dealers and other
industry professionals, such as investment advisers, accountants and estate
planning firms (collectively, "Service Agents") for servicing activities, as
described below, at a rate up to 0.25% per annum of the average daily net asset
value of the Fund's shares. However, Harris Trust or HIM, in lieu of the Fund,
from time to time in its sole discretion, may volunteer to bear the costs of
such fees to certain Service Agents. The Administrators and the Distributor may
act as Service Agents and receive fees under the Service Plan.
The Service Plan for the
Fund allow the Fund
to pay Service Agents
for certain servicing
activities provided
to their customers.
In addition to such fees, up to 0.05% per annum of the average daily
net asset value of the Fund may be paid to Service Agents for such services by
the Administrators out of their administration fee, past profits or any other
sources available to them. In addition to the fees paid by the Fund, the Fund
may, pursuant to the Service Plan, defray all or part of the cost of preparing
and
<PAGE>
printing brochures and other promotional materials and of delivering
prospectuses and those materials to prospective shareholders of the Fund by
paying on an annual basis up to the greater of $100,000 or 0.05% of the net
asset value of the Fund's shares (but not in any case greater than such costs).
For more information concerning expenses pursuant to the Service Plan, see
"Management."
Servicing activities provided by Service Agents to their customers
investing in the Fund may include, among other things, one or more of the
following: establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; answering customer inquiries
regarding the Fund; assisting customers in changing dividend options, account
designations and addresses; performing sub-accounting; investing customer cash
account balances automatically in Fund shares; providing periodic statements
showing a customer's account balance and integrating such statements with those
of other transactions and balances in the customer's other accounts serviced by
the Service Agent; arranging for bank wires, distribution and such other
services as the Fund may request, to the extent the Service Agent is permitted
to do so by applicable statute, rule or regulation.
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income of the Fund will be declared and
paid quarterly. The Fund's net taxable capital gains, if any, will be
distributed at least annually (to the extent required to avoid imposition of the
4% excise tax described below). Dividends and distributions paid by the Fund
will be invested in additional shares of the Fund at net asset value and
credited to the shareholder's account on the payment date or, at the
shareholder's election, paid in cash. Dividend checks and Statements of Account
will be mailed approximately two business days after the payment date. The Fund
will forward to the Transfer Agent the monies for dividends to be paid in cash
on the payment date.
The Fund declares
and pays dividends
quarterly.
FEDERAL INCOME TAXES
The Fund (and each of the other investment portfolios of the Company)
will be treated as a separate entity for tax purposes and thus the provisions of
the Internal Revenue Code (the "Code") generally will be applied to the Fund
separately, rather than to the Company as a whole. As a result, net capital
gains, net investment income, and operating expenses will be determined
separately for the Fund. The Company intends to qualify the Fund as a regulated
investment company under Subchapter M of the Code. As a portfolio of a regulated
investment company, the Fund will not be subject to federal income taxes with
respect to net investment income and net capital gains distributed to its
shareholders, as long as it distributes 90% or more of its net investment income
(including net short-term capital gains) each year.
<PAGE>
Distributions of net long-term capital gains, if any, will be taxable
as long-term capital gains, whether received in cash or reinvested in additional
shares, regardless of how long the shareholder has held the shares, and will not
qualify for the dividends-received deductions.
A taxable gain or loss may also be realized by a holder of shares in
the Fund upon the redemption or transfer of shares depending on the tax basis of
the shares and their price at the time of the transaction. Any loss realized on
a sale or exchange of shares of the Fund will be disallowed to the extent shares
are acquired within the 61-day period beginning 30 days before and ending 30
days after disposition of the shares.
The Company will be required to withhold, subject to certain
exemptions, a portion (currently, 31%) from dividends paid or credited to
individual shareholders and from redemption proceeds, if a correct taxpayer
identification number, certified when required, is not on file with the Company
or Transfer Agent.
ACCOUNT SERVICES
Shareholders receive a Statement of Account whenever a share
transaction, dividend or capital gain distribution is effected in the accounts,
or at least annually. Shareholders an write or call the Company at the address
and telephone number on page one of this Prospectus with any questions relating
to their investment in shares of the Fund.
ORGANIZATION AND CAPITAL STOCK
The Company, which was incorporated in Maryland on September 16, 1987,
is a diversified, open-end management investment company. The authorized capital
stock of the Company consists of 10,000,000,000 shares having a par value of
$.001 per share. Currently, the Company has six portfolios in operation. The
Board has authorized the Intermediate Bond Fund to issue one class of shares. In
the future, the Board of Directors of the Company may authorize the issuance of
shares of additional investment portfolios and additional classes of shares of
any portfolio.
All shares of the Company have equal voting rights and the shares of
each will be voted in the aggregate, and not by class, except where voting by
class is required by law or where the matter involved affects only one class. A
more detailed statement of the voting rights of shareholders is contained in the
Statement of Additional Information. All shares of the Company, when issued,
will be fully paid and non-assessable.
<PAGE>
As of November 15, 1995, Harris Trust held of record 32,388 shares,
equal to 26.8% of the outstanding shares of the Fund. Harris Trust has indicated
that it holds its shares on behalf of various client accounts and not as
beneficial owner.
The Company may dispense with annual meetings of shareholders in any
year in which Directors are not required to be elected by shareholders. The
Board of Directors of the Company, when requested by at least 10% of the
Company's outstanding shares, will call a meeting of shareholders for the
purpose of voting upon the question of removal of a Director or Directors and
will assist in communications with other shareholders as required by Section
16(c) of the 1940 Act.
REPORTS TO SHAREHOLDERS
The fiscal year of the Company ends on December 31. The Company will
send to its shareholders a semi-annual report showing the investments held by
the Fund and other information (including unaudited financial statements)
pertaining to the Company. An annual report, containing financial statements
audited by independent accountants, is also sent to shareholders.
CALCULATION OF YIELD AND TOTAL RETURN
From time to time the Fund may advertise its yield, tax-equivalent
yield and "total return." "Total return" refers to the amount an investment in
shares of the Fund would have earned, including any increase or decrease in net
asset value, over a specified period of time and assumes the payment of the
maximum sales load and the reinvestment of all dividends and distributions. The
total return of the Fund shows what an investment in shares of the Fund would
have earned over a specified period of time (such as one, five or ten years or
the period of time since commencement of operations, if shorter) assuming the
payment of the maximum sales loads when the investment was first made and that
all distributions and dividends by the Fund were reinvested on their
reinvestment dates during the period less all recurring fees. When the Fund
compares its total return to that of other mutual funds or relevant indices, its
total return may also be computed without reflecting the sales load so long as
the sales load is stated separately in connection with the comparison.
The yield of the Fund refers to the income generated by an investment
in shares of the Fund over a 30-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during the 30-day period is assumed to be earned and
reinvested at a constant rate and compounded semi-annually. The annualized
income is then shown as a percentage of the investment.
<PAGE>
The Fund's performance figures for a class of shares represent past
performance, will fluctuate and should not be considered as representative of
future results. The yield of any investment is generally a function of portfolio
quality and maturity, type of instrument and operating expenses.
<PAGE>
INVESTMENT ADVISER DISTRIBUTOR
Harris Trust & Savings Bank Funds Distributor, Inc.
111 West Monroe Street One Exchange Place
Chicago, Illinois 60603 Boston, Massachusetts 02109
PORTFOLIO MANAGEMENT AGENT CUSTODIAN
HARRIS INVESTMENT MANAGEMENT, INC. PNC Bank, N.A.
190 South LaSalle Street Broad and Chestnut Streets
Chicago, Illinois 60603 Philadelphia, Pennsylvania 19101
ADMINISTRATORS TRANSFER AGENT AND
First Data Investor Services Group, Inc. DIVIDEND DISBURSING AGENT
53 State Street PFPC Inc.
Boston, Massachusetts 02109 P.O. Box 8950
Wilmington, Delaware 19885
PFPC Inc.
103 Bellevue Parkway INDEPENDENT ACCOUNTANTS
Wilmington, Delaware 19809 Price Waterhouse LLP
Philadelphia, Pennsylvania
LEGAL COUNSEL
Bell, Boyd & Lloyd
Chicago, Illinois
Information contained herein is subject to completion or
amendment. A
registration statement relating to these securities has been
filed with the
Securities and Exchange Commission but has not yet become
effective. These
securities may not be sold nor may offers to buy be accepted
prior to the time
the registration statement becomes effective. This Statement
of Additional
Information shall not constitute an offer to sell or the
solicitation of an
offer to buy nor shall there by any sale of these securities
in any state in
which such offer, solicitation or sale would be unlawful prior
to registration
or qualification under the securities laws of any such state.
Subject to Completion
Preliminary Statement of Additional Information dated
___________, 1995
HARRIS INSIGHT FUNDS
One Exchange Place, Boston, Massachusetts 02109
Telephone: (800) 982-8782
The Harris Insight Funds Trust (the "Trust) is an open-
end, diversified
management investment company that currently offers a
selection of eleven
investment portfolios. HT Insight Funds, Inc. (the "Company")
is an open-end,
diversified management investment company that currently offers
six investment
portfolios. The eleven portfolios of the Trust and five of the six
portfolios of
the Company (collectively, the "Funds") are detailed in this
Statement of
Additional Information. The investment objectives of the Funds
are described in
the Prospectus.
See "Investment Objectives and Policies." The Funds are as
follows:
o Harris Insight Equity Fund (the "Equity Fund")
o Harris Insight Equity Income Fund (the "Equity Income
Fund")
o Harris Insight Growth Fund (the "Growth Fund")
o Harris Insight Small-Cap Opportunity Fund (the "Small-
Cap Fund")
o Harris Insight Index Fund (the "Index Fund")
o Harris Insight International Fund (the "International
Fund")
o Harris Insight Balanced Fund (the "Balanced Fund")
o Harris Insight Convertible Securities Fund (the
"Convertible
Securities Fund")
o Harris Insight Intermediate Bond Fund (the
"Intermediate Bond
Fund")
o Harris Insight Bond Fund (the "Bond Fund")
o Harris Insight Intermediate Government Bond Fund (the
"Government
Fund")
o Harris Insight Intermediate Tax-Exempt Bond Fund (the
"Intermediate Tax-Exempt Fund")
<PAGE>
o Harris Insight Tax-Exempt Bond Fund (the "Tax-Exempt
Fund")
o Harris Insight Government Money Market Fund (the
"Government Money
Fund")
o Harris Insight Money Market Fund (the "Money Fund")
o Harris Insight Tax-Exempt Money Market Fund (the "Tax-
Exempt Money
Fund")
Each of the Trust's eleven Funds has two classes of
shares, Class A
Shares and Institutional Shares. Two of the Company's Funds also
each have two
classes of shares, Class A Shares and Institutional Shares. The
remaining three
Funds of the Company described in this Statement of Additional
Information, the
Government Money Fund, the Money Fund and the Tax-Exempt
Money Fund
(collectively, the "Money Market Funds") each have three
classes of Shares,
Class A, Class B and Institutional Shares.
This Statement of Additional Information is not a
prospectus and is
authorized for distribution only when preceded or accompanied
by the Funds'
related Prospectuses dated ___________, 1995 and any
supplement thereto (the
"Prospectuses"). This Statement of Additional Information
contains additional
information that should be read in conjunction with each of the
Prospectuses,
additional copies of which may be obtained without charge from the
Company's and
the Trust's principal underwriter, Funds Distributor, Inc.,
by writing or
calling the Funds at the address or telephone number given above.
TABLE OF CONTENTS
<TABLE>
<S>
<C>
Investment Strategies.............
Capital Stock.......................
Ratings...........................
Other...............................
Investment Restrictions
Custodian...........................
Management........................
Independent Accountants.............
Service Plans.....................
Experts.............................
Calculation of Yield and
Financial Statements................
Total Return....................
Unaudited Financial Statements
Determination of Net
for the Ten Months Ended.......
Asset Value ....................
October 31, 1995..................
Portfolio Transactions.....
Appendix...........................
Federal Income Taxes..............
</TABLE>
<PAGE>
INVESTMENT STRATEGIES
ASSET-BACKED SECURITIES. Asset-backed securities are
generally issued
as pass-through certificates, which represent undivided
fractional ownership
interests in the underlying pool of assets, or as debt
instruments, which are
also known as collateralized obligations and are generally issued
as the debt of
a special purpose entity organized solely for the purpose of
owning such assets
and issuing such debt. Asset-backed securities are often
backed by a pool of
assets representing the obligations of a number of different
parties. Payments
of principal and interest may be guaranteed up to certain
amounts and for a
certain time period by a letter of credit issued by a
financial institution
unaffiliated with the entities issuing the securities.
The estimated life of an asset-backed security
varies with the
prepayment experience with respect to the underlying debt
instruments. The rate
of such prepayments, and hence the life of the asset-backed
security, will be
primarily a function of current market interest rates, although
other economic
and demographic factors may be involved.
CONVERTIBLE SECURITIES. Because they have the
characteristics of both
fixed-income securities and common stock, convertible securities
sometimes are
called "hybrid" securities. Convertible bonds, debentures and
notes are debt
obligations offering a stated interest rate; convertible
preferred stocks are
senior securities offering a stated dividend rate. Convertible
securities will
at times be priced in the market like other fixed income
securities: that is,
their prices will tend to rise when interest rates decline and
will tend to fall
when interest rates rise. However, because a convertible
security provides an
option to the holder to exchange the security for either a
specified number of
the issuer's common shares at a stated price per share or the cash
value of such
common shares, the security market price will tend to fluctuate
in relationship
to the price of the common shares into which it is
convertible. Thus,
convertible securities ordinarily will provide opportunities both
for producing
current income and longer-term capital appreciation.
Because convertible
securities are usually viewed by the issuer as future common
stock, they are
generally subordinated to other senior securities and therefore
are rated one
category lower than the issuer's non-convertible debt
obligations or preferred
stock. Securities rated "B" or "CCC" (or "Caa") are
regarded as having
predominantly speculative characteristics with respect to the
issuer's capacity
to pay interest and repay principal, with "B" indicating a
lesser degree of
speculation than "CCC" (or "Caa"). While such debt will likely
have some quality
and protective characteristics, these are outweighed by large
uncertainties or
major exposures to adverse conditions. Securities rated "CCC" (or
"Caa") have a
currently identifiable vulnerability to default and are dependent
upon favorable
business, financial, and economic conditions to meet timely
payment of interest
and repayment of principal. In the event of adverse business,
financial, or
economic conditions, they are not likely to have the capacity
to pay interest
and repay principal.
While the market values of low-rated and comparable
unrated securities
tend to react less to fluctuations in interest rate levels
than the market
values of higher-rated securities, the market values of certain
low-rated and
comparable unrated securities also tend to be
<PAGE>
more sensitive to individual corporate developments and
changes in economic
conditions than higher-rated securities. In addition, low-rated
securities and
comparable unrated securities generally present a higher degree
of credit risk,
and yields on such securities will fluctuate over time. Issuers of
low-rated and
comparable unrated securities are often highly leveraged and may
not have more
traditional methods of financing available to them so that
their ability to
service their debt obligations during an economic downturn or
during sustained
periods of rising interest rates may be impaired. The risk
of loss due to
default by such issuers is significantly greater because
low-rated and
comparable unrated securities generally are unsecured and
frequently are
subordinated to the prior payment of senior indebtedness. A
Fund may incur
additional expenses to the extent that it is required to seek
recovery upon a
default in the payment of principal or interest on its portfolio
holdings. The
existence of limited markets for low-rated and comparable unrated
securities may
diminish the Fund's ability to obtain accurate market quotations
for purposes of
valuing such securities and calculating its net asset value.
Fixed-income securities, including low-rated securities
and comparable
unrated securities, frequently have call or buy-back features
that permit their
issuers to call or repurchase the securities from their holders,
such as a Fund.
If an issuer exercises these rights during periods of declining
interest rates,
the Fund may have to replace the security with a lower yielding
security, thus
resulting in a decreased return to the Fund.
To the extent that there is no established retail
secondary market for
low-rated and comparable unrated securities, there may be little
trading of such
securities in which case the responsibility of the Trust's Board
of Trustees or
the Company's Board of Directors, as the case may be, to value
such securities
becomes more difficult and judgment plays a greater role in
valuation because
there is less reliable, objective data available. In addition, a
Fund's ability
to dispose of the bonds may become more difficult.
Furthermore, adverse
publicity and investor perceptions, whether or not based
on fundamental
analysis, may decrease the values and liquidity of high yield
bonds, especially
in a thinly traded market.
The market for certain low-rated and comparable unrated
securities is
relatively new and has not weathered a major economic recession.
The effect that
such a recession might have on such securities is not known. Any
such recession,
however, could likely disrupt severely the market for such
securities and
adversely affect the value of such securities. Any such economic
downturn also
could adversely affect the ability of the issuers of such
securities to repay
principal and pay interest thereon and could result in a higher
incidence of
defaults.
FLOATING AND VARIABLE RATE OBLIGATIONS. The Portfolio
Management Agent
(or the Investment Adviser with respect to the Tax-Exempt
Money Fund) will
monitor, on an ongoing basis, the ability of an issuer of a
Floating or Variable
Rate demand instrument to pay principal and interest on demand.
A Fund's right
to obtain payment at par on a demand instrument could be
affected by events
occurring between the date the Fund elects to demand payment
and the date
payment is due that may affect the ability of the issuer of the
instrument to
make payment when due, except when such demand instrument
permits same
<PAGE>
day settlement. To facilitate settlement, these same day demand
instruments may
be held in book entry form at a bank other than the Funds'
custodian subject to
a sub-custodian agreement between the bank and the Funds'
custodian.
The floating and variable rate obligations that the
Funds may purchase
include certificates of participation in such obligations
purchased from banks.
A certificate of participation gives a Fund an undivided
interest in the
underlying obligations in the proportion that the Fund's
interest bears to the
total principal amount of the obligation. Certain certificates of
participation
may carry a demand feature that would permit the holder to
tender them back to
the issuer prior to maturity. The Money Market Funds may invest
in certificates
of participation even if the underlying obligations carry stated
maturities in
excess of thirteen months upon compliance with certain conditions
contained in a
rule of the Securities and Exchange Commission (the
"Commission"). The income
received on certificates of participation in tax-exempt
municipal obligations
constitutes interest from tax-exempt obligations.
FOREIGN SECURITIES. As discussed in the Prospectus,
investing in
foreign securities generally represents a greater degree of risk
than investing
in domestic securities, due to possible exchange rate
fluctuations, less
publicly available information, more volatile markets,
less securities
regulation, less favorable tax provisions, war or expropriation.
As a result of
its investments in foreign securities, a Fund may receive
interest or dividend
payments, or the proceeds of the sale or redemption of such
securities, in the
foreign currencies in which such securities are denominated.
The International Fund may purchase non-dollar
securities denominated
in the currency of countries where the interest rate environment
as well as the
general economic climate provide an opportunity for declining
interest rates and
currency appreciation. If interest rates decline, such non-
dollar securities
will appreciate in value. If the currency also appreciates
against the dollar,
the total investment in such non-dollar securities would be
enhanced further.
(For example, if United Kingdom bonds yield 14% during a year
when interest
rates decline causing the bonds to appreciate by 5% and the
pound rises 3%
versus the dollar, then the annual total return of such bonds
would be 22%. This
example is illustrative only.) Conversely, a rise in interest
rates or decline
in currency exchange rates would adversely affect the Fund's
return.
Investments in non-dollar securities are evaluated
primarily on the
strength of a particular currency against the dollar and on the
interest rate
climate of that country. Currency is judged on the basis of
fundamental economic
criteria (e.g., relative inflation levels and trends, growth
rate forecasts,
balance of payments status and economic policies) as well as
technical and
political data. In addition to the foregoing, interest rates
are evaluated on
the basis of differentials or anomalies that may exist
between different
countries.
FORWARD CONTRACTS. Forward Contracts may be entered into
by the Equity
Fund, the Equity Income Fund, the Growth Fund, the Small-Cap
Fund, the Index
Fund, the
<PAGE>
International Fund and the Balanced Fund (collectively, the
"equity Funds") for
hedging purposes as well as for non-hedging purposes. Forward
Contracts may also
be entered into for "cross hedging" as noted in the Prospectus.
Transactions in
Forward Contracts entered into for hedging purposes will
include forward
purchases or sales of foreign currencies for the purpose of
protecting the
dollar value of securities denominated in a foreign currency or
protecting the
dollar equivalent of interest or dividends to be paid on such
securities. By
entering into such transactions, however, the Fund may be required
to forego the
benefits of advantageous changes in exchange rates. A Fund may
also enter into
transactions in Forward Contracts for other than hedging purposes
which presents
greater profit potential but also involves increased risk. For
example, if the
Adviser believes that the value of a particular foreign currency
will increase
or decrease relative to the value of the U.S. dollar, a Fund
may purchase or
sell such currency, respectively, through a Forward Contract.
If the expected
changes in the value of the currency occur, a Fund will realize
profits which
will increase its gross income. Where exchange rates do
not move in the
direction or to the extent anticipated, however, a Fund may
sustain losses which
will reduce its gross income. Such transactions, therefore, could
be considered
speculative.
The equity Funds have established procedures consistent
with statements
by the Commission and its staff regarding the use of Forward
Contracts by
registered investment companies, which require the use of
segregated assets or
"cover" in connection with the purchase and sale of such
contracts. In those
instances in which a Fund satisfies this requirement through
segregation of
assets, it will maintain, in a segregated account, cash, cash
equivalents or
high grade debt securities, which will be marked to market on a
daily basis, in
an amount equal to the value of its commitments under Forward
Contracts.
GOVERNMENT SECURITIES. Government Securities consist
of obligations
issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or
sponsored enterprises. Obligations of the United States
Government agencies and
instrumentalities are debt securities issued by
United States
Government-sponsored enterprises and federal agencies. Some of
these obligations
are supported by: (a) the full faith and credit of the United
States Treasury
(such as Government National Mortgage Association participation
certificates);
(b) the limited authority of the issuer to borrow from the
United States
Treasury (such as securities of the Federal Home Loan
Bank); (c) the
discretionary authority of the United States Government to
purchase certain
obligations (such as securities of the Federal National Mortgage
Association);
or (d) the credit of the issuer only. In the case of obligations
not backed by
the full faith and credit of the United States, the
investor must look
principally to the agency issuing or guaranteeing the
obligation for ultimate
repayment. In cases where United States Government support
of agencies or
instrumentalities is discretionary, no assurance can be given
that the United
States Government will provide financial support, since it
is not lawfully
obligated to do so.
INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. All
equity Funds,
the Convertible Securities Bond Fund, the Bond Fund, the
Government Fund, the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund may invest in
interest rate
futures contracts and options on such contracts that are traded
on a domestic
exchange or board of trade. Such
<PAGE>
investments may be made by a Fund solely for the purpose of
hedging against
changes in the value of its portfolio securities due to
anticipated changes in
interest rates and market conditions, and not for purposes of
speculation. A
public market exists for interest rate futures contracts
covering a number of
debt securities, including long-term United States Treasury
Bonds, ten-year
United States Treasury Notes, three-month U.S. Treasury Bills
and three-month
domestic bank certificates of deposit. Other financial futures
contracts may be
developed and traded. The purpose of the acquisition or sale of an
interest rate
futures contract by a Fund, as the holder of municipal or other
debt securities,
is to protect the Fund from fluctuations in interest rates on
securities without
actually buying or selling such securities.
Unlike the purchase or sale of a security, no
consideration is paid or
received by a Fund upon the purchase or sale of a futures
contract. Initially, a
Fund will be required to deposit with the broker an amount
of cash or cash
equivalents equal to approximately 10% of the contract amount
(this amount is
subject to change by the board of trade on which the contract
is traded and
members of such board of trade may charge a higher amount). This
amount is known
as initial margin and is in the nature of a performance bond
or good faith
deposit on the contract which is returned to the Fund upon
termination of the
futures contract, assuming that all contractual obligations have
been satisfied.
Subsequent payments, known as variation margin, to and from the
broker, will be
made on a daily basis as the price of the index fluctuates
making the long and
short positions in the futures contract more or less valuable, a
process known
as marking-to-market. At any time prior to the expiration of
the contract, a
Fund may elect to close the position by taking an opposite
position, which will
operate to terminate the Fund's existing position in the futures
contract.
A Fund may not purchase or sell futures contracts or
purchase options
on futures contracts if, immediately thereafter, more than one-
third of its net
assets would be hedged, or the sum of the amount of margin
deposits on the
Fund's existing futures contracts and premiums paid for options
would exceed 5%
of the value of the Fund's total assets. When a Fund enters
into futures
contracts to purchase an index or debt security or purchase call
options, an
amount of cash, U.S. government securities or other high grade
debt securities
equal to the notional market value of the underlying contract
will be deposited
and maintained in a segregated account with the Fund's
custodian to
collateralize the positions, thereby insuring that the use of
the contract is
unleveraged.
Although a Fund will enter into futures contracts
only if an active
market exists for such contracts, there can be no assurance
that an active
market will exist for the contract at any particular time. Most
domestic futures
exchanges and boards of trade limit the amount of fluctuation
permitted in
futures contract prices during a single trading day. The daily
limit establishes
the maximum amount the price of a futures contract may vary
either up or down
from the previous day's settlement price at the end of a trading
session. Once
the daily limit has been reached in a particular contract, no
trades may be made
that day at a price beyond that limit. The daily limit
governs only price
movement during a particular trading day and therefore does not
limit potential
losses because the limit may prevent the liquidation of
unfavorable positions.
It is possible that futures contract prices could move to
<PAGE>
the daily limit for several consecutive trading days with little
or no trading,
thereby preventing prompt liquidation of futures positions and
subjecting some
futures traders to substantial losses. In such event, it will not
be possible to
close a futures position and, in the event of adverse price
movements, a Fund
would be required to make daily cash payments of variation
margin. In such
circumstances, an increase in the value of the portion of the
portfolio being
hedged, if any, may partially or completely offset losses
on the futures
contract. As described above, however, there is no guarantee
the price of
municipal bonds or of other debt securities will, in fact,
correlate with the
price movements in the futures contract and thus provide an
offset to losses on
a futures contract.
If a Fund has hedged against the possibility of an
increase in interest
rates adversely affecting the value of municipal bonds or other
debt securities
held in its portfolio and rates decrease instead, the Fund will
lose part or all
of the benefit of the increased value of the securities it has
hedged because it
will have offsetting losses in its futures positions. In
addition, in such
situations, if a Fund has insufficient cash, it may have to sell
securities to
meet daily variation margin requirements. Such sales of securities
may, but will
not necessarily, be at increased prices which reflect the
decline in interest
rates. A Fund may have to sell securities at a time
when it may be
disadvantageous to do so.
In addition, the ability of a Fund to trade in futures
contracts and
options on futures contracts may be materially limited by the
requirements of
the Internal Revenue Code of 1986, as amended (the "Code"),
applicable to a
regulated investment company. See "Federal Income Taxes" below.
A Fund may purchase put and call options on interest
rate futures
contracts which are traded on a domestic exchange or board of
trade as a hedge
against changes in interest rates, and may enter into closing
transactions with
respect to such options to terminate existing positions. There
is no guarantee
such closing transactions can be effected.
Options on futures contracts, as contrasted with the
direct investment
in such contracts, give the purchaser the right, in return for the
premium paid,
to assume a position in futures contracts at a specified
exercise price at any
time prior to the expiration date of the options. Upon exercise
of an option,
the delivery of the futures position by the writer of the option
to the holder
of the option will be accompanied by delivery of the accumulated
balance in the
writer's futures margin account, which represents the amount by
which the market
price of the futures contract exceeds, in the case of a call, or
is less than,
in the case of a put, the exercise price of the option on the
futures contract.
The potential loss related to the purchase of an option on
interest rate futures
contracts is limited to the premium paid for the option
(plus transaction
costs). Because the value of the option is fixed at the point of
sale, there are
no daily cash payments to reflect changes in the value of
the underlying
contract; however, the value of the option does change daily
and that change
would be reflected in the net asset value of a Fund.
There are several risks in connection with the use of
interest rate
futures contracts and options on such futures contracts as
hedging devices.
Successful use of these derivative
<PAGE>
securities by a Fund is subject to the Portfolio Management
Agent's ability to
predict correctly movements in the direction of interest rates.
Such predictions
involve skills and techniques which may be different from those
involved in the
management of long-term municipal bond portfolio. There can be no
assurance that
there will be a correlation between price movements in interest
rate futures, or
related options, on the one hand, and price movements in the
municipal bond or
other debt securities which are the subject to the hedge, on
the other hand.
Positions in futures contracts and options on futures contracts
may be closed
out only on an exchange or board of trade that provides an
active market,
therefore, there can be no assurance that a liquid market will
exist for the
contract or the option at any particular time. Consequently, a
Fund may realize
a loss on a futures contract that is not offset by an increase
in the price of
the municipal bonds or other debt securities being hedged or may
not be able to
close a futures position in the event of adverse price
movements. Any income
earned from transactions in futures contracts and options on
futures contracts
will be taxable. Accordingly, it is anticipated that such
investments will be
made only in unusual circumstances, such as when the Portfolio
Management Agent
anticipates an extreme change in interest rates or market
conditions.
See additional risk disclosure below under "Index Futures
Contracts and
Options on Index Futures Contracts".
LETTERS OF CREDIT. Debt obligations, including municipal
obligations,
certificates of participation, commercial paper and
other short-term
obligations, may be backed by an irrevocable letter of credit
of a bank that
assumes the obligation for payment of principal and interest
in the event of
default by the issuer. Only banks that, in the opinion of
the Portfolio
Management Agent or the Investment Adviser with respect to the
Tax-Exempt Money
Fund, are of investment quality comparable to other permitted
investments of a
Fund, may be used for letter of credit backed investments.
LOANS OF PORTFOLIO SECURITIES. Each Fund, except the
Money Market
Funds, may lend to brokers, dealers and financial institutions
securities from
its portfolio representing up to one-third of the Fund's net
assets if cash or
cash equivalent collateral, including letters of credit, marked-
to-market daily
and equal to at least 100% of the current market value of the
securities loaned
(including accrued interest and dividends thereon) plus the
interest payable to
the Fund with respect to the loan is maintained by the borrower
with the Fund in
a segregated account. In determining whether to lend a security
to a particular
broker, dealer or financial institution, the Portfolio
Management Agent will
consider all relevant facts and circumstances, including the
creditworthiness of
the broker, dealer or financial institution. No Fund will
enter into any
portfolio security lending arrangement having a duration of
longer than one
year. Any securities that a Fund may receive as collateral will
not become part
of the Fund's portfolio at the time of the loan and, in the
event of a default
by the borrower, the Fund will, if permitted by law, dispose of
such collateral
except for such part thereof that is a security in which the
Fund is permitted
to invest. During the time securities are on loan, the
borrower will pay the
Fund any accrued income on those securities, and the Fund may
invest the cash
collateral and earn additional income or receive an agreed
upon fee from a
borrower that has delivered cash equivalent collateral. Loans of
securities by a
<PAGE>
Fund will be subject to termination at the Fund's or the
borrower's option. Each
Fund may pay reasonable administrative and custodial fees in
connection with a
securities loan and may pay a negotiated fee to the borrower
or the placing
broker. Borrowers and placing brokers may not be affiliated,
directly or
indirectly, with the Company, the Trust, the Investment Adviser,
the Portfolio
Management Agent, the Investment Sub-Adviser or the Distributor.
MORTGAGE-RELATED SECURITIES. All equity Funds, the
Intermediate Bond
Fund, the Bond Fund and the Government Fund may invest in
mortgage-backed
securities, including collateralized mortgage obligations
("CMOs") and
Government Stripped Mortgage-Backed Securities. The Government
Fund may purchase
such securities only if they represent interests in an
asset-backed trust
collateralized by the Government National Mortgage Association
("GNMA"), the
Federal National Mortgage Association ("FNMA"), or the
Federal Home Loan
Mortgage Corporation ("FHLMC").
CMOs are types of bonds secured by an underlying pool
of mortgages or
mortgage pass-through certificates that are structured to
direct payments on
underlying collateral to different series or classes of the
obligations. To the
extent that CMOs are considered to be investment companies,
investments in such
CMOs will be subject to the percentage limitations described
under "Investment
Company Securities" in the Prospectus.
Government Stripped Mortgage-Backed Securities are
mortgage-backed
securities issued or guaranteed by GNMA, FNMA, or FHLMC.
These securities
represent beneficial ownership interests in either
periodic principal
distributions ("principal-only") or interest distributions
("interest-only") on
mortgage-backed certificates issued by GNMA, FNMA or FHLMC, as
the case may be.
The certificates underlying the Government Stripped Mortgage-
Backed Securities
represent all or part of the beneficial interest in pools of
mortgage loans.
Mortgage-backed securities provide a monthly payment
consisting of
interest and principal payments. Additional payments may be
made out of
unscheduled repayments of principal resulting from the sale of
the underlying
residential property, refinancing or foreclosure, net of fees or
costs that may
be incurred. Prepayments of principal on mortgage-related
securities may tend to
increase due to refinancing of mortgages as interest rates
decline. Prompt
payment of principal and interest on GNMA mortgage pass-through
certificates is
backed by the full faith and credit of the United States.
FNMA guaranteed
mortgage pass-through certificates and FHLMC participation
certificates are
solely the obligations of those entities but are supported by the
discretionary
authority of the U.S. Government to purchase the agencies'
obligations.
Investments in interest-only Government Stripped
Mortgage-Backed
Securities will be made in order to enhance yield or to benefit
from anticipated
appreciation in value of the securities at times when the
Portfolio Management
Agent believes that interest rates will remain stable or increase.
In periods of
rising interest rates, the value of interest-only
Government Stripped
Mortgage-Backed Securities may be expected to increase because of
the diminished
expectation that the underlying mortgages will be prepaid. In this
situation
<PAGE>
the expected increase in the value of interest-only
Government Stripped
Mortgage-Backed Securities may offset all or a portion of any
decline in value
of the portfolio securities of the Fund. Investing in
Government Stripped
Mortgage-Backed Securities involves the risks normally associated
with investing
in mortgage-backed securities issued by government or
government-related
entities. In addition, the yields on interest-only and principal-
only Government
Stripped Mortgage-Backed Securities are extremely sensitive to
the prepayment
experience on the mortgage loans underlying the certificates
collateralizing the
securities. If a decline in the level of prevailing interest
rates results in a
rate of principal prepayments higher than anticipated,
distributions of
principal will be accelerated, thereby reducing the yield to
maturity on
interest-only Government Stripped Mortgage-Backed Securities and
increasing the
yield to maturity on principal-only Government Stripped
Mortgage-Backed
Securities. Conversely, if an increase in the level of prevailing
interest rates
results in a rate of principal prepayments lower than anticipated,
distributions
of principal will be deferred, thereby increasing the yield
to maturity on
interest-only Government Stripped Mortgage-Backed Securities and
decreasing the
yield to maturity on principal-only Government Stripped
Mortgage-Backed
Securities. Sufficiently high prepayment rates could result
in a Fund's not
fully recovering its initial investment in an interest-only
Government Stripped
Mortgage-Backed Security. Government Stripped Mortgage-Backed
Securities are
currently traded in an over-the-counter market maintained by
several large
investment banking firms. There can be no assurance that a Fund
will be able to
effect a trade of a Government Stripped Mortgage-Backed Security
at a time when
it wishes to do so.
MUNICIPAL LEASES. Each of the Intermediate Tax-Exempt
Fund and the
Tax-Exempt Fund may acquire participations in lease obligations
or installment
purchase contract obligations (hereinafter collectively
called "lease
obligations") of municipal authorities or entities. Although
lease obligations
do not constitute general obligations of the municipality
for which the
municipality's taxing power is pledged, a lease obligation is
ordinarily backed
by the municipality's covenant to budget for, appropriate, and
make the payments
due under the lease obligation. However, certain lease
obligations contain
"non-appropriation" clauses which provide that the
municipality has no
obligation to make lease or installment purchase payments in
future years unless
money is appropriated for such purpose on a yearly basis. In
addition to the
"non-appropriation" risk, these securities represent a
relatively new type of
financing that has not yet developed the depth of marketability
associated with
more conventional bonds. In the case of a "non-appropriation"
lease, a Fund's
ability to recover under the lease in the event of non-
appropriation or default
will be limited solely to the repossession of the leased
property in the event
foreclosure might prove difficult.
In evaluating the credit quality of a municipal lease
obligation and
determining whether such lease obligation will be considered
"liquid," the
Portfolio Management Agent will consider: (1) whether the lease
can be canceled;
(2) what assurance there is that the assets represented by
the lease can be
sold; (3) the strength of the lessee's general credit
(e.g., its debt,
administrative, economic, and financial characteristics); (4)
the likelihood
that the municipality will discontinue appropriating funding
for the leased
property because the property is no longer deemed essential to the
operations of
the municipality (e.g., the
<PAGE>
potential for an "event of non-appropriation"); and, (5) the
legal recourse in
the event of failure to appropriate.
MUNICIPAL OBLIGATIONS. As discussed in the applicable
Prospectus, the
Balanced Fund, the Intermediate Bond Fund, the Bond Fund, the
Intermediate
Tax-Exempt Fund, the Tax-Exempt Fund and the Tax-Exempt Money Fund
may invest in
tax exempt obligations to the extent consistent with each
Fund's investment
objective and policies. Notes sold as interim financing in
anticipation of
collection of taxes, a bond sale or receipt of other revenues
are usually
general obligations of the issuer.
