HT INSIGHT FUNDS INC, 485BPOS, 1998-04-30

HT INSIGHT FUNDS INC
485BPOS, 1998-04-30

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<PAGE> 1

As filed electronically with the Securities and Exchange Commission
on April 30, 1998

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. 30

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 31

HT INSIGHT FUNDS, INC. d/b/a HARRIS INSIGHT FUNDS
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

60 State Street, Suite 1300, Boston, MA 02109
---------------------------------------------
(Address of Principal Executive Offices including Zip Code)

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

Registrant's Telephone Number, including Area Code: (617) 557-0700

Name and Address of Agent for Service: Copies to:
Christopher J. Kelley, Esq. Cameron S. Avery, Esq.
HT Insight Funds, Inc. Bell, Boyd & Lloyd
d/b/a Harris Insight Funds Three First National Plaza
60 State Street 70 West Madison Street
Suite 1300 Chicago, IL 60602-4207
Boston, MA 02109

It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(1)
---
75 days after filing pursuant to paragraph (a)(2)
---
X on May 1, 1998 pursuant to paragraph (b)
---
on __________ pursuant to paragraph (a)(1)
---
on __________ pursuant to paragraph (a)(2) of rule 485
---

If appropriate, check the following box:
___ This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

<PAGE> 2

HT INSIGHT FUNDS, INC.
Registration Statement on Form N-1A

CROSS REFERENCE SHEET
Pursuant to Rule 495 (b)
under the Securities Act of 1933

(Prospectuses offering Class A and Institutional Shares of
HT Insight Funds, Inc.)

---------

PART A

N-1A Item No. Location
- ------------- --------
<S> <C>
Item 1. Cover Page Cover Page

Item 2. Synopsis Expense Summary; Financial Highlights

Item 3. Condensed Financial Information Financial Highlights; General Information - How
Performance is Reported

Item 4. General Description of Registrant Cover Page; Fund Summary; Investment Objectives and
Policies; Additional Investment Information; General
Information - More Information About the Trust and
the Company

Item 5. Management of the Fund Management

Item 5A. Management's Discussion of Fund Not Applicable
Performance

Item 6. Capital Stock and Other Securities Cover Page; Shareholder Services and Policies; How
the Funds Make Distributions to Shareholders; Tax
Information; General Information - More Information
About the Trust and the Company

Item 7. Purchase of Securities Being Offered Management; How to Buy Shares; How to Sell Shares;
Shareholder Services and Policies; General
Information - How Share Value is Determined

Item 8. Redemption or Repurchase How to Buy Shares; How to Sell Shares; Shareholder
Services and Policies

Item 9. Pending Legal Proceedings Not Applicable
</TABLE>

<PAGE> 3

(SAI offering Class A and Institutional Shares of HT
Insight Funds, Inc.)

PART B

N-1A Item No. Location
- ------------- --------
<S> <C>
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 Management
Securities

Item 16. Investment Advisory and Other Services Management; Service Plans; Custodian; Independent
Accountants

Item 17. Brokerage Allocation and Other Practices Portfolio Transactions

Item 18. Capital Stock and Other Securities Capital Stock and Beneficial Interest

Item 19. Purchase, Redemption and Pricing of Determination of Net Asset Value; Financial
Securities Being Offered 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
</TABLE>

<PAGE> 4

Harris
Insight(R) Funds

MAY 1, 1998 PROSPECTUS

Prospectus begins on page 1.

Class A Shares
Harris Insight Equity Funds
Harris Insight Fixed Income Funds
Harris Insight Money Market Funds

[HARRIS INSIGHT FUNDS LOGO]
Powerful Insight. Solid Investments.(SM)

<PAGE> 5
Harris Insight(R) Funds
60 State Street, Suite 1300 * Boston, Massachusetts 02109 * 800.982.8782

CLASS A SHARES

Harris Insight Emerging Markets Fund
Harris Insight International Fund
Harris Insight Small-Cap Opportunity Fund
Harris Insight Small-Cap Value Fund
Harris Insight Growth Fund
Harris Insight Equity Fund
Harris Insight Equity Income Fund
Harris Insight Index Fund
Harris Insight Balanced Fund
Harris Insight Convertible Securities Fund
Harris Insight Tax-Exempt Bond Fund
Harris Insight Bond Fund
Harris Insight Intermediate Tax-Exempt Bond Fund
Harris Insight Short/Intermediate Bond Fund
Harris Insight Intermediate Government Bond Fund
Harris Insight Tax-Exempt Money Market Fund
Harris Insight Money Market Fund
Harris Insight Government Money Market Fund
<PAGE> 6

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

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

To learn more about the Funds and their investments, you may obtain a copy of
the Harris Insight Funds' most recent financial report and portfolio listing or
Statement of Additional Information dated May 1, 1998 (the "SAI") simply by
calling (800) 982-8782. The SAI has been filed with the Securities and Exchange
Commission (the "SEC") and (as supplemented from time to time) is incorporated
by reference into this Prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI and other information regarding the
Funds.

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

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

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

May 1, 1998

1
<PAGE> 7
Table of Contents

FUND SUMMARY PAGE 4

EXPENSE SUMMARY PAGE 10

FINANCIAL HIGHLIGHTS PAGE 14

INVESTMENT OBJECTIVES AND POLICIES PAGE 30
Equity Funds PAGE 30
Fixed Income Funds PAGE 36
Money Market Funds PAGE 41

ADDITIONAL INVESTMENT INFORMATION PAGE 45
Additional Investment Policies PAGE 45
Risk Considerations PAGE 50

MANAGEMENT PAGE 56

HOW TO BUY SHARES PAGE 65

HOW TO SELL SHARES PAGE 68

SHAREHOLDER SERVICES AND POLICIES PAGE 70

HOW THE FUNDS MAKE DISTRIBUTIONS
TO SHAREHOLDERS; TAX INFORMATION PAGE 73

GENERAL INFORMATION PAGE 75
Banking Law Matters PAGE 75
How Share Value Is Determined PAGE 75
How Performance Is Reported PAGE 76
More Information About the Trust and the Company PAGE 77

APPENDIX A: PERMITTED INVESTMENTS PAGE 79

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the SAI and/or in
the Funds' official sales literature in connection with the offering of the
Funds' shares and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Trust or the Company.
This Prospectus does not constitute an offer in any jurisdiction in which, or to
any person to whom, such offer may not lawfully be made.
<PAGE> 8
FUND SUMMARY

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

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

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

EQUITY FUNDS

EMERGING MARKETS FUND seeks to provide capital appreciation by investing in
equity securities of companies in emerging markets that the investment adviser
believes to be undervalued.

INTERNATIONAL FUND seeks to provide international diversification and capital
appreciation by investing primarily in the equity securities of foreign issuers
that the investment adviser believes are undervalued. Current income is a
secondary objective.

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

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

GROWTH FUND seeks to provide capital appreciation by investing primarily in
common stocks and convertible securities of companies that the investment
adviser believes have above-average growth potential.

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

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

4
<PAGE> 9
INDEX FUND seeks to provide the return and risk characteristics of the Standard
& Poor's 500 Index, by investing primarily in securities of companies that
comprise that index.

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

FIXED INCOME FUNDS

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

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

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

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

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

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

MONEY MARKET FUNDS

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

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

5
<PAGE> 10
GOVERNMENT MONEY MARKET FUND seeks to provide investors with as high a level of
current income as is consistent with its investment policies, and with
preservation of capital and liquidity, by investing exclusively in short-term
U.S. Government securities and repurchase agreements backed by those securities.

WHO MANAGES EACH FUND'S INVESTMENTS?

Harris Trust and Savings Bank ("Harris Trust" or the "Adviser") serves as the
investment adviser for each Fund. Harris Trust and its predecessors have
provided investment management services to clients for over 100 years. In
addition to the services it performs for the Funds, Harris Trust provides
investment management services for pension, profit-sharing and personal
portfolios. As of December 31, 1997, assets under management totaled
approximately $16.4 billion.

Harris Investment Management, Inc. ("HIM" or the "Portfolio Management Agent")
provides daily portfolio management services for each of the Funds except for
the Tax-Exempt Money Market Fund. As of December 31, 1997, HIM had a staff of
60, including 33 professionals, providing investment expertise to the management
of the Harris Insight Funds and for pension, profit-sharing and institutional
portfolios. As of that date, assets under management were approximately $10.7
billion.

Subject to the general oversight of Harris Trust and HIM, Hansberger Global
Investors, Inc. ("Hansberger" or the "Investment Sub-Adviser") serves as
investment sub-adviser to the Emerging Markets Fund and the International Fund.
Each of Harris Trust, HIM and Hansberger is sometimes referred to as an
"investment adviser."

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

WHO SHOULD INVEST IN THE FUNDS?

The Equity Funds--the Emerging Markets Fund, the International Fund, the
Small-Cap Opportunity Fund, the Small-Cap Value Fund, the Growth Fund, the
Equity Fund, the Equity Income Fund, the Index Fund and the Balanced Fund--are
designed for long-term investors who can tolerate changes in the value of their
investments in return for the possibility of higher returns. The Fixed Income
Funds--the Convertible Securities Fund, the Tax-Exempt Bond Fund, the Bond Fund,
the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund and the
Intermediate Government Bond Fund--are designed for investors seeking some
degree of current income. The Money Market Funds--the Tax-Exempt Money

6
<PAGE> 11

Market Fund, the Money Market Fund and the Government Money Market Fund--are
designed for conservative investors seeking stability of principal, current
income at money market rates, and liquidity. The Tax-Exempt Bond Fund, the
Intermediate Tax-Exempt Bond Fund and the Tax-Exempt Money Market Fund are
specifically designed for those investors who seek income that is exempt from
Federal income tax.

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

WHAT ADVANTAGES DO THE FUNDS OFFER?

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

WHEN ARE DIVIDENDS PAID?

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

HOW ARE SHARES BOUGHT AND SOLD?

Class A Shares are offered through this Prospectus at a price equal to their net
asset value.

Shares may be bought or sold by mail, by bank wire or through your broker-dealer
or other financial institution. The minimum initial investment in Class A Shares
is $1,000. The minimum initial investment to open a retirement account is $250.
The minimum subsequent investment is $50. See HOW TO BUY SHARES and HOW TO SELL
SHARES.