TANs. An uncertainty in a municipal issuer's capacity to
raise taxes as
a result of such events as a decline in its tax base or a rise in
delinquencies
could adversely affect the issuer's ability to meet its
obligations on
outstanding TANs. Furthermore, some municipal issuers mix
various tax proceeds
into a general fund that is used to meet obligations other
than those of the
outstanding TANs. Use of such a general fund to meet various
obligations could
affect the likelihood of making payments on TANs.
BANs. The ability of a municipal issuer to meet its
obligations on its
BANs is primarily dependent on the issuer's adequate access to
the longer term
municipal bond market and the likelihood that the proceeds of
such bond sales
will be used to pay the principal of, and interest on, BANs.
RANs. A decline in the receipt of certain revenues, such
as anticipated
revenues from another level of government, could adversely
affect an issuer's
ability to meet its obligations on outstanding RANs. In
addition, the
possibility that the revenues would, when received, be used
to meet other
obligations could affect the ability of the issuer to pay the
principal of, and
interest on, RANs.
The Intermediate Bond Fund, the Balanced Fund, the
Bond Fund, the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund may also
invest in: (1)
municipal bonds having a maturity at the time of issuance of up to
40 years that
are rated at the date of purchase "Baa" or better by Moody's
Investors Service,
Inc. ("Moody's") or "BBB" or better by Standard & Poor's
Corporation ("S&P");
(2) municipal notes having maturities at the time of issuance
of 15 years or
less that are rated at the date of purchase "MIG 1" OR "MIG 2"
(or "VMIG 1" or
"VMIG 2" in the case of an issue having a variable rate with a
demand feature)
by Moody's or "SP-1+," "SP-1," or "SP-2" by S&P; and (3)
municipal commercial
paper with a stated maturity of one year or less that is rated
at the date of
purchase "P-2" or better by Moody's or "A-2" or better by S&P.
PUT AND CALL OPTIONS. All equity Funds, the
Convertible Securities
Fund, the Bond Fund, the Government Fund, the Intermediate Tax-
Exempt Fund and
the Tax-Exempt Fund may invest in covered put and covered call
options and write
covered put and covered call options on securities in which
they may invest
directly and that are traded on registered domestic securities
exchanges. The
writer of a call option, who receives a premium, has the
obligation, upon
exercise of the option, to deliver the underlying security
against payment of
<PAGE>
the exercise price during the option period. The writer of a put,
who receives a
premium, has the obligation to buy the underlying security, upon
exercise, at
the exercise price during the option period.
These Funds each may write put and call options on
securities only if
they are "covered," and such options must remain "covered" as
long as the Fund
is obligated as a writer. A call option is "covered" if a
Fund owns the
underlying security covered by the call or its equivalent or has
an absolute and
immediate right to acquire that security without additional cash
consideration
(or for additional cash consideration if held in a segregated
account by its
custodian) upon conversion or exchange of other securities
held in its
portfolio. A call option is also covered if a Fund holds on a
share-for-share or
equal principal amount basis a call on the same security as
the call written
where the exercise price of the call held is equal to or less
than the exercise
price of the call written or greater than the exercise price of
the call written
if the difference is maintained by the Fund in cash, Treasury
bills or other
high-grade short-term obligations in a segregated account with
its custodian. A
put option is "covered" if a Fund maintains cash, Treasury
bills, or other
high-grade short-term obligations with a value equal to the
exercise price in a
segregated account with its custodian, or owns on a share-for-
share or equal
principal amount basis a put on the same security as the put
written where the
exercise price of the put held is equal to or greater than the
exercise price of
the put written.
The principal reason for writing call options is to
attempt to realize,
through the receipt of premiums, a greater current return than
would be realized
on the underlying securities alone. In return for the premium, a
Fund would give
up the opportunity for profit from a price increase in the
underlying security
above the exercise price so long as the option remains open,
but retains the
risk of loss should the price of the security decline. Upon
exercise of a call
option when the market value of the security exceeds the exercise
price, a Fund
would receive less total return for its portfolio than it would
have if the call
had not been written, but only if the premium received for writing
the option is
less than the difference between the exercise price and the
market value. Put
options are purchased in an effort to protect the value of a
security owned
against an anticipated decline in market value. A Fund may forego
the benefit of
appreciation on securities sold or be subject to depreciation
on securities
acquired pursuant to call or put options, respectively, written
by the Fund. A
Fund may experience a loss if the value of the securities
remains at or below
the exercise price, in the case of a call option, or at or
above the exercise
price, in the case of a put option.
Each Fund may purchase put options in an effort to
protect the value of
a security owned against an anticipated decline in market value.
Exercise of a
put option will generally be profitable only if the market
price of the
underlying security declines sufficiently below the exercise price
to offset the
premium paid and the transaction costs. If the market price of
the underlying
security increases, a Fund's profit upon the sale of the
security will be
reduced by the premium paid for the put option less any amount for
which the put
is sold.
<PAGE>
The staff of the Commission has taken the position
that purchased
options not traded on registered domestic securities exchanges
and the assets
used as cover for written options not traded on such exchanges
are illiquid
securities. The Trust and the Company have agreed that, pending
resolution of
the issue, each of the Funds will treat such options and assets
as subject to
such Fund's limitation on investment in securities that
are not readily
marketable.
Writing of options involves the risk that there will
be no market in
which to effect a closing transaction. An exchange-traded option
may be closed
out only on an exchange that provides a secondary market for an
option of the
same series, and there is no assurance that a liquid secondary
market on an
exchange will exist.
REPURCHASE AGREEMENTS. A Fund may purchase portfolio
securities subject
to the seller's agreement to repurchase them at a mutually agreed
upon time and
price, which includes an amount representing interest on the
purchase price. A
Fund may enter into repurchase agreements only with respect to
obligations that
could otherwise be purchased by the Fund. The seller will be
required to
maintain in a segregated account for the Fund cash or cash
equivalent collateral
equal to at least 100% of the repurchase price (including
accrued interest).
Default or bankruptcy of the seller would expose a Fund to
possible loss because
of adverse market action, delays in connection with the
disposition of the
underlying obligations or expenses of enforcing its rights.
A Fund may not enter into a repurchase agreement if, as
a result, more
than 15% (10% with respect to the Equity Fund, the Intermediate
Bond Fund and
the Money Market Funds) of the market value of the Fund's total
net assets would
be invested in repurchase agreements with a maturity of more than
seven days and
in other illiquid securities. A Fund will enter into repurchase
agreements only
with registered broker/dealers and commercial banks that
meet guidelines
established by the Board of Directors or Trustees, as the case may
be.
Certain of the Funds may enter into reverse
repurchase agreements,
which are detailed in the Prospectus.
SECURITIES WITH PUTS. A put is not transferable by a
Fund, although a
Fund may sell the underlying securities to a third party at
any time. If
necessary and advisable, any Fund may pay for certain puts either
separately, in
cash or by paying a higher price for portfolio securities that
are acquired
subject to such a put (thus reducing the yield to maturity
otherwise available
for the same securities). The Funds expect, however, that puts
generally will be
available without the payment of any direct or indirect
consideration.
All equity Funds, the Intermediate Bond Fund, the
Bond Fund, the
Government Fund, the Intermediate Tax-Exempt Fund, the Tax-
Exempt Fund, the
Government Money Fund, the Money Fund and the Tax-Exempt Money
Fund intend to
enter into puts solely to maintain liquidity and do not intend to
exercise their
rights thereunder for trading purposes. The puts will only
be for periods
substantially less than the life of the underlying security. The
acquisition of
a put will not affect the valuation by a Fund of the underlying
security.
<PAGE>
The actual put will be valued at zero in determining net asset
value in the case
of the Money Market Funds. Where a Fund pays directly or
indirectly for a put,
its costs will be reflected as an unrealized loss of the period
during which the
put is held by the Fund and will be reflected in realized gain or
loss when the
put is exercised or expires. If the value of the underlying
security increases,
the potential for unrealized or realized gain is reduced by the
cost of the put.
The maturity of a municipal obligation purchased by a Fund
will not be
considered shortened by any put to which the obligation is
subject.
INDEX FUTURES CONTRACTS AND OPTIONS ON INDEX FUTURES
CONTRACTS. All
equity Funds, the Convertible Securities Fund, the Bond Fund,
the Government
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund
may attempt to
reduce the risk of investment in equity and other securities
by hedging a
portion of its portfolio through the use of futures contracts
on indices and
options on such indices traded on national securities exchanges.
Each of these
Funds may hedge a portion of its portfolio by selling index
futures contracts to
limit exposure to decline. During a market advance or when
the Portfolio
Management Agent anticipates an advance, a Fund may hedge a
portion of its
portfolio by purchasing index futures or options on indices.
This affords a
hedge against the Fund's not participating in a market advance at
a time when it
is not fully invested and serves as a temporary substitute for
the purchase of
individual securities that may later by purchased in a more
advantageous manner.
A Fund will sell options on indices only to close out existing
hedge positions.
A securities index assigns relative weightings to the
securities in the
index, and the index generally fluctuates with changes in the
market values of
these securities. A securities index futures contract is an
agreement in which
one party agrees to deliver to the other an amount of cash equal
to a specific
dollar amount times the difference between the value of a
specific securities
index at the close of the last trading day of the contract
and the price at
which the agreement is made. Unlike the purchase or sale of
an underlying
security, no consideration is paid or received by a Fund upon
the purchase or
sale of a securities index futures contract. When the contract is
executed, each
party deposits with a broker or in a segregated custodial
account a percentage
of the contract amount which may be as low as 5%, called the
"initial margin."
During the term of the contract, the amount of this deposit is
adjusted based on
the current value of the futures contract by payments of
variation margin to or
from the broker or segregated account.
Municipal bond index futures contracts, which are based
on an index of
40 tax-exempt, municipal bonds with an original issue size
of at least $50
million and a rating of A or higher by S&P or A or higher by
Moody's, began
trading in mid-1985. No physical delivery of the underlying
municipal bonds in
the index is made. The Fund may utilize any such contracts and
associated put
and call options for which there is an active trading market.
A Fund will use index futures contracts only as a hedge
against changes
resulting from market conditions in the values of securities held
in the Fund's
portfolio or which it intends to purchase and where the
transactions are
economically appropriate to the reduction
<PAGE>
of risks inherent in the ongoing management of the Fund. A Fund
will sell index
futures only if the amount resulting from the multiplication of
the then current
level of the indices upon which its futures contracts
which would be
outstanding, do not exceed one-third of the value of the
Fund's net assets.
Also, a Fund may not purchase or sell index futures if,
immediately thereafter,
the sum of the premiums paid for unexpired options on futures
contracts and
margin deposits on the Fund's outstanding futures contracts
would exceed 5% of
the market value of the Fund's total assets. When a Fund purchases
index futures
contracts, it will deposit an amount of cash and cash equivalents
equal to the
market value of the futures contracts in a segregated
account with its
custodian.
There are risks that are associated with the use of
futures contracts
for hedging purposes. The price of a futures contract will vary
from day to day
and should parallel (but not necessarily equal) the changes
in price of the
underlying securities that are included in the index. The
difference between
these two price movements is called "basis." There are
occasions when basis
becomes distorted. For instance, the increase in value of
the hedging
instruments may not completely offset the decline in value of the
securities in
the portfolio. Conversely, the loss in the hedged position may
be greater than
the capital appreciation that a Fund experiences in its
securities positions.
Distortions in basis are more likely to occur when the securities
hedged are not
part of the index covered by the futures contract. Further, if
market values do
not fluctuate, a Fund will sustain a loss at least equal to the
commissions on
the financial futures transactions.
All investors in the futures market are subject to
initial margin and
variation margin requirements. Rather than providing
additional variation
margin, an investor may close out a futures position. Changes in
the initial and
variation margin requirements may influence an investor's
decision to close out
the position. The normal relationship between the securities and
futures markets
may become distorted if changing margin requirements do not
reflect changes in
value of the securities. The margin requirements in the
futures market are
substantially lower than margin requirements in the
securities market.
Therefore, increased participation by speculators in the
futures market may
cause temporary basis distortion.
In the futures market, it may not always be possible to
execute a buy
or sell order at the desired price, or to close out an open
position due to
market conditions limits on open positions, and/or daily
price fluctuation
limits. Each market establishes a limit on the amount by which
the daily market
price of a futures contract may fluctuate. Once the market
price of a futures
contract reaches its daily price fluctuation limit, positions in
the commodity
can be neither taken nor liquidated unless traders are willing to
effect trades
at or within the limit. The holder of a futures contract
(including a Fund) may
therefore be locked into its position by an adverse price
movement for several
days or more, which may be to its detriment. If a Fund could not
close its open
position during this period, it would continue to be required to
make daily cash
payments of variation margin. The risk of loss to a Fund is
theoretically
unlimited when it writes (sells) a futures contract because it
is obligated to
settle for the value of the contract unless it is closed out,
regardless of
fluctuations in the price of the underlying index. When a Fund
purchases a put
option or
<PAGE>
call option, however, unless the option is exercised, the
maximum risk of loss
to the Fund is the price of the put option or call option
purchased.
Options on securities indices are similar to options
on securities
except that, rather than the right to take or make delivery of
securities at a
specified price, an option on a securities index gives the
holder the right to
receive, upon exercise of the option, an amount of cash if the
closing level of
the securities index upon which the option is based is greater
than, in the case
of a call, or less than, in the case of a put, the exercise price
of the option.
This amount of cash is equal to the difference between the
closing price of the
index and the exercise price of the option expressed in
dollars times a
specified multiple (the "multiplier"). The writer of the option is
obligated, in
return for the premium received, to make delivery of this amount.
Unlike options
on securities, all settlements are in cash, and gain or loss
depends on price
movements in the securities market generally (or in a
particular industry or
segment of the market) rather than price movements in individual
securities. A
Fund will write put options on indices only if they are covered
by segregating
with the Fund's custodian an amount of cash or short-term
investments equal to
the aggregate exercise price of the puts.
Except as described below, a Fund will write call
options on indices
only if on such date it holds a portfolio of securities at
least equal to the
value of the index times the multiplier times the number of
contracts. When a
Fund writes a call option on a broadly based stock market
index, it will
segregate or put into escrow with its custodian, or pledge
to a broker as
collateral for the option, "qualified securities" with a
market value at the
time the option is written of not less than 100% of the current
index value
times the multiplier times the number of contracts. If a Fund
has written an
option on an industry or market segment index, it will
segregate, escrow, or
pledge "qualified securities," all of which are stocks of
issuers in such
industry or market segment, with a market value at the time
the option is
written of not less than 100% of the current index value times
the multiplier
times the number of contracts. These stocks will include stocks
that represent
at least 50% of the weighting of the industry or market segment
index and will
represent at least 50% of a Fund's holdings in that industry or
market segment.
No individual security will represent more than 15% of the
amount segregated,
pledged or escrowed in the case of broadly based stock market
index options or
25% of this amount in the case of industry or market segment index
options. If
at the close of business on any day the market value of the
qualified securities
so segregated, escrowed or pledged falls below 100% of the
current index value
times the multiplier times the number of contracts, a Fund
will segregate,
escrow or pledge an amount in cash, Treasury bills or
other high-grade
short-term obligations equal in value to the difference. In
addition, when a
Fund writes a call on an index that is in-the-money at the
time the call is
written, a Fund will segregate with its custodian or pledge to
the broker as
collateral cash, U.S. Government or other high-grade short-term
debt obligations
equal in value to the amount by which the call is in-the-
money times the
multiplier times the number of contracts. Any amount segregated
pursuant to the
foregoing sentence may be applied to a Fund's obligation to
segregate additional
amounts in the event that the market value of the qualified
securities falls
below 100% of the current index value times the multiplier times
the number of
contracts. A "qualified security" is an equity security that
is listed on a
<PAGE>
national securities exchange or traded on the National Association
of Securities
Dealers Automated Quotation System against which the Equity Fund
has not written
a stock call option. However, if a Fund owns a call on the
same index as the
call written where the exercise price of the call owned is equal
to or less than
the exercise price of the call written, or greater than the call
written if the
difference is maintained by the Fund in cash, Treasury bills or
other high-grade
short-term obligations in a segregated account with its
custodian, it will not
be subject to the requirements described in this paragraph.
A Fund's successful use of index futures contracts
and options on
indices depends upon the Portfolio Management Agent's ability
to predict the
direction of the market and is subject to various
additional risks. The
correlation between movements in the price of the index future
and the price of
the securities being hedged is imperfect and the risk from
imperfect correlation
increases as the composition of a Fund's portfolio diverges from
the composition
of the relevant index. In addition, if a Fund purchases futures to
hedge against
market advances before it can invest in a security in an
advantageous manner and
the market declines, the Fund might create a loss on the
futures contract.
Particularly in the case of options on stock indices, a
Fund's ability to
establish and maintain positions will depend on market liquidity.
In addition,
the ability of a Fund to close out an option depends on a
liquid secondary
market. The risk of loss to a Fund is theoretically unlimited
when it writes
(sells) a futures contract because a Fund is obligated to settle
for the value
of the contract unless it is closed out, regardless of
fluctuations in the
underlying index. There is no assurance that liquid secondary
markets will exist
for any particular option at any particular time.
Although no Fund has a present intention to invest 5%
or more of its
assets in index futures and options on indices, a Fund has the
authority to
invest up to 25% of its net assets in such securities.
See additional risk disclosure above under "Interest
Rate Futures
Contracts and Related Options".
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS
(DELAYED-DELIVERY).
When-issued purchases and forward commitments (delayed-delivery)
are commitments
by a Fund to purchase or sell particular securities with payment
and delivery to
occur at a future date (perhaps one or two months later). These
transactions
permit the Fund to lock-in a price or yield on a security,
regardless of future
changes in interest rates.
When a Fund agrees to purchase securities on a when-
issued or forward
commitment basis, the Custodian will segregate on the books
of the Fund the
liquid assets of the Fund. Normally, the Custodian will set
aside portfolio
securities to satisfy a purchase commitment, and in such a case
the Fund may be
required subsequently to place additional assets in the
separate account in
order to ensure that the value of the account remains equal to the
amount of the
Fund's commitments. Because a Fund's liquidity and ability
to manage its
portfolio might be affected when it sets aside cash or portfolio
securities to
cover such purchase commitments, the Investment Adviser
expects that its
commitments to purchase when-issued
<PAGE>
securities and forward commitments will not exceed 25% of the
value of a Fund's
total assets absent unusual market conditions.
A Fund will purchase securities on a when-issued or
forward commitment
basis only with the intention of completing the transaction
and actually
purchasing the securities. If deemed advisable as a matter
of investment
strategy, however, a Fund may dispose of or renegotiate a
commitment after it is
entered into, and may sell securities it has committed to
purchase before those
securities are delivered to the Fund on the settlement date. In
these cases the
Fund may realize a capital gain or loss for federal income tax
purposes.
When a Fund engages in when-issued and forward commitment
transactions,
it relies on the other party to consummate the trade. Failure of
such party to
do so may result in the Fund's incurring a loss or missing an
opportunity to
obtain a price considered to be advantageous.
The market value of the securities underlying a when-
issued purchase or
a forward commitment to purchase securities, and any subsequent
fluctuations in
their market value, are taken into account when determining the
market value of
a Fund starting on the day the Fund agrees to purchase the
securities. A Fund
does not earn interest on the securities it has committed to
purchase until they
are paid for and delivered on the settlement date.
ZERO COUPON SECURITIES. A zero coupon security, which
may be purchased
by each of the Funds except the Convertible Securities
Fund, is a debt
obligation that does not entitle the holder to any periodic
payments of interest
prior to maturity and therefore is issued and traded at a discount
from its face
amount. Zero coupon securities may be created by separating
the interest and
principal components of securities issued or guaranteed by the
United States
Government or one of its agencies or instrumentalities or
issued by private
corporate issuers. These securities are not obligations issued or
guaranteed by
the United States Government. Typically, a custodian bank
or investment
brokerage firm holding the security has separated ("stripped")
the unmatured
interest coupons from the underlying principal. The holder may
then resell the
stripped securities. The stripped coupons are sold
separately from the
underlying principal, usually at a deep discount because the buyer
receives only
the right to receive a fixed payment on the security upon
maturity and does not
receive any rights to reinvestment of periodic interest (cash)
payments. Because
the rate to be earned on these reinvestments may be higher or
lower than the
rate quoted on the interest-paying obligations at the time of
the original
purchase, the investor's return on investments is uncertain
even if the
securities are held to maturity. This uncertainty is commonly
referred to as
reinvestment risk. With zero coupon securities, however,
there are no cash
distributions to reinvest, so investors bear no reinvestment
risk if they hold
the zero coupon securities to maturity; holders of zero
coupon securities,
however, forego the possibility of reinvesting at a higher yield
than the rate
paid on the originally issued security. With both zero coupon
securities and
interest-paying securities there is no reinvestment risk on the
principal amount
of the investment. When held to maturity, the entire
return from such
instruments is determined by the difference between such
instrument's purchase
price and its value at maturity. Because interest on zero coupon
securities is
not paid on a current
<PAGE>
basis, the values of securities of this type are subject to
greater fluctuations
than are the values of securities that distribute income
regularly. In addition,
a Fund's investment in zero coupon securities will result in
special tax
consequences. Although zero coupon securities do not make interest
payments, for
tax purposes, a portion of the difference between the security's
maturity value
and its purchase price is imputed income to a Fund each year.
Under the federal
tax laws applicable to investment companies, a Fund will not be
subject to tax
on its income if it pays annual dividends to its shareholders
substantially
equal to all the income received from, and imputed to, its
investments during
the year. Because imputed income must be paid to shareholders
annually, a Fund
may need to borrow money or sell securities to meet certain
dividend and
redemption obligations. In addition, the sale of securities
by a Fund may
increase its expense ratio and decrease its rate of return.
RATINGS
After purchase by the Funds, a security may cease to
be rated or its
rating may be reduced below the minimum required for purchase
by the Funds.
Neither event will require the Funds to sell such security unless
the amount of
such securities exceeds permissible limits established in the
Prospectuses.
However, the Portfolio Management Agent will reassess
promptly whether the
security presents minimal credit risks and determine whether
continuing to hold
the security is in the best interests of the Fund. A Money
Market Fund may be
required to sell a security downgraded below the minimum required
for purchase,
absent a specific finding by the Company's Board of Directors that
a sale is not
in the best interests of the Fund. To the extent the ratings
given by any
nationally recognized statistical rating organization may change
as a result of
changes in such organizations or in their rating systems, the
Funds will attempt
to use comparable ratings as standards for investments in
accordance with the
investment policies contained in the Prospectuses and in this
Statement of
Additional Information.
For additional information on ratings, see Appendix A to
this Statement
of Additional Information.
INVESTMENT RESTRICTIONS
No Fund may:
(1) issue senior securities or borrow money (except that
each Fund may
borrow from banks up to 10% of the current value of such Fund's
net assets for
temporary purposes only in order to meet redemptions, and these
borrowings may
be secured by the pledge of not more than 10% of the current value
of the Fund's
total assets, but investments may not be purchased by such
Fund while, with
respect to the Equity Fund, the Intermediate Bond Fund and the
Money Market
Funds, any such borrowing exists and, with respect to the
remaining Funds, any
aggregate borrowings in excess of 5% exist);
(2) pledge or mortgage its assets (except that each Fund
may pledge its
assets as described in (1) above and (i) to secure letters of
credit solely for
the purpose of participating in a captive insurance company
sponsored by the
Investment Company Institute
<PAGE>
to provide fidelity and directors' and officers' liability
insurance or (ii) to
a broker for the purpose of collateralizing investments, such
as stock index
futures contracts and put options);
(3) make loans, except loans of portfolio securities
and except that
each Fund may purchase or hold a portion of an issue of
publicly distributed
bonds, debentures or other obligations, purchase negotiable
certificates of
deposit and bankers' acceptances and enter into repurchase
agreements with
respect to its portfolio securities;
(4) if such Fund is the Equity Fund, the Intermediate
Bond Fund or a
Money Market Fund, invest an amount in excess of 10% of the
current value of
such Fund's net assets in repurchase agreements having
maturities of more than
seven days, variable amount master demand notes having notice
periods of more
than seven days, fixed time deposits that are subject to
withdrawal penalties
and have maturities of more than seven days, securities that
are not readily
marketable and other illiquid securities (including certain GICs
and BICs);
(5) purchase or sell real estate (other than securities
secured by real
estate or interests therein, securities backed by mortgages or
securities issued
by companies that invest in real estate or interests
therein), real estate
limited partnerships, commodities or commodity contracts
(except (i) with
respect to the Intermediate Bond Fund, the Equity Fund and the
Money Market
Funds, stock index futures and options on stock indices, (ii)
with respect to
the International Fund, futures, options, options on futures
and forward
contracts, and (iii) with respect to the remaining Funds,
futures, options and
options on futures);
(6) purchase securities on margin (except (i) with
respect to the
Equity Fund, the Intermediate Bond Fund and the Money
Market Funds, for
short-term credits necessary for the clearance of
transactions and margin
payments in connection with transactions in stock index futures
contracts, and
(ii) with respect to the remaining Funds, for short-term credits
necessary for
the clearance of transactions and margin payments in
connection with
transactions in futures, options and options on futures) or make
short sales of
securities;
(7) underwrite securities of other issuers, except to
the extent that
the purchase of municipal obligations or other permitted
investments directly
from the issuer thereof or from an underwriter for an issuer
and the later
disposition of such securities in accordance with any Fund's
investment program
may be deemed to be an underwriting;
(8) make investments for the purpose of exercising
control or
management; or
(9) if the Fund is the Intermediate Bond Fund, the
Equity Fund or a
Money Market Fund, purchase securities of other investment
companies, except
securities of certain money market funds in accordance with
the respective
Fund's investment objectives and policies and to the extent
permissible under
the 1940 Act, and except in connection with a merger,
consolidation,
acquisition, spin-off or reorganization.
<PAGE>
In addition, the Money Market Funds may not write,
purchase, or sell
puts, calls, warrants or options or any combinations thereof,
except that these
Funds may purchase securities with put rights in order to
maintain liquidity,
nor may they purchase equity securities or securities
convertible into equity
securities, except as provided in investment restriction number 9.
In addition, the Equity Fund may not invest in
securities of companies
that have been in business less than three years.
In addition, the Intermediate Bond Fund may not invest
more than 5% in
securities of issuers that have been in business less than three
years. (For
purposes of the above-described investment limitation,
issuers include
predecessors, sponsors, controlling persons, general partners,
guarantors and
originators of underlying assets which have less than three years
of continuous
operation or relevant business experience.)
Each of the foregoing investment restrictions is a
fundamental policy
of each of the Funds that may be changed only when permitted by
law and approved
by the holders of a majority of such Fund's outstanding voting
securities, as
described under "Capital Stock."
In addition to the above fundamental investment
policies, each of the
following investment restrictions may be changed at any time
by the Board of
Trustees or Directors, as the case may be.
No Fund may:
(1) invest more than 5% of its net assets in warrants,
valued at the
lower of cost or market, and no more than 2% of its net assets
may be invested
in warrants that are not listed on the New York or American
Stock Exchanges.
(Warrants acquired in units or attached to securities may be
deemed to be
without value.);
(2) invest in oil, gas and other mineral leases,
exploration or
development programs; or
(3) purchase or retain the securities of any issuer if
the officers,
directors or partners of the Trust or the Company, as the
case may be, its
Investment Adviser, Investment Sub-Adviser (with respect to the
International
Fund), Portfolio Management Agent or Administrator owning
beneficially more than
one-half of 1% of the securities of each issuer together own
beneficially more
than 5% of such securities.
Whenever any investment restriction states a maximum
percentage of a
Fund's assets, it is intended that if the percentage limitation
is met at the
time the action is taken, subsequent percentage changes
resulting from
fluctuating asset values will not be considered a
violation of such
restrictions, except that at no time may the value of the
illiquid securities
held by a Money Market Fund exceed 10% of the Fund's total assets.
<PAGE>
For purposes of these investment restrictions as well
as for purposes
of diversification under the 1940 Act, the identification of
the issuer of a
municipal obligation depends on the terms and conditions of the
obligation. If
the assets and revenues of an agency, authority,
instrumentality or other
political subdivision are separate from those of the government
creating the
subdivision and the obligation is backed only by the assets and
revenues of the
subdivision, such subdivision would be regarded as the sole
issuer. Similarly,
in the case of a "private activity bond," if the bond is
backed only by the
assets and revenues of the non-governmental user, the non-
governmental user
would be deemed to be the sole issuer. If in either case the
creating government
or another entity guarantees an obligation, the guarantee would
be considered a
separate security and be treated as an issue of such government or
entity.
The Trust cannot accurately predict the portfolio
turnover of the Funds.
With respect to each of the equity Funds, other than the Equity
Fund
and the Small-Cap Fund, portfolio turnover generally will be
less than 100%.
With respect to the Small-Cap Fund, portfolio turnover
generally will be less
than 200%. With respect to the fixed income Funds, other than the
Intermediate
Bond Fund, portfolio turnover generally will be less than
200%. The portfolio
turnover rates for the Equity Fund and the Intermediate Bond
Fund are shown in
the Prospectuses relating to those Funds under "Financial
Highlights." High portfolio
turnover rates can result in corresponding increases in
transaction costs, which are borne
directly by a Fund, and may result in the realization of short-
term capital gains which are
taxable to shareholders as ordinary income. See "Portfolio
Transactions" and
"Federal Income Taxes."
MANAGEMENT
TRUSTEES, DIRECTORS AND OFFICERS
The principal occupations of the Trustees and executive
officers of the
Trust and the Directors and executive officers of the Company for
the past five
years and their ages are listed below. The address of each,
unless otherwise
indicated, is One Exchange Place, Boston, Massachusetts 02109.
Trustees and
Directors deemed to be "interested persons" of the Trust or the
Company, as the
case may be, for purposes of the 1940 Act are indicated by an
asterisk.
*EDGAR R. FIEDLER, Trustee and Director - 845 Third Avenue, New
York, New York
10022. Age 65. Vice President and Economic Counsellor, The
Conference Board
since 1975; Director or Trustee, The Stanley Works, AARP
Income Trust, AARP
Insured Tax Free Income Trust, AARP Cash Investment Fund, Brazil
Fund, Scudder
Institutional Fund, Scudder Fund, Inc., Zurich American
Insurance Company,
Emerging Mexico Fund and Center for Policy Research of the
American Council for
Capital Formation. Formerly Assistant Secretary of the
Treasury for Economic
Policy (1971-1975).
C. GARY GERST, Trustee and Director and Chairman of the Board of
Directors and
Trustees - 11 South La Salle Street, Chicago, Illinois 60603.
Age 56. Chairman
Emeritus
<PAGE>
since 1993 and formerly Co-Chairman, La Salle Partners Ltd.
(Real
Estate Developer and Manager). Director, Trustee or Partner,
La Salle Street
Fund Inc., La Salle Street Fund Inc. of Delaware, DEL-LPL
Limited Partnership
and DEL-LPAML Limited Partnership.
JOHN W. McCARTER, JR., Trustee and Director - 225 West Wacker
Drive, Suite 1700,
Chicago, Illinois 60606. Age 57. Senior Vice President and
former Director of
Boozo Allen & Hamilton, Inc. (Consulting Firm); Director of W.W.
Grainger, Inc.
and A.M. Castle, Inc.
ERNEST M. ROTH, Trustee and Director - 205 Abingdon Avenue,
Kenilworth, Illinois
60043. Age 67. Consultant since 1992. Formerly, Senior Vice
President and Chief
Financial Officer, Commonwealth Edison Company. Director of
LaRabida Children's
Hospital and Chairman of LaRabida Children's Foundation.
RICHARD H. ROSE, President and Treasurer of the Trust and the
Company - Age 39.
Vice President, First Data Investor Services Group, Inc.,
since May 6, 1994.
Formerly Senior Vice President, The Boston Company Advisors, Inc.
PATRICIA L. BICKIMER, President and Secretary of the Trust and the
Company - Age
42. Vice President and Associate General Counsel, First Data
Investor Services
Group, Inc., since May 6, 1994; Formerly, Vice President and
Associate General
Counsel, The Boston Company Advisors, Inc.
LISA A. ROSEN, Assistant Secretary of the Trust and the
Company - Age 28.
Counsel, First Data Investor Services Group, Inc., since May 6,
1994. Formerly,
Assistant Vice President and Counsel with The Boston Company
Advisors, Inc.;
Associate with Hutchins, Wheeler & Dittmar.
Trustees of the Trust and Directors of the Company
receive from the
Trust and the Company, respectively, an annual fee in addition to
a fee for each
Board of Trustees or Directors meeting, as the case may be, and
Board committee
meeting attended and are reimbursed for all out-of-pocket
expenses relating to
attendance at meetings.
<PAGE>
The following table summarizes the compensation paid by
the Company to
the Directors of the Company for the fiscal year ended December
31, 1994:
<TABLE>
<CAPTION>
Pension or
Aggregate Compensation Retirement
Benefits Estimated Annual Total Compensation
Name of Person, Position from the Company Accrued as
Part Benefits upon from the Company
-------- ---------------- of Fund
Expenses Retirement and Fund Complex
<S> <C> <C>
<C> <C>
Edgar R. Fiedler, $19,000 (1) None
None $19,000
Director
C. Gary Gerst, $18,000 None
None $18,000
Director
John W. $ 0 None
None $ 0
McCarter, Jr.
Director(2)
Ernest M. Roth, $19,000 None
None $19,000
Director
- - - --------------------------
(1) For the period June 1988 through December 31, 1994, the
total amount of
compensation (including interest) payable or accrued for Mr.
Fiedler was
$142,776.52 pursuant to the Company's Deferred Compensation
Plan for its
Independent Directors.
(2) Mr. McCarter was not a Director of the Company during 1994.
</TABLE>
The Trust was not in operation during the fiscal year
ended December
31, 1994.
As of November 15, 1995, the principal holders of
each Fund of the
Company were as follows:
The Government Money Fund - Class A Shares: [To Be
Provided]
The Government Money Fund - Institutional Shares: [To
Be Provided]
The Money Fund - Class A Shares: [To Be Provided]
The Money Fund - Institutional Shares: [To Be Provided]
The Tax-Exempt Money Fund - Class A Shares: [To Be
Provided]
The Tax-Exempt Money Fund - Institutional Shares: [To Be
Provided]
<PAGE>
The Equity Fund - Class A Shares: [To Be Provided]
The Intermediate Bond Fund - Class A Shares: [To Be
Provided]
The shareholders described above have indicated that
they each hold
their shares on behalf of various accounts and not as beneficial
owners. To the
extent that any shareholder is the beneficial owner of more
than 25% of the
outstanding shares of any Fund, such shareholder may be deemed to
be a "control
person" of that Fund for purposes of the 1940 Act.
As of November 15, 1995, Directors and officers of
the Company as a
group beneficially owned less than 1% of the outstanding shares
of each of the
Company's Funds.
As of November 15, 1995, Trustees and officers of the
Trust as a group
beneficially owned less than 1% of the outstanding shares of the
Trust's Funds.
Investment Adviser, Investment Sub-Adviser and Portfolio
Management Agent. Each
of the Funds is advised by Harris Trust. With respect to the
Tax-Exempt Money
Fund, the Advisory Contract with Harris Trust provides that
Harris Trust is
responsible for all Fund purchase and sale transactions and
that Harris Trust
shall furnish to the Fund investment guidance and policy direction
in connection
with the daily portfolio management of the Fund. With respect
to Funds other
than the Tax-Exempt Money Fund, Harris Trust has entered
into Portfolio
Management Contracts with Harris Investment Management, Inc.
("HIM") under which
HIM is responsible for all Fund purchase and sale transactions and
for providing
all such daily portfolio management services to such Funds. Under
the Portfolio
Management Contracts, Harris Trust remains responsible for the
supervision and
oversight of HIM's performance.
With respect to the International Fund, HIM has
entered into an
investment sub-advisory agreement with Dunedin Fund
Managers, Limited
("Dunedin"), pursuant to which Dunedin provides certain
investment advisory
services to the International Fund.
Harris Trust or HIM provides to the Funds, among other
things, money
market security and fixed income research, analysis and
statistical and economic
data and information concerning interest rate and security
market trends,
portfolio composition and credit conditions. HIM analyzes key
financial ratios
that measure the growth, profitability, and leverage of issuers in
order to help
maintain a portfolio of above-average quality. Emphasis placed
on a particular
type of security will depend on an interpretation of
underlying economic,
financial and security trends. The selection and performance of
securities is
monitored by a team of analysts dedicated to evaluating the
quality of each
portfolio holding.
<PAGE>
The Advisory Contract and the Portfolio Management
Contract with
respect to the Equity Income Fund, the Growth Fund, the Small-
Cap Fund, the
Index Fund, the International Fund, the Balanced Fund,
the Convertible
Securities Fund, the Bond Fund, the Government Fund, the
Intermediate Tax-Exempt
Fund and the Tax-Exempt Fund will continue in effect for a
period of two
years from __________, 1995, and thereafter from year to year
provided the continuance is approved annually (i) by the
holders of a majority of the
respective Fund's outstanding voting securities or by the Board
of Trustees
and (ii) by a majority of the Trustees of the Trust who are not
parties to the
Advisory Contract or the Portfolio
Management Contract or "interested persons" (as defined in the
1940 Act) of any
such party. Such Advisory Contract may be terminated on 60 days'
written notice
by either party and will terminate automatically if assigned.
With respect to the remaining Funds, the Advisory
Contracts and, with
respect to the remaining Funds other than the Tax-Exempt
Money Fund, the
Portfolio Management Contracts will continue in effect from
year to year,
provided that such continuance is specifically approved as
described in the
immediately preceding paragraph.
For the fiscal years ended December 31, 1994, 1993
and 1992, the
Investment Adviser was entitled to receive fees from the Funds in
the following
amounts: the Government Money Fund, $274,034, $968,132, and
$768,659; the Money
Fund, $490,129, $1,294,047 and $1,287,743; the Tax-Exempt Money
Fund, $238,488,
$712,327 and $806,494; the Equity Fund, $332,754, $276,938 and
$223,464; and the
Intermediate Bond Fund, $411,562, $561,536 and $411,570,
respectively. The
remaining Funds were not in operation during the fiscal years
ended December 31,
1994, 1993 and 1992.
Waivers by the Investment Adviser of fees to which it
was entitled for
each period amounted to: the Government Money Fund, $0,
$154,970 and $54,784;
the Money Fund, $0, $314,673 and $332,996; the Tax-Exempt
Money Fund, $0,
$227,660 and $174,440; the Equity Fund, $4,974, $3,823 and
$5,222; and the
Intermediate Bond Fund, $191,603, $231,916 and $173,550.
Administrators. First Data Investor Services Group, Inc.
("First Data")
and PFPC Inc. ("PFPC") (the "Administrators") serve as the Funds'
administrators
pursuant to an Administration Agreement and an Administration
and Accounting
Services Agreement, respectively. First Data has agreed to
maintain office
facilities for the Funds; furnish clerical support and
stationery and office
supplies; prepare and file various reports with the
appropriate regulatory
agencies; and prepare various materials required by the
Commission or any state
securities commission having jurisdiction over the Company. PFPC
has agreed to
provide accounting and bookkeeping services for the Funds,
including the
computation of each Fund's net asset value, net income and
realized capital
gains, if any.
Distributor. Funds Distributor, Inc. (the
"Distributor") has entered
into a Distribution Agreement with the Company and with the
Trust, as the case
may be, pursuant to which it has the responsibility of
distributing shares of
the Funds.
<PAGE>
Other Information Pertaining to Distribution,
Administration, Custodian
and Transfer Agency Agreements. PFPC Inc., the Funds' Transfer
Agent and one of
the Funds' two administrators, is an affiliate of PNC Bank, N.A.,
the Company's
Custodian. PFPC Inc. and PNC Bank, N.A. are not affiliates of
First Data and Funds Distributor, Inc., and none of the
aforenamed entities is an affiliate of Harris Investment
Management, Inc.
The Trust's (or the Company's, as the case may be)
contracts with the
Investment Adviser, Investment Sub-Adviser, Portfolio
Management Agent,
Administrators, Transfer Agent and Custodian (the "Contractors")
provide that
if, in any fiscal year, the total expenses of a Fund incurred
by, or allocated
to, the Fund (excluding taxes, interest, brokerage
commissions and other
portfolio transaction expenses, other expenditures that are
capitalized in
accordance with generally accepted accounting principles and
extraordinary
expenses and payments under plans of the Fund adopted pursuant
to Rule 12b-1
under the Act (the "Service Plans"), but including the fees
provided for in the
Advisory Contracts and the Administration Agreement) exceed the
most restrictive
expense limitation applicable to the Fund imposed by the
securities laws or
regulations of the states in which the Fund's shares are
registered for sale,
such parties shall waive their fees proportionately under the
Advisory Contract
with respect to the Tax-Exempt Money Fund and the Portfolio
Management Contracts
with respect to all other Funds and fee agreement
with the Funds'
Administrators, Transfer Agent and Custodian for the fiscal year
to the extent
of the excess or reimburse the excess, but only to the
extent of their
respective fees. The Trust and the Company believe that
currently the most
restrictive applicable expense limitation is 2.5% of the first
$30 million of
average net assets, 2% of the next $70 million of average net
assets and 1.5% of
average net assets in excess of $100 million. No such waivers
were necessary in
1994.
SERVICE PLANS
As indicated in the Prospectuses, the Funds have adopted
Service Plans
under Section 12(b) of the 1940 Act and Rule 12b-1 promulgated
thereunder ("Rule
12b-1"). With respect to the Money Market Funds, the Service
Plans only relate
to Class A and Class B Shares of each such Fund. With respect to
the remaining
Funds (the "Non-Money Market Funds"), the Service Plans only
relate to Class A
Shares of each such Fund. Each Service Plan has been adopted
by the Board of
Trustees or Directors, as the case may be, including a majority
of the Trustees
or Directors who were not "interested persons" (as defined by
the 1940 Act) of
the Trust or the Company, and who had no direct or indirect
financial interest
in the operation of the Service Plan or in any agreement
related to the Plan
(the "Qualified Trustees" or "Qualified Directors", as the case
may be). Each
Service Plan will continue in effect from year to year if such
continuance is
approved by a majority vote of both the Trustees of the Trust or
the Directors
of the Company, as the case may be, and the Qualified Trustees
or Directors.
Agreements related to the Service Plans must also be approved
by such vote of
the Trustees or Directors and the Qualified Directors or Qualified
Trustees. The
Service Plans will terminate automatically if assigned, and may be
terminated at
any time, without payment of any penalty, by a vote of a
majority of the
outstanding voting securities of the proper Fund. No Service Plan
may be amended
to increase materially the amounts
<PAGE>
payable to Service Agents without the
approval of a majority of the outstanding voting securities of
the proper Fund,
and no material amendment to a Service Plan may be made
except by a majority of both the Trustees of the Trust or
Directors of the
Company, as the case may be, and the Qualified Trustees or
Directors.
Each Service Plan requires that certain service
providers furnish to
the Trustees or Directors, as the case may be, and the
Trustees or Directors
shall review, at least quarterly, a written report of the amounts
expended (and
purposes therefore) under such Service Plan. Rule 12b-1 also
requires that the
selection and nomination of the Trustees or Directors who are
not "interested
persons" of the Trust or the Company, respectively, be
made by such
disinterested Trustees or Directors.
Service Plan - Money Market Funds
Each Money Market Fund has entered into an
agreement with each
institution ("Service Organization") which purchases Class A or
Class B Shares
on behalf of its customers ("Customers"). In the case of Class
A Shares, the
Service Organization is required to provide shareholder support
services to its
Customers who beneficially own such Shares in consideration of the
payment of up
to 0.35% (on an annualized basis) of the average daily net asset
value of that
Money Market Fund's Class A Shares held by the Service
Organization for the
benefit of Customers. Support services will include: (i)
aggregating and
processing purchase and redemption requests from Customers
and placing net
purchase and redemption orders with the Money Market Fund's
Distributor; (ii)
processing dividend payments from the Money Market Fund on behalf
of Customers;
(iii) providing information periodically to Customers showing
their positions in
the Money Market Fund's shares; (iv) arranging for bank wires; (v)
responding to
Customer inquiries relating to the services performed by
the Service
Organization and handling correspondence; (vi) forwarding
shareholder
communications from the Money Market Fund (such as proxies,
shareholder reports,
annual and semi-annual financial statements, and dividend,
distribution and tax
notices) to Customers; (vii) acting as shareholder of record and
nominee; (viii)
arranging for the reinvestment of dividend payments; and (ix)
other similar
account administrative services. In addition, the Service
Organization will
provide assistance in connection with the distribution of shares
to Customers,
including the forwarding to Customers of prospectuses, sales
literature and
advertising materials provided by the Distributor of shares.
A Service Organization serving holders of Class B
Shares of a Money
Market Fund will provide the services set forth in (i), (v) and
(vii) and may
receive one or more of the services set forth in (ii), (iii),
(iv) and (viii)
above. In consideration of the services to be rendered under
the Servicing
Agreement with respect to Class B Shares, the Fund will
pay the Service
Organization up to 0.25% (on an annualized basis) of the average
daily net asset
value of the Class B Shares held by the Service Organization.
In addition, a Service Organization, at its option, may
also provide to
its holders of either Class A or Class B Shares (a) a service
that invests the
assets of their other accounts with the Service Organization in
the Money Market
Fund's shares (sweep program); (b)
<PAGE>
sub-accounting with respect to shares owned
beneficially or the information necessary for sub-
accounting; and (c)
checkwriting services.
There is no Service Plan in existence with respect
to the Class C
Shares (known herein as Institutional Shares) of the Money Market
Funds.
Service Plan - Non-Money Market Funds
Each Non-Money Market Fund (i.e. the Equity Fund, the
Equity Income
Fund, the Growth Fund, the Small-Cap Fund, the Index Fund, the
International
Fund, the Balanced Fund, the Convertible Securities Fund, the
Intermediate Bond
Fund, the Bond Fund, the Government Fund, the Intermediate Tax-
Exempt Fund and
the Tax-Exempt Fund) bears the costs and expenses in connection
with advertising
and marketing the Fund's Class A Shares and pays the fees
of financial
institutions (which may include banks), securities dealers and
other industry
professionals, such as investment advisors, accountants and
estate planning
firms (collectively, "Service Agents") for servicing activities,
as described
below, at a rate of up to 0.25% per annum of the value of the
Fund's average
daily net assets with respect to its Class A Shares.
Servicing activities provided by Service Agents to
their customers
investing in Class A Shares of the Non-Money Market Funds may
include, among
other things, one or more of the following: establishing
and maintaining
shareholder accounts and records; processing purchase
and redemption
transactions; answering customer inquiries regarding the
Fund; assisting
customers in changing dividend options; account designations
and addresses;
performing sub-accounting; investing customer cash
account balances
automatically in Fund shares; providing periodic statements
showing a customer's
account balance and integrating such statements with those of
other transactions
and balances in the customer's other accounts serviced by the
Service Agent;
arranging for bank wires; distribution and such other services
as a Fund may
request, to the extent the Service Agent is permitted by
applicable statute,
rule or regulation.
There is no Service Plan in existence with respect to the
Institutional
Shares of the Non-Money Market Funds.
Service Organization fees paid to Harris Trust for the
period ended
December 31, 1994 were $788,043, $1,216,638 and $411,044
(net of voluntary
waivers of $83,561, $398,226 and $156,470) for the Class A
Shares of the
Government Money Fund, Money Fund and Tax-Exempt Money Fund,
respectively. There
were no Service Organization fees payable during the period
ended December 31,
1994 for the Institutional Shares of the Money Market Funds.
To date, no
payments have been made with respect to the Non-Money Market
Funds' Service
Plans.
CALCULATION OF YIELD AND TOTAL RETURN
The Company makes available various yield quotations
with respect to
shares of each class of shares of the Money Market Funds. Each of
these amounts
was calculated based on
<PAGE>
the 7-day period ended October 31, 1995, by calculating
the net change in value, exclusive of capital changes, of a
hypothetical account
having a balance of one share at the beginning
of the period, dividing the net change in value by the value of
the account at
the beginning of the base period to obtain the base period
return, and
multiplying the base period return by 365/7, with the resulting
yield figure
carried to the nearest hundredth of one percent. The net change
in value of an
account consists of the value of additional shares purchased with
dividends from
the original share plus dividends declared on both the original
share and any
such additional shares (not including realized gains or losses
and unrealized
appreciation or depreciation) less applicable expenses.
Effective yield
quotations for Class A Shares and Institutional Shares of
each of the Money
Market Funds are also made available. These amounts are
calculated in a similar
fashion to yield, except that the base period return is
compounded by adding 1,
raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the
result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) 365/7 ] -1
Current yield for all of the Money Market Funds will
fluctuate from
time to time, unlike bank deposits or other investments that pay
a fixed yield
for a stated period of time, and does not provide a basis for
determining future
yields.
The yields of Class A Shares and Institutional Shares
of each of the
following Money Market Funds for the 7-day period ended October
31, 1995, were
5.19% and 5.50% for the Government Money Fund, 5.35% and 5.61%
for the Money
Fund and 3.22% and 3.51% for the Tax-Exempt Money Fund. The
effective yields for
the same period were 5.33% and 5.65% for the Government Money
Fund, 5.49% and
5.77% for the Money Fund and 3.27% and 3.57% for the Tax-Exempt
Money Fund,
respectively. Class A and Class B Shares of the Money Market
Funds bear the
expenses of fees paid to Service Organizations. As a result, at
any given time,
the net yield of Class A Shares could be up to 0.35% lower than
the net yield of
Institutional Shares, and the net yield of Class B Shares could
be up to 0.25%
lower than the net yield of Institutional Shares of the Money
Market Funds.
Class B Shares of the Money Market Funds had not been issued as
of October 31,
1995.
From time to time each of the Money Market Funds may
advertise its
"30-day average yield" and its "monthly average yield." Such
yields refer to the
average daily income generated by an investment in such Fund
over a 30-day
period, as appropriate, (which period will be stated in the
advertisement).
A standardized "tax-equivalent yield" may be quoted for
the Tax-Exempt
Money Fund, the Tax-Exempt Fund and the Intermediate Tax-Exempt
Fund, which is
computed by: (a) dividing the portion of the Fund's yield (as
calculated above)
that is exempt from Federal income tax by one minus a stated
Federal income
rate; and (b) adding the figure resulting from (a) above to
that portion, if
any, of the yield that is not exempt from federal income tax.
For the 7-day
period ended October 31, 1995, the effective tax equivalent yield
of the
<PAGE>
Class A
Shares and Institutional Shares of the Tax-Exempt Money Fund
were 4.74% and
5.17% respectively, based on a stated tax rate of 31%.
The Trust or the Company, as the case may be, makes
available 30-day
yield quotations with respect to Class A and Class B Shares of
the Non-Money
Market Funds. As required by regulations of the Commission, the
30-day yield is
computed by dividing a Fund's net investment income per share
earned during the
period by the net asset value on the last day of the period. The
average daily
number of shares outstanding during the period that are
eligible to receive
dividends is used in determining the net investment income per
share. Income is
computed by totaling the interest earned on all debt
obligations during the
period and subtracting from that amount the total of all
recurring expenses
incurred during the period. The 30-day yield is then
annualized assuming
semi-annual reinvestment and compounding of net investment income.
The 30-day yields for the period ended October 31, 1995,
were 1.39% for
Class A Shares of the Equity Fund and 5.41% for Class A
Shares of the
Intermediate Bond Fund. Institutional Shares of these Funds had
not been issued
as of October 31, 1995.
The Trust or the Company, as the case may be, also
makes available
total return quotations for Class A and Institutional Shares
of each of the
Non-Money Market Funds. Average annual total return for Class A
Shares of the
Equity Fund from February 26, 1988 (commencement of operations)
through October
31, 1995 and the annual total return for the fiscal years ended
December 31,
1993 and 1994 were 12.88%, 12.87% and (6.48)%, respectively. The
average annual
total return for Class A Shares of the Equity Fund for the one
year and five
year periods ended October 31, 1995 were 18.90% and 16.70%,
respectively.
Average annual total return for Class A Shares of the
Intermediate Bond Fund
from April 1, 1991 (commencement of operations) through October
31, 1995 and for
the one year period ended October 31, 1995 were 6.72% and 6.70%,
respectively.
The annual total return for the fiscal years ended December 31,
1993 and 1994
were 4.98% and (5.75)%, respectively. Each of these amounts is
computed by
assuming a hypothetical initial investment of $10,000 and
reflects the
imposition of the maximum sales charge. It is assumed that all of
the dividends
and distributions by each Fund over the specified period
of time were
reinvested. It was then assumed that at the end of the specified
period, the
entire amount was redeemed. The average annual total return was
then calculated
by calculating the annual rate required for the initial
investment to grow to
the amount that would have been received upon redemption.
The Funds may also calculate an aggregate total return
which reflects
the cumulative percentage change in value over the measuring
period. The
aggregate total return can be calculated by dividing the amount
received upon
redemption by the initial investment and subtracting one from
the result. The
aggregate total return for Class A Shares of the Equity Fund from
February 26,
1988 (commencement of operations) through October 31, 1995 and
the aggregate
total return for the fiscal years ended December 31, 1993 and 1994
were 153.75%,
12.87% and (6.48)%, respectively. The aggregate total return for
Class A Shares
of the Intermediate Bond Fund for the period from April 1, 1991
(commencement of
<PAGE>
operations) through October 31, 1995 and the aggregate total
return for the
fiscal years ended December 31, 1993 and 1994 were 34.79%,
and 4.98% and
(5.75)%, respectively. The remaining Non-Money Market Funds had
not
commenced operations as of October 31, 1995.
Current yield and total return for the Non-Money
Market Funds will
fluctuate from time to time, unlike bank deposits or other
investments which pay
a fixed yield for a stated period of time, and do not
provide a basis for
determining future yields. Yield (or total return) is a
function of portfolio
quality, composition, maturity and market conditions as well
as expenses
allocated to the Funds.
Performance data of the Funds may be compared to those
of other mutual
funds with similar investment objectives and to other relevant
indices, such as
those prepared by Salomon Brothers Inc. or Lehman Brothers Inc.,
or any of their
affiliates or to ratings prepared by independent services or
other financial or
industry publications that monitor the performance of mutual
funds. For example,
such data is reported in national financial publications such as
IBC/Donoghue's
Money Fund Report and Bank Rate Monitor (for money market
deposit accounts
offered by the 50 leading banks and thrift institutions in
the top five
metropolitan statistical areas). Money Magazine, Forbes,
Barron's, The Wall
Street Journal and The New York Times, reports prepared by
Lipper Analytical
Services and publications of a local or regional nature.
Performance information
may be quoted numerically or may be presented in a table,
graph or other
illustrations. All performance information advertised by the Funds
is historical
in nature and is not intended to represent or guarantee future
results.
In addition, investors should recognize that changes in
the net asset
value of shares of the Non-Money Market Funds will affect the
yield of such
Funds for any specified period, and such changes should be
considered together
with each such Fund's yield in ascertaining the Fund's
total return to
shareholders for the period. Yield information for all of the
Funds may be
useful in reviewing the performance of the Fund and for
providing a basis for
comparison with investment alternatives. The yield of a Fund,
however, may not
be comparable to other investment alternatives because of
differences in the
foregoing variables and differences in the methods used to
value portfolio
securities, compute expenses and calculate yield.
OTHER INFORMATION REGARDING INVESTMENT RETURNS. The
Intermediate
Tax-Exempt Fund, the Tax-Exempt Fund and the Tax-Exempt
Money Fund may
illustrate in advertising or sales literature the benefits
of tax-exempt
investing. For example, Table 1 shows taxpayers how to
translate Federal tax
savings from investments the income on which is not subject to
Federal income
tax into an equivalent yield from a taxable investment. The
yields shown in
Table 1 are for illustration purposes only and are not
intended to represent
current or future yields for the Funds, which may be higher or
lower than the
yields shown.
<PAGE>
TABLE 1
[To Be Provided]
DETERMINATION OF NET ASSET VALUE
As described under "Determination of Net Asset
Value" in the
Prospectuses, net asset value per share is determined at least as
often as each
day that the Federal Reserve Board of Philadelphia and the
New York Stock
Exchange are open, i.e., each weekday other than New Year's Day,
Martin Luther
King, Jr.'s Day, Presidents' Day (the third Monday in February),
Good Friday,
Memorial Day (the last Monday in May), Independence Day, Labor
Day (the first
Monday in September), Columbus Day, Veteran's Day,
Thanksgiving Day and
Christmas Day (each, a "Holiday").
As also indicated under "Determination of Net Asset
Value" in the
Prospectuses, each of the Money Market Funds uses the amortized
cost method to
determine the value of its portfolio securities pursuant to Rule
2a-7 under the
1940 Act ("Rule 2a-7"). The amortized cost method involves valuing
a security at
its cost and amortizing any discount or premium over the period
until maturity,
regardless of the impact of fluctuating interest rates on the
market value of
the security. While this method provides certainty in valuation,
it may result
in periods during which the value, as determined by amortized
cost, is higher or
lower than the price that a Fund would receive if the security
were sold. During
these periods the yield to a shareholder may differ somewhat
from that which
could be obtained from a similar fund that uses a method of
valuation based upon
market prices. Thus, during periods of declining interest rates,
if the use of
the amortized cost method resulted in a lower value of a Fund's
portfolio on a
particular day, a prospective investor in that Fund would be
able to obtain a
somewhat higher yield than would result from investments in a
fund using solely
market values, and existing Fund shareholders would receive
correspondingly less
income. The converse would apply during periods of rising interest
rates.
Rule 2a-7 provides that in order to value its
portfolio using the
amortized cost method, each of the Money Market Funds
must maintain a
dollar-weighted average portfolio maturity of 90 days or
less, purchase
securities having remaining maturities (as defined in Rule 2a-
7) of thirteen
months or less and invest only in securities determined by
the Board of
Directors to meet the quality and minimal credit risk requirements
of Rule 2a-7.
The maturity of an instrument is generally deemed to be the
period remaining
until the date when the principal amount thereof is due or the
date on which the
instrument is to be redeemed. Rule 2a-7, however, provides that
the maturity of
an instrument may be deemed shorter in the case of certain
instruments,
including certain variable and floating rate instruments
subject to demand
features. Pursuant to Rule 2a-7, the Board is required to
establish procedures
designed to stabilize, to the extent reasonably possible, the
price per share of
each of the Money Market Funds as computed for the purpose
of sales and
redemptions at $1.00. Such procedures include review of the
portfolio holdings
of each of the Money Market Funds by the Board of Directors, at
such intervals
as it may deem appropriate, to determine whether a Fund's net
asset value
calculated by using available market quotations
<PAGE>
deviates from $1.00 per share
based on amortized cost. The extent of any deviation will be
examined by the
Board of Directors. If such deviation exceeds 1/2 of 1%, the Board
will promptly
consider what action, if any, will be initiated. In the
event the Board
determines that a deviation exists that may result in material
dilution or other
unfair results to investors
or existing shareholders, the Board will take such corrective
action as it
regards as necessary and appropriate, including the sale
of portfolio
instruments prior to maturity to realize capital gains or losses
or to shorten
average portfolio maturity, withholding dividends or
establishing a net asset
value per share by using available market quotations.
PORTFOLIO TRANSACTIONS
The Trust or the Company, as the case may be, has no
obligation to deal
with any dealer or group of dealers in the execution of
transactions in
portfolio securities. Subject to policies established by the
Trust's Board of
Trustees and the Company's Board of Directors, as the case may be,
Harris Trust,
with respect to the Tax-Exempt Money Fund, and HIM, with
respect to all other
Funds, are responsible for each Fund's portfolio decisions and
the placing of
portfolio transactions. In placing orders, it is the policy of
the Company to
obtain the best results taking into account the dealer's general
execution and
operational facilities, the type of transaction involved and
other factors such
as the dealer's risk in positioning the securities involved.
While Harris Trust
and HIM generally seek reasonably competitive spreads or
commissions, the Funds
will not necessarily be paying the lowest spread or commission
available.
Purchases and sales of securities for the fixed income
Funds and the
Money Market Funds will usually be principal transactions.
Portfolio securities
normally will be purchased or sold from or to dealers serving as
market makers
for the securities at a net price. Each of the Funds will
also purchase
portfolio securities in underwritten offerings and will, on
occasion, purchase
securities directly from the issuer. Generally, municipal
obligations and
taxable money market securities are traded on a net basis and
do not involve
brokerage commissions. The cost of executing a Fund's
portfolio securities
transactions will consist primarily of dealer spreads, and
underwriting
commissions. Under the 1940 Act, persons affiliated with the
Company or the
Trust are prohibited from dealing with the Company or the Trust
as a principal
in the purchase and sale of securities unless an exemptive order
allowing such
transactions is obtained from the Commission.
Harris Trust or HIM may, in circumstances in which two
or more dealers
are in a position to offer comparable results for a Fund, give
preference to a
dealer that has provided statistical or other research services to
such adviser.
By allocating transactions in this manner, Harris Trust and/or
HIM are able to
supplement their own research and analysis with the views and
information of
other securities firms. Information so received will be in
addition to, and not
in lieu of, the services required to be performed under the
Advisory and
Portfolio Management Contracts, and the expenses of such
adviser will not
necessarily be reduced as a result of the receipt of this
supplemental research
information. Furthermore, research services furnished by
dealers through whom
Harris Trust or HIM effect securities transactions for a Fund
may be used by
Harris Trust or HIM in servicing its other accounts, and
not all of these
services may be used by Harris Trust or HIM in connection with
advising the
Funds.
<PAGE>
Total brokerage commissions and the total dollar amount
of transactions
on which commissions were paid during 1992 were $56,406 and
$43,938,655,
respectively, for the Equity Fund and $0 and $53,559,686,
respectively, for the
Intermediate Bond Fund. Total brokerage commissions and the total
dollar amount
of transactions on which commissions were paid during 1993
were $71,647 and
$51,408,027, respectively, for the Equity Fund and $0 and $0,
respectively, for
the Intermediate Bond Fund. Total brokerage commissions and
the total dollar
amount of transactions on which commissions were paid during 1994
were $113,552
and $82,318,090, respectively, for the Equity Fund and $0 and 0,
respectively
for the Intermediate Bond Fund.
With respect to transactions directed to brokers
because of research
services provided, total brokerage commissions, and the total
dollar amount of
the transactions on which such commissions were paid during 1992,
1993 and 1994
were $42,199 and $32,699,055; $29,144 and $22,553,022; $59,958
and $42,856,997,
respectively, for the Equity Fund. No such commissions were
paid for the
Intermediate Bond Fund for 1992, 1993 or 1994.
Purchases and sales of securities on a securities
exchange are effected
through brokers who charge a negotiated commission for their
services. Orders
may be directed to any broker including, to the extent and
in the manner
permitted by applicable law, Harris Investors Direct, Inc.
("HID") In the
over-the-counter market, securities are generally traded on a
"net" basis with
dealers acting as principal for their own accounts without a
stated commission,
although the price of the security usually includes a profit to
the dealer. In
underwritten offerings, securities are purchased at a fixed price
that includes
an amount of compensation to the underwriter, generally
referred to as the
underwriter's concession or discount. The Funds will not
deal with the
Distributor or HID in any transaction in which either one acts
as principal
except as may be permitted by the Commission.
In placing orders for portfolio securities of the
Funds, HIM is
required to give primary consideration to obtaining the most
favorable price and
efficient execution. This means that HIM will seek to execute
each transaction
at a price and commission, if any, that provide the most favorable
total cost or
proceeds reasonably attainable in the circumstances. While HIM
will generally
seek reasonably competitive spreads or commissions, the
Funds will not
necessarily be paying the lowest spread or commission
available. Commission
rates are established pursuant to negotiations with the broker
based on the
quality and quantity of execution services provided by the
broker in the light
of generally prevailing rates. The allocation of orders among
brokers and the
commission rates paid are reviewed periodically by the Board
of Trustees and
Board of Directors.
Subject to the above considerations, HID may act as a
main broker for
the Funds. For it to effect any portfolio transactions for
the Funds, the
commissions, fees or other remuneration received by it must be
reasonable and
fair compared to the commissions, fees
<PAGE>
or other remuneration paid to other
brokers in connection with comparable transactions involving
similar securities
being purchased or sold on a securities exchange during a
comparable period of
time. This standard would allow HID to receive no more than the
remuneration that would be expected to be received by an
unaffiliated broker on
a commensurate arm's-length transaction. Furthermore, the
Trustees of the Trust
and the Directors of the Company, including a majority who are
not "interested"
Trustees or Directors, as the case may be, have adopted
procedures that are
reasonably designed to provide that any commissions, fees or
other remuneration
paid to either one are consistent with the foregoing
standard. Brokerage
transactions with either one are also subject to such fiduciary
standards as may
be imposed upon each of them by applicable law.
FEDERAL INCOME TAXES
The Prospectuses describe generally the tax treatment of
distributions
by the Trust and the Company, as the case may be. This section of
the Statement
includes additional information concerning federal taxes.
Each Fund will be treated as a separate entity for
federal income tax
purposes and thus the provisions of the Code generally will be
applied to each
Fund separately, rather than to the Trust or the Company as a
whole.
Qualification as a regulated investment company under
the Internal
Revenue Code of 1986, as amended (the "Code") generally
requires, among other
things, that (a) at least 90% of the Fund's annual gross income
(without offset
for losses) be derived from interest, payments with respect to
securities loans,
dividends and gains from the sale or other disposition of stocks,
securities or
options thereon and certain other income including, but not
limited to, gains
from futures contracts; (b) the Fund derives less than 30% of
its gross income
from gains (without offset for losses) from the sale or other
disposition of
stocks, securities or options thereon and certain futures
contracts held for
less than three months; and (c) the Fund diversifies its
holdings so that, at
the end of each quarter of the taxable year, (i) at least 50%
of the market
value of the Fund's assets is represented by cash, government
securities and
other securities, with such other securities limited in
respect of any one
issuer to an amount not greater than 5% of each Fund's assets
and 10% of the
outstanding voting securities of such issuer, and (ii) not more
than 25% of the
value of its assets is invested in the securities of any one
issuer (other than
U.S. Government securities). As a regulated investment company,
each Fund will
not be subject to federal income tax on its net investment
income and net
capital gains distributed to its shareholders, provided that it
distributes to
its shareholders at least 90% of its net investment income
(including net
short-term capital gains) earned in each year and, in the case of
the Tax-Exempt
Money Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt
Fund, that it
distributes to its shareholders at least 90% of its net tax-
exempt income
(including net short-term capital gains). In addition, the
Tax-Exempt Money
Fund, the Intermediate Tax-Exempt Fund and the Tax-Exempt Fund
intend that at
least 50% of the value of its total assets at the close of each
quarter of its
taxable year will consist of obligations the interest on which
is exempt
<PAGE>
from
federal income tax, so that such Funds will qualify under
the Code to pay
"exempt-interest dividends."
As described in the relevant Prospectus, certain of
the Funds may
invest in municipal bond index futures contracts and options on
interest rate
futures contracts. The Funds do not anticipate that these
investment activities
will prevent the Funds from qualifying as regulated investment
companies. As a
general rule, these investment activities will increase or
decrease the amount
of long-term and short-term capital gains or losses realized
by a Fund and,
accordingly, will affect the amount of capital gains distributed
to the Fund's
shareholders.
For Federal income tax purposes, gain or loss on the
futures contracts
and options described above (collectively referred to as
"section 1256
contracts") is taxed pursuant to a special "mark-to-market"
system. Under the
mark-to-market system, a Fund may be treated as realizing a
greater or lesser
amount of gains or losses than actually realized. As a general
rule, gain or
loss on section 1256 contracts is treated as 60% long-term
capital gain or loss
and 40% short-term capital gain or loss, and, accordingly, the
mark-to-market
system will generally affect the amount of capital gains or
losses taxable to a
Fund and the amount of distributions taxable to a shareholder.
Moreover, if a
Fund invests in both section 1256 contracts and offsetting
positions in such
contracts, then the Fund might not be able to receive the
benefit of certain
recognized losses for an indeterminate period of time. Each
Fund expects that
its activities with respect to section 1256 contracts and
offsetting positions
in such contracts (a) will not cause it or its shareholders to
be treated as
receiving a materially greater amount of capital gains or
distributions than
actually realized or received and (b) will permit it to use
substantially all of
the losses of the Fund for the fiscal years in which the losses
actually occur.
Each Fund (except the Tax-Exempt Money Fund, the
Intermediate
Tax-Exempt Fund and the Tax-Exempt Fund to the extent of
this tax-exempt
interest) will generally be subject to an excise tax of 4% of the
amount of any
income or capital gains distributed to shareholders on a basis
such that such
income or gain is not taxable to shareholders in the calendar
year in which it
was earned by the Fund. Each Fund intends that it will distribute
substantially
all of its net investment income and net capital gains in
accordance with the
foregoing requirements, and, thus, expects not to be subject to
the excise tax.
Dividends declared by a Fund in October, November or
December payable to
shareholders of record on a specified date in such a month
and paid in the
following January will be treated as having been paid by the
Fund and received
by shareholders on December 31 of the calendar year in which
declared.
Income received by a Fund from sources within foreign
countries may be
subject to withholding and other taxes imposed by such
countries. Tax
conventions between certain countries and the United States
may reduce or
eliminate such taxes. It is impossible to determine the
effective rate of
foreign tax in advance since the amount of a Fund's assets to
be invested in
various countries is not known.
<PAGE>
Gains or losses on sales of securities by a Fund
generally will be
long-term capital gains or losses if the securities have been
held by it for
more than one year, except in certain
cases where the Fund acquires a put or writes a call thereon.
Other gains or
losses on the sale of securities will be short-term capital gains
or losses.
In the case of the Growth Fund, the Equity Fund, the
Small-Cap Fund,
the Equity Income Fund, the Index Fund, the International
Fund, the Balanced
Fund, the Convertible Securities Fund, the Bond Fund, the
Government Fund, the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund, if an
option written by a
Fund lapses or is terminated through a closing transaction, such
as a repurchase
by the Fund of the option from its holder, the Fund may realize
a short-term
capital gain or loss, depending on whether the premium income is
greater or less
than the amount paid by the Fund in the closing transaction.
In the case of the Growth Fund, the Equity Fund, the
Small-Cap Fund,
the Equity Income Fund, the Index Fund, the International
Fund, the Balanced
Fund, the Convertible Securities Fund, the Bond Fund, the
Government Fund, the
Intermediate Tax-Exempt Fund and the Tax-Exempt Fund, if
securities are sold by
the Fund pursuant to the exercise of a call option written by it,
such Fund will
add the premium received to the sale price of the securities
delivered in
determining the amount of gain or loss on the sale. If securities
are purchased
by the Fund pursuant to the exercise of a put option written
by it, the Fund
will subtract the premium received from its cost basis in
the securities
purchased. The requirement that a Fund derive less than 30% of
its gross income
from gains from the sale of securities held for less than three
months may limit
a Fund's ability to write options.
If, in the opinion of the Trust or the Company, as
the case may be,
ownership of its shares has or may become concentrated to an
extent that could
cause the Trust or the Company to be deemed a personal holding
company within
the meaning of the Code, the Trust or the Company may require the
redemption of
shares or reject any order for the purchase of shares in an
effort to prevent
such concentration.
CAPITAL STOCK
The Trust's Declaration of Trust authorizes the
Trustees to issue an
unlimited number of full and fractional shares of beneficial
interest, $.001 par
value, and to create one or more classes of these shares.
Pursuant thereto, the
Trustees have authorized the issuance of two
classes of shares, Class A Shares and Institutional Shares,
for each of the
eleven Funds of the Trust.
The authorized capital stock of the Company consists of
an aggregate of
10,000,000,000 shares ("Shares"), par value of $.001 per share.
With respect to
the Company's Funds detailed in this Statement of Additional
Information, the
Company's capital stock is currently classified as follows:
"Government Money
Fund-Class A," consisting of 500,000,000 Shares, "Government
Money Fund-Class
B," consisting of 200,000,000 Shares, "Government Money
Fund-Institutional
Shares," consisting of
<PAGE>
500,000,000 Shares, "Money Fund-Class A," consisting of
500,000,000 Shares, "Money Fund-Class B," consisting of
200,000,000 Shares,
"Money Fund-Institutional Shares," consisting of 500,000,000
Shares, "Tax-Exempt
Money Fund-Class A," consisting of 500,000,000 Shares,
"Tax-Exempt Money
Fund-Class B," consisting of 200,000,000 Shares, "Tax-
Exempt Money
Fund-Institutional Shares," consisting of 500,000,000 Shares,
"Harris Insight
Equity Fund-Class A," consisting of 100,000,000 Shares, "Harris
Insight Equity
Fund-Institutional Shares," consisting of 100,000,000 Shares,
"Harris Insight
Intermediate Bond Fund-Class A," consisting of 100,000,000
Shares, and "Harris
Insight Intermediate Bond Fund - Institutional Shares,"
consisting of
100,000,000 Shares.
Generally, all shares of the Trust and all shares of the
Company have
equal voting rights with other shares of the Trust or the Company,
respectively,
and will be voted in the aggregate, and not by class, except
where voting by
class is required by law or where the matter involved affects only
one class. As
used in the Prospectuses and in this Statement of Additional
Information, the
term "majority," when referring to the approvals to be
obtained from
shareholders in connection with general matters affecting
the Funds (e.g.,
election of Trustees or Directors and ratification of independent
accountants),
means the vote of the lesser of (i) 67% of the Trust's or the
Company's shares
represented at a meeting if the holders of more than 50% of
the outstanding
shares are present in person or by proxy, or (ii) more than 50%
of the Trust's
or the Company's outstanding shares. The term "majority," when
referring to the
approvals to be obtained from shareholders in connection with
matters affecting
a single Fund or any other single Fund (e.g., annual
approval of advisory
contracts), means the vote of the lesser of (i) 67% of the
shares of the Fund
represented at a meeting if the holders of more than 50% of
the outstanding
shares of the Fund are present in person or by proxy or (ii)
more than 50% of
the outstanding shares of the Fund. Shareholders are entitled
to one vote for
each full share held and fractional votes for fractional shares
held.
Each share of a Fund represents an equal proportionate
interest in that
Fund with each other share of the same Fund and is entitled to
such dividends
and distributions out of the income earned on the assets
belonging to that Fund
as are declared in the discretion of the Trust's Board of
Trustees or the
Company's Board of Directors, as the case may be. Notwithstanding
the foregoing,
each class of shares of each Fund bears exclusively the expense
of fees paid to
Service Organizations with respect to that class of shares. In
the event of the
liquidation or dissolution of the Trust or the Company (or a
Fund), shareholders
of each Fund (or the Fund being dissolved) are entitled to
receive the assets
attributable tothat Fund that are available for distribution, and
a distribution of any general
assets not attributable to a particular Fund that are available
for distribution
in such manner and on such basis as the Trustees or the
Directors, as the case
may be, in their sole discretion may determine.