7
<PAGE> 12
WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?

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

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

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

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

The policy of investing in smaller companies employed by the Small-Cap Value
Fund, the Small-Cap Opportunity Fund and the other Funds that invest in small
company securities entails certain risks in addition to those normally
associated with equity securities. Similarly, the International Fund's policy of
investing in foreign securities entails certain risks in addition to those
normally associated with equity securities. The Emerging Markets Fund's policy
of investing in securities of foreign issuers, particularly in countries with
smaller, emerging capital markets, involves certain risks not associated with
domestic investing, including fluctuations in foreign exchange rates, uncertain
political and economic developments, and the possible imposition of exchange

8
<PAGE> 13
controls or other foreign governmental laws or restrictions.

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

9
<PAGE> 14
EXPENSE SUMMARY

The following tables illustrate information concerning annual
fund operating expenses for Class A Shares of the Funds. Annual
operating expenses are factored into each Fund's share price and
are not charged directly to shareholder accounts.

Annual Operating Expenses
(as a percentage of average net assets after applicable fee waivers
and expense reimbursements)*
<TABLE>
<CAPTION>
INVESTMENT RULE
ADVISORY 12b-1
FEES FEES
<S> <C> <C>

EQUITY FUNDS
Emerging Markets Fund 0.91% None
International Fund 1.03 None
Small-Cap Opportunity Fund 0.99 None
Small-Cap Value Fund 0.73 None
Growth Fund 0.89 None
Equity Fund 0.70 None
Equity Income Fund 0.67 None
Index Fund 0.23 None
Balanced Fund 0.56 None

FIXED-INCOME FUNDS
Convertible Securities Fund 0.66 None
Tax-Exempt Bond Fund 0.60 None
Bond Fund 0.36 None
Intermediate Tax-Exempt Bond Fund 0.60 None
Short/Intermediate Bond Fund 0.41 None
Intermediate Government Bond Fund 0.24 None

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 0.11 0.04%
Money Market Fund 0.10 0.05
Government Money Market Fund 0.11 0.05
</TABLE>

10
<PAGE> 15
<TABLE>
<CAPTION>
SHAREHOLDER TOTAL
SERVICING OTHER OPERATING
FEES EXPENSES EXPENSES

<S> <C> <C> <C>
EQUITY FUNDS
Emerging Markets Fund 0.25% 0.84% 2.00%
International Fund 0.25 0.37 1.65
Small-Cap Opportunity Fund 0.25 0.21 1.45
Small-Cap Value Fund 0.25 0.26 1.24
Growth Fund 0.25 0.21 1.35
Equity Fund 0.25 0.18 1.13
Equity Income Fund 0.25 0.26 1.18
Index Fund 0.25 0.22 0.70
Balanced Fund 0.25 0.32 1.13

FIXED-INCOME FUNDS
Convertible Securities Fund 0.25 0.26 1.17
Tax-Exempt Bond Fund 0.25 0.20 1.05
Bond Fund 0.25 0.24 0.85
Intermediate Tax-Exempt Bond Fund 0.25 0.19 1.04
Short/Intermediate Bond Fund 0.25 0.19 0.85
Intermediate Government Bond Fund 0.25 0.26 0.75

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 0.25 0.14 0.54
Money Market Fund 0.25 0.11 0.51
Government Money Market Fund 0.25 0.12 0.53
</TABLE>

* The amounts for expenses are based on amounts incurred during the
Funds' most recent fiscal periods. Without fee waivers or expense
reimbursements, investment advisory fees and total operating expenses
would be 1.25% and 2.34% for the Emerging Markets Fund, 1.05% and 1.67%
for the International Fund, 1.00% and 1.46% for the Small-Cap
Opportunity Fund, 0.80% and 1.31% for the Small-Cap Value Fund, 0.90%
and 1.36% for the Growth Fund, 0.70% and 1.21% for the Equity Income
Fund, 0.25% and 0.72% for the Index Fund, 0.60% and 1.17% for the
Balanced Fund, 0.70% and 1.21% for the Convertible Securities Fund,
0.65% and 1.14% for the Bond Fund, 0.70% and 1.14% for the
Short/Intermediate Bond Fund and 0.65% and 1.16% for the Intermediate
Government Bond Fund; and Rule 12b-1 fees, other expenses and total
operating expenses would be 0.10%, 0.15% and 0.61% for the Tax-Exempt
Money Market Fund, 0.10%, 0.16% and 0.61% for the Money Market Fund,
and 0.10%, 0.17% and 0.63% for the Government Money Market Fund.

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

11
<PAGE> 16
EXAMPLE

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

ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>
EQUITY FUNDS
Emerging Markets Fund $20 $63 $108 $233
International Fund 17 52 90 195
Small-Cap Opportunity Fund 15 46 79 174
Small-Cap Value Fund 13 39 68 150
Growth Fund 14 43 74 162
Equity Fund 12 36 62 137
Equity Income Fund 12 37 65 143
Index Fund 7 22 39 87
Balanced Fund 12 36 62 137

FIXED-INCOME FUNDS
Convertible Securities Fund 12 37 64 142
Tax-Exempt Bond Fund 11 33 58 128
Bond Fund 9 27 47 105
Intermediate Tax-Exempt Bond Fund 11 33 58 128
Short/Intermediate Bond Fund 9 27 47 105
Intermediate Government Bond Fund 8 24 42 93

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 6 18 31 69
Money Market Fund 6 18 31 69
Government Money Market Fund 6 18 31 69
</TABLE>

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

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

12
<PAGE> 17
FINANCIAL HIGHLIGHTS

The financial highlights on the following pages
represent selected data for a single Class A Share of each Fund
outstanding for the periods shown. This information has been derived
from the financial statements audited by Price Waterhouse LLP,
independent accountants. The Funds' financial statements for the
year ended December 31, 1997, and independent accountants'
report thereon are included in the Funds' Annual Report and are
incorporated by reference into (are legally a part of) the Funds' SAI.
The financial highlights should be read in conjunction with the
financial statements. Further information about each Fund's
performance is contained in the Annual Report, which may be obtained
from the Harris Insight Funds without charge.

13
<PAGE> 18

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Emerging
Markets Fund International Fund
FOR THE PERIOD YEAR FOR THE PERIOD
10/21/97(5) TO ENDED 03/13/96(5) TO
12/31/97 12/31/97 12/31/96

<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.00 $ 15.46 $ 14.69
---------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.002 0.078 0.091
Net Realized and Unrealized Gain/(Loss)
on Investments (1.462) (0.876) 0.860
---------- -------- --------
Total from Investment Operations (1.460) (0.798) 0.951
---------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income 0.000 (0.069) (0.113)
Net Realized Gains 0.000 (1.263) (0.068)
---------- -------- --------
Total Distributions 0.000 (1.332) (0.181)
---------- -------- --------
Net Asset Value, End of Period $ 8.54 $ 13.33 $ 15.46
========== ======== ========
TOTAL RETURN (14.60)%(3) (5.21)% 6.48%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 96 1,265 597
Ratios of Expenses to Average
Net Assets(1) 2.00%(2) 1.65% 1.61%(2)
Ratio of Net Investment Income to
Average Net Assets 0.18%(2) 0.57% 0.35%(2)
Portfolio Turnover Rate 0.00% 93.33% 6.72%
Average Commission Rate(4) $ 0.003 $ 0.006 $ 0.020
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the period
ended December 31, 1997 for the Emerging Markets Fund would have been
2.34% (annualized), for the year ended December 31, 1997 and the period
ended December 31, 1996 for the International Fund would have been
1.67% and 1.63% (annualized), respectively, for the Small-Cap
Opportunity Fund would have been 1.46% and 1.47% (annualized),
respectively, for the period ended December 31, 1997 for the Small-Cap
Value Fund would have been 1.31% (annualized), and for the year ended
December 31, 1997 and the period ended December 31, 1996 for the Growth
Fund would have been 1.36% and 1.39% (annualized), respectively.

(2) Annualized.

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

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

(5) Date commenced operations.

14
<PAGE> 19

<TABLE>
<CAPTION>
Small-Cap Small-Cap
Opportunity Fund Value Fund Growth Fund
YEAR FOR THE PERIOD FOR THE PERIOD YEAR FOR THE PERIOD
ENDED 04/19/96(5) TO 07/10/97(5) TO ENDED 04/19/96(5) TO
12/31/97 12/31/96 12/31/97 12/31/97 12/31/96

<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.51 $ 14.25 $ 32.31 $ 18.69 $ 16.49
------- -------- --------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (0.003) 0.032 0.028 0.004 0.030
Net Realized and Unrealized Gain/(Loss)
on Investments 3.823 1.996 3.462 6.026 3.273
------- -------- --------- -------- --------
Total from Investment Operations 3.820 2.028 3.490 6.030 3.303
------- -------- --------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income 0.000 (0.050) (0.036) (0.004) (0.038)
Net Realized Gains (1.670) (0.718) (2.744) (2.046) (1.065)
------- -------- --------- -------- --------
Total Distributions (1.670) (0.768) (2.780) (2.050) (1.103)
------- -------- --------- -------- --------
Net Asset Value, End of Period $ 17.66 $ 15.51 $ 33.02 $ 22.67 $ 18.69
======= ======== ========= ======== ========
TOTAL RETURN 25.14% 14.29%(3) 10.95%(3) 32.54% 19.95%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 2,485 443 292 2,766 397
Ratios of Expenses to Average
Net Assets(1) 1.45% 1.45%(2) 1.24%(2) 1.35% 1.35%(2)
Ratio of Net Investment Income to
Average Net Assets (0.22)% 0.10%(2) 0.38%(2) (0.03)% 0.17%(2)
Portfolio Turnover Rate 39.63% 46.13% 91.66%(2) 37.02% 35.36%
Average Commission Rate(4) $ 0.054 $ 0.058 $ 0.055 $ 0.058 $ 0.058
</TABLE>

(2) Annualized.

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

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

(5) Date commenced operations.

15
<PAGE> 20

FINANCIAL HIGHLIGHTS CONT.