Shareholders are not entitled to any preemptive
rights. All shares,
when issued, will be fully paid and non-assessable by the Trust
or the Company,
as the case may be.
<PAGE>
OTHER
The Registration Statement, including the Prospectuses,
the Statement
of Additional Information and the exhibits filed therewith, may
be examined at
the office of the Commission in Washington, D.C. Statements
contained in the
Prospectuses or this Statement of Additional Information as to
the contents of
any contract or other document referred to herein or in the
Prospectuses are not
necessarily complete, and, in each instance, reference is made
to the copy of
such contract or other document filed as an exhibit to the
Registration
Statement, each such statement being qualified in all
respects by such
reference.
CUSTODIAN
As the Funds' custodian, PNC Bank, N.A., among other
things, maintains
a custody account or accounts in the name of each Fund, receives
and delivers
all assets for each Fund upon purchase and upon sale or maturity,
collects and
receives all income and other payments and distributions on
account of the
assets of each Fund, and pays all expenses of each Fund.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been selected as the
independent accountants
for both the Trust and the Company. Price Waterhouse LLP provides
audit services
and assistance and consultation in connection with review of
certain Commission
filings. Price Waterhouse LLP's address is 30 South 17th Street,
Philadelphia,
Pennsylvania 19103.
EXPERTS
The financial statements incorporated by
reference into the
Prospectuses and included in this Statement of Additional
Information have been
incorporated by reference or included in reliance on the
report of Price
Waterhouse LLP, independent accountants, given on the authority
of that firm as
experts in auditing and accounting.
<PAGE>
FINANCIAL STATEMENTS
Specimen Computations of Net Asset
Values and Offering Prices Per Share
Equity Fund (specimen computations)
Net Asset Value and Redemption Price per
Share of Capital Stock at October 31, 1995.............
$14.53
======
Maximum Offering Price per Share ($14.53 divided by .955)
----- ----
(reduced on purchases of $100,000 or more).............
$15.21
======
Intermediate Bond Fund (specimen computations)
Net Asset Value and Redemption Price per
Share of Capital Stock at October 31, 1995.............
$10.26
======
Maximum Offering Price per Share ($10.26 divided by .955)
----- ----
(reduced on purchases of $100,000 or more).............
$10.74
======
The Financial Statements for the year ended December 31,
1994 including
the notes thereto, have been audited by Price Waterhouse
LLP and are
incorporated by reference in the Statement of Additional
Information from the
Annual Report of the Company dated December 31, 1994.
<PAGE>
HARRIS INSIGHT FUNDS
Government Assets Fund
Statement of Assets and
Liabilities
October 31, 1995
(Unaudited)
ASSETS
Investments
at Value (Cost
$339,172,867)
$
3
3
9
,
1
7
2
,
8
6
7
Cash
4
3
9
Interest
Receivable
2
,
0
3
5
,
3
1
5
Prepaid
Expenses
1
5
,
3
0
7
TOTAL ASSETS
3
4
1
,
2
2
3
,
9
2
8
LIABILITIES
Dividend
Payable
1
,
4
6
0
,
9
1
8
Investment
Purchase Unsettled
0
Accrued
Expenses
2
0
5
,
8
8
3
TOTAL LIABILITIE
1
,
6
6
6
,
8
0
1
NET ASSETS
applicable to
339,557,127
shares
outstanding
$
3
3
9
,
5
5
7
,
1
2
7
NET ASSET VALUE PER
SHARE
$
1
.
0
0
FS-1
HARRIS INSIGHT FUNDS
Cash Management Fund
Statement of Assets and Liabilities
October 31,1995
(Unaudited)
ASSETS
Investments
at Value (Cost
$634,013,800)
$
6
3
4
,
0
1
3
,
8
0
0
Interest
Receivable
2
,
1
3
6
,
8
4
1
Prepaid
Expenses
6
7
,
3
6
5
Cash
1
9
1
TOTAL ASSETS
6
3
6
,
2
1
8
,
1
9
7
LIABILITIES
Accrued
Expenses
3
9
2
,
4
8
8
Dividend
Payable
2
,
9
7
8
,
3
2
4
Investment
Purchase
Unsettled
0
TOTAL LIABILITIES
3
,
3
7
0
,
8
1
2
NET ASSETS
applicable to
632,836,536
shares
outstanding
$
6
3
2
,
8
4
7
,
3
8
5
NET ASSET VALUE
PER SHARE
$
1
.
0
0
FS-2
HARRIS INSIGHT FUNDS
Tax-Free Money Market Fund
Statement of Assets and Liabilities
October 31, 1995
(Unaudited)
ASSETS
Cash
$
1
0
3
,
8
0
4
Investments
at Value (Cost
$407,674,304)
4
0
7
,
6
7
4
,
3
0
4
Interest
Receivable
2
,
3
6
0
,
3
1
5
Prepaid
Expenses
5
,
9
2
9
TOTAL ASSETS
4
1
0
,
1
4
4
,
3
5
2
LIABILITIES
Dividend
Payable
1
,
2
1
5
,
3
5
4
Accrued
Expenses
2
1
0
,
0
6
9
TOTAL LIABILITIES
1
,
4
2
5
,
4
2
3
NET ASSETS
applicable to
408,725,105
shares
outstanding
$
4
0
8
,
7
1
8
,
9
2
9
NET ASSET VALUE
PER SHARE
$
1
.
0
0
FS-3
HARRIS INSIGHT FUNDS
Equity Fund
Statement of Assets and
Liabilities
October, 1995
(Unaudited)
ASSETS
Cash
$
3
5
Investments
at Value (Cost
$47,889,940)
5
9
,
1
5
3
,
5
8
9
Dividends
Receivable
1
0
3
,
8
0
5
Receivable
for Investment
Sold
0
Interest
Receivable
4
,
3
9
9
Receivable
for Fund Share
Sold
3
0
,
6
1
0
Prepaid
Expenses
3
,
3
2
5
TOTAL ASSETS
5
9
,
2
9
5
,
7
6
3
LIABILITIES
Accrued
Expenses
5
5
,
9
4
2
TOTAL LIABILITIES
5
5
,
9
4
2
NET ASSETS
applicable to
4,076,607
shares
outstanding
$
5
9
,
2
3
9
,
8
2
1
NET ASSET VALUE
PER SHARE
$
1
4
.
5
3
FS-4
HARRIS INSIGHT FUNDS
Managed Fixed Income Fund
Statement of Assets and
Liabilities
October 31, 1995
(Unaudited)
ASSETS
Investments
at Value
(Cost
$587,379)
$
5
4
,
3
7
1
,
2
2
8
Interest
Receivable
6
9
2
,
4
7
7
Cash
0
Receivable
for
Investment
Sold
4
9
4
,
7
9
9
Receivable
for Fund
Share Sold
2
5
0
Prepaid
Expenses
2
,
8
4
0
TOTAL
ASSETS
5
5
,
5
6
1
,
5
9
4
LIABILITIES
Investment
Purchase
Unsettled
5
,
2
3
9
,
0
6
8
Payable
Fundshare
Redeemed
0
Accrued
Expenses
3
7
,
3
1
0
TOTAL
LIABILITIES
5
,
2
7
6
,
3
7
8
NET ASSETS
applicable
to
4,899,225
shares
outstanding
$
5
0
,
2
8
5
,
2
1
6
NET ASSET
VALUE PER
SHARE
$
1
0
.
2
6
FS-5
HARRIS INSIGHT FUNDS
Government Assets Fund
Statement of Operations
January 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INVESTMENT INCOME
Interest
$
1
4
,
7
9
0
,
1
3
6
EXPENSES
Investment
Advisory Fee
2
7
3
,
2
6
8
Pricing Fee
7
0
8
Administration
Fee
2
8
3
,
9
1
6
Funds -
Distribution Fee
2
4
,
1
6
3
Shareholder
Servicing Fee
7
9
4
,
2
3
1
Transfer Agent
Fee
2
8
,
8
9
7
Custodian Fee
5
8
,
0
4
3
Legal
6
,
9
1
1
Audit Fee
1
0
,
2
1
2
Insurance
9
,
1
1
5
Directors Fee
1
7
,
7
1
6
Printing
9
,
3
8
5
ICI Fees
4
,
8
8
9
Blue Sky
1
0
,
3
1
9
Advertising
7
,
6
5
0
SEC Fee
3
6
,
9
7
6
Miscellaneous
4
6
0
Total
Expenses
1
,
5
7
6
,
8
5
9
Less:
Accrued fee
waivers
(
2
2
7
,
9
2
8
)
Net
Expenses
1
,
3
4
8
,
9
3
1
NET INVESTMENT
INCOME
1
3
,
4
4
1
,
2
0
5
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net Realized
Gain (Loss) on
Investment
Transactions
0
Net Increase
(Decrease) in
Unrealized
Appreciation
on Investments
0
Net
Realized and
Unrealized Gain
(Loss) on
Investments
0
NET INCREASE
(DECREASE) IN NET
ASSETS
RESULTING FROM
OPERATIONS
$
1
3
,
4
4
1
,
2
0
5
FS-6
HARRIS INSIGHT FUNDS
Cash Management Fund
Statement of Operations
January 1,1995 through October 31, 1995
(Unaudited)
Year to Date
INVESTMENT
INCOME
$
3
2
,
0
6
9
,
0
7
4
Interest
EXPENSES
Investment
Advisory Fee
5
6
1
,
7
4
1
Funds-
Distribution Fee
5
1
,
3
0
0
Advertising
1
6
,
2
6
8
Administration
Fee
6
2
3
,
3
3
9
Transfer Agent
Fee
4
6
,
1
3
3
Directors Fee
4
0
,
0
6
5
Custodian Fee
1
2
4
,
8
6
7
Shareholder
Servicing Fee
1
,
5
4
5
,
4
5
1
Blue Sky Fee
1
2
,
3
3
4
Legal Fee
1
5
,
9
6
1
ICI Fee
1
1
,
0
0
8
Audit Fee
3
2
,
4
8
9
Insurance Fee
2
2
,
4
2
2
Printing Fee
2
2
,
3
0
3
Pricing fee
3
0
4
Organizational
Fee
0
Miscellaneous
Fee
8
9
2
Sec Fee
4
4
,
1
9
2
Total
Expenses
3
,
1
7
1
,
0
6
9
Less:
Accrued Fee
Waivers
(
4
1
8
,
2
3
3
)
Net
Expenses
2
,
7
5
2
,
8
3
6
NET INVESTMENT
INCOME
2
9
,
3
1
6
,
2
3
8
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net Realized
Gain (Loss) on
Investment
Transactions
1
1
,
7
0
6
Net Increase
(Decrease) in
Unrealized
Appreciation
on Investments
0
Net
Realized and
Unrealized Gain
(Loss) on
Investments
1
1
,
7
0
6
NET INCREASE
(DECREASE) IN NET
ASSETS
RESULTING FROM
OPERATIONS
$
2
9
,
3
2
7
,
9
4
4
FS-7
HARRIS INSIGHT FUNDS
Tax-Free Money Market Fund
Statement of Operations
January 1, 1995 through October 31, 1995
(Unaudited)
Year to Date
INVESTMENT
INCOME
Interest
$
1
3
,
4
2
2
,
1
5
2
EXPENSES
Investment
Advisory Fee
3
7
9
,
5
6
8
Administration
Fee
4
1
0
,
3
4
5
Transfer
Agent Fee
3
7
,
2
1
7
Custodian Fee
5
3
,
8
5
3
Legal Fee
1
0
,
3
0
3
Pricing Fee
3
8
3
Audit Fee
2
3
,
6
5
0
Insurance Fee
1
2
,
1
9
1
Directors Fee
2
5
,
8
8
6
Printing Fee
1
4
,
2
0
2
SEC Fee
2
2
,
9
0
8
Blue Sky Fee
7
,
5
2
3
Miscellaneous
Fee
1
9
9
Shareholder
Servicing Fee
4
7
4
,
0
7
1
ICI Fee
6
,
9
9
8
Advertising
Fee
1
0
,
5
9
8
Total
Expenses
1
,
4
8
9
,
8
9
5
Less:
Accrued fee
waivers
(
1
2
5
,
6
9
5
)
Net
Expenses
1
,
3
6
4
,
2
0
0
NET INVESTMENT
INCOME
1
2
,
0
5
7
,
9
5
2
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net Realized
Gain (Loss) on
Investment
Transactions
(
9
6
8
)
Unamortized
Market Discount
0
NET INCREASE
(DECREASE) IN
NET
ASSETS
RESULTING FROM
OPERATIONS
$
1
2
,
0
5
6
,
9
8
4
FS-8
HARRIS INSIGHT FUNDS
Equity Fund
Statement of Operations
January 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INVESTMENT INCOME
Dividends
$
1
,
0
7
5
,
3
8
3
Interest
5
9
,
6
5
8
Total
Investment Income
1
,
1
3
5
,
0
4
1
EXPENSES
Investment
Advisory Fee
2
9
0
,
2
7
3
Administration Fee
4
4
,
6
8
0
Transfer Agent Fee
1
6
,
2
0
7
Funds Disributor
4
,
3
6
9
Advertising
1
,
3
8
2
Custodian Fee
2
0
,
3
8
6
Legal Fee
1
,
0
9
9
Audit Fee
1
,
2
1
8
Directors' Fee
3
,
0
6
1
Printing
3
,
3
5
5
ICI Fee
6
3
5
Pricing Fee
2
,
3
6
1
Organization
0
Blue Sky
9
,
2
4
5
Insurance
1
,
7
7
0
SEC
8
2
5
Miscellaneous
1
8
5
Total Expenses
4
0
1
,
0
5
1
Less: Accrued
fee waiver
(
3
,
8
2
6
)
Net Expenses
3
9
7
,
2
2
5
NET INVESTMENT
INCOME
7
3
7
,
8
1
6
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net Realized Gain
(Loss) on Investment
Transactions
3
,
8
3
2
,
2
4
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
8
,
5
8
8
,
7
7
1
Net Realized
and Unrealized Gain
(Loss) on
Investments
1
2
,
4
2
1
,
0
1
3
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS
$
1
3
,
1
5
8
,
8
2
9
FS-9
HARRIS INSIGHT FUNDS
Managed Fixed Income Fund
Statement of Operations
October 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INVESTMENT
INCOME
Interest
$
2
,
5
0
7
,
6
4
5
Total
Investment Income
2
,
5
0
7
,
6
4
5
EXPENSES
Investment
Advisory Fee
2
6
6
,
9
7
4
Administration
Fee
4
5
,
5
4
4
Transfer Agent
Fee
8
,
7
9
9
Custodian Fee
1
4
,
1
9
7
Legal Fee
1
,
2
9
6
Audit Fee
1
,
1
9
2
Directors' Fee
2
,
8
6
0
Printing
3
,
2
2
7
Organization
2
,
3
3
2
Blue Sky
1
4
,
7
1
3
ICI Fee
8
3
6
Insurance
1
,
7
3
6
Pricing
6
,
0
8
4
Miscellaneous
Expense
6
7
Total
Expenses
3
6
9
,
8
5
7
Less:
Accrued fee
waivers
(
1
4
1
,
0
2
2
)
Net
Expenses
2
2
8
,
8
3
5
NET INVESTMENT
INCOME
2
,
2
7
8
,
8
1
0
REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
Net Realized
Gain (Loss) on
Investment
Transactions
6
4
4
,
2
2
2
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation)
1
,
9
4
9
,
9
6
1
Net
Realized and
Unrealized Gain
(Loss) on
Investments
2
,
5
9
4
,
1
8
3
NET INCREASE
(DECREASE) IN NET
ASSETS
RESULTING FROM
OPERATIONS
$
4
,
8
7
2
,
9
9
3
FS-10
HARRIS INSIGHT FUNDS
Government Assets Fund
Statement of Changes in Net
Assets
January 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
Operations:
Net
Investment Income
1
3
,
4
4
1
,
2
0
5
Net
Realized Gain
(Loss) on
Investments
0
Net
Increase
(Decrease) in
Unrealized
Appreciation on
Investments
0
Net
Increase in Net
Assets Resulting
from
Operations
1
3
,
4
4
1
,
2
0
5
Distributions:
Dividends
from Net
Investment Income
(
1
3
,
4
4
1
,
2
0
5
)
Dividends
from Net Realized
Gain
0
Total
Distribution to
Shareholders
(
1
3
,
4
4
1
,
2
0
5
)
Capital Share
Transactions:
Proceeds
from sale of
capital shares
1
,
4
6
4
,
2
2
1
,
0
5
1
Value of
shares reinvested
3
,
1
6
9
,
9
3
5
Cost of
shares
repurchased
(
1
,
3
6
7
,
0
7
0
,
2
2
4
)
Net
Increase
(Decrease) in Net
Assets
from
Capital Share
Transactions
1
0
0
,
3
2
0
,
7
6
2
Total
Increase
(Decrease) in
Net
Assets
1
0
0
,
3
2
0
,
7
6
2
NET ASSETS:
Beginning of
period
2
3
9
,
2
3
6
,
3
6
5
End of period
3
3
9
,
5
5
7
,
1
2
7
FS-11
HARRIS INSIGHT FUNDS
Cash Management Fund
Statement of Changes in Net Assets
January 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INCREASE
(DECREASE) IN NET
ASSETS:
Operations:
Net
Investment Income
$
2
9
,
3
1
6
,
2
3
8
Net
Realized Gain
(Loss) on
Investments
1
1
,
7
0
6
Net
Increase
(Decrease) in
Unrealized
Appreciation on
Investments
0
Net
Increase in Net
Assets Resulting
from
Operations
2
9
,
3
2
7
,
9
4
4
Distributions:
Dividends
from Net
Investment Income
(
2
9
,
3
1
6
,
2
3
8
)
Capital
Share
Transactions:
Proceeds
from sale of
capital shares
2
,
4
0
7
,
0
4
4
,
3
1
9
Value of
shares reinvested
5
,
1
6
2
,
5
2
9
Cost of
shares
repurchased
(
2
,
3
4
1
,
7
2
6
,
9
8
9
)
Net
Increase
(Decrease) in Net
Assets
from
Capital Share
Transaction
7
0
,
4
7
9
,
8
5
9
Total
Increase
(Decrease) in Net
Assets
7
0
,
4
9
1
,
5
6
5
NET ASSETS:
Beginning of
period
5
6
2
,
3
5
5
,
8
2
0
End of period
$
6
3
2
,
8
4
7
,
3
8
5
FS-12
HARRIS INSIGHT FUNDS
Tax-Free Money Market Fund
Statement of Changes in Net Assets
January 1, 1995 through October 31, 1995
(Unaudited)
Year to Date
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net
Investment Income
$
1
2
,
0
5
7
,
9
5
2
Net
Realized
Gain(Loss) on
Investment
(
9
6
8
)
Unamortized
Market Discount
0
Net
increase in Net
Assets Resulting
from
Operations
1
2
,
0
5
6
,
9
8
4
Distributions:
Dividends
from Net
Investment Income
(
1
2
,
0
5
7
,
9
5
2
)
Capital Share
Transactions:
Proceeds
from sale of
capital shares
7
6
6
,
2
2
3
,
4
4
7
Value of
shares reinvested
2
,
6
9
9
,
1
8
3
Cost of
shares
repurchased
(
7
2
0
,
8
0
3
,
3
0
1
)
Net
Increase
(Decrease) in Net
Assets
from
Capital Share
Transactions
4
8
,
1
1
9
,
3
2
9
Total
Increase
(Decrease) in Net
Assets
4
8
,
1
1
8
,
3
6
1
NET ASSETS:
Beginning of
period
3
6
0
,
6
0
0
,
5
6
8
End of period
$
4
0
8
,
7
1
8
,
9
2
9
FS-13
HARRIS INSIGHT FUNDS
Equity Fund
Statement of Changes in Net Assets
January 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net
Investment Income
$
7
3
7
,
8
1
6
Net
Realized Gain
(Loss) on
Investments
3
,
8
3
2
,
2
4
2
Net
Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation) on
Investments
8
,
5
8
8
,
7
7
1
Net
Increase
(Decrease) in Net
Assets
Resulting
from Operations
1
3
,
1
5
8
,
8
2
9
Distributions:
Dividends
from Net
Investment Income
(
6
6
7
,
6
0
3
)
Dividends
from Capital
Gains
0
Total
Distributions
(
6
6
7
,
6
0
3
)
Capital Share
Transactions:
Proceeds
from sale of
capital shares
2
7
,
1
4
4
,
6
2
1
Value of
shares reinvested
2
1
5
,
6
8
0
Cost of
shares
repurchased
(
1
9
,
5
3
1
,
7
5
2
)
Net
Increase
(Decrease) in Net
Assets
from
Capital Share
Transactions
7
,
8
2
8
,
5
4
9
Total Increase
(Decrease) in
Net Assets
2
0
,
3
1
9
,
7
7
5
NET ASSETS:
Beginning of
period
3
8
,
9
2
0
,
0
4
6
End of period
$
5
9
,
2
3
9
,
8
2
1
FS-14
HARRIS INSIGHT FUNDS
Managed Fixed Income Fund
Statement of Changes in Net Assets
October 1, 1995 through October 31,
1995
(Unaudited)
Year to Date
INCREASE
(DECREASE) IN NET
ASSETS:
Operations:
Net
Investment Income
$
2
,
2
7
8
,
8
1
0
Net
Realized Gain
(Loss) on
Investments
6
4
4
,
2
2
2
Net
Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation) on
Investments
1
,
9
4
9
,
9
6
1
Net
Increase
(Decrease) in Net
Assets
Resulting
from Operations
4
,
8
7
2
,
9
9
3
Distributions:
Dividends
from Net
Investment Income
(
2
,
1
4
6
,
6
4
1
)
Total
Distributions
(
2
,
1
4
6
,
6
4
1
)
Capital Share
Transactions:
Capital
shares sold
1
2
,
1
5
2
,
8
6
6
Value of
shares reinvested
1
,
0
6
3
,
5
2
5
Cost of
shares
repurchased
(
9
,
9
9
0
,
0
5
4
)
Net
Increase
(Decrease) in Net
Assets
from
Capital Share
Transactions
3
,
2
2
6
,
3
3
7
Total Increase
(Decrease) in
Net Assets
5
,
9
5
2
,
6
8
9
NET ASSETS:
Beginning of
period
4
4
,
3
3
2
,
5
2
7
End of period
$
5
0
,
2
8
5
,
2
1
6
FS-15
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Government Assets Fund
CLASS A
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
1
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
0
Net Asset
Value,
Beginning of
Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
4
5
.
0
3
7
.
0
2
6
.
0
3
3
.
0
5
5
.
0
7
5
Total
from
Investment
Operations
.
0
4
5
.
0
3
7
.
0
2
6
.
0
3
3
.
0
5
5
.
0
7
5
Less
Distribution
s:
Dividends to
Shareholders
from
Net
Investment
Income
(
.
0
4
5
)
(
.
0
3
7
)
(
.
0
2
6
)
(
.
0
3
3
)
(
.
0
5
5
)
(
.
0
7
5
)
Total
Distribution
s
(
.
0
4
5
)
(
.
0
3
7
)
(
.
0
2
6
)
(
.
0
3
3
)
(
.
0
5
5
)
(
.
0
7
5
)
Net Asset
Value, End
of Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Total
Return:
4
.
6
1
%
(
3
)
3
.
7
2
%
2
.
6
2
%
3
.
4
2
%
5
.
6
7
%
7
.
7
8
%
Ratios/Suppl
emental
Data:
Net Assets,
End of
Period
$(000)
3
0
4
,
0
7
1
2
2
9
,
6
1
9
2
6
3
,
9
0
9
1
4
0
,
1
3
4
6
3
2
,
6
6
3
8
7
,
0
9
8
Ratios of
Expenses to
Average Net
Assets (1)
0
.
5
7
%
(
2
)
0
.
6
0
%
0
.
6
1
%
0
.
6
6
%
0
.
7
1
%
0
.
5
2
%
Ratios of
Net
Investment
Income to
Average
Net Assets
5
.
4
1
%
(
2
)
3
.
6
2
%
2
.
5
7
%
3
.
3
4
%
5
.
4
5
%
7
.
4
9
%
_______________________
(1) Without the voluntary waiver of fees, the expense ratios
would have
been 0.67%, 0.66%, 0.70%, 0.70%, 0.78% and 0.83%, for the
ten months ended October 31, 1995 and the years ended
December 31,
1994, 1993, 1992, 1991 and 1990, respectively.
(2) Annualized.
(3) Total Returns for periods less than one year are not
annualized.
FS-16
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Gover
nment
Asset
s
Fund
CLASS
C
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
0
5
/
1
6
/
9
4
*
t
o
1
2
/
3
1
/
9
4
Net Asset
Value,
Beginning of
Period
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
4
7
.
0
2
8
Total
from
Investment
Operations
.
0
4
7
.
0
2
8
Less
Distribution
s:
Dividends to
Shareholders
from
Net
Investment
Income
(
.
0
4
7
)
(
.
0
2
8
)
Total
Distribution
s
(
.
0
4
7
)
(
.
0
2
8
)
Net Asset
Value, End
of Period
$
1
.
0
0
$
1
.
0
0
Total
Return:
4
.
8
3
%
(
3
)
2
.
8
2
%
(
3
)
Ratios/Suppl
emental
Data:
Net Assets,
End of
Period
$(000)
3
5
,
4
8
6
9
,
6
1
7
Ratios of
Expenses to
Average Net
Assets (1)
0
.
3
1
%
(
2
)
0
.
2
9
%
(
2
)
Ratios of
Net
Investment
Income to
Average
Net Assets
5
.
6
5
%
(
2
)
4
.
5
2
%
(
2
)
____________________________
* Date commenced operations.
(1) Without the voluntary waiver of fees, the expense ratios
would have
been 0.32%
and 0.31% for the ten months ended October 31, 1995 and the
period
ended
December 31, 1994, respectively.
(2) Annualized.
(3) Total Returns for periods less than one year are not
annualized.
FS-17
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Cash Management Fund
CLASS A
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
1
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
0
Net Asset
Value,
Beginning
of Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
4
5
.
0
3
7
.
0
2
7
.
0
3
4
.
0
5
7
.
0
7
7
Total
from
Investment
Operations
.
0
4
5
.
0
3
7
.
0
2
7
.
0
3
4
.
0
5
7
.
0
7
7
Less
Distributio
ns:
Dividends
to
Shareholder
s from
Net
Investment
Income
(
.
0
4
5
)
(
.
0
3
7
)
(
.
0
2
7
)
(
.
0
3
4
)
(
.
0
5
7
)
(
.
0
7
7
)
Total
Distributio
ns
(
.
0
4
5
)
(
.
0
3
7
)
(
.
0
2
7
)
(
.
0
3
4
)
(
.
0
5
7
)
(
.
0
7
7
)
Net Asset
Value, End
of Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Total
Return:
4
.
6
4
%
(
3
)
3
.
7
9
%
2
.
6
9
%
3
.
4
1
%
5
.
8
7
%
7
.
9
4
%
Ratios/Supp
lemental
Data:
Net Assets,
End of
Period
$(000)
4
3
8
,
5
8
1
5
3
0
,
3
6
6
3
4
8
,
9
8
4
3
8
3
,
2
8
0
2
6
3
,
4
1
9
1
5
3
,
9
3
4
Ratios of
Expenses to
Average Net
Assets (1)
0
.
5
6
%
(
2
)
0
.
5
5
%
0
.
5
7
%
0
.
6
0
%
0
.
7
1
%
0
.
6
7
%
Ratios of
Net
Investment
Income to
Average
Net
Assets
5
.
4
6
%
(
2
)
3
.
7
9
%
2
.
6
6
%
3
.
3
4
%
5
.
6
9
%
7
.
6
6
%
____________________________
(1) Without the voluntary waiver of fees, the expense ratios for
the
ten months ended October 31, 1995 and the years ended December 31,
1994,
1993,
1992, 1991 and 1990 would have been 0.65%, 0.65%, 0.72%,
0.73%,
0.74% and 0.78%, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not
annualized.
FS-18
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Cash
Manag
ement
Fund
CLASS
C
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Net Asset
Value,
Beginning
of Period
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
4
8
.
0
3
9
Total
from
Investment
Operations
.
0
4
8
.
0
3
9
Less
Distributio
ns:
Dividends
to
Shareholder
s from
Net
Investment
Income
(
.
0
4
8
)
(
.
0
3
9
)
Total
Distributio
ns
(
.
0
4
8
)
(
.
0
3
9
)
Net Asset
Value, End
of Period
$
1
.
0
0
$
1
.
0
0
Total
Return:
4
.
8
7
%
(
3
)
4
.
0
8
%
(
3
)
Ratios/Supp
lemental
Data:
Net Assets,
End of
Period
$(000)
1
9
4
,
2
6
7
3
1
,
9
9
0
Ratios of
Expenses to
Average Net
Assets (1)
0
.
3
0
%
(
2
)
0
.
2
9
%
(
2
)
Ratios of
Net
Investment
Income to
Average
Net
Assets
5
.
6
8
%
(
2
)
4
.
7
9
%
(
2
)
____________________________
(1) Without the voluntary waiver of fees, the expense ratios for
the
ten months ended
October 31, 1995 and the period ended December 31, 1994
would
have been 0.31% and 0.30%, respectively.
(2) Annualized.
(3) Total returns for periods of less than one year are not
annualized.
(4) Commenced operations on January 5, 1994.
FS-19
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Tax-Free Money Market Fund
CLASS A
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
1
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
0
Net Asset
Value,
Beginning of
Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
2
7
.
0
2
3
.
0
2
0
.
0
2
5
.
0
4
1
.
0
5
3
Total from
Investment
Operations
.
0
2
7
.
0
2
3
.
0
2
0
.
0
2
5
.
0
4
1
.
0
5
3
Less
Distributions
:
Dividends to
Shareholders
from
Net
Investment
Income
(
.
0
2
7
)
(
.
0
2
3
)
(
.
0
2
0
)
(
.
0
2
5
)
(
.
0
4
1
)
(
.
0
5
3
)
Total
Distributions
(
.
0
2
7
)
(
.
0
2
3
)
(
.
0
2
0
)
(
.
0
2
5
)
(
.
0
4
1
)
(
.
0
5
3
)
Net Asset
Value, End of
Period
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
$
1
.
0
0
Total Return:
2
.
7
4
%
(
3
)
2
.
3
0
%
1
.
9
9
%
2
.
5
4
%
4
.
1
6
%
5
.
5
1
%
Ratios/Supple
mental Data:
Net Assets,
End of Period
$(000)
1
5
7
,
0
0
0
1
2
3
,
5
0
3
1
6
8
,
4
4
0
1
5
2
,
8
2
1
1
5
7
,
6
9
3
1
3
6
,
1
1
7
Ratios of
Expenses to
Average Net
Assets (1)
0
.
5
7
%
(
2
)
0
.
5
4
%
0
.
5
4
%
0
.
6
2
%
0
.
4
9
%
0
.
4
7
%
Ratios of Net
Investment
Income to
Average
Net Assets
3
.
2
4
%
(
2
)
2
.
2
0
%
1
.
9
7
%
2
.
5
0
%
4
.
0
8
%
5
.
3
8
%
_______________________________
(1) Without the voluntary waiver of fees, the expense ratios for
the
ten months ended October 31, 1995 and for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990 would have
been
0.65%, 0.65%, 0.71%, 0.73%, 0.75% and 0.78%, respectively.
(2) Annualized.
(3) Total Returns for periods less than one year are not
annualized.
FS-20
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Tax-
Free
Money
Marke
t
Fund
CLASS
C
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
0
1
/
0
5
/
9
4
*
t
o
1
2
/
3
1
/
9
4
Net Asset
Value,
Beginning of
Period
$
1
.
0
0
$
1
.
0
0
Income from
Investment
Operations:
Net
Investment
Income
.
0
2
9
.
0
2
5
Total from
Investment
Operations
.
0
2
9
.
0
2
5
Less
Distributions
:
Dividends to
Shareholders
from
Net
Investment
Income
(
.
0
2
9
)
(
.
0
2
5
)
Total
Distributions
(
.
0
2
9
)
(
.
0
2
5
)
Net Asset
Value, End of
Period
$
1
.
0
0
$
1
.
0
0
Total Return:
2
.
9
8
%
(
3
)
2
.
5
6
%
(
3
)
Ratios/Supple
mental Data:
Net Assets,
End of Period
$(000)
2
5
1
,
7
1
9
2
3
7
,
1
0
1
Ratios of
Expenses to
Average Net
Assets (1)
0
.
2
9
%
(
2
)
0
.
2
8
%
(
2
)
Ratios of Net
Investment
Income to
Average
Net Assets
3
.
5
1
%
(
2
)
2
.
9
9
%
(
2
)
_____________________
* Date commenced operations.
(1) Without the voluntary waiver of fees, the expense ratios
would have
been for
the ten months ended October 31, 1995, and the period ended
December 31, 1994
0.30% and 0.30%, respectively.
(2) Annualized.
(3) Total Returns for periods less than one year are not
annualized.
FS-21
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Equity Fund
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
1
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
0
Net
Asset
Value,
Beginni
ng of
Period
$
1
1
.
2
8
$
1
2
.
8
6
$
1
1
.
5
7
$
1
2
.
0
8
$
1
0
.
0
5
$
1
1
.
2
2
Income
from
Investm
ent
Operati
ons:
Net
Investm
ent
Income
.
1
9
0
.
2
6
3
.
1
9
7
.
2
6
7
.
2
8
2
.
3
2
3
Net
Realize
d and
Unreali
zed
Gain
(Loss)
on
Investm
ents
3
.
2
3
3
(
.
5
1
4
)
1
.
9
0
4
.
7
0
3
2
.
4
1
8
(
1
.
2
0
3
)
Total
from
Investm
ent
Operati
ons
3
.
4
2
3
(
.
2
5
1
)
2
.
1
0
1
.
9
7
0
2
.
7
0
0
(
.
8
8
0
)
Less
Distrib
utions:
Dividen
ds to
Shareho
lders
from
Net
Investm
ent
Income
(
.
1
7
3
)
(
.
2
6
3
)
(
.
2
0
4
)
(
.
2
9
0
)
(
.
2
8
0
)
(
.
2
9
0
)
Dividen
ds to
Shareho
lders
from
Net
Capital
Gains
- - - -
(
1
.
0
6
6
)
(
.
6
0
7
)
(
1
.
1
9
0
)
(
.
3
9
0
)
- - - -
Total
Distrib
utions
(
.
1
7
3
)
(
1
.
3
2
9
)
(
.
8
1
1
)
(
1
.
4
8
0
)
(
.
6
7
0
)
(
.
2
9
0
)
Net
Asset
Value,
End of
Period
$
1
4
.
5
3
$
1
1
.
2
8
$
1
2
.
8
6
$
1
1
.
5
7
$
1
2
.
0
8
$
1
0
.
0
5
Total
Return:
3
0
.
5
1
%
(
3
)
(
2
.
0
5
)
%
1
8
.
2
3
%
8
.
1
9
%
2
7
.
2
9
%
(
7
.
8
7
)
%
Ratios/
Supplem
ental
Data:
Net
Assets,
End of
Period
$(000)
5
9
,
2
4
0
3
8
,
9
2
0
4
7
,
2
4
1
3
1
,
8
0
9
3
4
,
1
5
0
2
4
,
6
4
9
Ratios
of
Expense
s to
Average
Net
Assets
(1)
0
.
9
6
%
(
2
)
0
.
9
0
%
0
.
9
3
%
0
.
9
6
%
0
.
9
8
%
1
.
0
0
%
Ratios
of Net
Investm
ent
Income
to
Average
Net
Assets
1
.
7
8
%
(
2
)
1
.
9
4
%
1
.
5
9
%
2
.
1
6
%
2
.
5
2
%
3
.
2
9
%
Portfol
io
Turnove
r Rate
6
4
.
8
6
%
8
7
.
8
3
%
5
7
.
3
1
%
6
3
.
7
9
%
7
7
.
8
5
%
5
2
.
2
7
%
_______________________________
(1) Without the voluntary waiver of fees, the expense ratios for
the
ten months ended October 31, 1995 and for the years ended
December 31, 1994, 1993, 1992, 1991 and 1990 would have been
0.97%,
0.92% 0.96%, 0.98%, 1.01% and 1.21%, respectively.
(2) Annualized
(3) Total returns for periods of less than one year are not
annualized.
(4) Sales load is not reflected in total return.
FS-22
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Managed Fixed Income Fund
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
0
4
/
0
1
/
9
1
*
t
o
1
2
/
3
1
/
9
1
Net
Asset
Value,
Beginn
ing of
Period
$
9
.
6
6
$
1
0
.
3
4
$
1
0
.
2
2
$
1
0
.
5
7
$
1
0
.
0
0
Income
from
Invest
ment
Operat
ions:
Net
Invest
ment
Income
.
4
9
6
.
5
5
9
.
5
6
3
.
6
3
0
.
4
7
4
Net
Realiz
ed and
Unreal
ized
Gain
(Loss)
on
Invest
ments
.
5
7
3
(
.
6
9
4
)
.
4
3
5
(
.
0
8
7
)
.
6
0
1
Total
from
Invest
ment
Operat
ions
1
.
0
6
9
(
.
1
3
5
)
.
9
9
8
.
5
4
3
1
.
0
7
5
Less
Distri
bution
s:
Divide
nds to
Shareh
olders
from
Net
Invest
ment
Income
(
.
4
6
9
)
(
.
5
4
5
)
(
.
5
6
4
)
(
.
6
3
1
)
(
.
4
7
5
)
Divide
nds to
Shareh
olders
from
Net
Capita
l
Gains
- - - -
- - - -
(
.
3
1
4
)
(
.
2
6
2
)
(
.
0
3
0
)
Total
Distri
bution
s
(
.
4
6
9
)
(
.
5
4
5
)
(
.
8
7
8
)
(
.
8
9
3
)
(
.
5
0
5
)
Net
Asset
Value,
End of
Period
$
1
0
.
2
6
$
9
.
6
6
$
1
0
.
3
4
$
1
0
.
2
2
$
1
0
.
5
7
Total
Return
:
1
1
.
2
8
%
(
3
)
(
1
.
2
9
)
%
9
.
9
1
%
5
.
2
8
%
1
1
.
0
4
%
(
3
)
Ratios
/Suppl
ementa
l
Data:
Net
Assets
, End
of
Period
$(000)
5
0
,
2
8
5
4
4
,
3
3
3
7
4
,
0
5
7
7
1
,
8
4
8
4
4
,
3
1
3
Ratios
of
Expens
es to
Averag
e Net
Assets
(1)
0
.
6
0
%
(
2
)
0
.
6
0
%
0
.
6
0
%
0
.
6
0
%
0
.
6
0
%
(
2
)
Ratios
of Net
Invest
ment
Income
to
Averag
e Net
Assets
5
.
9
7
%
(
2
)
5
.
2
9
%
5
.
3
2
%
6
.
0
7
%
6
.
6
0
%
(
2
)
Portfo
lio
Turnov
er
Rate
1
6
9
.
5
9
%
1
4
0
.
9
9
%
2
1
5
.
0
7
%
1
3
3
.
7
8
%
1
0
8
.
7
0
%
___________________________
* Date commenced operations.
(1) Without the voluntary waiver of fees, the expense ratios for
the
ten months ended October 31, 1995, for the years
ended December 31, 1994, 1993, 1992, and for the period
ended
December 31, 1991 would have been 0.97%, 0.92%,
0.94%, 0.93%, and 1.01% , respectively.
(2) Annualized
(3) Total returns for periods of less than one year are not
annualized.
(4) Sales load is not reflected in total return.
FS-23
APPENDIX A
Description of Bond Ratings
The following summarizes the highest four ratings used
by Standard &
Poor's Corporation ("S&P") for corporate and municipal debt:
AAA - Debt rated AAA has the highest rating
assigned by S&P.
Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to
pay interest
and repay principal and differs from AAA issues
only in a small
degree.
A - Debt rated A has a strong capacity to pay
interest and
repay principal although it is somewhat more
susceptible to the
adverse effects of changes in circumstances
and economic
conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an
adequate capacity
to pay interest and repay principal. Whereas it
normally exhibits
adequate protection parameters, adverse economic
conditions or
changing circumstances are more likely to lead
to a weakened
capacity to pay interest and repay principal
for debt in this
category than for those in higher rated categories.
To provide more detailed indications of credit quality,
the AA, A and
BBB ratings may be modified by the addition of a plus or
minus sign to show
relative standing within these major rating categories.
The following summarizes the highest four ratings
used by Moody's
Investors Service, Inc. ("Moody's") for corporate and municipal
long-term debt:
Aaa - Bonds that are rated Aaa are judged to
be of the best
quality. They carry the smallest degree of
investment risk and
are generally referred to as "gilt edge." Interest
payments are
protected by a large or by an exceptionally
stable margin and
principal is secure. While the various protective
elements are
likely to change, such changes as can be
visualized are most
unlikely to impair the fundamentally strong
position of such
issues.
Aa - Bonds that are rated Aa are judged to be of
high quality
by all standards. Together with the Aaa group they
comprise what
are generally known as high grade bonds. They
are rated lower
than the best bonds because margins of protection
may not be as
large as in Aaa securities or fluctuation of
protective elements
may be of greater amplitude or there may be
other elements
present which make the long-term risks appear
somewhat larger
than in Aaa securities.
A-
1
<PAGE>
A - Bonds that are rated A possess many
favorable investment
attributes and are to be considered upper
medium grade
obligations. Factors giving security to
principal and interest
are considered adequate, but elements may be
present which
suggest a susceptibility to impairment sometime in
the future.
Baa - Bonds that are rated Baa are considered
medium grade
obligations, i.e., they are neither highly
protected nor poorly
secured. Interest payments and principal security
appear adequate
for the present but certain protective elements may
be lacking or
may be characteristically unreliable over any
great length of
time. Such bonds lack outstanding investment
characteristics and
in fact have speculative characteristics as well.
Moody's applies numerical modifiers (1, 2 and 3)
with respect to
corporate bonds rated Aa, A and Baa. The modifier 1 indicates
that the bond
being rated ranks in the higher end of its generic rating
category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates
that the bond
ranks in the lower end of its generic rating category. With
regard to municipal
bonds, those bonds in the Aa, A and Baa groups which Moody's
believes possess
the strongest investment attributes are designated by the
symbols Aa1, A1 or
Baa1, respectively.
The following summarizes the highest four ratings used by
Duff & Phelps
Credit Rating Co. ("D&P") for bonds:
AAA - Debt rated AAA is of the highest credit
quality. The risk
factors are considered to be negligible, being only
slightly more
than for risk-free U.S. Treasury debt.
AA - Debt rated AA is of high credit
quality. Protection
factors are strong. Risk is modest but may vary
slightly from
time to time because of economic conditions.
A - Bonds that are rated A have protection
factors which are
average but adequate. However risk factors are
more variable and
greater in periods of economic stress.
BBB - Bonds that are rated BBB have below
average protection
factors but are still considered sufficient
for prudent
investment. Considerable variability in risk
during economic
cycles.
To provide more detailed indications of credit quality,
the AA, A and
BBB ratings may be modified by the addition of a plus or
minus sign to show
relative standing within these major categories.
A-2
<PAGE>
The following summarizes the ratings used by IBCA Limited
and IBCA Inc.
("IBCA") for bonds:
Obligations rated AAA by IBCA have the lowest
expectation of
investment risk. Capacity for timely repayment of
principal and
interest is substantial, such that adverse
changes in business,
economic or financial conditions are unlikely
to increase
investment risk significantly.
IBCA also assigns a rating to certain
international and U.S.
banks. An IBCA bank rating represents IBCA's
current assessment
of the strength of the bank and whether such bank
would receive
support should it experience difficulties. In its
assessment of a
bank, IBCA uses a dual rating system comprised of
Legal Ratings
and Individual Ratings. In addition, IBCA assigns
banks Long and
Short-Term Ratings as used in the corporate
ratings discussed
above. Legal Ratings, which range in gradation
from 1 through 5,
address the question of whether the bank would
receive support
provided by central banks or shareholders if
it experienced
difficulties, and such ratings are considered
by IBCA to be a
prime factor in its assessment of credit
risk. Individual
Ratings, which range in gradations from A through
E, represent
IBCA's assessment of a bank's economic merits
and address the
question of how the bank would be viewed if it
were entirely
independent and could not rely on support from
state authorities
or its owners.
Description of Municipal Notes Ratings
The following summarizes the two highest ratings used
by Moody's for
short-term notes and variable rate demand obligations:
MIG-1/VMIG-1. Obligations bearing these
designations are of the
best quality, enjoying strong protection by
established cash
flows, superior liquidity support or
demonstrated broad-based
access to the market for refinancing.
MIG-2/VMIG-2. Obligations bearing these
designations are of high
quality with margins of protection ample although
not as large as
in the preceding group.
The following summarizes the two highest ratings by
Standard & Poor's
for short-term municipal notes:
SP-1 - Very strong or strong capacity to pay
principal and
interest. Those issues determined to possess
overwhelming safety
characteristics are given a "plus" (+) designation.
SP-2 - Satisfactory capacity to pay principal and
interest.
A-3
<PAGE>
The three highest rating categories of D&P for short-term
debt are Duff
1, Duff 2, and Duff 3. D&P employs three designations, Duff 1+,
Duff 1 and Duff
1-, within the highest rating category. Duff 1+ indicates
highest certainty of
timely payment. Short-term liquidity, including internal
operating factors
and/or access to alternative sources of funds, is judged to be
"outstanding, and
safety is just below risk-free U.S. Treasury short-term
obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors
are excellent
and supported by good fundamental protection factors. Risk
factors are
considered to be minor. Duff 1- indicates high certainty of
timely payment.
Liquidity factors are strong and supported by good
fundamental protection
factors. Risk factors are very small. Duff 2 indicates good
certainty of timely
payment. Liquidity factors and company fundamentals are sound.
Although ongoing
funding needs may enlarge total financing requirements,
access to capital
markets is good. Risk factors are small. Duff 3 indicates
satisfactory liquidity
and other protection factors qualify issue as to investment
grade. Risk factors
are larger and subject to more variation.
Nevertheless, timely payment is expected.
D&P uses the fixed-income ratings described above under
"Description of
Bond Ratings" for tax-exempt notes and other short-term
obligations.
Description of Commercial Paper Ratings
Commercial paper rated A-1 by S&P indicates that the
degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely
strong safety characteristics are denoted in A-1+. Capacity for
timely payment
on commercial paper rated A-2 is satisfactory but the relative
degree of safety
is not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper
rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting
institutions) are
considered to have a superior capacity for repayment of short-
term promissory
obligations. Issuers rated Prime-2 (or related supporting
institutions) are
considered to have strong capacity for repayment of short-
term promissory
obligations. This will normally be evidenced by many of the
characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage
ratios, while sound, will be more subject to variation.
Capitalization
characteristics, while still appropriate, may be more
affected by external
conditions. Ample alternate liquidity is maintained.
The highest rating of D&P for commercial paper is Duff
1. D&P employs
three designations, Duff 1 plus, Duff 1 and Duff 1 minus,
within the highest
rating category.
A-4
<PAGE>
Duff 1 plus indicates highest certainty of timely
payment. Short-term
liquidity, including internal operating factors and/or
ready access to
alternative sources of funds, is judged to be "outstanding, and
safety is just
below risk-free U.S. Treasury short-term obligations" Duff 1
indicates very high
certainty of timely payment. Liquidity factors are excellent
and supported by
strong fundamental protection factors. Risk factors are
considered to be minor.
Duff 1 minus indicates high certainty of timely payment.
Liquidity factors are
strong and supported by good fundamental protection factors.
Risk factors are
very small.
The following summarizes the highest ratings used
by Fitch for
short-term obligations:
F-1+ securities possess exceptionally strong credit
quality. Issues
assigned this rating are regarded as having the strongest
degree of assurance
for timely payment.
F-1 securities possess exceptionally strong credit
quality. Issues
assigned this rating reflect an assurance of timely payment only
slightly less
in degree than issues rated F-1+.
Commercial paper rated A-1 by Standard & Poor's
indicates that the
degree of safety regarding timely payment is strong. Those issued
determined to
possess extremely strong safety characteristics are denoted A-1+.
The rating Prime-1 is the highest commercial paper
rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting
institutions) are
considered to have a superior capacity for repayment of short-
term promissory
obligations.
D&P uses the short-term ratings described above for
commercial paper.
Fitch uses the short-term ratings described above for
commercial paper.
Thomson BankWatch, Inc. (TBW") ratings are based upon a
qualitative and
quantitative analysis of all segments of the organization
including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation
to buy or sell
securities of any of these companies. Further, BankWatch does
not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper,
other senior
short-term obligations and deposit obligations of the
entities to which the
rating has been assigned.
The TBW Short-Term Ratings specifically assess the
likelihood of an
untimely payment of principal or interest.
A-5
<PAGE>
TBW-1 The highest category; indicates a
very high degree
of likelihood that principal and
interest will be
paid on a timely basis.
TBW-2 The second highest category; while
the degree of
safety regarding timely repayment of
principal and
interest is strong, the relative
degree of safety
is not as high as for issues rated
"TBW-1".
TBW-3 The lowest investment grade
category; indicates
that while more susceptible to
adverse developments
(both internal and external) than
obligations with
higher ratings, capacity to service
principal and
interest in a timely fashion
is considered
adequate.
TBW-4 The lowest rating category; this
rating is regarded
as non-investment grade and therefore
speculative.
A-6
HARRIS INSIGHT
FUNDS
HARRIS INSIGHT CONVERTIBLE
FUND
STATEMENT OF ADDITIONAL
INFORMATION
One Exchange Place, Boston,
Massachusetts 02109
Telephone: (800)
982-8782
The Harris Insight Convertible Fund (the "Fund") is one of
six portfolios of HT Insight
Funds, Inc. (the "Company") an open-end diversified management
investment company.
The investment objective of the Fund is described in the Prospectus.
See "Investment
Objective and Polices."
This Statement of Additional Information is not a
prospectus and is authorized for
distribution only when preceded or accompanied by the Fund's
Prospectus dated ______, 1995
and any supplement thereto (the "Prospectuses"). This Statement of
Additional Information contains
additional information that should be read in conjunction with each
of the Prospectuses, additional
copies of which may be obtained without charge from the Company's
principal underwriter,
Funds Distributor, Inc., by writing or calling the Fund at the
address or telephone number given above.
TABLE OF CONTENTS
Investment Strategies Capital Stock
Ratings Other
Investment Restrictions Custodian
Management ............. Independent
Accountants..........
Service Plan....................
Experts..........................
Calculation of Yield and Financial
Statements.............
Total Return.................. Unaudited Financial
Statements
Determination of Net for the Ten Months
Ended
Asset Value .................. October 31,
1995................
Portfolio Transactions..........
Appendix.........................
Federal Income Taxes............
<PAGE>
INVESTMENT STRATEGIES
CONVERTIBLE SECURITIES. Because they have the
characteristics of both
fixed-income securities and common stock, convertible securities
sometimes are
called "hybrid" securities. Convertible bonds, debentures and
notes are debt
obligations offering a stated interest rate; convertible preferred
stocks are
senior securities offering a stated dividend rate. Convertible
securities will
at times be priced in the market like other fixed income
securities: that is,
their prices will tend to rise when interest rates decline and will
tend to fall
when interest rates rise. However, because a convertible security
provides an
option to the holder to exchange the security for either a specified
number of
the issuer's common shares at a stated price per share or the cash
value of such
common shares, the security market price will tend to fluctuate in
relationship
to the price of the common shares into which it is
convertible. Thus,
convertible securities ordinarily will provide opportunities both
for producing
current income and longer-term capital appreciation. Because
convertible
securities are usually viewed by the issuer as future common
stock, they are
generally subordinated to other senior securities and therefore
are rated one
category lower than the issuer's non-convertible debt obligations
or preferred
stock. Securities rated "B" or "CCC" (or "Caa") are regarded
as having
predominantly speculative characteristics with respect to the
issuer's capacity
to pay interest and repay principal, with "B" indicating a lesser
degree of
speculation than "CCC" (or "Caa"). While such debt will likely have
some quality
and protective characteristics, these are outweighed by large
uncertainties or
major exposures to adverse conditions. Securities rated "CCC" (or
"Caa") have a
currently identifiable vulnerability to default and are dependent
upon favorable
business, financial, and economic conditions to meet timely payment
of interest
and repayment of principal. In the event of adverse business,
financial, or
economic conditions, they are not likely to have the capacity to
pay interest
and repay principal.
While the market values of low-rated and comparable unrated
securities
tend to react less to fluctuations in interest rate levels than
the market
values of higher-rated securities, the market values of certain
low-rated and
comparable unrated securities also tend to be more sensitive to
individual
corporate developments and changes in economic conditions than
higher-rated
securities. In addition, low-rated securities and comparable unrated
securities
generally present a higher degree of credit risk, and yields on such
securities
will fluctuate over time. Issuers of low-rated and comparable unrated
securities
are often highly leveraged and may not have more traditional
methods of
financing available to them so that their ability to service
their debt
obligations during an economic downturn or during sustained
periods of rising
interest rates may be impaired. The risk of loss due to default by
such issuers
is significantly greater because low-rated and comparable unrated
securities
generally are unsecured and frequently are subordinated to the prior
payment of
senior indebtedness. The Fund may incur additional expenses to the
extent that
it is required to seek recovery upon a default in the payment of
principal or
interest on its portfolio holdings. The existence of limited
markets for
low-rated and comparable unrated securities may diminish the Fund's
ability to
obtain accurate market quotations for purposes of valuing such
securities and
calculating its net asset value.
<PAGE>
Fixed-income securities, including low-rated securities and
comparable
unrated securities, frequently have call or buy-back features that
permit their
issuers to call or repurchase the securities from their holders,
such as the
Fund. If an issuer exercises these rights during periods of
declining interest
rates, the Fund may have to replace the security with a lower
yielding security,
thus resulting in a decreased return to the Fund.
To the extent that there is no established retail secondary
market for
low-rated and comparable unrated securities, there may be little
trading of such
securities in which case the responsibility of the Company's Board of
Directors,
as the case may be, to value such securities becomes more difficult
and judgment
plays a greater role in valuation because there is less reliable,
objective data
available. In addition, the Fund's ability to dispose of the bonds
may become
more difficult. Furthermore, adverse publicity and investor
perceptions, whether
or not based on fundamental analysis, may decrease the values and
liquidity of
high yield bonds, especially in a thinly traded market.
The market for certain low-rated and comparable unrated
securities is
relatively new and has not weathered a major economic recession. The
effect that
such a recession might have on such securities is not known. Any such
recession,
however, could likely disrupt severely the market for such
securities and
adversely affect the value of such securities. Any such economic
downturn also
could adversely affect the ability of the issuers of such
securities to repay
principal and pay interest thereon and could result in a higher
incidence of
defaults.
FLOATING AND VARIABLE RATE OBLIGATIONS. The Portfolio
Management Agent
will monitor, on an ongoing basis, the ability of an issuer of a
Floating or
Variable Rate demand instrument to pay principal and interest on
demand. The
Fund's right to obtain payment at par on a demand instrument could
be affected
by events occurring between the date the Fund elects to demand
payment and the
date payment is due that may affect the ability of the issuer of the
instrument
to make payment when due, except when such demand instrument
permits same day
settlement. To facilitate settlement, these same day demand
instruments may be
held in book entry form at a bank other than the Fund's custodian
subject to a
sub-custodian agreement between the bank and the Fund's custodian.
The floating and variable rate obligations that the Fund
may purchase
include certificates of participation in such obligations purchased
from banks.
A certificate of participation gives the Fund an undivided
interest in the
underlying obligations in the proportion that the Fund's interest
bears to the
total principal amount of the obligation. Certain certificates of
participation
may carry a demand feature that would permit the holder to tender
them back to
the issuer prior to maturity. The income received on
certificates of
participation in tax-exempt municipal obligations constitutes
interest from
tax-exempt obligations.
FOREIGN SECURITIEs. As discussed in the Prospectus,
investing in
foreign securities generally represents a greater degree of risk
than investing
in domestic securities, due to possible exchange rate
fluctuations, less
publicly available information, more volatile
<PAGE>
markets, less securities regulation, less favorable tax
provisions, war or
expropriation. As a result of its investments in foreign
securities, the Fund
may receive interest or dividend payments, or the proceeds of
the sale or
redemption of such securities, in the foreign currencies in
which such
securities are denominated.
GOVERNMENT SECURITIES. Government Securities consist of
obligations
issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or
sponsored enterprises. Obligations of the United States Government
agencies and
instrumentalities are debt securities issued by
United States
Government-sponsored enterprises and federal agencies. Some of these
obligations
are supported by: (a) the full faith and credit of the United
States Treasury
(such as Government National Mortgage Association participation
certificates);
(b) the limited authority of the issuer to borrow from the
United States
Treasury (such as securities of the Federal Home Loan Bank);
(c) the
discretionary authority of the United States Government to
purchase certain
obligations (such as securities of the Federal National Mortgage
Association);
or (d) the credit of the issuer only. In the case of obligations
not backed by
the full faith and credit of the United States, the investor
must look
principally to the agency issuing or guaranteeing the obligation
for ultimate
repayment. In cases where United States Government support of
agencies or
instrumentalities is discretionary, no assurance can be given that
the United
States Government will provide financial support, since it is
not lawfully
obligated to do so.
LETTERS OF CREDIT. Debt obligations, including municipal
obligations,
certificates of participation, commercial paper and other
short-term
obligations, may be backed by an irrevocable letter of credit of
a bank that
assumes the obligation for payment of principal and interest in
the event of
default by the issuer. Only banks that, in the opinion of the
Portfolio
Management Agent are of investment quality comparable to other
permitted
investments of the Fund, may be used for letter of credit backed
investments.
LOANS OF PORTFOLIO SECURITIES. The Fund may lend to
brokers, dealers
and financial institutions securities from its portfolio
representing up to
one-third of the Fund's net assets if cash or cash equivalent
collateral,
including letters of credit, marked-to-market daily and equal to at
least 100%
of the current market value of the securities loaned (including
accrued interest
and dividends thereon) plus the interest payable to the Fund with
respect to the
loan is maintained by the borrower with the Fund in a segregated
account. In
determining whether to lend a security to a particular broker,
dealer or
financial institution, the Portfolio Management Agent will consider
all relevant
facts and circumstances, including the creditworthiness of the
broker, dealer or
financial institution. The Fund will not into any portfolio
security lending
arrangement having a duration of longer than one year. Any
securities that the
Fund may receive as collateral will not become part of the Fund's
portfolio at
the time of the loan and, in the event of a default by the
borrower, the Fund
will, if permitted by law, dispose of such collateral except
for such part
thereof that is a security in which the Fund is permitted to invest.
During the
time securities are on loan, the borrower will pay the Fund any
accrued income
on those securities, and the Fund may invest the cash
collateral and earn
additional income or receive an agreed upon fee from a
borrower that has
delivered cash equivalent collateral. Loans of securities by the
Fund will
<PAGE>
be subject to termination at the Fund's or the borrower's option.
The Fund may
pay reasonable administrative and custodial fees in connection with a
securities
loan and may pay a negotiated fee to the borrower or the
placing broker.
Borrowers and placing brokers may not be affiliated, directly or
indirectly,
with the Company, the Investment Adviser, the Portfolio Management
Agent or the
Distributor.
PUT AND CALL OPTIONS. The Fund may invest in covered put
and covered
call options and write covered put and covered call options on
securities in
which the Fund may invest directly and that are traded on
registered domestic
securities exchanges. The writer of a call option, who receives a
premium, has
the obligation, upon exercise of the option, to deliver the
underlying security
against payment of the exercise price during the option period. The
writer of a
put, who receives a premium, has the obligation to buy the
underlying security,
upon exercise, at the exercise price during the option period.
The Fund may write put and call options on securities only
if they are
"covered," and such options must remain "covered" as long as
the Fund is
obligated as a writer. A call option is "covered" if the Fund
owns the
underlying security covered by the call or its equivalent or has an
absolute and
immediate right to acquire that security without additional cash
consideration
(or for additional cash consideration if held in a segregated
account by its
custodian) upon conversion or exchange of other securities
held in its
portfolio. A call option is also covered if the Fund holds on a
share-for-share
or equal principal amount basis a call on the same security as the
call written
where the exercise price of the call held is equal to or less than
the exercise
price of the call written or greater than the exercise price of the
call written
if the difference is maintained by the Fund in cash, Treasury
bills or other
high-grade short-term obligations in a segregated account with its
custodian. A
put option is "covered" if the Fund maintains cash, Treasury
bills, or other
high-grade short-term obligations with a value equal to the exercise
price in a
segregated account with its custodian, or owns on a share-for-
share or equal
principal amount basis a put on the same security as the put
written where the
exercise price of the put held is equal to or greater than the
exercise price of
the put written.
The principal reason for writing call options is to attempt
to realize,
through the receipt of premiums, a greater current return than would
be realized
on the underlying securities alone. In return for the premium, the
Fund would
give up the opportunity for profit from a price increase in the
underlying
security above the exercise price so long as the option remains
open, but
retains the risk of loss should the price of the security decline.
Upon exercise
of a call option when the market value of the security exceeds
the exercise
price, the Fund would receive less total return for its portfolio
than it would
have if the call had not been written, but only if the premium
received for
writing the option is less than the difference between the exercise
price and
the market value. Put options are purchased in an effort to protect
the value of
a security owned against an anticipated decline in market value.
The Fund may
forego the benefit of appreciation on securities sold or be
subject to
depreciation on securities acquired pursuant to call or
put options,
respectively, written by the Fund. The Fund may experience a loss
if the value
of the securities remains at or below
<PAGE>
the exercise price, in the case of a call option, or at or above
the exercise
price, in the case of a put option.
The Fund may purchase put options in an effort to protect
the value of
a security owned against an anticipated decline in market value.
Exercise of a
put option will generally be profitable only if the market
price of the
underlying security declines sufficiently below the exercise price to
offset the
premium paid and the transaction costs. If the market price of the
underlying
security increases, the Fund's profit upon the sale of the
security will be
reduced by the premium paid for the put option less any amount for
which the put
is sold.
The staff of the Securities and Exchange Commission (the
"Commission")
has taken the position that purchased options not traded on
registered domestic
securities exchanges and the assets used as cover for written options
not traded
on such exchanges are illiquid securities. The Company has agreed
that, pending
resolution of the issue, the Fund will treat such options and assets
as subject
to such Fund's limitation on investment in securities that are
not readily
marketable.
Writing of options involves the risk that there will be
no market in
which to effect a closing transaction. An exchange-traded option
may be closed
out only on an exchange that provides a secondary market for an
option of the
same series, and there is no assurance that a liquid secondary
market on an
exchange will exist.
REPURCHASE AGREEMENTS. The Fund may purchase portfolio
securities
subject to the seller's agreement to repurchase them at a mutually
agreed upon
time and price, which includes an amount representing interest on
the purchase
price. The Fund may enter into repurchase agreements only with
respect to
obligations that could otherwise be purchased by the Fund. The
seller will be
required to maintain in a segregated account for the Fund
cash or cash
equivalent collateral equal to at least 100% of the repurchase price
(including
accrued interest). Default or bankruptcy of the seller would expose
the Fund to
possible loss because of adverse market action, delays in
connection with the
disposition of the underlying obligations or expenses of enforcing
its rights.
The Fund may not enter into a repurchase agreement if,
as a result,
more than 10% of the market value of the Fund's total net
assets would be
invested in repurchase agreements with a maturity of more than seven
days and in
other illiquid securities. The Fund will enter into repurchase
agreements only
with registered broker/dealers and commercial banks that meet
guidelines
established by the Board of Directors.
The Fund also may enter into reverse repurchase agreements,
which are
detailed in the Prospectus.
SECURITIES WITH PUTS. A put is not transferable by the
Fund, although
the Fund may sell the underlying securities to a third party at
any time. If
necessary and advisable, the Fund may pay for certain puts either
separately, in
cash or by paying a higher price for
<PAGE>
portfolio securities that are acquired subject to such a put (thus
reducing the
yield to maturity otherwise available for the same
securities). The Fund
expects, however, that puts generally will be available without the
payment of
any direct or indirect consideration.
The Fund intends to enter into puts solely to maintain
liquidity and
does not intend to exercise its rights thereunder for trading
purposes. The puts
will only be for periods substantially less than the life of the
underlying
security. The acquisition of a put will not affect the valuation by
the Fund of
the underlying security. Where the Fund pays directly or indirectly
for a put,
its costs will be reflected as an unrealized loss of the period
during which the
put is held by the Fund and will be reflected in realized gain or
loss when the
put is exercised or expires. If the value of the underlying security
increases,
the potential for unrealized or realized gain is reduced by the cost
of the put.
The maturity of a municipal obligation purchased by the Fund
will not be
considered shortened by any put to which the obligation is subject.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS
(DELAYED-DELIVERY).
When-issued purchases and forward commitments (delayed-delivery) are
commitments
by the Fund to purchase or sell particular securities with payment
and delivery
to occur at a future date (perhaps one or two months later). These
transactions
permit the Fund to lock-in a price or yield on a security,
regardless of future
changes in interest rates.
When the Fund agrees to purchase securities on a when-issued
or forward
commitment basis, the Custodian will segregate on the books of
the Fund the
liquid assets of the Fund. Normally, the Custodian will set aside
portfolio
securities to satisfy a purchase commitment, and in such a case the
Fund may be
required subsequently to place additional assets in the separate
account in
order to ensure that the value of the account remains equal to the
amount of the
Fund's commitments. Because the Fund's liquidity and ability to
manage its
portfolio might be affected when it sets aside cash or portfolio
securities to
cover such purchase commitments, the Investment Adviser
expects that its
commitments to purchase when-issued securities and forward
commitments will not
exceed 25% of the value of the Fund's total assets absent
unusual market
conditions.
The Fund will purchase securities on a when-issued
or forward
commitment basis only with the intention of completing the
transaction and
actually purchasing the securities. If deemed advisable as a
matter of
investment strategy, however, the Fund may dispose of or
renegotiate a
commitment after it is entered into, and may sell securities it has
committed to
purchase before those securities are delivered to the Fund on the
settlement
date. In these cases the Fund may realize a capital gain or loss
for federal
income tax purposes.
When the Fund engages in when-issued and forward
commitment
transactions, it relies on the other party to consummate the trade.
Failure of
such party to do so may result in the Fund's incurring a loss or
missing an
opportunity to obtain a price considered to be advantageous.
<PAGE>
The market value of the securities underlying a when-issued
purchase or
a forward commitment to purchase securities, and any subsequent
fluctuations in
their market value, are taken into account when determining the
market value of
the Fund starting on the day the Fund agrees to purchase the
securities. The
Fund does not earn interest on the securities it has committed to
purchase until
they are paid for and delivered on the settlement date.
RATINGS
After purchase by the Fund, a security may cease to be
rated or its
rating may be reduced below the minimum required for purchase
by the Fund.
Neither event will require the Fund to sell such security unless
the amount of
such securities exceeds permissible limits established in the
Prospectuses.
However, the Portfolio Management Agent will reassess promptly
whether the
security presents minimal credit risks and determine whether
continuing to hold
the security is in the best interests of the Fund. To the extent
the ratings
given by any nationally recognized statistical rating organization
may change as
a result of changes in such organizations or in their rating
systems, the Fund
will attempt to use comparable ratings as standards for
investments in
accordance with the investment policies contained in the
Prospectuses and in
this Statement of Additional Information.
For additional information on ratings, see Appendix A to
this Statement
of Additional Information.
INVESTMENT RESTRICTIONS
The Fund may not:
(1) issue senior securities or borrow money (except that
the Fund may
borrow from banks up to 10% of the current value of the Fund's net
assets for
temporary purposes only in order to meet redemptions, and these
borrowings may
be secured by the pledge of not more than 10% of the current value of
the Fund's
total assets, but investments may not be purchased by the Fund
while any such
borrowing exists.
(2) pledge or mortgage its assets (except that the Fund may
pledge its
assets as described in (1) above and (i) to secure letters of credit
solely for
the purpose of participating in a captive insurance company
sponsored by the
Investment Company Institute to provide fidelity and directors'
and officers'
liability insurance or (ii) to a broker for the purpose of
collateralizing
investments, such as stock index futures contracts and put options);
(3) make loans, except loans of portfolio securities and
except that
the Fund may purchase or hold a portion of an issue of publicly
distributed
bonds, debentures or other obligations, purchase negotiable
certificates of
deposit and bankers' acceptances and enter into repurchase
agreements with
respect to its portfolio securities;
(4) invest an amount in excess of 10% of the current
value of the
Fund's net assets in repurchase agreements having maturities of more
than seven
days, variable amount master
<PAGE>
demand notes having notice periods of more than seven days, fixed
time deposits
that are subject to withdrawal penalties and have maturities of more
than seven
days, securities that are not readily marketable and other illiquid
securities
(including certain GICs and BICs);
(5) purchase or sell real estate (other than securities
secured by real
estate or interests therein, securities backed by mortgages or
securities issued
by companies that invest in real estate or interests therein),
real estate
limited partnerships, commodities or commodity contracts except
stock index
futures and options on stock indices;
(6) purchase securities on margin (except for short-
term credits
necessary for the clearance of transactions and margin payments in
connection
with transactions in stock index futures contracts) or make
short sales of
securities;
(7) underwrite securities of other issuers, except to the
extent that
the purchase of municipal obligations or other permitted
investments directly
from the issuer thereof or from an underwriter for an issuer
and the later
disposition of such securities in accordance with the Fund's
investment program
may be deemed to be an underwriting;
(8) make investments for the purpose of exercising
control or
management; or
(9) purchase securities of other investment
companies, except
securities of certain money market funds in accordance with
the Fund's
investment objectives and policies and to the extent permissible
under the 1940
Act, and except in connection with a merger, consolidation,
acquisition,
spin-off or reorganization.
Each of the foregoing investment restrictions is a
fundamental policy
of the Fund that may be changed only when permitted by law and
approved by the
holders of a majority of the Fund's outstanding voting securities,
as described
under "Capital Stock."
In addition to the above fundamental investment policies,
each of the
following investment restrictions may be changed at any time by
the Board of
Directors, as the case may be.
The Fund may not:
(1) invest more than 5% of its net assets in warrants,
valued at the
lower of cost or market, and no more than 2% of its net assets may
be invested
in warrants that are not listed on the New York or American Stock
Exchanges.
(Warrants acquired in units or attached to securities may be
deemed to be
without value.);
(2) invest in oil, gas and other mineral leases,
exploration or
development programs; or
(3) purchase or retain the securities of any issuer if the
officers,
directors or partners of the Company, its Investment Adviser,
Portfolio
Management Agent or Administrator
<PAGE>
owning beneficially more than one-half of 1% of the securities of
each issuer
together own beneficially more than 5% of such securities.
Whenever any investment restriction states a maximum
percentage of the
Fund's assets, it is intended that if the percentage limitation is
met at the
time the action is taken, subsequent percentage changes
resulting from
fluctuating asset values will not be considered a
violation of such
restrictions.
For purposes of these investment restrictions as well as
for purposes
of diversification under the 1940 Act, the identification of the
issuer of a
municipal obligation depends on the terms and conditions of the
obligation. If
the assets and revenues of an agency, authority,
instrumentality or other
political subdivision are separate from those of the government
creating the
subdivision and the obligation is backed only by the assets and
revenues of the
subdivision, such subdivision would be regarded as the sole issuer.
Similarly,
in the case of a "private activity bond," if the bond is backed
only by the
assets and revenues of the non-governmental user, the non-
governmental user
would be deemed to be the sole issuer. If in either case the creating
government
or another entity guarantees an obligation, the guarantee would be
considered a
separate security and be treated as an issue of such government or
entity.
MANAGEMENT
DIRECTORS AND OFFICERS
The principal occupations of the executive officers of the
Company for
the past five years and their ages are listed below. The address of
each, unless
otherwise indicated, is One Exchange Place, Boston,
Massachusetts 02109.
Directors deemed to be "interested persons" of the Company, as the
case may be,
for purposes of the 1940 Act are indicated by an asterisk.
*EDGAR R. FIEDLER, Director - 845 Third Avenue, New York, New York
10022. Age
65. Vice President and Economic Counsellor, The Conference Board
since 1975;
Director or Trustee, The Stanley Works, AARP Income Trust, AARP
Insured Tax Free
Income Trust, AARP Cash Investment Fund, Brazil Fund, Scudder
Institutional
Fund, Scudder Fund, Inc., Zurich American Insurance Company,
Emerging Mexico
Fund and Center for Policy Research of the American Council
for Capital
Formation. Formerly Assistant Secretary of the Treasury for
Economic Policy
(1971-1975).
C. GARY GERST, Chairman of the Board of Directors; Director - 11
South La Salle
Street, Chicago, Illinois 60603. Age 56. Chairman Emeritus
since 1993 and
formerly Co-Chairman, La Salle Partners Ltd. (Real Estate
Developer and
Manager). Director, Trustee or Partner, La Salle Street Fund
Inc., La Salle
Street Fund Inc. of Delaware, DEL-LPL Limited Partnership and DEL-
LPAML Limited
Partnership.
<PAGE>
JOHN W. McCARTER, JR., Director - 225 West Wacker Drive, Suite
1700, Chicago,
Illinois 60606. Age 57. Senior Vice President and former Director of
Boozo Allen
& Hamilton, Inc. (Consulting Firm); Director of W.W. Grainger,
Inc. and A.M.
Castle, Inc.
ERNEST M. ROTH, Director - 205 Abingdon Avenue, Kenilworth, Illinois
60043. Age
67. Consultant since 1992. Formerly, Senior Vice President and
Chief Financial
Officer, Commonwealth Edison Company. Director of LaRabida
Children's Hospital
and Chairman of LaRabida Children's Foundation.
RICHARD H. ROSE, Treasurer of the Company - Age 39. Vice President,
First Data
Investor Services Group, Inc., since May 6, 1994. Formerly
Senior Vice
President, The Boston Company Advisors, Inc.
PATRICIA L. BICKIMER, President and Secretary of the Company -
Age 42. Vice
President and Associate General Counsel, First Data Investor
Services Group,
Inc., since May 6, 1994; Formerly, Vice President and Associate
General Counsel,
The Boston Company Advisors, Inc.
LISA A. ROSEN, Assistant Secretary of the Company - Age 28. Counsel,
First Data
Investor Services Group, Inc., since May 6, 1994. Formerly,
Assistant Vice
President and Counsel with The Boston Company Advisors, Inc.;
Associate with
Hutchins, Wheeler & Dittmar.
Directors of the Company receive from the Company, an
annual fee in
addition to a fee for each Board of Directors meeting, and Board
committee
meeting attended and are reimbursed for all out-of-pocket expenses
relating to
attendance at meetings.