Equity
Fund
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.53 $ 13.99 $ 11.28 $ 12.86
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.174 0.451 0.229 0.263
Net Realized and Unrealized Gain/(Loss)
on Investments 5.190 2.926 3.827 (0.514)
-------- -------- -------- --------
Total from Investment Operations 5.364 3.377 4.056 (0.251)
-------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.175) (0.173) (0.232) (0.263)
Net Realized Gains (3.129) (1.664) (1.114) (1.066)
-------- -------- -------- --------
Total Distributions (3.304) (1.837) (1.346) (1.329)
-------- -------- -------- --------
Net Asset Value, End of Period $ 17.59 $ 15.53 $ 13.99 $ 11.28
======== ======== ======== ========

TOTAL RETURN 35.45% 24.15% 36.26% (2.05)%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 17,859 7,792 61,256 38,920
Ratios of Expenses to Average
Net Assets(1) 1.13% 0.94% 0.96% 0.90%
Ratio of Net Investment Income to
Average Net Assets 1.08% 1.47% 1.75% 1.94%
Portfolio Turnover Rate 81.48% 75.20% 75.93% 87.83%
Average Commission Rate(4) $ 0.054 $ 0.056 -- --
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years
ended December 31, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988 for the Equity Fund would have been
0.97%, 0.92%, 0.96%, 0.98%, 1.01%, 1.21%, 1.47% and 1.41% (annualized),
respectively.

(2) Annualized.

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

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

(5) Date commenced operations.

16
<PAGE> 21

Equity
Fund
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED ENDED 02/26/88(5)
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 TO 12/31/88
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.57 $ 12.08 $ 10.05 $ 11.22 $ 10.58 $ 10.00
-------- -------- -------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.197 0.267 0.282 0.323 0.347 0.265
Net Realized and Unrealized Gain/(Loss)
on Investments 1.904 0.703 2.418 (1.203) 2.573 0.555
-------- -------- -------- -------- --------- --------
Total from Investment Operations 2.101 0.970 2.700 (0.880) 2.920 0.820
-------- -------- -------- -------- --------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.204) (0.290) (0.280) (0.290) (0.450) (0.240)
Net Realized Gains (0.607) (1.190) (0.390) -- (1.830) --
-------- -------- -------- -------- --------- --------
Total Distributions (0.811) (1.480) (0.670) (0.290) (2.280) (0.240)
-------- -------- -------- -------- --------- --------
Net Asset Value, End of Period $ 12.86 $ 11.57 $ 12.08 $ 10.05 $ 11.22 $ 10.58
======== ======== ======== ======== ========= ========

TOTAL RETURN 18.23% 8.19% 27.29% (7.87)% 27.81% 8.23%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 47,241 31,809 34,150 24,649 15,885 24,524
Ratios of Expenses to Average
Net Assets(1) 0.93% 0.96% 0.98% 1.00% 1.00% 1.00%(2)
Ratio of Net Investment Income to
Average Net Assets 1.59% 2.16% 2.52% 3.29% 2.95% 3.03%(2)
Portfolio Turnover Rate 57.31% 63.79% 77.85% 52.27% 42.00% 33.03%
Average Commission Rate(4) -- -- -- -- -- --
</TABLE>

(2) Annualized.

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

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

(5) Date commenced operations.

17
<PAGE> 22

FINANCIAL HIGHLIGHTS CONT.
<TABLE>
<CAPTION>

Equity Index
Income Fund Fund
Year For the Period Year
Ended 04/18/96(5) to Ended
12/31/97 12/31/96 12/31/97
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.72 $ 13.02 $ 18.48
-------- -------- -------
Income from Investment Operations:
Net Investment Income 0.237 0.179 0.247
Net Realized and Unrealized Gain
on Investments 4.037 1.732 5.725
-------- -------- -------
Total from Investment Operations 4.274 1.911 5.972
-------- -------- -------
Less Distributions:
Net Investment Income (0.220) (0.213) (0.233)
Net Realized Gains (1.464) (0.998) (0.709)
-------- -------- -------
Total Distributions (1.684) (1.211) (0.942)
-------- -------- -------
Net Asset Value, End of Period $ 16.31 $ 13.72 $ 23.51
======== ======== =======

Total Return 31.53% 14.67%(3) 32.51%
Ratios/Supplemental Data:
Net Assets, End of Period ($000) 1,241 298 6,942
Ratios of Expenses to Average
Net Assets(1) 1.18% 1.18%(2) 0.70%
Ratio of Net Investment Income to
Average Net Assets 1.44% 2.11%(2) 1.14%
Portfolio Turnover Rate 29.87% 52.77% 7.10%
Average Commission Rate(4) $ 0.058 $ 0.059 $ 0.020
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the year
ended December 31, 1997 and the period ended December 31, 1996 for the
Equity Income Fund would have been 1.21% and 1.19% (annualized),
respectively, for the Index Fund would have been 0.72% and 0.74%
(annualized), respectively, for the period ended December 31, 1997 for
the Balanced Fund would have been 1.17% (annualized), for the
Convertible Securities Fund would have been 1.21% (annualized), and for
the year ended December 31, 1997 and the period ended December 31, 1996
for the Tax-Exempt Bond Fund would have been 1.05% and 1.06%
(annualized), respectively.

(2) Annualized.

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

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

(5) Date commenced operations.

18
<PAGE> 23

Index Balanced Convertible Tax-Exempt
Fund Fund Securities Fund Bond Fund
For the Period For the Period For the Period Year For the Period
04/19/96(5) to 4/16/97(5) to 03/26/97(5) to Ended 10/02/96(5) to
12/31/96 12/31/97 12/31/97 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 16.35 $ 12.56 $ 29.30 $ 10.25 $ 10.33
------- ------- -------- ------- -------
Income from Investment Operations:
Net Investment Income 0.188 0.301 0.690 0.435 0.105
Net Realized and Unrealized Gain
on Investments 2.511 2.411 3.122 0.391 0.136
------- ------- -------- ------- -------
Total from Investment Operations 2.699 2.712 3.812 0.826 0.241
------- ------- -------- ------- -------
Less Distributions:
Net Investment Income (0.225) (0.342) (0.825) (0.435) (0.105)
Net Realized Gains (0.344) 0.000 (3.767) (0.121) (0.216)
------- ------- -------- ------- -------
Total Distributions (0.569) (0.342) (4.592) (0.556) (0.321)
------- ------- -------- ------- -------
Net Asset Value, End of Period $ 18.48 $ 14.93 $ 28.52 $ 10.52 $ 10.25
======= ======= ======== ======= =======

Total Return 16.56%(3) 21.72%(3) 13.39%(3) 8.28% 2.34%(3)
Ratios/Supplemental Data:
Net Assets, End of Period ($000) 150 700 85 644 38
Ratios of Expenses to Average
Net Assets(1) 0.70%(2) 1.13%(2) 1.17%(2) 1.05% 1.05%(2)
Ratio of Net Investment Income to
Average Net Assets 1.60%(2) 3.20%(2) 3.51%(2) 4.22% 4.35%(2)
Portfolio Turnover Rate 4.71% 108.29%(2) 93.24%(2) 61.52% 61.60%
Average Commission Rate(4) $ 0.038 $ 0.058 $ 0.053 -- --
</TABLE>

(2) Annualized.

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

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

(5) Date commenced operations.

19
<PAGE> 24

FINANCIAL HIGHLIGHTS CONT.

Bond Fund
Year For the Period
Ended 04/22/96(4) to
12/31/97 12/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period $ 10.07 $ 9.99
-------- --------
Income from Investment Operations:
Net Investment Income 0.603 0.402
Net Realized and Unrealized Gain
on Investments 0.284 0.113
-------- --------
Total from Investment Operations 0.887 0.515
-------- --------
Less Distributions:
Net Investment Income (0.603) (0.402)
Net Realized Gains (0.154) (0.033)
-------- --------
Total Distributions (0.757) (0.435)
-------- --------
Net Asset Value, End of Period $ 10.20 $ 10.07
======== ========

Total Return 9.14% 5.27%(3)
Ratios/Supplemental Data:
Net Assets, End of Period ($000) 936 130
Ratios of Expenses to Average
Net Assets(1) 0.85% 0.85%(2)
Ratio of Net Investment Income to
Average Net Assets 6.00% 5.87%(2)
Portfolio Turnover Rate 138.30% 116.02%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the year
ended December 31, 1997 and the period ended December 31, 1996 for the
Bond Fund would have been 1.14% and 1.23% (annualized), respectively,
and for the Intermediate Tax-Exempt Bond Fund would have been 1.04% and
1.07% (annualized), respectively.

(2) Annualized.

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

(4) Date commenced operations.

20
<PAGE> 25

<TABLE>
<CAPTION>
Intermediate
Tax-Exempt Bond Fund
Year For the Period
Ended 03/13/96(4) to
12/31/97 12/31/96
<S> <C> <C>
Net Asset Value, Beginning of Period $ 10.58 $ 10.55
-------- --------
Income from Investment Operations:
Net Investment Income 0.327 0.084
Net Realized and Unrealized Gain
on Investments 0.220 0.066
-------- --------
Total from Investment Operations 0.547 0.150
-------- --------
Less Distributions:
Net Investment Income (0.327) (0.084)
Net Realized Gains (0.050) (0.036)
-------- --------
Total Distributions (0.377) (0.120)
-------- --------
Net Asset Value, End of Period $ 10.75 $ 10.58
======== ========

Total Return 6.14% 1.44%(3)
Ratios/Supplemental Data:
Net Assets, End of Period ($000) 644 --
Ratios of Expenses to Average
Net Assets(1) 1.04% 1.04%(2)
Ratio of Net Investment Income to
Average Net Assets 3.91% 4.33%(2)
Portfolio Turnover Rate 48.72% 57.23%
</TABLE>

(2) Annualized.

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

(4) Date commenced operations.