The following table summarizes the compensation paid by the
Company to
the Directors of the Company for the fiscal year ended December 31,
1994:
<PAGE>
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement
Benefits Estimated Annual Total Compensation
Name of Person, Compensation Accrued as Part
Benefits upon from the Company
Position from the Company of Fund Expenses
Retirement and Fund Complex
<S> <C> <C>
<C> <C>
Edgar R. Fiedler, $19,000 (1)
Director None
None $19,000
C. Gary Gerst, $18,000
Director None
None $18,000
John W. $ 0
McCarter, Jr. None
None $ 0
Director(2)
Ernest M. Roth, $19,000 None
None $19,000
Director
- - - --------------------------
(1) For the period June 1988 through December 31, 1994, the
total amount of
compensation (including interest) payable or accrued for Mr.
Fiedler was
$142,776.52 pursuant to the Company's Deferred Compensation
Plan for its
Independent Directors.
(2) Mr. McCarter was not a Director of the Company during 1994.
</TABLE>
As of November 15, 1995, the principal holders of the
Fund were as
follows:
[To Be Provided]
The shareholders described above have indicated that
they each hold
their shares on behalf of various accounts and not as beneficial
owners. To the
extent that any shareholder is the beneficial owner of more than
25% of the
outstanding shares of any Fund, such shareholder may be deemed to be
a "control
person" of that Fund for purposes of the 1940 Act.
As of November 15, 1995, Directors and officers of the
Company as a
group beneficially owned less than 1% of the outstanding shares of
each of the
Company's Funds.
Investment Adviser, Investment Sub-Adviser and Portfolio Management
Agent. The
Fund is advised by Harris Trust. Harris Trust has entered into
Portfolio
Management Contracts with Harris Investment Management, Inc. ("HIM")
under which
HIM is responsible for all Fund purchase and sale transactions and
for providing
all such daily portfolio management services to the Fund. Under
the Portfolio
Management Contracts, Harris Trust remains responsible for the
supervision and
oversight of HIM's performance.
<PAGE>
Harris Trust or HIM provides to the Fund, among other
things, money
market security and fixed income research, analysis and statistical
and economic
data and information concerning interest rate and security
market trends,
portfolio composition and credit conditions. HIM analyzes key
financial ratios
that measure the growth, profitability, and leverage of issuers in
order to help
maintain a portfolio of above-average quality. Emphasis placed on a
particular
type of security will depend on an interpretation of underlying
economic,
financial and security trends. The selection and performance of
securities is
monitored by a team of analysts dedicated to evaluating the
quality of each
portfolio holding.
The Advisory Contract and the Portfolio Management
Contract will
continue in effect from year to year, provided that such
continuance is
specifically approved as described in the immediately preceding
paragraph.
For the fiscal years ended December 31, 1994, 1993 and
1992, the
Investment Adviser was entitled to receive fees from the Fund in the
following
amounts: $26,524, $51,186 and $41,091, respectively. Waivers by the
Investment
Adviser of fees to which it was entitled from the Fund for each
period amounted
to: $16,347, $28,451 and $27,241.
Administrators. First Data Investor Services Group, Inc.
("First Data")
and PFPC Inc. ("PFPC") (the "Administrators") serve as the Fund's
administrators
pursuant to an Administration Agreement and an Administration and
Accounting
Services Agreement, respectively. First Data has agreed to
maintain office
facilities for the Fund; furnish clerical support and stationery
and office
supplies; prepare and file various reports with the appropriate
regulatory
agencies; and prepare various materials required by the Commission
or any state
securities commission having jurisdiction over the Company. PFPC
has agreed to
provide accounting and bookkeeping services for the Fund,
including the
computation of the Fund's net asset value, net income and
realized capital
gains, if any.
Distributor. Funds Distributor, Inc. (the "Distributor")
has entered
into a Distribution Agreement with the Company pursuant to which
it has the
responsibility of distributing shares of the Fund.
Other Information Pertaining to Distribution,
Administration, Custodian
and Transfer Agency Agreements. PFPC Inc., the Fund's Transfer Agent
and one of
the Fund's two administrators, is an affiliate of PNC Bank, N.A.,
the Company's
Custodian. PFPC Inc. and PNC Bank, N.A. are not affiliates of
First Data and
Funds Distributor, Inc., and none of the aforenamed entities is an
affiliate of
Harris Investment Management, Inc.
The Company's contracts with the Investment Adviser,
Portfolio
Management Agent, Administrators, Transfer Agent and
Custodian (the
"Contractors") provide that if, in any fiscal year, the total
expenses of the
Fund incurred by, or allocated to, the Fund (excluding taxes,
interest,
brokerage commissions and other portfolio transaction
expenses, other
expenditures that are capitalized in accordance with generally
accepted
accounting principles
<PAGE>
and extraordinary expenses and payments under plans of the Fund
adopted pursuant
to Rule 12b-1 under the Act (the "Service Plans"), but
including the fees
provided for in the Advisory Contract and the Administration
Agreement) exceed
the most restrictive expense limitation applicable to the Fund
imposed by the
securities laws or regulations of the states in which the Fund's
shares are
registered for sale, such parties shall waive their fees
proportionately under
the Portfolio Management Contract with respect to the Fund and
fee agreement
with the Fund's Administrators, Transfer Agent and Custodian for the
fiscal year
to the extent of the excess or reimburse the excess, but only to
the extent of
their respective fees. The Company believes that currently the most
restrictive
applicable expense limitation is 2.5% of the first $30 million of
average net
assets, 2% of the next $70 million of average net assets and 1.5% of
average net
assets in excess of $100 million. No such waivers were necessary in
1994.
SERVICE PLAN
As indicated in the Prospectuses, the Fund has adopted a
Service Plan
under Section 12(b) of the 1940 Act and Rule 12b-1 promulgated
thereunder ("Rule
12b-1") with respect to its shares. The Service Plan has been
adopted by the
Board of Directors, including a majority of the Directors who
were not
"interested persons" (as defined by the 1940 Act) of the Company, and
who had no
direct or indirect financial interest in the operation of the Service
Plan or in
any agreement related to the Plan (the "Qualified Directors"). The
Service Plan
will continue in effect from year to year if such continuance is
approved by a
majority vote of both the Directors of the Company and the Qualified
Directors.
Agreements related to the Service Plan must also be approved by such
vote of the
Directors and the Qualified Directors. The Service Plan will
terminate
automatically if assigned, and may be terminated at any time, without
payment of
any penalty, by a vote of a majority of the outstanding voting
securities of the
Fund. The Service Plan may not be amended to increase materially
the amounts
payable to Service Agents without the approval of a majority of the
outstanding
voting securities of the Fund, and no material amendment to the
Service Plan may
be made except by a majority of both the Directors of the
Company and the
Qualified Directors.
The Service Plan requires that certain service providers
furnish to the
Directors, and the Directors shall review, at least quarterly, a
written report
of the amounts expended (and purposes therefore) under such Service
Plan. Rule
12b-1 also requires that the selection and nomination of the
Directors who are
not "interested persons" of the Company be made by such disinterested
Directors.
The Fund bears the costs and expenses in connection with
advertising
and marketing the Fund's shares and pays the fees of financial
institutions
(which may include banks), securities dealers and other industry
professionals,
such as investment advisors, accountants and estate
planning firms
(collectively, "Service Agents") for servicing activities, as
described below,
at a rate of up to 0.25% per annum of the value of the Fund's
average daily net
assets.
<PAGE>
Servicing activities provided by Service Agents to their
customers
investing in shares of the Fund may include, among other things, one
or more of
the following: establishing and maintaining shareholder accounts
and records;
processing purchase and redemption transactions; answering
customer inquiries
regarding the Fund; assisting customers in changing dividend
options; account
designations and addresses; performing sub-accounting; investing
customer cash
account balances automatically in Fund shares; providing periodic
statements
showing a customer's account balance and integrating such statements
with those
of other transactions and balances in the customer's other accounts
serviced by
the Service Agent; arranging for bank wires; distribution and
such other
services as the Fund may request, to the extent the Service Agent
is permitted
by applicable statute, rule or regulation.
To date, no payments have been made pursuant to the
Fund's Service
Plan.
CALCULATION OF YIELD AND TOTAL RETURN
The Company makes available 30-day yield quotations with
respect to
shares of the Fund. As required by regulations of the Commission,
the 30-day
yield is computed by dividing the Fund's net investment income per
share earned
during the period by the net asset value on the last day of the
period. The
average daily number of shares outstanding during the period that
are eligible
to receive dividends is used in determining the net investment income
per share.
Income is computed by totaling the interest earned on all debt
obligations
during the period and subtracting from that amount the total of all
recurring
expenses incurred during the period. The 30-day yield is then
annualized
assuming semi-annual reinvestment and compounding of net investment
income.
The 30-day yield for the period ended October 31, 1995,
were 3.70% for
the Fund.
The Company also makes available total return quotations
for shares of
the Fund. Average annual total return for the Fund for the period
from February
24, 1988 (commencement of operations) through October 31, 1995 was
7.27% and the
annual total return for the fiscal years ended December 31, 1993
and 1994 were
8.41% and (8.30%) respectively. Each of these amounts is computed by
assuming a
hypothetical initial investment of $10,000 and reflects the
imposition of the
maximum sales charge. It is assumed that all of the dividends and
distributions
by the Fund over the specified period of time were reinvested.
It was then
assumed that at the end of the specified period, the entire amount
was redeemed.
The average annual total return was then calculated by calculating
the annual
rate required for the initial investment to grow to the amount that
would have
been received upon redemption.
The Fund may also calculate an aggregate total return
which reflects
the cumulative percentage change in value over the measuring
period. The
aggregate total return can be calculated by dividing the amount
received upon
redemption by the initial investment and subtracting one from the
result. The
aggregate total
<PAGE>
return for the Fund from February 24, 1988 (commencement of
operations) through
October 31, 1995 and the aggregate total return for the fiscal
years ended
December 31, 1993 and 1994, respectively were 71.51%, 8.41%
and (8.30%),
respectively.
Current yield and total return for the Fund will fluctuate
from time to
time, unlike bank deposits or other investments which pay a fixed
yield for a
stated period of time, and do not provide a basis for determining
future yields.
Yield (or total return) is a function of portfolio quality,
composition,
maturity and market conditions as well as expenses allocated to the
Fund.
Performance data of the Fund may be compared to those of
other mutual
funds with similar investment objectives and to other relevant
indices, such as
those prepared by Salomon Brothers Inc. or Lehman Brothers Inc., or
any of their
affiliates or to ratings prepared by independent services or other
financial or
industry publications that monitor the performance of mutual funds.
For example,
such data is reported in national financial publications such as
IBC/Donoghue's
Money Fund Report and Bank Rate Monitor (for money market
deposit accounts
offered by the 50 leading banks and thrift institutions in the
top five
metropolitan statistical areas). Money Magazine, Forbes,
Barron's, The Wall
Street Journal and The New York Times, reports prepared by Lipper
Analytical
Services and publications of a local or regional nature. Performance
information
may be quoted numerically or may be presented in a table,
graph or other
illustrations. All performance information advertised by the Funds is
historical
in nature and is not intended to represent or guarantee future
results.
In addition, investors should recognize that changes in
the net asset
value of shares of the Fund will affect the yield of the Fund for any
specified
period, and such changes should be considered together with the
Fund's yield in
ascertaining the Fund's total return to shareholders for the
period. Yield
information for the Fund may be useful in reviewing the performance
of the Fund
and for providing a basis for comparison with investment
alternatives. The yield
of the Fund, however, may not be comparable to other investment
alternatives
because of differences in the foregoing variables and differences in
the methods
used to value portfolio securities, compute expenses and calculate
yield.
<PAGE>
DETERMINATION OF NET ASSET VALUE
As described under "Determination of Net Asset
Value" in the
Prospectuses, net asset value per share is determined at least as
often as each
day that the Federal Reserve Board of Philadelphia and the New
York Stock
Exchange are open, i.e., each weekday other than New Year's Day,
Martin Luther
King, Jr.'s Day, Presidents' Day (the third Monday in February),
Good Friday,
Memorial Day (the last Monday in May), Independence Day, Labor Day
(the first
Monday in September), Columbus Day, Veteran's Day,
Thanksgiving Day and
Christmas Day (each, a "Holiday").
PORTFOLIO TRANSACTIONS
The Company has no obligation to deal with any dealer
or group of
dealers in the execution of transactions in portfolio securities.
Subject to
policies established by the Company's Board of Directors HIM is
responsible for
the Fund's portfolio decisions and the placing of portfolio
transactions. In
placing orders, it is the policy of the Company to obtain the
best results
taking into account the dealer's general execution and operational
facilities,
the type of transaction involved and other factors such as the
dealer's risk in
positioning the securities involved. While HIM generally seeks
reasonably
competitive spreads or commissions, the Fund will not necessarily be
paying the
lowest spread or commission available.
Purchases and sales of securities for the Fund will
usually be
principal transactions. Portfolio securities normally will be
purchased or sold
from or to dealers serving as market makers for the securities at a
net price.
The Fund will also purchase portfolio securities in underwritten
offerings and
will, on occasion, purchase securities directly from the issuer.
Generally,
municipal obligations and taxable money market securities are
traded on a net
basis and do not involve brokerage commissions. The cost of executing
the Fund's
portfolio securities transactions will consist primarily of dealer
spreads, and
underwriting commissions. Under the 1940 Act, persons
affiliated with the
Company are prohibited from dealing with the Company as a
principal in the
purchase and sale of securities unless an exemptive order
allowing such
transactions is obtained from the Commission.
HIM may, in circumstances in which two or more
dealers are in a
position to offer comparable results for the Fund, give preference
to a dealer
that has provided statistical or other research services to such
adviser. By
allocating transactions in this manner, HIM is able to
supplement its own
research and analysis with the views and information of other
securities firms.
Information so received will be in addition to, and not in lieu of,
the services
required to be performed under the Portfolio Management
Contract, and the
expenses of such adviser will not necessarily be reduced as a
result of the
receipt of this supplemental research information.
Furthermore, research
services furnished by dealers through whom HIM effects securities
transactions
for the Fund may be used by HIM in servicing its other accounts, and
not all of
these services may be used by HIM in connection with advising the
Fund.
<PAGE>
Total brokerage commissions and the total dollar amount of
transactions
on which commissions were paid during 1992 were $545 and $603,563,
respectively,
for the Fund. Total brokerage commissions and the total dollar
amount of
transactions on which commissions were paid during 1993 were
$2,865 and
$2,139,170, respectively, for the Fund. Total brokerage
commissions and the
total dollar amount of transactions on which commissions were paid
during 1994
were $1,030 and $875,988, respectively, for the Fund.
With respect to transactions directed to brokers because
of research
services provided, total brokerage commissions, and the total
dollar amount of
the transactions on which such commissions were paid during 1992,
1993 and 1994,
no such commissions were paid for the Fund.
Purchases and sales of securities on a securities exchange
are effected
through brokers who charge a negotiated commission for their
services. Orders
may be directed to any broker including, to the extent and in
the manner
permitted by applicable law, Harris Investors Direct, Inc.
("HID") In the
over-the-counter market, securities are generally traded on a "net"
basis with
dealers acting as principal for their own accounts without a stated
commission,
although the price of the security usually includes a profit to the
dealer. In
underwritten offerings, securities are purchased at a fixed price
that includes
an amount of compensation to the underwriter, generally referred
to as the
underwriter's concession or discount. The Fund will not deal
with the
Distributor or HID in any transaction in which either one acts as
principal
except as may be permitted by the Commission.
In placing orders for portfolio securities of the Fund, HIM
is required
to give primary consideration to obtaining the most favorable
price and
efficient execution. This means that HIM will seek to execute each
transaction
at a price and commission, if any, that provide the most favorable
total cost or
proceeds reasonably attainable in the circumstances. While HIM
will generally
seek reasonably competitive spreads or commissions, the Fund
will not
necessarily be paying the lowest spread or commission available.
Commission
rates are established pursuant to negotiations with the broker
based on the
quality and quantity of execution services provided by the broker
in the light
of generally prevailing rates. The allocation of orders among
brokers and the
commission rates paid are reviewed periodically by the Board of
Directors.
Subject to the above considerations, HID may act as a main
broker for
the Fund. For it to effect any portfolio transactions for the
Fund, the
commissions, fees or other remuneration received by it must be
reasonable and
fair compared to the commissions, fees or other remuneration
paid to other
brokers in connection with comparable transactions involving similar
securities
being purchased or sold on a securities exchange during a comparable
period of
time. This standard would allow HID to receive no more than the
remuneration
that would be expected to be received by an unaffiliated
broker on a
commensurate arm's-length transaction. Furthermore, the
Directors of the
Company, including a majority who are not "interested" Directors
have adopted
procedures that are reasonably designed to provide that any
commissions, fees or
other remuneration paid to either one are consistent with the
foregoing
standard. Brokerage transactions with either one
<PAGE>
are also subject to such fiduciary standards as may be imposed upon
each of them
by applicable law.
FEDERAL INCOME TAXES
The Prospectuses describe generally the tax treatment of
distributions
by the Company. This section of the Statement includes additional
information
concerning federal taxes.
The Fund will be treated as a separate entity for federal
income tax
purposes and thus the provisions of the Internal Revenue Code
of 1986, as
amended (the "Code") generally will be applied to the Fund
separately, rather
than to the Company as a whole.
Qualification as a regulated investment company under
the Code
generally requires, among other things, that (a) at least 90% of
the Fund's
annual gross income (without offset for losses) be derived from
interest,
payments with respect to securities loans, dividends and gains from
the sale or
other disposition of stocks, securities or options thereon and
certain other
income including, but not limited to, gains from futures contracts;
(b) the Fund
derives less than 30% of its gross income from gains (without offset
for losses)
from the sale or other disposition of stocks, securities or options
thereon and
certain futures contracts held for less than three months; and
(c) the Fund
diversifies its holdings so that, at the end of each quarter of
the taxable
year, (i) at least 50% of the market value of the Fund's assets is
represented
by cash, government securities and other securities, with such other
securities
limited in respect of any one issuer to an amount not greater
than 5% of the
Fund's assets and 10% of the outstanding voting securities of such
issuer, and
(ii) not more than 25% of the value of its assets is invested in the
securities
of any one issuer (other than U.S. Government securities). As a
regulated
investment company, the Fund will not be subject to federal income
tax on its
net investment income and net capital gains distributed to its
shareholders,
provided that it distributes to its shareholders at least 90%
of its net
investment income (including net short-term capital gains) earned in
each year.
For Federal income tax purposes, gain or loss on the
futures contracts
and options described above (collectively referred to as
"section 1256
contracts") is taxed pursuant to a special "mark-to-market" system.
Under the
mark-to-market system, the Fund may be treated as realizing a
greater or lesser
amount of gains or losses than actually realized. As a general
rule, gain or
loss on section 1256 contracts is treated as 60% long-term capital
gain or loss
and 40% short-term capital gain or loss, and, accordingly, the
mark-to-market
system will generally affect the amount of capital gains or losses
taxable to
the Fund and the amount of distributions taxable to a shareholder.
Moreover, if
the Fund invests in both section 1256 contracts and offsetting
positions in such
contracts, then the Fund might not be able to receive the benefit
of certain
recognized losses for an indeterminate period of time. The Fund
expects that its
activities with respect to section 1256 contracts and offsetting
positions in
such contracts (a) will not cause it or its shareholders to be
treated as
receiving a materially greater amount of capital gains or
distributions than
actually realized or received
<PAGE>
and (b) will permit it to use substantially all of the losses of
the Fund for
the fiscal years in which the losses actually occur.
The Fund will generally be subject to an excise tax of 4% of
the amount
of any income or capital gains distributed to shareholders on a
basis such that
such income or gain is not taxable to shareholders in the calendar
year in which
it was earned by the Fund. The Fund intends that it will
distribute
substantially all of its net investment income and net capital
gains in
accordance with the foregoing requirements, and, thus, expects not to
be subject
to the excise tax. Dividends declared by the Fund in October,
November or
December payable to shareholders of record on a specified date in
such a month
and paid in the following January will be treated as having been
paid by the
Fund and received by shareholders on December 31 of the calendar
year in which
declared.
Income received by the Fund from sources within foreign
countries may
be subject to withholding and other taxes imposed by such
countries. Tax
conventions between certain countries and the United States
may reduce or
eliminate such taxes. It is impossible to determine the
effective rate of
foreign tax in advance since the amount of the Fund's assets to be
invested in
various countries is not known.
Gains or losses on sales of securities by the Fund
generally will be
long-term capital gains or losses if the securities have been
held by it for
more than one year, except in certain cases where the Fund
acquires a put or
writes a call thereon. Other gains or losses on the sale of
securities will be
short-term capital gains or losses.
If an option written by the Fund lapses or is terminated
through a
closing transaction, such as a repurchase by the Fund of the
option from its
holder, the Fund may realize a short-term capital gain or loss,
depending on
whether the premium income is greater or less than the amount paid
by the Fund
in the closing transaction. If securities are sold by the Fund
pursuant to the
exercise of a call option written by it, such Fund will add the
premium received
to the sale price of the securities delivered in determining the
amount of gain
or loss on the sale. If securities are purchased by the Fund
pursuant to the
exercise of a put option written by it, the Fund will subtract
the premium
received from its cost basis in the securities purchased. The
requirement that
the Fund derive less than 30% of its gross income from gains from
the sale of
securities held for less than three months may limit the Fund's
ability to write
options.
If, in the opinion of the Company, ownership of its shares
has or may
become concentrated to an extent that could cause the Company to
be deemed a
personal holding company within the meaning of the Code, the Company
may require
the redemption of shares or reject any order for the purchase of
shares in an
effort to prevent such concentration.
<PAGE>
CAPITAL STOCK
The authorized capital stock of the Company consists of an
aggregate of
10,000,000,000 shares ("Shares"), par value of $.001 per share. With
respect to
the Fund, the Company's capital stock is currently classified as
"Class D,"
referred to as the Harris Insight Convertible Fund, consisting of
100,000,000
Shares.
Generally, all shares of the Company have equal voting
rights and will
be voted in the aggregate, and not by class, except where voting
by class is
required by law or where the matter involved affects only one class.
As used in
the Prospectuses and in this Statement of Additional
Information, the term
"majority," when referring to the approvals to be obtained from
shareholders in
connection with general matters affecting the Fund (e.g., election
of Directors
and ratification of independent accountants), means the vote of
the lesser of
(i) 67% of the Company's shares represented at a meeting if the
holders of more
than 50% of the outstanding shares are present in person or by
proxy, or (ii)
more than 50% of the Company's outstanding shares. The term
"majority," when
referring to the approvals to be obtained from shareholders in
connection with
matters affecting a single fund or any other single fund (e.g.,
annual approval
of advisory contracts), means the vote of the lesser of (i) 67% of
the shares of
the Fund represented at a meeting if the holders of more than
50% of the
outstanding shares of the Fund are present in person or by proxy
or (ii) more
than 50% of the outstanding shares of the Fund. Shareholders are
entitled to one
vote for each full share held and fractional votes for fractional
shares held.
Each share of the Fund represents an equal proportionate
interest in
that Fund with each other share of the Fund and is entitled to such
dividends
and distributions out of the income earned on the assets belonging
to that Fund
as are declared in the discretion of the Company's Board of
Directors.
Notwithstanding the foregoing, each class of shares of each
fund bears
exclusively the expense of fees paid to Service Organizations with
respect to
that class of shares. In the event of the liquidation or
dissolution of the
Company (or the Fund), shareholders of the Fund (or the Fund being
dissolved)
are entitled to receive the assets attributable to that Fund that
are available
for distribution, and a distribution of any general assets not
attributable to
the particular Fund that are available for distribution in such
manner and on
such basis as the Directors in their sole discretion may determine.
Shareholders are not entitled to any preemptive rights.
All shares,
when issued, will be fully paid and non-assessable by the Company.
OTHER
The Registration Statement, including the Prospectuses,
the Statement
of Additional Information and the exhibits filed therewith, may be
examined at
the office of the Commission in Washington, D.C. Statements
contained in the
Prospectuses or this Statement of Additional Information as to the
contents of
any contract or other document referred to herein or in the
Prospectuses are not
necessarily complete, and, in each instance,
<PAGE>
reference is made to the copy of
such contract or other document filed as an exhibit to the
Registration
Statement, each such statement being qualified in all
respects by such
reference.
CUSTODIAN
As the Fund's custodian, PNC Bank, N.A., among other
things, maintains
a custody account or accounts in the name of each Fund, receives
and delivers
all assets for the Fund upon purchase and upon sale or maturity,
collects and
receives all income and other payments and distributions on
account of the
assets of the Fund, and pays all expenses of the Fund.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been selected as the independent
accountants
for the Company. Price Waterhouse LLP provides audit services and
assistance and
consultation in connection with review of certain Commission
filings. Price
Waterhouse LLP's address is 30 South 17th Street, Philadelphia,
Pennsylvania
19103.
EXPERTS
The financial statements incorporated by reference
into the
Prospectuses and included in this Statement of Additional
Information have been
incorporated by reference or included in reliance on the
report of Price
Waterhouse LLP, independent accountants, given on the authority of
that firm as
experts in auditing and accounting.
<PAGE>
FINANCIAL STATEMENTS
Specimen Computations of Net Asset
Values and Offering Prices Per Share
<TABLE>
<CAPTION>
<S> <C>
Convertible Fund (specimen computations)
Net Asset Value and Redemption Price per
Share of Capital Stock at October 31, 1995...................
$9.52
=====
Maximum Offering Price per Share ($9.62 divided by .955)
---- ----
(reduced on purchases of $100,000 or more)............
$9.97
=====
</TABLE>
The financial statements for the year ended December 31,
1994 including
the notes thereto, have been audited by Price Waterhouse
LLP and are
incorporated by reference in this Statement of Additional
Information from the
Annual Report of the Company dated December 31, 1994.
<PAGE>
HARRIS INSIGHT FUNDS
Convertible Fund
Statement of Assets and Liabilities
October 31, 1995
(Unaudited)
ASSETS
Investments at Value (Cost
$1,083,377)
$1,15
1,016
Interest Receivable
10,79
3
Dividends Receivable
1,175
Prepaid Expenses
1,649
Cash
20
Receivable for investments
sold
250
TOTAL ASSETS
1,16
4,903
LIABILITIES
Accrued Expenses
3,461
Payable for Investments
Purchased
0
Payable for Fund Share
Redeemed
9,647
TOTAL LIABILITIES
13,
108
NET ASSETS applicable to 120,964
shares outstanding
$1,15
1,795
NET ASSET VALUE PER SHARE
$9
.52
FS-1
HARRIS INSIGHT FUNDS
Convertible Fund
Statement of Operations
January 1, 1995 through October 31, 1995
(Unaudited)
Year to Date
INVESTMENT INCOME
Dividends
$18
,24
7
Interest
5
4,9
41
Total Investment
Income
7
3,1
88
EXPENSES
Investment Advisory
Fee
7,7
44
Administration Fee
1,3
06
Custodian Fee
3,5
67
Transfer Agent Fee
5,9
63
Directors Fee
166
Legal Fee
32
Audit Fee
15
Sec Fee
0
Printing Fee
76
Advertising Fee
28
Blue Sky Fee
5,3
02
Pricing Fee
3,0
49
ICI Dues
59
Insurance Fee
146
Miscellaneous Fee
144
Total Expenses
27,
597
Less: Accrued fee
waivers
(18
,74
6)
Net Expenses
8,8
51
NET INVESTMENT INCOME
6
4,3
37
REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net Realized
Gain(Loss) on
Investment
Transactions
(89
3)
Net Increase
(Decrease) in
Unrealized
Appreciation
(Depreciation) on
Investments
139
,89
1
Net Realized and
Unrealized
Gain(Loss) on
Investments
1
38,
998
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
$
203
,33
5
FS-2
HARRIS INSIGHT FUNDS
Convertible Fund
Statement of Changes in Net Assets
January 1, 1995 through October 31, 1995
(Unaudited)
Year to Date
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net Investment Income
$64
,33
7
Net Realized Gain(Loss) on
Investments
(89
3)
Net Increase (Decrease) in
Unrealized
Appreciation (Depreciation)
on Investments
1
39,
891
Net Increase in Net Assets
Resulting
from Operations
203
,33
5
Distributions:
Dividends from Net investment
Income
Capital Share Transactions:
Proceeds from sale of
capital shares
82,
491
Value of shares reinvested
38,
901
Cost of shares repurchased
(5
04,
564
)
Net Increase (Decrease) in Net
Assets
from Capital Share
Transactions
(38
3,1
72)
Total Increase (Decrease)
in Net Assets
(
264
,17
0)
NET ASSETS:
Beginning of period
1
,41
5,9
65
End of period
$1,
151
,79
5
FS-3
HARRIS INSIGHT FUNDS
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout each Period)
Convertible Fund
T
e
n
M
o
n
t
h
s
E
n
d
e
d
1
0
/
3
1
/
9
5
(
U
n
a
u
d
i
t
e
d
)
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
4
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
3
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
2
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
1
Y
e
a
r
E
n
d
e
d
1
2
/
3
1
/
9
0
Net Asset Value,
Beginning of Period
$
8
.
7
8
$
9
.
8
4
$
9
.
1
6
$
8
.
4
1
$
7
.
1
8
$
9
.
5
1
Income from
Investment
Operations:
Net Investment Income
.
7
7
9
.
6
6
9
.
5
3
8
.
4
8
7
.
6
0
9
.
7
8
8
Net Realized and
Unrealized
Gain (Loss) on
Investments
.
5
8
8
(
1
.
0
4
9
)
.
6
8
0
.
7
8
3
1
.
2
2
1
(
2
.
3
7
8
)
Total from
Investment Operations
1
.
3
6
7
(
.
3
8
0
)
1
.
2
1
8
1
.
2
7
0
1
.
8
3
0
(
1
.
5
9
0
)
Less Distributions:
Dividends to
Shareholders from
Net Investment
Income
(
.
6
2
7
)
(
.
6
8
0
)
(
.
5
3
8
)
(
.
5
2
0
)
(
.
6
0
0
)
(
.
7
4
0
)
Dividends to
Shareholders from
Net Capital Gains
- - - -
- - - -
- - - -
- - - -
- - - -
- - - -
Total
Distributions
(
.
6
2
7
)
(
.
6
8
0
)
(
.
5
3
8
)
(
.
5
2
0
)
(
.
6
0
0
)
(
.
7
4
0
)
Net Asset Value, End
of Period
$
9
.
5
2
$
8
.
7
8
$
9
.
8
4
$
9
.
1
6
$
8
.
4
1
$
7
.
1
8
Total Return:
1
5
.
7
4
%
(
3
)
(
4
.
0
1
)
%
1
3
.
5
0
%
1
5
.
4
0
%
2
6
.
0
4
%
(
1
7
.
1
2
)
%
Ratios/Supplemental
Data:
Net Assets, End of
Period $(000)
1
,
1
5
2
1
,
4
1
6
6
,
0
6
4
7
,
3
5
4
3
,
7
3
2
5
,
5
5
2
Ratios of Expenses to
Average Net Assets
(1)
0
.
8
0
%
(
2
)
0
.
8
0
%
0
.
8
0
%
0
.
8
0
%
0
.
8
0
%
0
.
8
0
%
Ratios of Net
Investment Income to
Average Net Assets
5
.
8
2
%
(
2
)
5
.
2
1
%
5
.
1
6
%
5
.
8
3
%
6
.
9
1
%
8
.
1
3
%
Portfolio Turnover
Rate
2
9
.
3
4
%
3
1
.
6
3
%
8
1
.
0
4
%
2
1
.
2
7
%
6
2
.
2
0
%
4
8
.
2
0
%
_______________________________
(1) Without the voluntary waiver of fees, the expense ratios for the ten months
ended October 31, 1995 and the years ended December 31, 1994,
1993, 1992, 1991 and 1990 would have been 2.49%, 1.26%, 1.20%, 1.26%, 1.66%
and 1.40%, respectively.
(2) Annualized
(3) Total returns for periods of less than one year are not annualized.
(4) Sales load is not reflected in total return.
FS-4
APPENDIX A
Description of Bond Ratings
The following summarizes the highest four ratings used by
Standard &
Poor's Corporation ("S&P") for corporate and municipal debt:
AAA - Debt rated AAA has the highest rating
assigned by S&P.
Capacity to pay interest and repay principal is
extremely strong.
AA - Debt rated AA has a very strong capacity to
pay interest
and repay principal and differs from AAA issues only
in a small
degree.
A - Debt rated A has a strong capacity to pay
interest and
repay principal although it is somewhat more
susceptible to the
adverse effects of changes in circumstances
and economic
conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an
adequate capacity
to pay interest and repay principal. Whereas it
normally exhibits
adequate protection parameters, adverse economic
conditions or
changing circumstances are more likely to lead to
a weakened
capacity to pay interest and repay principal for
debt in this
category than for those in higher rated categories.
To provide more detailed indications of credit quality,
the AA, A and
BBB ratings may be modified by the addition of a plus or minus
sign to show
relative standing within these major rating categories.
The following summarizes the highest four ratings used
by Moody's
Investors Service, Inc. ("Moody's") for corporate and municipal long-
term debt:
Aaa - Bonds that are rated Aaa are judged to be
of the best
quality. They carry the smallest degree of
investment risk and
are generally referred to as "gilt edge." Interest
payments are
protected by a large or by an exceptionally stable
margin and
principal is secure. While the various protective
elements are
likely to change, such changes as can be
visualized are most
unlikely to impair the fundamentally strong
position of such
issues.
Aa - Bonds that are rated Aa are judged to be of
high quality
by all standards. Together with the Aaa group they
comprise what
are generally known as high grade bonds. They are
rated lower
than the best bonds because margins of protection
may not be as
large as in Aaa securities or fluctuation of
protective elements
may be of greater amplitude or there may be
other elements
present which make the long-term risks appear
somewhat larger
than in Aaa securities.
<PAGE>
A - Bonds that are rated A possess many favorable
investment
attributes and are to be considered upper
medium grade
obligations. Factors giving security to principal
and interest
are considered adequate, but elements may be
present which
suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds that are rated Baa are considered
medium grade
obligations, i.e., they are neither highly protected
nor poorly
secured. Interest payments and principal security
appear adequate
for the present but certain protective elements may be
lacking or
may be characteristically unreliable over any great
length of
time. Such bonds lack outstanding investment
characteristics and
in fact have speculative characteristics as well.
Moody's applies numerical modifiers (1, 2 and 3) with
respect to
corporate bonds rated Aa, A and Baa. The modifier 1 indicates
that the bond
being rated ranks in the higher end of its generic rating category;
the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates
that the bond
ranks in the lower end of its generic rating category. With regard
to municipal
bonds, those bonds in the Aa, A and Baa groups which Moody's
believes possess
the strongest investment attributes are designated by the symbols
Aa1, A1 or
Baa1, respectively.
The following summarizes the highest four ratings used by
Duff & Phelps
Credit Rating Co. ("D&P") for bonds:
AAA - Debt rated AAA is of the highest credit
quality. The risk
factors are considered to be negligible, being only
slightly more
than for risk-free U.S. Treasury debt.
AA - Debt rated AA is of high credit quality.
Protection
factors are strong. Risk is modest but may vary
slightly from
time to time because of economic conditions.
A - Bonds that are rated A have protection
factors which are
average but adequate. However risk factors are more
variable and
greater in periods of economic stress.
BBB - Bonds that are rated BBB have below average
protection
factors but are still considered sufficient
for prudent
investment. Considerable variability in risk
during economic
cycles.
To provide more detailed indications of credit quality,
the AA, A and
BBB ratings may be modified by the addition of a plus or minus
sign to show
relative standing within these major categories.
<PAGE>
The following summarizes the ratings used by IBCA Limited
and IBCA Inc.
("IBCA") for bonds:
Obligations rated AAA by IBCA have the lowest
expectation of
investment risk. Capacity for timely repayment of
principal and
interest is substantial, such that adverse changes
in business,
economic or financial conditions are unlikely
to increase
investment risk significantly.
IBCA also assigns a rating to certain
international and U.S.
banks. An IBCA bank rating represents IBCA's current
assessment
of the strength of the bank and whether such bank
would receive
support should it experience difficulties. In its
assessment of a
bank, IBCA uses a dual rating system comprised of
Legal Ratings
and Individual Ratings. In addition, IBCA assigns
banks Long and
Short-Term Ratings as used in the corporate ratings
discussed
above. Legal Ratings, which range in gradation from 1
through 5,
address the question of whether the bank would
receive support
provided by central banks or shareholders if it
experienced
difficulties, and such ratings are considered by
IBCA to be a
prime factor in its assessment of credit risk.
Individual
Ratings, which range in gradations from A through E,
represent
IBCA's assessment of a bank's economic merits and
address the
question of how the bank would be viewed if it
were entirely
independent and could not rely on support from state
authorities
or its owners.
Description of Municipal Notes Ratings
The following summarizes the two highest ratings used by
Moody's for
short-term notes and variable rate demand obligations:
MIG-1/VMIG-1. Obligations bearing these designations
are of the
best quality, enjoying strong protection by
established cash
flows, superior liquidity support or demonstrated
broad-based
access to the market for refinancing.
MIG-2/VMIG-2. Obligations bearing these designations
are of high
quality with margins of protection ample although not
as large as
in the preceding group.
The following summarizes the two highest ratings by
Standard & Poor's
for short-term municipal notes:
SP-1 - Very strong or strong capacity to pay
principal and
interest. Those issues determined to possess
overwhelming safety
characteristics are given a "plus" (+) designation.
SP-2 - Satisfactory capacity to pay principal and
interest.