21
<PAGE> 26

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
Short/Intermediate
Bond Fund
YEAR YEAR YEAR
ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.14 $ 10.38 $ 9.66
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.608 0.594 0.588
Net Realized and Unrealized Gain/(Loss)
on Investments 0.070 (0.247) 0.720
-------- -------- --------
Total from Investment Operations 0.678 0.347 1.308
-------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.608) (0.587) (0.588)
Net Realized Gains 0.000 0.000 0.000
-------- -------- --------
Total Distributions (0.608) (0.587) (0.588)
-------- -------- --------
Net Asset Value, End of Period $ 10.21 $ 10.14 $ 10.38
======== ======== ========

TOTAL RETURN 6.89% 3.51% 13.88%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 5,922 4,432 51,814
Ratios of Expenses to Average
Net Assets(1) 0.85% 0.62% 0.60%
Ratio of Net Investment Income to
Average Net Assets 5.99% 5.59% 5.91%
Portfolio Turnover Rate 98.08% 186.02% 194.94%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the
years ended 1997, 1996, 1995, 1994, 1993 and 1992, and the period
ended December 31, 1991 for the Short/Intermediate Bond Fund would
have been 1.14%, 0.92%, 0.96%, 0.92%, 0.94%, 0.93% and 1.01%
(annualized), respectively, and for the period ended December 31,
1997 for the Intermediate Government Bond Fund would have been
1.16% (annualized).

(2) Annualized.

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

(4) Date commenced operations.

22
<PAGE> 27

<TABLE>
<CAPTION>
Short/Intermediate Intermediate
Bond Fund Govt. Bond Fund
YEAR YEAR YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED ENDED 04/01/91(4) TO 04/16/97(4) TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/97
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.34 $ 10.22 $ 10.57 $ 10.00 $ 16.06
--------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.559 0.563 0.630 0.474 0.702
Net Realized and Unrealized Gain/(Loss)
on Investments (0.694) 0.435 (0.087) 0.601 0.521
--------- -------- -------- -------- --------
Total from Investment Operations (0.135) 0.998 0.543 1.075 1.223
--------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.545) (0.564) (0.631) (0.475) (0.702)
Net Realized Gains 0.000 (0.314) (0.262) (0.030) (0.041)
--------- -------- -------- -------- --------
Total Distributions (0.545) (0.878) (0.893) (0.505) (0.743)
--------- -------- -------- -------- --------
Net Asset Value, End of Period $ 9.66 $ 10.34 $ 10.22 $ 10.57 $ 16.54
========= ======== ======== ======== ========

TOTAL RETURN (1.29)% 9.91% 5.28% 11.04%(3) 7.76%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 44,333 74,057 71,848 44,313 716
Ratios of Expenses to Average
Net Assets(1) 0.60% 0.60% 0.60% 0.60%(2) 0.75%(2)
Ratio of Net Investment Income to
Average Net Assets 5.29% 5.32% 6.07% 6.60%(2) 6.06%(2)
Portfolio Turnover Rate 140.99% 215.07% 133.78% 108.70% 84.89%(2)
</TABLE>

(2) Annualized.

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

(4) Date commenced operations.

23
<PAGE> 28

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
Tax-Exempt
Money Market Fund
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.031 0.029 0.033 0.023
-------- -------- --------- ---------
Total from Investment Operations 0.031 0.029 0.033 0.023
-------- -------- --------- ---------
LESS DISTRIBUTIONS:
Net Investment Income (0.031) (0.029) (0.033) (0.023)
-------- -------- --------- ---------
Total Distributions (0.031) (0.029) (0.033) (0.023)
-------- -------- --------- ---------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= =========

TOTAL RETURN 3.17% 2.94% 3.31% 2.30%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 223,071 178,849 170,570 123,501
Ratios of Expenses to Average
Net Assets(1) 0.54% 0.53% 0.56% 0.54%
Ratio of Net Investment Income to
Average Net Assets 3.13% 2.89% 3.25% 2.20%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the
years ended December 31, 1997, 1996, 1995, 1994, 1993, 1992, 1991,
1990 and 1989 and the period ended December 31, 1988, for the
Tax-Exempt Money Market Fund would have been 0.61%, 0.64%, 0.65%,
0.65%, 0.71%, 0.73%, 0.75%, 0.78%, 0.82% and 0.85% (annualized),
respectively.

(2) Annualized.

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

(4) Date commenced operations.

24
<PAGE> 29

<TABLE>
<CAPTION>
Tax-Exempt
Money Market Fund
YEAR YEAR YEAR YEAR YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED ENDED 02/09/88(4) TO
12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.020 0.025 0.041 0.053 0.058 0.043
--------- -------- -------- -------- --------- --------
Total from Investment Operations 0.020 0.025 0.041 0.053 0.058 0.043
--------- -------- -------- -------- --------- --------
LESS DISTRIBUTIONS:
Net Investment Income (0.020) (0.025) (0.041) (0.053) (0.058) (0.043)
--------- -------- -------- -------- --------- --------
Total Distributions (0.020) (0.025) (0.041) (0.053) (0.058) (0.043)
--------- -------- -------- -------- --------- --------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ========= ========

TOTAL RETURN 1.99% 2.54% 4.16% 5.51% 5.91% 4.39%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 168,440 152,821 157,693 136,117 112,674 103,192
Ratios of Expenses to Average
Net Assets(1) 0.54% 0.62% 0.49% 0.47% 0.43% 0.51%(2)
Ratio of Net Investment Income to
Average Net Assets 1.97% 2.50% 4.08% 5.38% 5.76% 4.81%(2)
</TABLE>

(2) Annualized.

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

(4) Date commenced operations.

<PAGE> 30

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
MONEY MARKET FUND
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.052 0.050 0.054 0.037 0.027
Realized Loss on Investments (0.001) -- -- -- --
----- ----- ----- ----- -----
Total from Investment Operations 0.051 0.050 0.054 0.037 0.027
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Net Investment Income (0.052) (0.050) (0.054) (0.037) (0.027)
----- ----- ----- ----- -----
Total Distributions (0.052) (0.050) (0.054) (0.037) (0.027)
----- ----- ----- ----- -----

CAPITAL CONTRIBUTION 0.001 -- -- -- --
----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
TOTAL RETURN 5.35% 5.11% 5.58% 3.79% 2.69%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 677,804 461,213 423,588 530,366 348,984
Ratios of Expenses to Average
Net Assets(1) 0.51% 0.52% 0.56% 0.55% 0.57%
Ratio of Net Investment Income to
Average Net Assets 5.23% 5.00% 5.42% 3.79% 2.66%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, for the Money Market Fund would have been 0.61%,
0.63%, 0.65%, 0.65%, 0.72%, 0.73%, 0.74%, 0.78%, 0.85% and 0.87% (annualized),
respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.

26
<PAGE> 31

<TABLE>
<CAPTION>
MONEY MARKET FUND
YEAR YEAR YEAR YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED 02/10/88(4) TO
12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.034 0.057 0.077 0.086 0.064
Realized Loss on Investments -- -- -- -- --
----- ----- ----- ----- -----
Total from Investment Operations 0.034 0.057 0.077 0.086 0.064
----- ----- ----- ----- -----
LESS DISTRIBUTIONS:
Net Investment Income (0.034) (0.057) (0.077) (0.086) (0.064)
----- ----- ----- ----- -----
Total Distributions (0.034) (0.057) (0.077) (0.086) (0.064)
----- ----- ----- ----- -----

CAPITAL CONTRIBUTION -- -- -- -- --
----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====

TOTAL RETURN 3.41% 5.87% 7.94% 9.01% 6.59%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 383,280 263,419 153,934 172,439 112,144
Ratios of Expenses to Average
Net Assets(1) 0.60% 0.71% 0.67% 0.58% 0.46%(2)
Ratio of Net Investment Income to
Average Net Assets 3.34% 5.69% 7.66% 8.60% 7.15%(2)
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, for the Money Market Fund would have been 0.61%,
0.63%, 0.65%, 0.65%, 0.72%, 0.73%, 0.74%, 0.78%, 0.85% and 0.87% (annualized),
respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.

27
<PAGE> 32

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
GOVERNMENT
MONEY MARKET FUND
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.050 0.049 0.054 0.037 0.026
----- ----- ----- ----- -----
Total from Investment Operations 0.050 0.049 0.054 0.037 0.026
----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
Net Investment Income (0.050) (0.049) (0.054) (0.037) (0.026)
----- ----- ----- ----- -----
Total Distributions (0.050) (0.049) (0.054) (0.037) (0.026)
----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====

TOTAL RETURN 5.17% 5.00% 5.51% 3.72% 2.62%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 247,594 206,073 264,426 229,619 263,909
Ratios of Expenses to Average
Net Assets(1) 0.53% 0.54% 0.57% 0.60% 0.61%
Ratio of Net Investment Income to
Average Net Assets 5.05% 4.89% 5.36% 3.62% 2.57%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, for the Government Money Market Fund would have
been 0.63%, 0.67%, 0.67%, 0.66%, 0.70%, 0.70%, 0.78%, 0.83%, 0.88% and 0.99%
(annualized), respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.

28
<PAGE> 33

<TABLE>
<CAPTION>
GOVERNMENT
MONEY MARKET FUND
YEAR YEAR YEAR YEAR FOR THE PERIOD
ENDED ENDED ENDED ENDED 02/11/88(4) TO
12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----

INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.033 0.055 0.075 0.084 0.061
----- ----- ----- ----- -----
Total from Investment Operations 0.033 0.055 0.075 0.084 0.061
----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
Net Investment Income (0.033) (0.055) (0.075) (0.084) (0.061)
----- ----- ----- ----- -----
Total Distributions (0.033) (0.055) (0.075) (0.084) (0.061)
----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====

TOTAL RETURN 3.42% 5.67% 7.78% 8.80% 6.27%(3)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 140,134 632,663 87,098 35,751 43,870
Ratios of Expenses to Average
Net Assets(1) 0.66% 0.71% 0.52% 0.40% 0.54%(2)
Ratio of Net Investment Income to
Average Net Assets 3.34% 5.45% 7.49% 8.45% 7.24%(2)
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1997, 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989 and the
period ended December 31, 1988, for the Government Money Market Fund would have
been 0.63%, 0.67%, 0.67%, 0.66%, 0.70%, 0.70%, 0.78%, 0.83%, 0.88% and 0.99%
(annualized), respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.

<PAGE> 34
INVESTMENT OBJECTIVES AND POLICIES

Each of the Funds has distinct investment objectives and
policies, which are set forth below. Investments that may be
made by all of the Funds are listed under ADDITIONAL
INVESTMENT INFORMATION--ADDITIONAL INVESTMENT POLICIES. For a further
description of each Fund's investments and investment techniques,
see ADDITIONAL INVESTMENT INFORMATION, APPENDIX A: PERMITTED
INVESTMENTS ("Appendix A") and the SAI. There is no assurance that
any Fund will achieve its investment objective or that the
Money Market Funds will be able to maintain a stable net asset value.
As used throughout this Prospectus, the term "U.S. Government
Securities" means obligations issued or guaranteed by the
U.S. Government, its agencies, instrumentalities or sponsored enterprises.

EQUITY FUNDS

EMERGING MARKETS FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in a diversified portfolio of publicly traded equity
securities of companies located in emerging markets that the investment adviser
believes are undervalued. To a lesser degree, the Fund also may invest in
emerging market equity securities offered in "private placements." Dividend and
interest income from portfolio securities is largely an incidental
consideration.

The Fund's investment approach relies heavily on a fundamental analysis of
securities with a long-term investment perspective. The Fund seeks to maximize
this approach by extending the search for value into many countries around the
world. This global search provides the Fund with more diverse opportunities and
flexibility to shift portfolio investments not only from company to company and
industry to industry, but also from country to country, in search of undervalued
securities.

30
<PAGE> 35
try," or "developing country" apply to any country that, in the investment
adviser's opinion, is generally considered to be an emerging or developing
country by the international financial community, which includes the
International Bank for Reconstruction and Development (the "World Bank") and the
International Finance Corporation. There are currently over 130 countries that
are emerging or developing countries under this standard; approximately 40 of
these countries currently have stock markets. These countries generally include
every nation in the world except the U.S., Canada, Japan, Australia, New Zealand
and most nations located in Western Europe. Securities of issuers located in
emerging market countries or traded in emerging markets present greater
liquidity risks and other risks than securities of issuers located in developed
countries or traded in more established markets.

By engaging in its own research and by reviewing research obtained through
outside sources, the investment adviser seeks to identify appropriate
investments for the Fund. The investment adviser may consider a number of
factors in evaluating potential investments, including political risks, classic
macro-economic variables and equity market valuations. The investment adviser
also focuses on the quality of a company's management, growth prospects and
financial well being. The Fund's investments generally will reflect a broad
cross-section of countries, industries and companies in order to minimize risk.
In situations where the market for a particular security is determined by the
investment adviser to be sufficiently liquid, the Fund may engage in short
sales.

The Fund may invest in certain debt securities of any grade, rated or unrated,
such as convertible bonds and bonds selling at discount, when the investment
adviser believes the potential for appreciation will equal or exceed that
available from investments in common stock. These securities may be subject to
significant risk. See RISK CONSIDERATIONS--RISKS OF FIXED INCOME SECURITIES. The
Fund also may engage in securities of companies or investment trusts that invest
in, or securities backed by, mortgages, real estate or interests in real estate,
including real estate investment trusts ("REITs").

INTERNATIONAL FUND

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment

31
<PAGE> 36
objective by investing in equity securities of issuers outside the U.S. that the
investment adviser believes are undervalued.

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

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

SMALL-CAP
OPPORTUNITY FUND

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller
capitalization that the investment adviser believes are attractively valued in
the market. Market capitalization refers to the total market value of a
company's outstanding shares of common stock. Smaller capitalization companies
are those with market capitalizations, at the time of the Fund's investment,
that fall in the lowest 15% of market capitalization of publicly traded
companies listed in the U.S. These securities will tend to be represented in the
Russell 2000 Index.

32
<PAGE> 37

In investing the Fund's assets, the investment adviser follows a discipline that
seeks to identify companies offering above-average earnings, sales and asset
value growth.

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

SMALL-CAP VALUE FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller capitalization
that the investment adviser believes are conservatively valued in the
marketplace. Market capitalization refers to the total market value of a
company's outstanding shares of common stock. Smaller capitalization companies
are those with market capitalizations, at the time of the Fund's investment,
that fall in the lowest 15% of market capitalization of publicly traded
companies listed in the U.S. These securities will tend to be represented in the
Russell 2000 Index.

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

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

GROWTH FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

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

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

EQUITY FUND

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

33
<PAGE> 38
to provide equity-based returns characteristic of these securities. Market
capitalization refers to the total market value of a company's outstanding
shares of common stock. The selected issuers will be representative of those
sectors found within the Standard & Poor's 500 Index (the "S&P 500 Index").
Using both "quantitative" and "fundamental" analysis, the investment adviser
selects investments that it believes will provide returns greater than the
securities comprising the S&P 500 Index over the long-term with a risk level
approximating that of the index, with risk measured by volatility.

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

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

EQUITY INCOME FUND

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

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

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

34
<PAGE> 39
INDEX FUND

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing, under normal market conditions, primarily in securities of companies
that comprise the Standard & Poor's 500 Index (the "S&P 500 Index"), an
unmanaged index that emphasizes large capitalization companies. As of December
31, 1997, the index represented approximately 74% of the market capitalization
of publicly owned stocks in the U.S.

The Fund is managed through the use of a "quantitative" or "indexing" investment
discipline, which attempts to duplicate the investment composition and
performance of the S&P 500 Index through statistical procedures. As a result,
the investment adviser does not employ traditional methods of fund investment
management, such as selecting securities on the basis of economic, financial and
market analysis. The Fund seeks quarterly performance within one
percentage-point of the performance of the index (i.e., the percentage return of
the index [plus or minus] 1%). On at least a monthly basis, the investment
adviser compares the Fund's performance to that of the index. In the event the
Fund's performance for the preceding three-month period does not adequately
track the performance of the index, the investment adviser may adjust the Fund's
holdings accordingly.

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

Standard & Poor's ("S&P") makes no representation or warranty, expressed or
implied, to the

35
<PAGE> 40
purchasers of the Fund or any member of the public regarding the
advisability of investing in either the Index Fund or the ability of the S&P 500
Index to track general stock market performance. The Fund is not sponsored,
endorsed, sold or promoted by S&P. S&P does not guarantee the accuracy and/or
completeness of the S&P 500 Index or any data included therein.

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

BALANCED FUND

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

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

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

FIXED INCOME FUNDS

CONVERTIBLE SECURITIES FUND

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

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

36
<PAGE> 41
The Fund seeks to achieve its investment objective by investing primarily in
convertible securities, which are bonds, debentures, notes or preferred stock
that are convertible into common stock, or warrants, which are options to
purchase common stock at a specified price.

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

Under normal market conditions, the Fund will invest without limitation in
convertible securities of U.S. corporations and in Eurodollar securities
convertible into common stocks of U.S. corporations that are rated "B" or better
by Standard & Poor's ("S&P") or "B" ("b" in the case of preferred stocks) or
better by Moody's Investors Service ("Moody's") at the time of purchase, or, if
not rated, considered by the investment adviser 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. See RISK CONSIDERATIONS--RISKS OF FIXED INCOME SECURITIES. By their
nature, convertible securities may be more volatile in price than higher-rated
debt obligations.

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

37
<PAGE> 42
up to 15% of its total assets in common stocks; and up to 5% of its net assets
in warrants. The Fund also may write (sell) covered put and call options, buy
covered put and call options, buy and sell interest rate futures contracts and
buy and write covered options on those futures contracts.

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

During its most recent fiscal year ended December 31, 1997, the Fund had 84% of
its average assets in rated debt securities, 7% in unrated debt securities and
the remainder in cash and equity securities. During that year, the Fund had the
following percentages of its average assets invested in rated securities: AAA -
2%, AA - 6%, A - 8%, BBB - 37%, BB - 15%, B - 9%, CCC or below - 2%. This
information reflects the average composition of the Fund's assets for the Fund's
last fiscal year and is not necessarily representative of the Fund as of the
current fiscal year or any other time.

TAX-EXEMPT BOND FUND

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

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

The Fund attempts to anticipate changes in interest rates, analyzing yield
differentials for different types of bonds, and analyzing credit for specific
issues and municipalities. As a matter of fundamental policy, the Fund invests
at least 80% of its assets, under normal market conditions, in a broad range of
municipal bonds and other obligations issued by state and local governments to
finance their operations or special projects.

38
<PAGE> 43

These securities make interest payments that are exempt from Federal income tax.

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

BOND FUND

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

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

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

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

INTERMEDIATE
TAX-EXEMPT BOND FUND

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

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

39
<PAGE> 44

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

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

SHORT/INTERMEDIATE
BOND FUND

INVESTMENT POLICIES. The Fund seeks to provide income and share price
volatility of a 2- to 5-year average maturity taxable bond portfolio. Thus, it
is anticipated that when interest rates rise, share price of the Fund will tend
to fall less than longer-term bond funds and appreciate less when interest rates
fall.

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

40
<PAGE> 45
foreign governments and their political subdivisions, asset-backed securities,
various mortgage-backed securities (including those issued or collateralized by
U.S. Government agencies and inverse floating rate mortgage-backed securities),
other floating/variable rate obligations, municipal obligations and zero coupon
debt securities.

The Fund also may hold short-term U.S. Government Obligations (as defined in
Appendix A), "high-quality" money market instruments (i.e., those within the two
highest rating categories or, if unrated, determined by the investment adviser
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 investment adviser's
opinion, existing circumstances warrant.

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

INTERMEDIATE GOVERNMENT BOND FUND

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in U.S. Government Securities, including mortgage-backed
securities, having an intermediate-term average maturity. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in U.S.
Government Securities and in repurchase agreements collateralized by U.S.
Government Securities. The average portfolio maturity (or average life with
respect to mortgage-backed securities) generally will be between 3 and 10 years.

The Fund's investments may include asset-backed securities, zero coupon
securities and debt securities of U.S. corporations (with respect to 20% of the
Fund's total assets at the time of purchase). In addition, the Fund may invest
in foreign debt securities guaranteed by the U.S. Government, its agencies or
instrumentalities (with respect to 10% of the Fund's total assets at the time of
purchase). The Fund also may write (sell) covered put and call options, buy
covered put and call options, buy and sell interest rate futures contracts and
buy and write covered options on those futures contracts.

MONEY MARKET FUNDS
TAX-EXEMPT MONEY
MARKET FUND

INVESTMENT OBJECTIVE. The Fund seeks to provide investors with as high a level
of current income that is exempt from Federal income taxes as is consistent

41
<PAGE> 46
with its investment policies and with preservation of capital and liquidity.