<PAGE>
The three highest rating categories of D&P for short-term
debt are Duff
1, Duff 2, and Duff 3. D&P employs three designations, Duff 1+, Duff
1 and Duff
1-, within the highest rating category. Duff 1+ indicates highest
certainty of
timely payment. Short-term liquidity, including internal
operating factors
and/or access to alternative sources of funds, is judged to be
"outstanding, and
safety is just below risk-free U.S. Treasury short-term
obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors
are excellent
and supported by good fundamental protection factors. Risk
factors are
considered to be minor. Duff 1- indicates high certainty of
timely payment.
Liquidity factors are strong and supported by good fundamental
protection
factors. Risk factors are very small. Duff 2 indicates good
certainty of timely
payment. Liquidity factors and company fundamentals are sound.
Although ongoing
funding needs may enlarge total financing requirements, access
to capital
markets is good. Risk factors are small. Duff 3 indicates
satisfactory liquidity
and other protection factors qualify issue as to investment grade.
Risk factors
are larger and subject to more variation. Nevertheless, timely
payment is
expected.
D&P uses the fixed-income ratings described above under
"Description of
Bond Ratings" for tax-exempt notes and other short-term obligations.
Description of Commercial Paper Ratings
Commercial paper rated A-1 by S&P indicates that the
degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely
strong safety characteristics are denoted in A-1+. Capacity for
timely payment
on commercial paper rated A-2 is satisfactory but the relative
degree of safety
is not as high as for issues designated A-1.
The rating Prime-1 is the highest commercial paper rating
assigned by
Moody's. Issuers rated Prime-1 (or related supporting
institutions) are
considered to have a superior capacity for repayment of short-term
promissory
obligations. Issuers rated Prime-2 (or related supporting
institutions) are
considered to have strong capacity for repayment of short-term
promissory
obligations. This will normally be evidenced by many of the
characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends
and coverage
ratios, while sound, will be more subject to variation.
Capitalization
characteristics, while still appropriate, may be more affected
by external
conditions. Ample alternate liquidity is maintained.
The highest rating of D&P for commercial paper is Duff 1.
D&P employs
three designations, Duff 1 plus, Duff 1 and Duff 1 minus, within
the highest
rating category.
<PAGE>
Duff 1 plus indicates highest certainty of timely payment.
Short-term
liquidity, including internal operating factors and/or ready
access to
alternative sources of funds, is judged to be "outstanding, and
safety is just
below risk-free U.S. Treasury short-term obligations" Duff 1
indicates very high
certainty of timely payment. Liquidity factors are excellent and
supported by
strong fundamental protection factors. Risk factors are considered
to be minor.
Duff 1 minus indicates high certainty of timely payment. Liquidity
factors are
strong and supported by good fundamental protection factors. Risk
factors are
very small.
The following summarizes the highest ratings used by
Fitch for
short-term obligations:
F-1+ securities possess exceptionally strong credit
quality. Issues
assigned this rating are regarded as having the strongest degree
of assurance
for timely payment.
F-1 securities possess exceptionally strong credit
quality. Issues
assigned this rating reflect an assurance of timely payment only
slightly less
in degree than issues rated F-1+.
Commercial paper rated A-1 by Standard & Poor's
indicates that the
degree of safety regarding timely payment is strong. Those issued
determined to
possess extremely strong safety characteristics are denoted A-1+.
The rating Prime-1 is the highest commercial paper rating
assigned by
Moody's. Issuers rated Prime-1 (or related supporting
institutions) are
considered to have a superior capacity for repayment of short-term
promissory
obligations.
D&P uses the short-term ratings described above for
commercial paper.
Fitch uses the short-term ratings described above for
commercial paper.
Thomson BankWatch, Inc. (TBW") ratings are based upon a
qualitative and
quantitative analysis of all segments of the organization
including, where
applicable, holding company and operating subsidiaries.
BankWatch Ratings do not constitute a recommendation to
buy or sell
securities of any of these companies. Further, BankWatch does
not suggest
specific investment criteria for individual clients.
The TBW Short-Term Ratings apply to commercial paper,
other senior
short-term obligations and deposit obligations of the entities
to which the
rating has been assigned.
The TBW Short-Term Ratings specifically assess the
likelihood of an
untimely payment of principal or interest.
<PAGE>
TBW-1 The highest category; indicates a very
high degree
of likelihood that principal and
interest will be
paid on a timely basis.
TBW-2 The second highest category; while
the degree of
safety regarding timely repayment of
principal and
interest is strong, the relative
degree of safety
is not as high as for issues rated "TBW-
1".
TBW-3 The lowest investment grade category;
indicates
that while more susceptible to adverse
developments
(both internal and external) than
obligations with
higher ratings, capacity to service
principal and
interest in a timely fashion is
considered
adequate.
TBW-4 The lowest rating category; this rating
is regarded
as non-investment grade and therefore
speculative.
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Audited Financial Statements as of December 31, 1994
are incorporated by reference from the Registrant's Annual Report
dated December 31, 1994 and include the following:
Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
Financial Statements included in Parts A and B of
this Registration Statement are as follows:
Statement of Net Assets, October 31, 1995
(unaudited)
Statement of Operations, October 31, 1995
(unaudited)
Statement of Changes in Net Assets, October
31, 1995
(unaudited)
Financial Highlights, October 31, 1995
(unaudited)
No Financial Statements are included in Part A or
Part B for the Harris Insight Intermediate Municipal Income Fund,
Harris Insight Prime Reserve Fund or Harris Insight Hemisphere
Free Trade Fund
(b) Exhibits:
Note: As used herein the term "Registration Statement" refers
to the Registration Statement of Registrant under the Securities
Act of 1933 on Form N-1A, No. 33-17957, and the term "Post-
Effective Amendment" refers to a post-effective amendment to the
Registration Statement.
Exhibit
Number Description
(1)(a) Articles of Incorporation incorporated by
reference to Exhibit No. 1(c)
to the Registration Statement filed on
October 15, 1987.
(1)(b) Articles Supplementary to the Articles of
Incorporation dated September 21, 1990 incorporated by reference
to Exhibit No.1(b) to Post-Effective Amendment No. 5 filed on
September 5, 1990.
(1)(c) Articles Supplementary to the Articles of
Incorporation dated November 4, 1992 incorporated by reference to
Exhibit No. 1(c) to Post-Effective Amendment No. 13 filed on
April 19, 1993.
(1)(d) Articles Supplementary to the Articles of
Incorporation dated August 6, 1993 incorporated by reference to
Exhibit No. 1(d) to Post-Effective Amendment No. 14 filed on
August 20, 1993.
(1)(e) Articles Supplementary to the Articles of
Incorporation dated May 27, 1994 incorporated by reference to
Exhibit 1(e) to Post-Effective Amendment No. 16 filed on June 1,
1994.
(1)(f) Articles Supplementary to the Articles of
Incorporation dated July 19, 1994 incorporated by reference to
Exhibit 1(f) to Post-Effective Amendment No. 18 filed on July 29,
1994.
(1)(g) Articles Supplementary to the Articles of
Incorporation dated January 9, 1995 incorporated by reference to
Exhibit 1(g) to Post-Effective Amendment No. 20 filed on January
23, 1995.
(1)(h) Articles Supplementary to the Articles of
Incorporation dated ____________, 1995.*
(2)(a) By-Laws incorporated by reference to Exhibit No. 2(a)
to the Registration Statement filed on October 15, 1987.
(2)(b) Addendum to By-Laws dated July 21, 1988 incorporated
by reference to Exhibit No. 2(b) to Post-Effective Amendment No.
12 filed on November 30, 1992.
*To be filed by amendment.
Exhibit
Number Description
(2)(c) Addendum to By-Laws dated July 21, 1989 incorporated
by reference to Exhibit No. 2(c) to Post-Effective Amendment No.
12 filed on November 30, 1992.
(3) Not Applicable.
(4) Forms of Stock Certificate incorporated by reference to
Exhibit No. 4 to Pre-Effective Amendment No. 2 to the
Registration Statement filed on January 29, 1988.
(5)(a) Advisory Contract on behalf of HT Insight Government
Fund (now named " Harris Insight Government Money
Market
Fund") dated January 13, 1988 between Registrant and
Harris Trust & Savings Bank incorporated by reference to Exhibit
5(a)(i) to the Registration Statement filed on October 15, 1987.
(5)(b) Advisory Contract on behalf of HT Insight Cash
Management Fund
(now named "Harris Insight Money Market
Fund") dated January 13, 1988 between Registrant and Harris
Trust & Savings Bank incorporated by reference to Exhibit
5(a)(ii) to the Registration Statement filed on October 15, 1987.
(5)(c) Advisory Contract on behalf of HT Insight Tax-Free
Money Market Fund (now named "Harris Insight Tax-Exempt Money
Market Fund") dated January 13, 1988 between Registrant and
Harris Trust & Savings Bank incorporated by reference to Exhibit
5(a)(iii) to the Registration Statement filed on October 15,
1987.
(5)(d) Advisory Contract on behalf of HT Insight Convertible
Fund (now named "Harris Insight Convertible Fund") dated
January 13, 1988 between Registrant and Harris Trust & Savings
Bank incorporated by reference to Exhibit 5(a)(iv) to the
Registration Statement filed on October 15, 1987.
(5)(e) Advisory Contract on behalf of HT Insight Equity Fund
(now named "Harris Insight Equity Fund") dated
January 13, 1988 between Registrant and Harris Trust & Savings
Bank incorporated by reference to Exhibit 5(a)(v) to the
Registration Statement filed on October 15, 1987.
Exhibit
Number Description
(5)(f) Advisory Contract on behalf of HT Insight Government
Fund dated May 1, 1990 between Registrant and Harris Trust &
Savings Bank incorporated by reference to Exhibit 5(f) to Post-
Effective Amendment No. 7 filed on April 1, 1991.
(5)(g) Advisory Contract on behalf of HT Insight Cash
Management Fund dated May 1, 1990 between Registrant and Harris
Trust & Savings Bank incorporated by reference to Exhibit 5(g) to
Post-Effective Amendment No. 7 filed on April 1, 1991.
(5)(h) Advisory Contract on behalf of HT Insight Convertible
Fund dated May 1, 1990 between Registrant and Harris Trust &
Savings Bank incorporated by reference to Exhibit 5(h) to Post-
Effective Amendment No. 7 filed on April 1, 1991.
(5)(i) Advisory Contract on behalf of HT Insight Equity Fund
dated May 1, 1990 between Registrant and Harris Trust & Savings
Bank incorporated by reference to Exhibit 5(i) to Post-Effective
Amendment No. 7 filed on April 1, 1991.
(5)(j) Advisory Contract on behalf of HT Insight Managed
Fixed Income Fund (now named "Harris Insight Intermediate
Bond Fund") dated April 1, 1991 between Registrant and
Harris Trust & Savings Bank incorporated by reference to Exhibit
5(j) to Post-Effective Amendment No. 8 filed on October 1, 1991.
(5)(k) Advisory Contract on behalf of Harris Insight
Intermediate Municipal Income Fund between Registrant and Harris
Trust & Savings Bank.*
(5)(l) Advisory Contract on behalf of Harris Insight
Government Assets Fund between Registrant and Harris Trust &
Savings Bank incorporated by reference to Exhibit 5(l) to Post-
Effective Amendment No. 15 filed on May 2, 1994.
(5)(m) Advisory Contract on behalf of Harris Insight Cash
Management Fund between Registrant and Harris Trust & Savings
Bank incorporated by reference to Exhibit 5(m) to Post-Effective
Amendment No. 15 filed on May 2, 1994.
*To be filed by amendment.
Exhibit
Number Description
(5)(n) Advisory Contract on behalf of Harris Insight Tax-
Free Money Market Fund between Registrant and Harris Trust &
Savings Bank incorporated by reference to Exhibit 5(n) to Post-
Effective Amendment No. 15 filed on May 2, 1994.
(5)(o) Advisory Contract on behalf of Harris Insight Prime
Reserve Fund between Registrant and Harris Trust & Savings Bank.*
(5)(p) Advisory Contract on behalf of Harris Insight NAFTA
Advantage Fund (now named "Harris Insight Hemisphere Free
Trade Fund") between Registrant and Harris Investment
Management, Inc.*
(5)(q) Portfolio Management Contract on behalf of HT Insight
Government Fund dated May 1, 1990 between Harris Trust & Savings
Bank and Harris Investment Management, Inc. incorporated by
reference to Exhibit 5(k) to Post-Effective Amendment No. 7 filed
on April 1, 1991.
(5)(r) Portfolio Management Contract on behalf of HT Insight
Cash Management Fund dated May 1, 1990 between Harris Trust &
Savings Bank and Harris Investment Management, Inc. incorporated
by reference to Exhibit 5(l) to Post-Effective Amendment No. 7
filed on April 1, 1991.
(5)(s) Portfolio Management Contract on behalf of HT Insight
Convertible Fund dated May 1, 1990 between Harris Trust & Savings
Bank and Harris Investment Management, Inc. incorporated by
reference to Exhibit 5(m) to Post-Effective Amendment No. 7 filed
on April 1, 1991.
(5)(t) Portfolio Management Contract on behalf of HT Insight
Equity Fund dated May 1, 1990 between Harris Trust & Savings Bank
and Harris Investment Management, Inc. incorporated by reference
to Exhibit 5(n) to Post-Effective Amendment No. 7 filed on April
1, 1991.
(5)(u) Portfolio Management Contract on behalf of HT Insight
Managed Fixed Income Fund dated April 1, 1991 between Harris
Trust & Savings Bank and Harris Investment Management, Inc.
incorporated by reference to Exhibit 5(o) to Post-Effective
Amendment No. 8 filed on October 1, 1991.
*To be filed by amendment.
Exhibit
Number Description
(5)(v) Portfolio Management Contract on behalf of Harris
Insight Intermediate Municipal Income Fund between Harris Trust &
Savings Bank and Harris Investment Management, Inc.*
(5)(w) Portfolio Management Contract on behalf of Harris
Insight Government Assets Fund between Harris Trust & Savings
Bank and Harris Investment Management, Inc. incorporated by
reference to Exhibit 5(u) to Post-Effective Amendment No. 15
filed on May 2, 1994.
(5)(x) Portfolio Management Contract on behalf of Harris
Insight Cash Management Fund between Harris Trust & Savings Bank
and Harris Investment Management, Inc. incorporated by reference
to Exhibit 5(v) to Post-Effective Amendment No. 15 filed on May
2, 1994.
(5)(y) Portfolio Management Contract on behalf of Harris
Insight Prime Reserve Fund between Harris Trust & Savings Bank
and Harris Investment Management, Inc.*
(5)(z) Investment Advisory and Portfolio Management Services
Agreement on behalf of Harris Insight NAFTA Advantage
Fund between Harris Investment Management, Inc. and Bancomer
Asesora de Fondos, S.A. de C.V.*
(5)(aa) Investment Advisory and Portfolio Management Services
Agreement on behalf of Harris Insight NAFTA Advantage
Fund between Harris Investment Management, Inc. and Bank of
Montreal Investment Counsel Limited.*
(6)(a) Distribution Agreement between Registrant and Lazard,
Freres & Co. incorporated by reference to Exhibit 6(a) to the
Registration Statement filed on October 15, 1987.
(6)(b) Dealer Agreement incorporated by reference to Exhibit
6(b) of Pre-Effective Amendment No. 1 to the Registration
Statement filed on December 17, 1987.
*To be filed by amendment.
Exhibit
Number Description
(6)(c) Dealer Contract incorporated by reference to Exhibit
6(b) of Pre-Effective Amendment No. 2 to the Registration
Statement filed on January 29, 1988.
(6)(d) Underwriting Agreement, dated February 1, 1990,
between Registrant and Scudder Fund Distributors, Inc.
incorporated by reference to Exhibit 6(a) to Post-Effective
Amendment No. 3 filed on March 1, 1989.
(6)(e) Form of Dealer Contract incorporated by reference to
Exhibit 6(b) to Post-Effective Amendment No. 3 filed on March 1,
1989.
(6)(f) Distribution Agreement between Registrant and TBC
Funds Distributor, Inc. dated December 1, 1989 incorporated by
reference to Exhibit 6(f) to Post-Effective Amendment No. 4 filed
on March 2, 1990.
(6)(g) Supplement to Distribution Agreement between
Registrant and TBC Funds Distributor, Inc. relating to HT Insight
Income Fund dated July 24, 1990 incorporated by reference to
Exhibit 6(g) to Post-Effective Amendment No. 6 filed on November
2, 1990.
(6)(h) Notice to Distributor relating to Harris Insight
Intermediate Municipal Income Fund dated November 5, 1992
incorporated by reference to Exhibit 6(h) to Post-Effective
Amendment No. 13 filed on April 19, 1993.
(6)(i) Notice to Distributor relating to the addition of
Class B Shares and Class C Shares (now named
"Institutional Shares") of the Harris Insight Government
Assets, Cash Management and Tax-Free Money Market Funds
incorporated by reference to Exhibit 6(i) to Post-Effective
Amendment No. 15 filed on May 2, 1994.
(6)(j) Amended Distribution Agreement between Registrant and
Funds Distributor, Inc. dated October 28, 1993 incorporated by
reference to Exhibit 6(j) to Post-Effective Amendment No. 15
filed on May 2, 1994.
(6)(k) Distribution Agreement between Registrant and Funds
Distributor, Inc. dated April 13, 1994 incorporated by reference
to Exhibit 6(k) to Post-Effective Amendment No. 16 filed on June
1, 1994.
Exhibit
Number Description
(6)(l) Notice to Distributor relating to Harris Insight
Prime Reserve Fund dated July 19, 1994.*
(6)(m) Notice to Distributor relating to Harris Insight
NAFTA Advantage Fund dated July 19, 1994.*
(6)(n) Notice to Distributor relating to the addition of
Class B Shares of the Harris Insight Equity Fund and Managed
Fixed Income Fund.
(7) Not Applicable.
(8)(a) Custodian Contract between Registrant and State
Street Bank and Trust Company incorporated by reference to
Exhibit 8(a) to the Registration Statement filed on October 15,
1987.
(8)(b) Custodian Agreement between Registrant and Provident
National Bank dated December 1, 1989 incorporated by reference to
Exhibit 8(b) to Post-Effective Amendment No. 4 filed on March 2,
1990.
(8)(c) Supplement to Custodian Agreement between Registrant
and Provident National Bank relating to HT Insight Income Fund
dated July 24, 1990 incorporated by reference to Exhibit 8(c) to
Post-Effective Amendment No. 6 filed on November 2, 1990.
(8)(d) Notice to the Custodian relating to Harris Insight
Intermediate Municipal Income Fund dated November 23, 1992
incorporated by reference to Exhibit 8(d) to Post-Effective
Amendment No. 13 filed on April 19, 1993.
(8)(e) Notice to Custodian relating to Harris Insight Prime
Reserve Fund dated July 19, 1994.*
(8)(f) Notice to Custodian relating to Harris Insight
NAFTA Advantage Fund dated July 19, 1994.*
(9)(a) Transfer Agency Agreement between Registrant and
State Street Bank and Trust Company incorporated by reference to
Exhibit 9(a) to the Registration Statement filed on October 15,
1987.
_____________________
*To be filed by amendment.
Exhibit
Number Description
(9)(b) Transfer Agency Agreement between Registrant and
Provident Financial Processing Corporation dated December 1, 1989
incorporated by reference to Exhibit 9(b) to Post-Effective
Amendment No. 4 filed on March 2, 1990.
(9)(c) Supplement to Transfer Agency Agreement between
Registrant and Provident Financial Processing Corporation
relating to HT Insight Income Fund dated July 24, 1990
incorporated by reference to Exhibit 9(c) to Post-Effective
Amendment No. 6 filed on November 2, 1990.
(9)(d) Notice to Provident Financial Processing Corporation
as Transfer Agent relating to Harris Insight Intermediate
Municipal Income Fund dated November 9, 1992 incorporated by
reference to Exhibit 9(d) to Post-Effective Amendment No. 13
filed on April 19, 1993.
(9)(e) Notice to PFPC Inc. as Transfer Agent relating to the
addition of Class B and Class C Shares of the Harris Insight
Government Assets, Cash Management and Tax-Free Money Market
Funds incorporated by reference to Exhibit 9(e) to Post-Effective
Amendment No. 15 filed on May 2, 1994.
(9)(f) Form of Notice to PFPC Inc. as Transfer Agent
relating to Harris Insight Prime Reserve Fund dated July 19, 1994
incorporated by reference to Exhibit 9(f) to Post-Effective
Amendment No. 16 filed on June 1, 1994.
(9)(g) Notice to PFPC Inc. as Transfer Agent relating to
Harris Insight NAFTA Advantage Fund dated July 19, 1994.*
(9)(h) Administration Agreement on behalf of HT Insight
Government Fund incorporated by reference to Exhibit 5(b)(i) to
the Registration Statement filed on October 15, 1987.
(9)(i) Administration Agreement on behalf of HT Insight Cash
Management Fund incorporated by reference to Exhibit 5(b)(ii) to
the Registration Statement filed on October 15, 1987.
_____________________
*To be filed by amendment.
Exhibit
Number Description
(9)(j) Administration Agreement on behalf of HT Insight Tax-
Free Money Market Fund incorporated by reference to Exhibit
5(b)(iii) to the Registration Statement filed on October 15,
1987.
(9)(k) Administration Agreement on behalf of HT Insight
Convertible Fund incorporated by reference to Exhibit 5(b)(iv)
to the Registration Statement filed on October 15, 1987.
(9)(l) Administration Agreement on behalf of HT Insight
Equity Fund incorporated by reference to Exhibit 5(b)(v) to the
Registration Statement filed on October 15, 1987.
(9)(m) Administration Agreement between Registrant and The
Boston Company Advisors, Inc. dated December 1, 1989 incorporated
by reference to Exhibit 9(j) to Post-Effective Amendment No. 4
filed on March 2, 1990.
(9)(n) Supplement to Administration Agreement between
Registrant and The Boston Company Advisors, Inc. relating to HT
Insight Income Fund dated July 24, 1990 incorporated by reference
to Exhibit 9(k) to Post-Effective Amendment No. 6 filed on
November 2, 1990.
(9)(o) Administration and Accounting Services Agreement
between Registrant and Provident Financial Processing Corporation
dated December 1, 1989 incorporated by reference to Exhibit 9(l)
to Post-Effective Amendment No. 4 filed on March 2, 1990.
(9)(p) Supplement to Administration and Accounting Services
Agreement between Registrant and Provident Financial Processing
Corporation relating to HT Insight Income Fund dated July 24,
1990 incorporated by reference to Exhibit 9(m) to Post-Effective
Amendment No. 6 filed on November 2, 1990.
(9)(q) Notice to The Boston Company Advisors, Inc. as
Administrator relating to Harris Insight Intermediate Municipal
Income Fund dated November 5, 1992 incorporated by reference to
Exhibit 9(n) to Post-Effective Amendment No. 13 filed on April
19, 1993.
Exhibit
Number Description
(9)(r) Notice to Provident Financial Processing Corporation
as Administrator and Accounting Services Agent relating to Harris
Insight Intermediate Municipal Income Fund dated March 29, 1993
incorporated by reference to Exhibit 9(o) to Post-Effective
Amendment No. 13 filed on April 19, 1993.
(9)(s) Notice to The Boston Company Advisors, Inc. relating
to the addition of Class B and Class C Shares of the Harris
Insight Government Assets, Cash Management and Tax-Free Money
Market Funds incorporated by reference to Exhibit 9(q) to Post-
Effective Amendment No. 15 filed on May 2, 1994.
(9)(t) Notice to PFPC Inc. relating to the addition of Class
B and Class C Shares of the Harris Insight Government Assets,
Cash Management and Tax-Free Money Market Funds incorporated by
reference to Exhibit 9(r) to Post-Effective Amendment No. 15
filed on May 2, 1994.
(9)(u) Notice to The Shareholder Services Group, Inc. as
Administrator, relating to Harris Insight Prime Reserve Fund
dated July 19, 1994.*
(9)(v) Consent of Registrant to the assignment of the
Administration Agreement between The Boston Company Advisors,
Inc. and Registrant to The Shareholder Services Group, Inc. dated
April 29, 1994 incorporated by reference to Exhibit 9(u) to Post-
Effective Amendment No. 16 filed on June 1, 1994.
(9)(w) Notice to PFPC Inc. as Administrator and Accounting
Services Agent relating to Harris Insight Prime Reserve Fund
dated July 19, 1994.*
(9)(x) Notice to The Shareholder Services Group, Inc. as
Administrator, relating to Harris Insight NAFTA Advantage
Fund dated July 19, 1994.*
(9)(y) Notice to PFPC Inc. as Administrator and Accounting
Services Agent relating to Harris Insight NAFTA Advantage
Fund dated July 19, 1994.*
*To be filed by amendment.
Exhibit
Number Description
(9)(z) Form of Shareholder Servicing Agreement incorporated
by reference to Exhibit 9(p) to Post-Effective Amendment No. 12
filed on November 30, 1992.
(9)(aa) Form of Servicing Agreement Relating to Class A
Shares of the Harris Insight Government Assets, Cash
Management and Tax-Free Money Market Funds incorporated by
reference to Exhibit 9 (t) to Post-Effective Amendment
No. 14 filed on August 20, 1993.
(9)(bb) Form of Servicing Agreement Relating to Class B
Shares of the Harris Insight Government Assets, Cash
Management and Tax-Free Money Market Funds incorporated by
reference to Exhibit 9 (u) to Post-Effective Amendment
No. 14 filed on August 20, 1993.
(9)(cc) Form of Servicing Agreement Relating to Class A
Shares of the Harris Insight Prime Reserve Fund incorporated by
reference to Exhibit 9(z) to Post-Effective Amendment No. 16
filed on June 1, 1994.
(9)(dd) Form of Servicing Agreement Relating to Class B
Shares of the Harris Insight Prime Reserve Fund incorporated by
reference to Exhibit 9(aa) to Post-Effective Amendment No. 16
filed on June 1, 1994.
(9)(ee) Form of Servicing Agreement Relating to Class A
Shares of the Harris Insight NAFTA Advantage Fund
incorporated by reference to Exhibit 9(ee) to Post-Effective
Amendment No. 18 filed on July 29, 1994.
(9)(ff) Notice to PFPC Inc. as Transfer Agent relating to the
addition of Class B Shares of the Harris Insight Equity Fund and
Managed Fixed Income Fund.*
(9)(gg) Notice to The Shareholder Services Group, Inc.
relating to the addition of Class B Shares of the Harris Insight
Equity Fund and Managed Fixed Income Fund.*
*To be filed by amendment.
Exhibit
Number Description
(9)(hh) Form of Servicing Agreement Relating to Class B
Shares of the Harris Insight Equity Fund and Managed Fixed Income
Fund.*
(10)(a) Opinion and Consent of Counsel incorporated by
reference to Exhibit 10(a) to Post-Effective Amendment No. 6
filed on November 2, 1990.
(10)(b) Opinion and Consent of The Boston Company Advisors,
Inc. relating to shares of HT Insight Managed Fixed Income Fund
incorporated by reference to Exhibit 10(b) to Post-Effective
Amendment No. 7 filed on
April 1, 1991.
(10)(c) Opinion and Consent of The Boston Company Advisors,
Inc. relating to shares of Harris Insight Intermediate Municipal
Income Fund incorporated by reference to Exhibit 10(c) to Post-
Effective Amendment No. 12 filed on November 30, 1992.
(10)(d) Opinion and Consent of The Boston Company Advisors,
Inc. relating to the addition of Class B and Class C Shares of
the Harris Insight Government Assets, Cash Management and Tax-
Free Money Market Funds incorporated by reference to Exhibit
10(d) to Post-Effective Amendment No. 14 filed on August 20,
1993.
(10)(e) Opinion and Consent of Counsel of The Shareholder
Services Group, Inc. relating to shares of Harris Insight Prime
Reserve Fund incorporated by reference to Exhibit 10(e) to Post-
Effective Amendment No. 16 filed on June 1, 1994.
(10)(f) Opinion and Consent of Counsel of The Shareholder
Services Group, Inc. relating to shares of Harris Insight NAFTA
Advantage Fund incorporated by reference to Exhibit 10(f) to
Post-Effective Amendment No. 17 filed on July 29, 1994.
(10)(g) Opinion and Consent of Counsel of The Shareholder
Services Group, Inc. relating to the addition of Class B Shares
of the Harris Insight Equity Fund and Managed Fixed Income Fund.*
*To be filed by amendment.
Exhibit
Number Description
(11) Consent of Price Waterhouse LLP filed herein.
(12) Not Applicable.
(13)(a) Purchase Agreement investment letter of Lazard Freres
& Co. incorporated by reference to Exhibit 13(a) to Pre-Effective
Amendment No. 2 to the Registration Statement filed on
January 29, 1988.
(13)(b) Purchase Agreement between Registrant and The Boston
Company Advisors, Inc. dated October 31, 1990 with respect to the
HT Insight Income Fund incorporated by reference to Exhibit 13(b)
to Post-Effective Amendment No. 7 filed on April 1, 1991.
(13)(c) Purchase Agreement between Registrant and Funds
Distributor, Inc. with respect to the Harris Insight Intermediate
Municipal Income Fund.*
(13)(d) Purchase Agreement between Registrant and Funds
Distributor, Inc. with respect to Class B and Class C Shares of
the Harris Insight Government Assets, Cash Management and Tax-
Free Money Market Funds, incorporated by reference to Exhibit
5(l) to Post-Effective Amendment No. 15 filed on May 2, 1994.
(13)(e) Purchase Agreement between Registrant and Funds
Distributor, Inc. with respect to the Harris Insight Prime
Reserve Fund.*
(13)(f) Purchase Agreement between Registrant and Funds
Distributor, Inc. with respect to the Harris Insight NAFTA
Advantage Fund.*
(13)(g) Purchase Agreement between Registrant and Funds
Distributor, Inc. with respect to Class B Shares of the Harris
Insight Equity Fund and Managed Fixed Income Fund.*
(14) Not Applicable.
*To be filed by amendment.
Exhibit
Number Description
(15)(a) Service Plan on behalf of HT Insight Government Fund
incorporated by reference to Exhibit 15(a)(i) to the Registration
Statement filed on October 15, 1987.
(15)(b) Service Plan on behalf of HT Insight Cash Management
Fund incorporated by reference to Exhibit 15(a)(ii) to the
Registration Statement filed on October 15, 1987.
(15)(c) Service Plan on behalf of HT Insight Tax-Free Money
Market Fund incorporated by reference to Exhibit 15(a)(iii) to
the Registration Statement filed on October 15, 1987.
(15)(d) Service Plan on behalf of HT Insight Convertible Fund
incorporated by reference to Exhibit 15(a)(iv) to the
Registration Statement filed on October 15, 1987.
(15)(e) Service Plan on behalf of HT Insight Equity Fund
incorporated by reference to Exhibit 15(a)(v) to the Registration
Statement filed on October 15, 1987.
(15)(f) Form of Service Agreement between Registrant and
Service Agent incorporated by reference to Exhibit 15(b)(i) to
Pre-Effective Amendment No. 2 to the Registration Statement filed
on January 29, 1988.
(15)(g) Form of Service Agreement between Lazard Freres & Co.
and Service Agent incorporated by reference to Exhibit 15(b)(ii)
to Pre-Effective Amendment No. 2 to the Registration Statement
filed on January 29, 1988.
(15)(h) Service Plan on behalf of HT Insight Government Fund
adopted as of November 9, 1989 incorporated by reference to
Exhibit 15(h) to Post-Effective Amendment No. 4 filed on March 2,
1990.
(15)(i) Service Plan on behalf of HT Insight Cash Management
Fund adopted as of November 9, 1989 incorporated by reference to
Exhibit 15(i) to Post-Effective Amendment No. 4 filed on March 2,
1990.
(15)(j) Service Plan on behalf of HT Insight Tax-Free Money
Market Fund adopted as of November 9, 1989 incorporated by
reference to Exhibit 15(j) to Post-Effective Amendment No. 4
filed on March 2, 1990.
Exhibit
Number Description
(15)(k) Service Plan on behalf of HT Insight Convertible Fund
adopted as of November 9, 1989 incorporated by reference to
Exhibit 15(k) to Post-Effective Amendment No. 4 filed on March 2,
1990.
(15)(l) Service Plan on behalf of HT Insight Equity Fund
adopted as of November 9, 1989 incorporated by reference to
Exhibit 15(l) to Post-Effective Amendment No. 4 filed on March 2,
1990.
(15)(m) Service Plan on behalf of HT Insight Income Fund
adopted as of July 20, 1990 incorporated by reference to Exhibit
15(m) to Post-Effective Amendment No. 7 filed on April 1, 1991.
(15)(n) Service Plan on behalf of HT Insight Government
Assets Fund adopted as of November 9, 1989 and as revised on
April 24, 1991 incorporated by reference to Exhibit 15(n) to
Post-Effective Amendment No. 9 filed on April 29, 1992.
(15)(o) Service Plan on behalf of HT Insight Cash Management
Fund adopted as of November 9, 1989 and as revised on April 24,
1991 incorporated by reference to Exhibit 15(o) to Post-Effective
Amendment No. 9 filed on April 29, 1992.
(15)(p) Service Plan on behalf of HT Insight Tax-Free Money
Market Fund adopted as of November 9, 1989 and as revised on
April 24, 1991 incorporated by reference to Exhibit 15(p) to
Post-Effective Amendment No. 9 filed on April 29, 1992.
(15)(q) Service Plan on behalf of HT Insight
Convertible Fund adopted as of November 9, 1989 and as revised on
April 24, 1991 incorporated by reference to Exhibit 15(q) to
Post-Effective Amendment No. 9 filed on April 29, 1992.
(15)(r) Service Plan on behalf of HT Insight Equity
Fund adopted as of November 9, 1989 and as revised on April 24,
1991 incorporated by reference to Exhibit 15(r) to Post-Effective
Amendment No. 9 filed on April 29, 1992.
(15)(s) Service Plan on behalf of HT Insight Managed
Fixed Income Fund adopted as of July 20, 1990 and as revised on
April 24, 1991 incorporated by reference to Exhibit 15(s) to
Post-Effective Amendment No. 9 filed on April 29, 1992.
Exhibit
Number Description
(15)(t) Service Plan on behalf of Harris Insight
Intermediate Municipal Income Fund adopted as of October 20, 1992
incorporated by reference to Exhibit 15(t) to Post-Effective
Amendment No. 13 filed on April 19, 1993.
(15)(u) Amended and Restated Service Plan on behalf of
the Harris Insight Government Assets, Cash Management and Tax-
Free Money Market Funds, incorporated by reference to Exhibit
15(u) to Post-Effective Amendment No. 15 filed on May 2, 1994.
(15)(v) Form of Service Plan on behalf of Harris
Insight Prime Reserve Fund incorporated by reference to Exhibit
15(v) to Post-Effective Amendment No. 16 filed on June 1, 1994.
(15)(w) Form of Service Plan on behalf of Harris
Insight NAFTA Advantage Fund incorporated by reference
to Exhibit 15(w) to Post-Effective Amendment No. 18 filed on July
29, 1994.
(16)(a) Certain schedules for computation of
performance quotations with respect to HT Insight Equity and HT
Insight Convertible Funds incorporated by reference to Exhibit
16(a) to Post-Effective Amendment No. 3 filed on March 1, 1989.
(16)(b) Certain schedules for computation of
performance quotations with respect to HT Insight Convertible
Fund, HT Insight Equity Fund and HT Insight Managed Fixed Income
Fund incorporated by reference to Exhibit 16(b) to Post-Effective
Amendment No. 8 filed on October 1, 1991.
(16)(c) Certain schedules for computation of
performance quotations with respect to Harris Insight
Intermediate Municipal Income Fund.*
(16)(d) Certain schedules for computation of
performance quotations with respect to Harris Insight Government
Assets Fund - Class A, Cash Management Fund - Class A and Tax-
Free Money Market Fund - Class A incorporated by reference to
Exhibit 16(d) to Post-Effective Amendment No. 15 filed on May 2,
1994.
*To be filed by amendment.
Exhibit
Number Description
(16)(e) Certain schedules for computation of
performance quotations with respect to Harris Insight Government
Assets Fund - Class B; Government Assets Fund - Class C; Cash
Management Fund - Class B; Cash Management Fund - Class C; Tax-
Free Money Market Fund - Class B; and Tax-Free Money Market Fund
- - - - Class C.*
(16)(f) Certain schedules for computation of
performance quotations with respect to Class A, Class B, and
Class C Shares of Harris Insight Prime Reserve Fund.*
(16)(g) Certain schedules for computation of
performance quotations with respect to Class A and Class B Shares
of Harris Insight NAFTA Advantage Fund.*
(16)(h) Certain schedules for computation of
performance quotations with respect to Harris Insight Equity Fund
- - - - Class B and Managed Fixed Income Fund - Class B.*
(17) Financial Data Schedule filed herein.
(18) Form of Multi-Class Plan filed herein.
*To be filed by amendment.
Item 25. Persons Controlled by or under Common Control with
Registrant.
No person is controlled by or under common control
with Registrant. For additional information, see "Management"
and "Organization and Capital Stock" in the Prospectuses, Part A
of this Registration Statement.
Item 26. Number of Holders of Securities.
As of November 15, 1995, the number of record holders
of each Fund was as follows: Government Money Market Fund - Class
A, 29; Government Money Market Fund - Class B, 0; Government
Money Market Fund - Institutional Shares, 2; Money Market Fund -
Class A, 62; Money Market Fund - Class B, 0; Money Market Fund -
Institutional Shares, 2; Tax-Exempt Money Market Fund - Class A,
27; Tax-Exempt Money Market Fund - Class B, 0; Tax-Exempt Money
Market Fund - Institutional Shares, 2; Convertible Fund, 10;
Equity Fund - Class A, 48; Equity Fund - Institutional Shares, 0;
Intermediate Bond Fund Fund - Class A, 22; Intermediate Bond Fund
- - - - Institutional Shares, 0; Intermediate Municipal Income Fund, 0;
Prime Reserve Fund - Class A, 0; Prime Reserve Fund - Class B, 0;
Prime Reserve Fund - Institutional Shares, 0; Hemisphere Free
Trade Fund - Class A, 0; Hemisphere Free Trade Fund -
Institutional Shares, 0.
Item 27. Indemnification.
Section 2-418 of the General Corporation Law of Maryland
authorizes registrant to indemnify its directors and officers
under specified circumstances. Article IV of the by-laws of
Registrant (exhibit 2 to this amendment, which is incorporated
herein by reference) provides in effect that registrant shall
provide certain indemnification of its directors and officers.
In accordance with Section 17(h) of the Investment Company Act,
this provision of the bylaws shall not protect any person against
any liability to the Registrant or its shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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 controlling person of the
registrant in 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 Act and will be governed by the final adjudication of such
issue.
Registrant and its directors, officers and employees are
insured, under a policy of insurance maintained by Registrant,
within the limits and subject to the limitations of the policy,
against certain expenses in connection with the defense of
actions, suits or proceedings, and certain liabilities that might
be imposed as a result of such actions, suits or proceedings, to
which they are parties by reason of being or having been such
directors or officers. The policy expressly excludes coverage
for any director or officer for any claim arising out of any
fraudulent act or omission, any dishonest act or omission or any
criminal act or omission of the director or officer.
Pursuant to Section IV of the Distribution Agreement
dated April 13, 1994 (exhibit 6(k) to this amendment which is
incorporated herein by reference), Funds Distributor, Inc., as
principal underwriter of the Registrant, and the Registrant have
agreed to indemnify each other and their respective directors and
officers under certain circumstances.
Item 28. Business and Other Connections of Investment Adviser.
(a) Harris Trust & Savings Bank ("Harris Trust"), an
indirect, wholly-owned subsidiary of Bank of Montreal,
serves as investment adviser to the Harris Insight
Government Money Market, Money Market, Tax-Exempt Money
Market, Prime Reserve, Convertible, Equity, Intermediate Bond
and Intermediate Municipal Income Funds. Harris Trust's
business is that of an Illinois state-chartered bank with respect
to which it conducts a variety of commercial banking and trust
activities.
To the knowledge of Registrant, none of the directors or
executive officers of Harris Trust except those set forth below,
is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment
of a substantial nature. Set forth below are the names and
principal businesses of the directors and executive officers of
Harris Trust who are or during the past two fiscal years have
been engaged in any other business, profession, vocation or
employment of a substantial nature for their own account or in
the capacity or director, officer, employee, partner or trustee.
All directors of Harris Trust also serve as directors of Harris
Bankcorp, Inc., the immediate parent of Harris Trust.
Position(s) with Principal Business(es) During
Name Harris Trust the Last Two Fiscal Years
Alan G. McNally Director and Chairman of the Board and
Chief
Vice Chairman Executive Officer of Harris Trust &
of the Board Savings Bank and Harris Bankcorp,
Inc. Formerly, Vice Chairman of Personal and Commercial Financial
Services of the Bank of Montreal.
James O. Webb Director President, James O. Webb &
Associates, Inc.
Matthew W. Barrett Director Chairman of the Board and
Chief Executive Officer of the Bank of Montreal.
F. Anthony Comper Director President and Chief Operating
Officer of the Bank of Montreal.
Susan T. Congalton Director Managing Director of Lupine
Partners. Formerly General Counsel and Chief Financial Officer,
Finance and Law of Carson Pierre Scott Company.
Position(s) with Principal Business(es) During
Name Harris Trust the Last Two Fiscal Years
Roxanne J. Decyk Director Vice President -- Corporate
Planning, Amoco Chemical Company. Formerly, Senior Vice
President of Commercial and Industrial Sales, Amoco Chemical
Corporation.
Wilbur H. Gantz Director President and Chief Executive
Officer, PathoGenesis Corporation.
James J. Glasser Director Chairman, President and Chief
Executive Officer of GATX Corporation.
Daryl F. Grisham Director President and Chief Executive
Officer of Parker House Sausage Company.
Dr. Leo M. Henikoff Director President and Chief Executive
Officer of Rush-Presbyterian - St. Luke's Medical Center.
Dr. Stanley O. Ikenberry Director President of the
University of Illinois.
Charles H. Shaw Director Chairman of the Shaw Company.
Richard E. Terry Director Chairman and Chief Executive
Officer of Peoples Energy Corporation.
William J. Weisz Director Chairman of the Board of Motorola,
Inc.
Edward W. Vice Chairman and Senior Executive Vice
President --
Lyman, Jr. Director Corporate and Institutional
Financial
Services, Harris Trust & Savings Bank.
Formerly, Department Executive, Corporate Banking, Harris Trust &
Savings Bank.
Maribeth S. Rahe Vice Chairman and Senior Executive Vice
President -- Personal & Commercial Services, Harris Trust &
Savings Bank. Formerly, Department Executive, Personal Financial
Services, Harris Trust & Savings Bank.
(b) Harris Investment Management, Inc. ("HIM"), an
indirect subsidiary of Bank of Montreal, serves as the Portfolio
Management Agent of the Government Money Market, Money
Market, Prime Reserve, Convertible Securities ,
Equity, Intermediate Bond and Intermediate Municipal
Income Funds pursuant to Portfolio Management Agreements with
Harris Trust. HIM also serves as investment adviser to the
Hemisphere Free Trade Fund. HIM's business is that of a Delaware
corporation registered as an investment adviser under the
Investment Advisers Act of 1940.
To the knowledge of the Registrant, none of the
directors or executive officers of HIM, except those set forth
below, is or has been at anytime during the past two fiscal years
engaged in any other business, profession, vocation or employment
of a substantial nature with respect to publicly traded companies
for their own account or in the capacity of director, officer,
employees, partner or trustee.
Position(s) Principal Business(es) During
Name with HIM the Last Two Fiscal Years
Brian J. Steck Director and Chairman of the Board of
Chairman of the Harris Investment Management,
Board Inc. Vice-Chairman of
Investment Banking of Bank of Montreal,
President of the Bank of Montreal Investment Management Limited.
Donald G.M. Coxe Director, President President and Chief
Investment Officer of
and Chief Investment Harris Investment Management,
Inc.
Officer Formerly, Chief Strategist of Nesbitt
Thomson Inc.
Edward W. Lyman, Jr. Director Senior Executive Vice
President --Corporate & Institutional Financial Services, Harris
Trust & Savings Bank. Formerly, Department Executive
of Corporate Banking , Harris Trust & Savings Bank.
Maribeth S. Rahe Director Senior Executive Vice President --
Personal & Commercial Services, Harris Trust & Savings
Bank. Prior to January, 1994 Personal Financial Services
Department Executive of Harris Trust & Savings Bank.
Position(s) Principal Business(es) During
Name with HIM the Last Two Fiscal Years
Nancy B. Wolcott Director Executive Vice President --
Corporate & Institutional Trust, Harris Trust & Savings Bank.
Formerly, Senior Vice President, Harris Trust & Savings Bank.
Terry A. Jackson Director Executive Vice President,
Bank of Montreal Asset Management Services, President of the
Trust Company of the Bank of Montreal and President of the Bank
of Montreal Investment Management. Vice President of Nesbitt
Thompson, Inc. Formerly, Executive Vice President -- Retail and
Institutional Sales, Bank of Montreal.
Wayne Thomas Director Senior Vice President --
Personal Investment Management, Harris Trust & Savings Bank.
Carla Eyre Treasurer and Chief Senior Partner, Harris
Investment
Operating Officer Management.
Blanche Hurt Secretary Director of Harris Trust & Savings
Bank Trust and Investment Compliance Office. Formerly, Corporate
Fiduciary Officer of Harris Trust & Savings Bank.
(c) Bancomer Asesora de Fondos, S.A. de C.V.
("Bancomer") is a wholly owned subsidiary of Casa de
Bolsa Bancomer, S.A. de C.V., a Mexican broker-dealer registered
with the Comision Nacional de Valores, the securities regulatory
body of Mexico. Bancomer's business is that of an investment
adviser to banks or thrift institutions, investment companies,
pension and profit sharing plans, trusts, estates, charitable
institutions, corporations or individuals with respect to
investments in Latin America. Bancomer serves as an investment
sub-adviser of the Hemisphere Free Trade Fund pursuant
to an Investment Advisory and Portfolio Management Services
Agreement with HIM.
To the knowledge of the Registrant, none of the
directors or executive officers of Bancomer, except those set
forth below, is or has been at anytime during the past two fiscal
years engaged in any other business, profession, vocation or
employment of a substantial nature with respect to publicly
traded companies for their own account or in the capacity of
director, officer, employees, partner or trustee.
Position(s) Principal Business(es) During
Name with Bancomer the Last Two Fiscal Years
Emilio Illanes Director and Director of Mutual
Funds Division,
President Grupo Financiero Bancomer.
Formerly, Director General of
the Mexican Broker Dealers
Association.
Enrique Garduno Director Senior Vice President of
International Funds, Casa de
Bolsa Bancomer, S.A. de C.V.
Formerly, Senior Vice President
of Mutual Funds Division,
Bancomer, S.A.
Ruben Marquez Director Vice President of Development and
Analytical Support for Investment
Strategies, Casa de Bolsa Bancomer
S.A. de C.V. Formerly, Senior
Analyst of Economics Division,
Grupo Financiero Bancomer.
Miguel Angel Director DirectorDirector General of Casa de
Noriega Bolsa Bancomer, S.A. de C.V.
Formerly, Managing Director of
Investment Banking, Bankers Trust
Company.
Mario Osorio Director and Chief Chief
Administrative Officer, Casa
Administrative de Bolsa Bancomer,
Officer S.A. de C.V. Formerly,
Senior Vice
President Casa de Bolsa
Bancomer, S.A. de C. V.
(d) Bank of Montreal Investment Counsel Limited
("BOMIC"), a subsidiary of Bank of Montreal, serves as an
investment sub-adviser of the NAFTA Advantage Fund
pursuant to an Investment Advisory and Portfolio Management
Services Agreement with HIM. BOMIC's business is that of a
Canadian corporation, managing $9.2 billion (Canadian) on behalf
of institutional clients.
To the knowledge of the Registrant, none of the
directors or executive officers of BOMIC, except those set forth
below, is or has been at anytime during the past two fiscal years
engaged in any other business, profession, vocation or employment
of a substantial nature with respect to publicly traded companies
for their own account or in the capacity of director, officer,
employees, partner or trustee.
Position(s) Principal Business(es) During
Name with BOMIC the Last Two Fiscal Years
A. Donald Mutch Director and Chairman Senior Vice
President, Asset Management
of the Board Services of the Bank of Montreal
and
President of the Bank of
Montreal Investment Management
Limited
Barbara G. Stymiest Director Senior Vice President and
Chief Financial
Officer of Nesbitt Thomson Inc.
Brian J. Steck Director Vice President of Investment
Banking of
the Bank of Montreal and President
and Chief Executive Officer of
Nesbitt Thomson Inc.
Philip Heitner Director and President of
the Bank of
President Montreal Investment Counsel Limited
Aubrey W. Baillie Director President and Chief Operating
Officer of
Nesbitt Thomson Inc.
Terry A. Jackson Director Vice Chairman of Nesbitt
Thomson Inc.
Item 29. Principal Underwriter.
(a) In addition to HT Insight Funds Inc., Funds
Distributor, Inc. ("Funds Distributor") currently acts as
distributor for BEA Investment Funds, Inc., BJB Investment
Funds, Foreign Investment Fund, Inc., Fremont Mutual Funds,
Harris Insight Funds Trust, The Munder Funds Trust, The
Munder Funds, Inc., PanAgora Funds, Sierra Trust Funds, St.
Clair Money Market Fund, Skyline Funds and Waterhouse Investors
Cash Managers Fund. Funds Distributor is registered with
the Securities and Exchange Commission as a broker-dealer and is
a member of the National Association of Securities Dealers. Funds
Distributor is an indirect wholly-owned subsidiary of
Boston Institutional Group, Inc., a holding company all of
whose outstanding shares are owned by key employees.
(b) The information required by this Item 29 (b) with
respect to each director, officer, or partner of Funds
Distributor is incorporated by reference to Schedule A of Form BD
filed by Funds Distributor with the Securities and Exchange
Commission pursuant to the Securities Act of 1934 (File No. 8-
20518).
(c) Not applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to
be maintained by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained at one or more of the
following offices: HT Insight Funds, Inc., d/b/a Harris Insight
Funds, One Exchange Place, Boston, Massachusetts 02109; PNC Bank,
N.A., Broad and Chestnut Streets, Philadelphia, Pennsylvania
19107; PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware
19809; First Data Investor Services Group, Inc., One
Exchange Place, Boston, Massachusetts 02109; or Harris Trust &
Savings Bank, 111 West Monroe Street, Chicago, Illinois 60690.
Item 31. Management Services.
Other than as set forth under the captions
"Management," in the Prospectuses constituting Part A of this
Post-Effective Amendment to the Registration Statement and
"Management" in the Statement of Additional Information
constituting Part B of this Registration Statement, Registrant is
not a party to any management-related service contracts.
Item 32. Undertakings.
(a) Registrant undertakes to call a meeting for the
purpose of voting upon the question or removal of a trustee or
trustees when requested in writing to do so by the holders of at
least 10% of a Fund's outstanding shares of beneficial interest
and in connection with such meeting to comply with the provisions
of Section 16(c) of the Investment Company Act of 1940, as
amended, relating to shareholder communications.
(b) Registrant undertakes to file a Post-Effective
Amendment relating to each of the Harris Insight Intermediate
Municipal Income Fund, the Harris Insight Prime Reserve Fund and
the Harris Insight Hemisphere Free Trade Fund (the "Funds"),
using reasonably current financial statements which need not be
certified, within four to six months from the date each of the
Funds commences investment operations.
(c) The Registrant will 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended,
and the Investment Company Act of 1940, as amended, the Registrant
has duly
caused this Post-Effective Amendment No. __ to the Registration
Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in
the City of
Boston and Commonwealth of Massachusetts on the ___ day of
December, 1995.
HT Insight Funds, Inc. d/b/a
HARRIS INSIGHT FUNDS
By:
Patricia L. Bickimer, President
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Post-Effective Amendment No. ___ to the Registration Statement ]
has been
signed below by the following persons in the capacities and on the
date indicated:
Signature Title Date
President & Chief
Patricia L. Bickimer Executive Officer
Director & Chairman
C. Gary Gerst of the Board
Director
Edgar R. Fiedler
_______________________________________ Director
John W. McCarter, Jr.
Director
Ernest M. Roth
Treasurer (Principal
Richard H. Rose Financial Officer)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended,
and the Investment Company Act of 1940, as amended, the Registrant
has duly
caused this Post-Effective Amendment No. 23 to the Registration
Statement to be
signed on its behalf by the undersigned, thereto duly authorized,
in the City of
Boston and Commonwealth of Massachusetts on the 11th day of
December,
1995.
HT Insight Funds, Inc. d/b/a
HARRIS INSIGHT FUNDS
By: /s/ Patricia L. Bickimer
Patricia L. Bickimer, President
Pursuant to the requirements of the Securities Act of 1933,
as amended,
this Post-Effective Amendment No. 23 to the Registration Statement
has been
signed below by the following persons in the capacities and on the
date indicated:
Signature Title Date
/s/ Patricia L. Bickimer President & Chief
12/11/95
Executive Officer
/s/ C. Gary Gerst Chairman of the Board
12/11/95
C. Gary Gerst & Director
/s/ Edgar R. Fiedler Director 12/11/95
Edgar R. Fiedler
/s/ John W. McCarter, Jr. Director 12/11/95
John W. McCarter, Jr.
/s/ Ernest M. Roth Director 12/11/95
Ernest M. Roth
/s/ Richard H. Rose Treasurer (Principal
12/11/95
Richard H. Rose Financial Officer)
EXHIBIT INDEX
Exhibit Number Description
Exhibit 11 Consent of Price Waterhouse LLP
Exhibit 17 Financial Data Schedule
Exhibit 18 Form of Multi-Class Plan
bankgrp\harris\partc\exhib895.doc
27
Consent of Independent Accountants
We hereby consent to the use in the Statements of Additional
Information constituting
part of this Post-Effective Amendment No. 23 to the registration
statement on Form
N-1A of our report dated February 6, 1995, relating to the financial
statements and
financial highlights of the Harris Insight Funds appearing in the
December 31, 1994
Annual Report to Shareholders, which appears in such Statements
of Additional
Information. We also consent to the references to us under the
headings "Independent
Accountants" and "Experts" in the Statements of Additional
Information and to the
reference to us under the heading "Financial Highlights" in
the Prospectuses.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
December 6, 1995
HT INSIGHT FUNDS, INC.
D/B/A HARRIS INSIGHT FUNDS
Multi-Class Plan
Introduction
The purpose of this Plan is to specify the attributes
of the classes of shares offered by HT Insight Funds, Inc.
d/b/a Harris Insight Funds (the "Company"), including the
sales charges, expense allocations, conversion features and
exchange features of each class, as required by Rule 18f-3
under the Investment Company Act of 1940, as amended (the
"1940 Act"). In general, shares of each class will have the
same rights and obligations except for one or more expense
variables (which will result in different yields, dividends
and, in the case of the Company's non-money market
portfolios, net asset values for the different classes),
certain related voting and other rights, exchange
privileges, conversion rights, class designation and sales
loads assessed due to differing distribution methods.
Features of the Classes
Shares of each class of a fund of the Company shall
represent an equal pro rata interest in such fund, and
generally, shall have identical voting, dividend,
liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications, designations and
terms and conditions, except that: (a) each class shall have
a different designation; (b) each class may have a different
sales charge structure; (c) each class of shares shall bear
any class expenses; (d) each class shall have exclusive
voting rights on any matter submitted to shareholders that
relates solely to its arrangement and each class shall have
separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from
the interests of any other class; and (e) each class may
have different exchange and/or conversion features.
Allocation of Expenses
Pursuant to Rule 18f-3 under the 1940 Act, the Company
shall allocate to each class of shares in a fund of the
Company (i) any fees and expenses incurred by the Company in
connection with the distribution of such class of shares
under a distribution plan adopted for such class of shares
pursuant to Rule 12b-1, and (ii) any fees and expenses
incurred by the Company under a shareholder servicing plan
in connection with the provision of shareholder services to
the holders of such class of shares. In addition, the
President and Chief Financial Officer of the Company shall
determine, subject to Board approval or ratification, which
of the following fees and expenses may be allocated to a
particular class of shares in a fund of the Company:
(i) transfer agent fees identified by the transfer
agent as being attributable to such class of shares;
(ii) printing and postage expense related to
preparing and distributing materials such as shareholder
reports, prospectuses, reports, and proxies to current
shareholders of such class of shares or to regulatory
agencies with respect to such class of shares;
(iii) blue sky registration or qualification fees
incurred by such class of shares;
(iv) Securities and Exchange Commission registration
fees incurred by such class of shares;
(v) the expense of administrative personnel and
services (including, but not limited to, those of a
portfolio accountant, custodian or dividend paying agent
charged with calculating net asset values or determining or
paying dividends) as required to support the shareholders of
such class of shares;
(vi) litigation or other legal expenses relating
solely to such class of shares;
(vii) fees of the Company's Directors incurred as a
result of issues relating to such class of shares; and
(viii) independent accountants' fees relating
solely to such class of shares.
Any changes to the determination of class expenses
allocated to a particular class of shares will be approved
by a vote of the Directors of the Company, including a
majority of the Directors who are not "interested persons"
of the Company as defined under the 1940 Act.
For purposes of this Plan, a "Daily Dividend
Portfolio" shall be a portfolio which declares distributions
of net investment income daily and/or maintains the same net
asset value per share in each class. Income, realized and
unrealized capital gains and losses, and any expenses of a
non-Daily Dividend Portfolio of the Company not allocated to
a particular class of the fund pursuant to this Plan shall
be allocated to each class of the fund on the basis of the
net asset value of that class in relation to the net asset
value of the fund. Income, realized and unrealized capital
gains and losses, and any expenses of a Daily Dividend
Portfolio, including a money market fund, of the Company not
allocated to a particular class of the fund pursuant to this
Plan shall be allocated to each class of the fund on the
basis of the relative net assets (settled shares), as
defined in Rule 18f-3, of that class in relation to the net
assets of the fund.
Class A Shares
Class A Shares of a fund are offered at net asset
value plus, for non-money market funds, an initial sales
charge as set forth in the then-current prospectus of a
fund. The initial sales charge may be waived or reduced on
certain types of purchases as set forth in a fund's then-
current prospectus. Class A Shares of a non-money market
fund of the Company may be exchanged for Class A Shares of
another non-money market fund of the Company or of the
Harris Insight Funds Trust (the "Trust") and Class A Shares
of a money market fund of the Company may be exchanged for a
money market fund of the Company or the Trust without the
imposition of any sales charge.
Class A Shares of the money market funds pay Rule 12b-
1 fees of up to 0.35% (annualized) of the average daily net
assets of a fund's Class A Shares. Class A Shares of the
non-money market funds of the Company pay Rule 12b-1 fees of
up to 0.25% (annualized) of the average daily net assets of
a fund's Class A Shares. Distribution and support services
provided by brokers, dealers and other institutions may
include forwarding sales literature and advertising
materials provided by the Company's distributor; processing
purchase, exchange and redemption requests from customers
placing orders with the Company's transfer agent; processing
dividend and distribution payments from the funds of the
Company on behalf of customers; providing information
periodically to customers showing their positions in Class A
Shares; providing sub-accounting with respect to Class A
Shares beneficially owned by customers or the information
necessary for sub-accounting; responding to inquiries from
customers concerning their investment in Class A Shares;
arranging for bank wires; and providing such other similar
services as may reasonably be requested.
Class B Shares
Class B Shares of the money market funds are offered
at net asset value. Class B Shares of a money market fund
may be exchanged for Class B Shares of another money market
fund of the Company without the imposition of a sales
charge.
Class B Shares of the money market funds pay Rule 12b-
1 fees of up to 0.25% (annualized) of the average daily net
assets of a fund's Class B Shares. Distribution and support
services provided by brokers, dealers and other institutions
may include forwarding sales literature and advertising
materials provided by the Company's distributor; processing
purchase, exchange and redemption requests from customers
placing orders with the Company's transfer agent; processing
dividend and distribution payments from the funds of the
Company on behalf of customers; providing information
periodically to customers showing their positions in Class B
Shares; providing sub-accounting with respect to Class B
Shares beneficially owned by customers or the information
necessary for sub-accounting; responding to inquiries from
customers concerning their investment in Class B Shares;
arranging for bank wires; and providing such other similar
services as may reasonably be requested.
Institutional Shares
Institutional Shares of a fund are offered at net
asset value. Institutional Shares of a fund may be
exchanged for Institutional Shares of another fund of the
Company or of the Trust without the imposition of a sales
charge. Institutional Shares pay no Rule 12b-1 fees or
service fees.
Voting Rights
Each class shall have exclusive voting rights on any
matter submitted to shareholders that relates solely to its
arrangement. Each class shall have separate voting rights
on any matter submitted to shareholders in which the
interests of one class differ from the interests of any
other class.
Board Review
The Board of Directors of the Company shall review
this Plan as frequently as they deem necessary. Prior to
any material amendment(s) to this Plan, the Company's Board
of Directors, including a majority of the Directors who are
not interested persons of the Company shall find this Plan,
as proposed to be amended (including any proposed amendments
to the method of allocating class and/or fund expenses), is
in the best interest of each class of shares of the Company
individually and the Company as a whole. In considering
whether to approve any proposed amendment(s) to the Plan,
the Directors of the Company shall request and evaluate such
information as they consider reasonably necessary to
evaluate the proposed amendment(s) to the Plan.
1
Harris/misc/mltipln.doc
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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17
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57,18
1.76
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312
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> HT INSIGHT FUNDS, INC., GOVERNMENT ASSETS FUND-CLASSC
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24,73
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6,412
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0,135
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1,204
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1,161
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39
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0
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00,55
8.93
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82,63
1,602
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.40
<NET-CHANGE-IN-ASSETS>
100,3
20,76
0.54
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<ACCUMULATED-GAINS-PRIOR>
0
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273,2
67.96
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0
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1,576
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17
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24,66
8,708
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1.00
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> HT INSIGHT FUNDS, INC., CASH MANAGEMENT FUND-CLASSA
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66,86
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80,61
9.29
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32,06
9,074
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<EXPENSES-NET>
2,752
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00
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29,31
6,238
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11,70
5.56
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0
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0
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8,724
.35
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0
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,047,
568.7
4
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1,979
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0
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5,162
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51
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70,49
1,564
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0
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561,7
40.63
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3,171
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38
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59,48
1.88
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> HT INSIGHT FUNDS, INC., CASH MANAGEMENT FUND, CLASSC
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9,798
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0
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66,75
5.24
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9,074
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2,752
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00
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29,31
6,238
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11,70
5.56
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0
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0
<EQUALIZATION>
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36
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0
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524,9
96,75
0.06
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362,7
20,41
3.28
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<NET-CHANGE-IN-ASSETS>
70,49
1,564
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0
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0
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561,7
40.63
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0
<GROSS-EXPENSE>
3,171
,069.
38
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110,4
32,74
8.05
<PER-SHARE-NAV-BEGIN>
1.00
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3
<PER-SHARE-GAIN-APPREC>
0
<PER-SHARE-DIVIDEND>
0
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(.047
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<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
1.00
<EXPENSE-RATIO>
.30%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<SERIES>
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<NAME> HT INSIGHT FUNDS, INC., TAX-FREE MONEY MARKET FUND-
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407,6
74,30
3.92
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74,30
3.92
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109,7
32.53
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44,35
1.52
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<SENIOR-LONG-TERM-DEBT>
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1,425
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157,0
05,69
1.05
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157,0
05,69
1.05
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123,5
04,97
4.22
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<ACCUMULATED-NET-GAINS>
0
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
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157,0
00,26
8.37
<DIVIDEND-INCOME>
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2,152
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<EXPENSES-NET>
1,364
,200.
07
<NET-INVESTMENT-INCOME>
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<REALIZED-GAINS-CURRENT>
0
<APPREC-INCREASE-CURRENT>
0
<NET-CHANGE-FROM-OPS>
0
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
4,078
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48
<DISTRIBUTIONS-OF-GAINS>
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<DISTRIBUTIONS-OTHER>
0
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297,9
23,90
4.12
<NUMBER-OF-SHARES-REDEEMED>
267,1
22,37
0.24
<SHARES-REINVESTED>
2,699
,182.
95
<NET-CHANGE-IN-ASSETS>
48,11
8,360
.32
<ACCUMULATED-NII-PRIOR>
624
<ACCUMULATED-GAINS-PRIOR>
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2)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
379,5
68.39
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
1,489
,896.
74
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151,1
56,73
7.64
<PER-SHARE-NAV-BEGIN>
1.00
<PER-SHARE-NII>
.0270
97
<PER-SHARE-GAIN-APPREC>
0
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
(.027
097)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
1.00
<EXPENSE-RATIO>
.56%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
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<NAME> HT INSIGHT FUNDS, INC., TAX-FREE MONEY MARKET FUND-
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407,6
74,30
3.92
<INVESTMENTS-AT-VALUE>
407,6
74,30
3.92
<RECEIVABLES>
236,3
15.07
<ASSETS-OTHER>
109,7
32.53
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
410,1
44,35
1.52
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
1,425
,422.
74
<TOTAL-LIABILITIES>
1,425
,422.
74
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
251,7
19,41
3.54
<SHARES-COMMON-STOCK>
251,7
19,41
3.54
<SHARES-COMMON-PRIOR>
237,1
00,80
2.05
<ACCUMULATED-NII-CURRENT>
0
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
0
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
0
<NET-ASSETS>
251,7
18,66
0.41
<DIVIDEND-INCOME>
0
<INTEREST-INCOME>
13,42
2,152
.14
<OTHER-INCOME>
0
<EXPENSES-NET>
1,364
,200.
07
<NET-INVESTMENT-INCOME>
(968)
<REALIZED-GAINS-CURRENT>
0
<APPREC-INCREASE-CURRENT>
0
<NET-CHANGE-FROM-OPS>
0
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
7,979
,706.
59
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
468,2
99,54
2.54
<NUMBER-OF-SHARES-REDEEMED>
453,6
80,93
1.29
<SHARES-REINVESTED>
.24
<NET-CHANGE-IN-ASSETS>
48,11
8,360
.32
<ACCUMULATED-NII-PRIOR>
624
<ACCUMULATED-GAINS-PRIOR>
(5,83
2)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
379,5
68.39
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
1,489
,896.
74
<AVERAGE-NET-ASSETS>
272,7
32,40
1.85
<PER-SHARE-NAV-BEGIN>
1.00
<PER-SHARE-NII>
.0294
08
<PER-SHARE-GAIN-APPREC>
0
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
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408)
<RETURNS-OF-CAPITAL>
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<PER-SHARE-NAV-END>
1.00
<EXPENSE-RATIO>
.29%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER> 4
<NAME> HT INSIGHT FUNDS, INC., CONVERTIBLE FUND
<S> <C>
<PERIOD-TYPE>
10-
MOS
<FISCAL-YEAR-END>
DEC-
31-
1995
<PERIOD-END>
10-
31-
1995
<INVESTMENTS-AT-COST>
1,083
,377.
20
<INVESTMENTS-AT-VALUE>
1,151
,015.
74
<RECEIVABLES>
12,21
8.32
<ASSETS-OTHER>
1,669
.01
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
1,164
,903.
07
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
13,10
8.49
<TOTAL-LIABILITIES>
13,10
8.49
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
3,758
,781.
02
<SHARES-COMMON-STOCK>
120,9
64.40
<SHARES-COMMON-PRIOR>
161,2
35.93
8
<ACCUMULATED-NII-CURRENT>
18,40
8.90
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(2,69
3,033
.88)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
67,63
8.54
<NET-ASSETS>
1,151
,794.
58
<DIVIDEND-INCOME>
18,24
6.78
<INTEREST-INCOME>
54,94
1.05
<OTHER-INCOME>
0
<EXPENSES-NET>
8,850
.88
<NET-INVESTMENT-INCOME>
64,33
6.95
<REALIZED-GAINS-CURRENT>
(892.
76)
<APPREC-INCREASE-CURRENT>
139,8
90.54
<NET-CHANGE-FROM-OPS>
203,3
34.73
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(84,3
33.11
)
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
8,965
.048
<NUMBER-OF-SHARES-REDEEMED>
53,33
7.328
<SHARES-REINVESTED>
4,100
.702
<NET-CHANGE-IN-ASSETS>
(264,
170.4
2)
<ACCUMULATED-NII-PRIOR>
38,40
5.06
<ACCUMULATED-GAINS-PRIOR>
(2,69
2,141
.12)
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
7,744
.51
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
27,59
7.48
<AVERAGE-NET-ASSETS>
1,328
,358.
93
<PER-SHARE-NAV-BEGIN>
8.78
<PER-SHARE-NII>
.779
<PER-SHARE-GAIN-APPREC>
.588
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
(.627
)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
9.52
<EXPENSE-RATIO>
.80%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER> 5
<NAME> HT INSIGHT FUNDS, INC., EQUITY FUND
<S> <C>
<PERIOD-TYPE>
10-
MOS
<FISCAL-YEAR-END>
DEC-
31-
1995
<PERIOD-END>
10-
31-
1995
<INVESTMENTS-AT-COST>
47,88
9,939
.69
<INVESTMENTS-AT-VALUE>
59,15
3,589
.25
<RECEIVABLES>
138,8
14.02
<ASSETS-OTHER>
3,359
.79
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
59,29
5,763
.06
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
55,94
2.44
<TOTAL-LIABILITIES>
55,94
2.44
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
44,06
4,105
.93
<SHARES-COMMON-STOCK>
4,076
,607.
285
<SHARES-COMMON-PRIOR>
3,451
,656.
989
<ACCUMULATED-NII-CURRENT>
70,43
8.47
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
3,841
,626.
56
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
11,26
3,649
.66
<NET-ASSETS>
59,23
9,820
.62
<DIVIDEND-INCOME>
1,129
,951.
31
<INTEREST-INCOME>
0
<OTHER-INCOME>
5,089
.95
<EXPENSES-NET>
397,2
25.04
<NET-INVESTMENT-INCOME>
737,8
16.22
<REALIZED-GAINS-CURRENT>
3,832
,241.
61
<APPREC-INCREASE-CURRENT>
8,588
,771.
31
<NET-CHANGE-FROM-OPS>
13,15
8,829
.24
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(667,
603.2
3)
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
2,087
,612.
052
<NUMBER-OF-SHARES-REDEEMED>
1,478
,808.
55
<SHARES-REINVESTED>
16,14
6.794
<NET-CHANGE-IN-ASSETS>
20,31
9,774
.62
<ACCUMULATED-NII-PRIOR>
225.4
8
<ACCUMULATED-GAINS-PRIOR>
9,384
.95
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
290,2
72.54
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
401,0
51.00
<AVERAGE-NET-ASSETS>
49,88
4,256
.10
<PER-SHARE-NAV-BEGIN>
11.28
<PER-SHARE-NII>
.190
<PER-SHARE-GAIN-APPREC>
3.233
<PER-SHARE-DIVIDEND>
(.173
)
<PER-SHARE-DISTRIBUTIONS>
0
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
14.53
<EXPENSE-RATIO>
.96%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE>
0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE>6
<SERIES>
<NUMBER> 6
<NAME> HT INSIGHT FUNDS, INC., MANAGED FIXED INCOME FUND
<S> <C>
<PERIOD-TYPE>
10-
MOS
<FISCAL-YEAR-END>
DEC-
31-
1995
<PERIOD-END>
10-
31-
1995
<INVESTMENTS-AT-COST>
53,58
7,371
.47
<INVESTMENTS-AT-VALUE>
54,37
1,228
.21
<RECEIVABLES>
692,4
75.98
<ASSETS-OTHER>
497,8
89.04
<OTHER-ITEMS-ASSETS>
0
<TOTAL-ASSETS>
55,56
1,593
.23
<PAYABLE-FOR-SECURITIES>
0
<SENIOR-LONG-TERM-DEBT>
0
<OTHER-ITEMS-LIABILITIES>
5,276
,377.
33
<TOTAL-LIABILITIES>
5,276
,377.
33
<SENIOR-EQUITY>
0
<PAID-IN-CAPITAL-COMMON>
51,68
5,772
.55
<SHARES-COMMON-STOCK>
4,899
,224.
894
<SHARES-COMMON-PRIOR>
4,587
,854.
89
<ACCUMULATED-NII-CURRENT>
133,7
69.77
<OVERDISTRIBUTION-NII>
0
<ACCUMULATED-NET-GAINS>
(2,31
8,183
.16)
<OVERDISTRIBUTION-GAINS>
0
<ACCUM-APPREC-OR-DEPREC>
783,8
56.74
<NET-ASSETS>
50,28
5,215
.90
<DIVIDEND-INCOME>
0
<INTEREST-INCOME>
2,507
,644.
50
<OTHER-INCOME>
0
<EXPENSES-NET>
228,8
34.62
<NET-INVESTMENT-INCOME>
2,278
,809.
88
<REALIZED-GAINS-CURRENT>
644,2
22.38
<APPREC-INCREASE-CURRENT>
1,949
,960.
74
<NET-CHANGE-FROM-OPS>
4,872
,993.
00
<EQUALIZATION>
0
<DISTRIBUTIONS-OF-INCOME>
(2,14
6,640
.75)
<DISTRIBUTIONS-OF-GAINS>
0
<DISTRIBUTIONS-OTHER>
0
<NUMBER-OF-SHARES-SOLD>
1,205
,987.
203
<NUMBER-OF-SHARES-REDEEMED>
1,000
,520.
082
<SHARES-REINVESTED>
105,9
02.88
3
<NET-CHANGE-IN-ASSETS>
5,952
,688.
90
<ACCUMULATED-NII-PRIOR>
1,600
.64
<ACCUMULATED-GAINS-PRIOR>
0
<OVERDISTRIB-NII-PRIOR>
0
<OVERDIST-NET-GAINS-PRIOR>
0
<GROSS-ADVISORY-FEES>
266,9
73.54
<INTEREST-EXPENSE>
0
<GROSS-EXPENSE>
369,8
56.55
<AVERAGE-NET-ASSETS>
45,79
2,002
.95
<PER-SHARE-NAV-BEGIN>
9.66
<PER-SHARE-NII>
.496
<PER-SHARE-GAIN-APPREC>
.573
<PER-SHARE-DIVIDEND>
0
<PER-SHARE-DISTRIBUTIONS>
(.469
)
<RETURNS-OF-CAPITAL>
0
<PER-SHARE-NAV-END>
10.26
<EXPENSE-RATIO>
.60%
<AVG-DEBT-OUTSTANDING>
0
<AVG-DEBT-PER-SHARE
0
SHARED\BANKGRP\HARRIS\MISC\FDS1295E.DOC
</TABLE>