Investment Policies. The Fund invests only in high quality, short-term money
market instruments that are determined by the investment adviser, pursuant to
procedures established by the Company's Board of Directors, to be eligible for
purchase and to present minimal credit risks. The Fund invests primarily in
high-quality municipal obligations. Municipal obligations are debt obligations
issued by or on behalf of states, cities, municipalities and other public
authorities. Except for temporary investments in taxable obligations described
below, the Fund will invest only in municipal obligations that are exempt from
Federal income taxes in the opinion of bond counsel. Such obligations include
municipal bonds, municipal notes and municipal commercial paper.

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

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

Under ordinary market conditions, the Fund will maintain as a fundamental policy
at least 80% of the value of its total assets in obligations that are exempt
from Federal income tax and not subject to the alternative minimum tax. The Fund
may, pending the investment of proceeds of sales of its shares or proceeds from
the sale of portfolio securities, in anticipation of redemptions, or to maintain
a "defensive" posture when, in the opinion of the 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
securities whose interest income is subject to taxation.

From time to time, the Fund may invest 25% or more of its assets in municipal
obligations that are related in such a way that an economic, business or
political development or change affecting one of these obligations would also
affect the

42
<PAGE> 47
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.

MONEY MARKET FUND

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

Investment Policies. The Fund invests only in high quality, short-term money
market instruments that are determined by the investment adviser, pursuant to
procedures established by the Company's Board of Directors, to be eligible for
purchase and to present minimal credit risks. The Fund invests in a broad range
of short-term money market instruments, including U.S. Government Securities and
bank and commercial obligations. The commercial paper purchased by the Fund will
consist of U.S. dollar-denominated direct obligations of domestic and foreign
corporate issuers, including bank holding companies.

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

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

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GOVERNMENT MONEY MARKET FUND

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

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

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

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ADDITIONAL INVESTMENT INFORMATION

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

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

ADDITIONAL INVESTMENT POLICIES

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

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

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<PAGE> 50
Diversification. Each Fund is diversified as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act"). As a matter of
fundamental policy, no Fund may invest more than 5% of the current value of its
total assets in the securities of any one issuer (other than U.S. Government
Securities), except that up to 25% of the value of the total assets of a Fund
(other than the Money Market Fund and the Government Money Market Fund) may be
invested without regard to this limitation. Notwithstanding this policy, each of
the Money Market Fund and the Government Money Market Fund may invest more than
5% of its total assets in the securities of a single issuer for a period of up
to three business days after the purchase thereof, so long as it does not make
more than one such investment at any one time. As a matter of fundamental
policy, no Fund may purchase securities of an issuer if, as a result, with
respect to 75% of its total assets, it would own more than 10% of the voting
securities of such issuer.

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

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

Illiquid Securities. Each Fund may invest up to 15% (10% with respect to the
Equity Fund, the Short/Intermediate Bond Fund and the Money Market Funds) of its
net assets in securities that are considered illiquid. Illiquid securities are
securities that cannot be disposed of within seven days in the ordinary course
of business at approximately the amount at which the Fund has valued the
securities and include, among other things, repurchase agreements not entitling
the holder to payment within seven days and restricted securities (other than
those determined to be liquid pursuant to guidelines established by the Trust's
Board of Trustees (and the Company's Board of Directors)). See Appendix A.

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<PAGE> 51
Borrowing. As a matter of fundamental policy, no Fund may borrow from banks,
except that a Fund may borrow up to 10% of the current value of its net 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 any aggregate borrowings in
excess of 5% exist).

Securities Lending. 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 total assets. However, such loans may
be made only if secured by cash or cash equivalent collateral. 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. As with any
extension of credit, there are risks of incurring a loss should the borrower of
the securities fail financially. However, the Funds will lend securities to
firms deemed creditworthy by the investment adviser. 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.

Rating Matters. Each of the Equity Funds and the Fixed Income Funds may invest
in securities convertible into or exchangeable for common stocks or preferred
stocks, as well as U.S. Government Securities and debt obligations of domestic
corporations rated "BBB" or better by Standard & Poor's ("S&P") or "Baa" or
better by Moody's Investors Service ("Moody's"), or that have an equivalent
rating by another nationally recognized statistical rating organization
("NRSRO") at the time of purchase or, if not rated, are considered by the
investment adviser to be of comparable quality. Debt securities rated "BBB" by
S&P or "Baa" by Moody's (the fourth and lowest category of investment grade) and
securities of comparable quality 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. Debt securities rated in the fifth highest category
("BB" by S&P or "Ba" by Moody's) and securities of comparable quality (commonly
referred to as "junk bonds") are not considered to be investment grade and have
speculative or predominantly speculative characteristics. The Emerging Markets
Fund may invest in debt securities of any grade and the Convertible Securities
Fund may invest in debt securities that are less than investment grade. See RISK
CONSIDERATIONS--RISKS OF FIXED INCOME SECURITIES.

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<PAGE> 52
Each Fund may purchase debt obligations that are not rated if, in the opinion of
the investment adviser, they are of investment quality at least comparable to
other rated investments that may be purchased by the Fund. After purchase by a
Fund, a security may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. Neither event will require a Fund
(other than a Money Market Fund) to sell the security unless the amount of the
security exceeds permissible limits. However, the investment adviser will
reassess promptly whether the security presents minimal credit risks and
determine whether continuing to hold the security is in the best interests of
the Fund. To the extent that the ratings given by Moody's, S&P or another NRSRO
for securities may change as a result of changes in the rating systems or due to
the corporate reorganization of an NRSRO, each Fund will attempt to use
comparable ratings as standards for its investments in accordance with the
investment objectives and policies of that Fund. The ratings of Moody's and S&P
are more fully described in the Appendix to the SAI. A Money Market Fund may be
required to sell a security downgraded below the minimum required for purchase,
absent a specific finding by the Company's Board of Directors that a sale is not
in the best interests of the Fund.

Temporary Defensive Position. When business or financial conditions warrant,
each of the Emerging Markets Fund and the International Fund may assume a
temporary defensive position by investing in money market investments. These
money market investments include obligations of the U.S. Government and its
agencies and instrumentalities, obligations of foreign sovereignties, other debt
securities, commercial paper including bank obligations, certificates of deposit
(including Eurodollar certificates of deposit) and repurchase agreements.

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<PAGE> 53
instruments denominated in any currency issued by international development
agencies; (d) finance company and corporate commercial paper and other
short-term corporate debt obligations of corporations organized under the laws
of any member state of the OECD meeting the Fund's credit quality standards; and
(e) repurchase agreements with banks and broker-dealers covering any of the
foregoing securities. The short-term and medium-term debt securities in which
the Fund may invest for temporary defensive purposes will be those that the
investment adviser believes to be of high quality, i.e., subject to relatively
low risk of loss of interest or principal (there is currently no rating system
for debt securities in most emerging countries). If rated, these securities will
be rated in one of the three highest rating categories by rating services such
as Moody's or S&P (i.e., rated at least "A").

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

The realization of taxable capital gains and, with respect to equity securities,
the amount of brokerage commissions will tend to increase as the level of
portfolio activity increases. Portfolio turnover rates for the Funds are
included in the Financial Highlights for that Fund. An annual portfolio turnover
rate of 100% would occur if all of the securities held by the Fund were replaced
once in a period of one year.

The investment advisers seek "best execution" for all portfolio transactions,
but a Fund may pay higher than the lowest available commission rates when its
investment adviser believes it is reasonable to do so in light of the value of
the brokerage, research and other services provided by the broker effecting the
transaction. Purchase and sale orders for securities on behalf of any Fund may
be combined with those of other accounts that the investment advisers manage,
and for which it has brokerage placement authority, in the interest of seeking
the most favorable overall net results. When an investment adviser determines
that a particular security should be bought or sold for any of the Funds and
other accounts it manages, the investment adviser undertakes to allocate the
transactions among the participants equitably. To the extent permitted

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<PAGE> 54

by the SEC, the Funds may pay brokerage commissions to certain affiliated
persons. During the last fiscal year, no Fund paid commissions to these persons.

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

RISK CONSIDERATIONS

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

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

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

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

Debt securities are subject to "credit risk" relating to the financial condition
of the issuers of the securities. Prices of debt securities may fluctuate based
on changes

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in the actual and perceived creditworthiness of issuers. The prices of
lower-rated securities often fluctuate more than those of higher-rated
securities.

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

LOW-RATED FIXED INCOME 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 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 a 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 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.

An economic recession in the U.S. or another country would likely disrupt the
market in that country 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.

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

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

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

With respect to the Emerging Markets Fund, investments in the securities of
issuers located in countries with smaller, emerging capital markets may involve
additional risks.

POLITICAL AND ECONOMIC RISKS. In any emerging market country, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could affect investments in
that country. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as economic growth rate, rate
of inflation, capital reinvestment, resources, self-sufficiency and balance of
payments positions. Certain foreign investments may also be subject to foreign
withholding or other governmental taxes that could reduce the return on these
investments.

Certain emerging market countries may restrict investment by foreign entities.
For example, a country may limit the level of foreign investment in certain
issuers, require prior approval of foreign investment by the government, impose
additional tax on foreign investors or limit holdings by foreign investors to
specific classes of securities of an issuer that have less advantageous rights
(with regard to convertibility, for example) than classes available to
domiciliaries of the country.

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Substantial limitations may also exist in certain countries with respect to a
foreign investor's ability to repatriate investment income, capital or the
proceeds of sales of securities. The Emerging Markets Fund could be adversely
affected by delays in, or refusals to grant, any required governmental approvals
for repatriation of capital. Securities that are subject to material legal
restrictions on repatriation may be considered illiquid securities and,
therefore, may be subject to the Emerging Markets Fund's 15% limitation on such
investments.

FINANCIAL INFORMATION AND STANDARDS. Often the regulation of, and available
information about, issuers and their securities is less extensive in emerging
market countries than in the U.S. Foreign companies may not be subject to
uniform accounting, auditing and financial reporting standards or to
requirements or practices comparable to those applicable to U.S. companies.

REGULATION AND LIQUIDITY OF MARKETS. Government supervision and regulation of
exchanges and brokers in emerging market countries is frequently less extensive
than in the U.S. These markets may have different clearance and settlement
procedures. In certain cases, settlements have not kept pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in settlement could adversely affect or interrupt the Emerging Markets
Fund's intended investment program or result in investment losses due to
intervening declines in security values.

Securities markets in emerging market countries are substantially smaller than
U.S. securities markets and have substantially less trading volume, resulting in
diminished liquidity and greater price volatility. Reduced secondary market
liquidity may make it more difficult for the Emerging Markets Fund to determine
the value of its portfolio securities or to dispose of particular instruments
when necessary. Brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher as well.

INFLATION. Several emerging market countries have experienced substantial, and
in some periods extremely high, rates of inflation in recent years. Inflation
and rapid fluctuations in inflation rates may have very negative effects on the
economies and securities markets of certain emerging market countries. Further,
inflation accounting rules in some emerging market countries require, for
companies that keep accounting records in the local currency, that certain
assets and liabilities be restated on the company's balance sheet in order to
express items in terms of currency of constant purchasing power. Inflation
accounting may indirectly

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generate losses or profits for certain emerging market companies.

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

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

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

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

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

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

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

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

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

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

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

Management Risk. A strategy used by an investment adviser may fail to produce
the intended result, which could have a negative effect on fund performance.

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MANAGEMENT

TRUSTEES AND DIRECTORS

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

C. Gary Gerst
Chairman of the Board of Directors and Board of Trustees; and Chairman Emeritus,
LaSalle Partners, Ltd. (real estate investment management and consulting).

Edgar R. Fiedler
Senior Fellow and Economic Counsellor, The Conference Board; Director, The
Stanley Works, Scudder Institutional Funds, AARP Income Trust, Brazil Fund,
Emerging Mexico Fund, and Scudder Pathway Series.

John W. McCarter, Jr.
President and Chief Executive Officer, The Field Museum of Natural History
(Chicago); Director, LaSalle Partners Funds, Inc.; Former Senior Vice President
and Director, Booz-Allen & Hamilton, Inc. (consulting firm); Director, W.W.
Grainger, Inc. and A.M. Castle, Inc.

Ernest M. Roth
Consultant; Director, La Rabida Children's Hospital; Chairman, La Rabida
Children's Foundation; Retired Senior Vice President and Chief Financial
Officer, Commonwealth Edison Company.

INVESTMENT ADVISER

Harris Trust is the investment adviser for each of the Funds pursuant to
Advisory Contracts with the Trust and the Company. Harris Trust, located at 111
West Monroe Street, Chicago, Illinois, is the successor to the investment
banking firm of N.W. Harris & Co. that was organized in 1882 and was
incorporated in 1907 under the present name of the bank. It is an Illinois
state-chartered bank and a member of the Federal Reserve System. At December 31,
1997, Harris Trust had total assets under management of approximately $16.4
billion and was the largest of 26 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, 1997, Harris Trust managed more than $12.8 billion in
discretionary personal trust assets, and administered more than $17 billion in
non-discretionary trust assets.

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

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

<TABLE>
<S> <C>
Emerging Markets Fund 1.25%
International Fund 1.05%
Small-Cap
Opportunity Fund 1.00%
Small-Cap Value Fund 0.80%
Growth Fund 0.90%
Equity Fund 0.70%
Equity Income Fund 0.70%
Index Fund 0.25%
Balanced Fund 0.60%
Convertible
Securities Fund 0.70%
Tax-Exempt Bond Fund 0.60%
Bond Fund 0.65%
Intermediate Tax-Exempt
Bond Fund 0.60%
Short/Intermediate
Bond Fund 0.70%
Intermediate
Government Bond Fund 0.65%
</TABLE>

Tax-Exempt Money Market Fund, Money Market Fund and Government Money Market
Fund: 0.14% of each Fund's first $100 million of net assets plus 0.10% of the
Fund's remaining net assets.

PORTFOLIO MANAGEMENT AGENT

Harris Trust has entered into Portfolio Management Contracts with Harris
Investment Management, under which HIM undertakes to furnish investment guidance
and policy direction in connection with the daily portfolio management of all of
the Funds except for the Tax-Exempt Money Market Fund. For the services provided
by HIM, Harris Trust pays HIM the advisory fees it receives from the Funds. As
of December 31, 1997, HIM managed an estimated $10.7 billion in assets.

INVESTMENT SUB-ADVISER

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Fort Lauderdale, Florida 33301, is majority controlled by Mr. Thomas L.
Hansberger, who founded the firm in 1994. As of December 31, 1997, Hansberger
managed assets with a value of approximately $1.39 billion.

Pursuant to the Investment Sub-advisory Contracts (the "Sub-advisory
Contracts"), Hansberger makes investment decisions for the Emerging Markets Fund
and the International Fund and continuously reviews, supervises and administers
the Funds' investment program. HIM supervises the performance of Hansberger,
including Hansberger's adherence to the Funds' investment objectives and
policies. Pursuant to the Sub-advisory Contracts, HIM pays Hansberger fees for
its investment sub-advisory services from the advisory fees HIM receives from
Harris Trust and indirectly from the advisory fees paid by the Funds to Harris
Trust pursuant to the Advisory Contract.

PORTFOLIO MANAGEMENT

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

EMERGING MARKETS FUND - Thomas L. Hansberger, Francisco Alzuru, Ajit Dayal,
Aureole L.W. Foong, Robert Mazuelos and Vladimir Tyurenkov. Mr. Hansberger
Chairman and Chief Executive Officer of Hansberger, is the Fund's leader. Before
forming Hansberger in 1994, Mr. Hansberger had served as Chairman, President and
Chief Executive Officer of Templeton Worldwide, Inc., the parent holding company
of the Templeton group of companies. While at Templeton, Mr. Hansberger served
as director of research and was an officer, director or primary portfolio
manager for several Templeton mutual funds. Mr. Alzuru joined Hansberger in 1994
as a Managing Director, portfolio manager and research analyst, specializing in
Latin America. Prior to joining Hansberger, he worked at Vestcorp Partners as
their Latin American analyst. Mr. Dayal is Managing Director of India Research.
Prior to joining Hansberger, he was employed by Ashok Biria and S.G. Warburg. He
also was the director on all Jardine Fleming companies in India. Mr. Dayal was
responsible for setting up the research and fund management operations with a
focus on identifying key Indian personnel for brokering and investment banking.
Mr. Dayal has 13 years of investment management experience. He received his
Bachelor of Arts in Economics from Bombay University and his MBA from the
University of North Carolina at Chapel Hill. Mr. Foong is Director of Asian
Research. He is responsible for overseeing the Asian research effort as well as
covering the global cellular and European telecom industries. Prior

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to joining Hansberger, Mr. Foong was a Director of Peregrine Asset Management
where he was a portfolio manager responsible for several mutual funds and
private accounts investing in regional Asian markets. Prior to Peregrine, Mr.
Foong was with Unifund, a private investment firm headquartered in Geneva. Mr.
Foong was based in Bangkok and Hong Kong where he was a portfolio manager
responsible for the Asian markets. Prior to that, Mr. Foong was with Morgan
Stanley Inc. in New York, Los Angeles and Hong Kong where he worked in the
Private Client Services department responsible for high net worth individual
accounts. Mr. Foong holds an MBA and a Bachelors of Science in Computer Science
from the University of Southern California in Los Angeles. Mr. Mazuelos joined
Hansberger in 1995 as a research analyst. Prior to joining Hansberger, he was a
performance analyst at Templeton Investment Counsel, Inc., where he was
responsible for return analysis on separate accounts and mutual funds. Mr.
Tyurenkov joined Hansberger in 1995 as Managing Director of Eastern Europe and
Russia, portfolio manager and research analyst. Prior to joining Hansberger, he
spent several years working for the Russian government and worked extensively on
the Pepperdine University Russian Conversion and Privatization Program.

INTERNATIONAL FUND - James Chaney, John Carl Fenley, Victoria Gretzky and John
Hock. Mr. Chaney, who joined Hansberger in 1996 as Chief Investment Officer, is
the Fund's leader. Prior to joining Hansberger, he was Executive Vice President
for Templeton Worldwide and a senior member of its Portfolio Management/Strategy
Committee. While at Templeton, Mr. Chaney managed numerous accounts, including
the Foreign Equity Series of Templeton Institutional Funds Inc. Mr. Fenley is
responsible for research coverage of global equities. Prior to joining
Hansberger, he developed and managed the Institutional Investment Department for
SunTrust Bank, South Florida where his client base included local and national
foundations, endowments, corporations and municipalities. Mr. Fenley formerly
served as portfolio manager and equity analyst covering the capital goods and
transportation sectors for Fifth Third Bank. Mr. Fenley received his Bachelor of
Arts degree in Economics from Vanderbilt University. He is a Chartered Financial
Analyst and a member of the Association for Investment Management and Research
(AIMR). Ms. Gretzky joined Hansberger in 1995 as a research analyst. Prior to
joining Hansberger, she was a research analyst for Optimum Consulting, a
Russian-based firm which specialized in restructuring Russian companies during
privatization. Mr. Hock joined Hansberger in 1996 as a research analyst. Prior
to joining Hansberger, he was a senior analyst

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in the global securities research and economics group at Merrill Lynch.

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

SMALL-CAP VALUE FUND - Thomas M. Corkill, CFA. Mr. Corkill joined Harris Trust
in 1982 and serves as Partner and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in March 1997 and has 28
years of experience in portfolio management and research.

GROWTH FUND - James E. Depies, CFA. Mr. Depies joined Harris Trust in 1981 and
serves as Senior Partner and Portfolio Manager. He has served as portfolio
manager of the Fund since the Fund commenced operations in February 1996 and has
37 years of investment experience.

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

EQUITY INCOME FUND - Daniel L. Sido. Mr. Sido joined HIM in 1994 and serves as
Senior Partner and Portfolio Manager. He has served as portfolio manager of the
Fund since the Fund commenced operations in February 1996 and has over 14 years
of investment management experience. Prior to joining HIM, he served as
portfolio manager for a trust company, managing equity and fixed income
portfolios.

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

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

CONVERTIBLE SECURITIES FUND - Douglas G. Madigan, CFA. Mr. Madigan has served as
portfolio manager of the Fund since the

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Fund commenced operations in March 1997. For a description of Mr. Madigan, see
Small-Cap Opportunity Fund above.

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

BOND FUND - Laura Alter and Maureen Svagera. Ms. Alter joined HIM in 1994 and
serves as Senior Partner and Portfolio Manager. She has served as portfolio
manager of the Fund since the Fund commenced operations in April 1996 and has 13
years of experience in the fixed-income investment area. Prior to joining HIM,
she served as portfolio manager for a major mutual fund investment management
firm. Ms. Svagera joined HIM in 1994 and serves as Senior Partner and Portfolio
Manager. She has served as portfolio manager of the Fund since the Fund
commenced operations and has 15 years of experience in the fixed-income markets.
Prior to joining HIM, she spent five years at an investment management firm as
principal/vice president focusing on the mortgage and asset-backed markets.

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

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

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

TAX-EXEMPT MONEY MARKET FUND - Kathleen A. Bramlage. Ms. Bramlage has served as
portfolio manager of the Fund since August 1993. For a description of Ms.
Bramlage, see Tax-Exempt Bond Fund above.

MONEY MARKET FUND - Randall T. Royther. Mr. Royther joined Harris Trust in 1990
and serves as Partner and Portfolio Manager. Mr. Royther has served as portfolio
manager of the Fund since June 1995 and has nine years of investment experience.

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<PAGE> 66

Government Money Market Fund - Randall T. Royther. Mr. Royther has served as
portfolio manager of the Fund since June 1995. For a description of Mr. Royther,
see Money Market Fund above.

ADMINISTRATORS,
CUSTODIAN AND
TRANSFER AGENT

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

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

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

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

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

DISTRIBUTOR

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

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Plans described below, if implemented pursuant to contractual arrangements
between the Trust or the Company and the Distributor and approved by the Board
of Trustees of the Trust or the Board of Directors of the Company.

SERVICE PLAN

Under a complex-wide Service Plan relating to Class A Shares of the Funds, each
Fund may pay the fees of financial institutions (which may include banks),
securities dealers and other industry professionals, such as the investment
advisers, accountants and estate planning firms (collectively, "Service
Organizations") for servicing activities, as described below, at a rate of up to
0.25% of the average daily net assets attributable to the Fund's Class A Shares.
From their own resources, Harris Trust and HIM from time to time may voluntarily
pay fees to certain Service Organizations. Under a separate Service Plan adopted
by the Money Market Funds, those Funds also may bear the costs and expenses
connected with advertising and marketing Class A Shares and may make additional
payments to Service Organizations for servicing activities as described below,
at a rate of up to 0.10% of the average daily assets attributable to Class A
Shares. The Administrators and the Distributor may act as Service Organizations
and receive fees under a Service Plan.

Servicing activities provided by Service Organizations to their customers
investing in the Funds may include establishing and maintaining shareholder
accounts and records; processing purchase and redemption transactions; answering
customer inquiries; assisting customers in changing dividend options, account
designations and addresses; sub-accounting; investing customer cash account
balances automatically in Fund shares; providing periodic account balance
statements and integrating these statements with those of other transactions
and balances in the customer's other accounts serviced by the Service
Organization; arranging for bank wires; and performing other services to the
extent permitted by applicable statute, rule or regulation.

EXPENSES

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the expense of printing and mailing prospectuses used for promotional purposes,
unless otherwise payable pursuant to a Service Plan with respect to Class A
Shares), shareholders' reports, notices, proxy statements and reports to
regulatory agencies; insurance premiums and certain expenses relating to
insurance coverage; trade association membership dues; brokerage and other
expenses connected with the execution of portfolio securities transactions; fees
and expenses of the Funds' Custodian including those for keeping books and
accounts; expenses of shareholders' meetings and meetings of Boards of Trustees
and Directors; expenses relating to the issuance, registration and qualification
of shares of the Funds; fees of pricing services; organizational expenses; and
any extraordinary expenses. Expenses attributable to each Fund are borne by that
Fund. Other general expenses of the Trust or the Company are allocated among the
Funds in an equitable manner as determined by the Boards of Trustees and
Directors.

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HOW TO BUY SHARES

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

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

Minimum Investments. The Funds have the following minimum investments:

<TABLE>
<S> <C>
To open
an account ............................. $1,000 per Fund

To open a
retirement
account ................................ $250 per Fund

To add to an existing
account ................................ $50 per Fund

Investing through an
Automatic Investment
Plan ................................... $50 per Fund
</TABLE>

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

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

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

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

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

PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3
For Credit To:
Harris Insight
Funds 85-5093-2950
Re: [Name of Fund]--
Class A Shares
Account No.:
Account Name:

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

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

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

Automatic Investing. Automatic investing is an easy way to add to your Harris
Insight Funds and can help you achieve your financial goals as simply and
conveniently as possible. Through the Harris Insight Funds Automatic Investment
Plan you can have as little as $50 a month electronically withdrawn from your
checking account and invested in the Fund of your choice. This feature can be
established when you open your account. For more information or to receive an
application, please call (800) 982-8782.

GENERAL PURCHASE INFORMATION

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Money Market Fund normally calculates its NAV on or before 12:00 Noon, Eastern
time. The Money Market Fund normally calculates its NAV on or before 2:30 p.m.,
Eastern time. Shares are purchased at the next share price calculated after your
investment is received and accepted.

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

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HOW TO SELL SHARES

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

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

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

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

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

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

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

GENERAL REDEMPTION INFORMATION

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

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

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

Wire Redemption Privilege. If the wire redemption privilege has been elected on
the shareholder application, redemption of shares may be requested by telephone,
on any day the Funds and the Transfer Agent are open for business, by calling
the Funds at (800) 625-7073. The minimum amount that may be wired is $1,000.
Otherwise, a check is mailed to the shareholder's address of record. The Funds
reserve the right to change this minimum or to terminate the privilege.
Redemption proceeds normally are transmitted by wire on the business day after a
redemption request is made. For each of the Tax-Exempt Money Market Fund and the
Government Money Market Fund, if a request is received by the Transfer Agent by
12:00 Noon, Eastern time on a day the Funds and the Transfer Agent are open for
business, the redemption proceeds will be transmitted to the shareholder's bank
that same day. For the Money Market Fund, if a request is received by the
Transfer Agent by 2:30 p.m., Eastern time on a day the Fund and the Transfer
Agent are open for business, the redemption proceeds will be transmitted to the
shareholder's bank that same day.

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

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SHAREHOLDER SERVICES AND POLICIES

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

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

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

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

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

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

At the Funds' discretion, signature guarantees also may be required for other
redemptions. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who is a
participant in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are the Securities Transfer
Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP)
and the New York Stock Exchange, Inc. Medallion Signature Program (MSP).
Signature guarantees which are not part of these programs will not be accepted.

Telephone Transactions. Investors may buy (by bank wire), sell and exchange
shares by telephone. Shareholders engaging in telephone transactions should be
aware that they may be foregoing some of the security associated

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with written requests. A shareholder may bear the risk of any resulting losses
from a telephone transaction. The Funds will employ reasonable procedures to
confirm that telephonic instructions are genuine. If the Funds or their service
providers fail to employ these measures, they may be liable for any losses
arising from unauthorized or fraudulent instructions. In addition, the Funds
reserve the right to record all telephone conversations. Please verify the
accuracy of telephone instructions immediately upon receipt of confirmation
statements.

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

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

Share Certificates. Share certificates are not issued.

Eligibility by State. You may only invest in, or exchange into, Class A Shares
legally available in your jurisdiction of residence.

Checkwriting. The Money Market Fund, the Government Money Market Fund and the
Tax-Exempt Money Market Fund offer a checkwriting privilege. If you are an
investor in one of these Funds and have completed the checkwriting application
and signature card, you may redeem shares by writing a check against your
account. If you are opening a new account and wish to use checkwriting, you must
complete the checkwriting application and signature card when completing the
account application. If you already have an account, you may contact the Harris
Insight Funds at (800) 982-8782 for the necessary forms.

Upon receipt of the necessary forms, checks will be forwarded to you. The
minimum check amount is $500. The checkwriting privilege will be subject to the
customary rules and regulations governing checkwriting. If your account is
registered as belonging to multiple owners (e.g., as joint tenants), each
shareholder must sign each check, unless the shareholders have authorized fewer
signatures and such election is on file with the Funds' Transfer Agent. When the
check is presented to the Transfer Agent for payment, the Fund's

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Custodian will cause the Fund to redeem a sufficient number of shares in your
account to cover the amount of the check, which enables you to continue earning
income on those shares until the check is presented for payment. You should make
certain that you own a sufficient number of shares to cover the amount of the
check. If you do not own enough shares to cover a check when presented, the
check will be returned to the payee marked "insufficient funds." Checks written
for amounts that would require the redemption of shares purchased by check or
electronic funds transfer within the previous 10 business days or checks written
in amounts of less than $500 may be returned. Charges may be imposed for
returned checks, stop payment orders, copies of cancelled checks and other
special services. The Funds and the Custodian reserve the right to terminate or
modify this privilege or to impose a service fee in connection with the
privilege.

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

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HOW THE FUNDS MAKE DISTRIBUTIONS
TO SHAREHOLDERS; TAX INFORMATION

Dividends of net investment income currently
are declared and paid at least annually by each Fund in
accordance with the Fund's dividend policy. Dividends from each
of the Emerging Markets Fund, the International Fund,
the Small-Cap Opportunity Fund and the Small-Cap Value Fund
are declared and paid annually. Dividends from the Growth Fund are
declared and paid semi-annually. Dividends from each of the Equity
Income Fund, the Equity Fund, the Index Fund, the
Balanced Fund and the Convertible Securities Fund are declared and
paid quarterly. Dividends from the Tax-Exempt Bond Fund, the Bond Fund,
the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond
Fund and the Intermediate Government Bond Fund are declared
daily and paid monthly. Dividends from each of the Money Market Funds
are declared daily and paid monthly. Any net capital gains will be
declared and paid at least annually. Dividend and capital gain distributions
may be invested in additional shares of the same Fund at net asset
value and credited to your account on the payment date or paid in cash.
Distribution checks and account statements will be mailed
approximately two business days after the payment date.

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

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

Distributions of net long-term capital gains, if any, will be taxable as
long-term capital gains, whether received in cash or reinvested in additional
shares, regardless of how long the share-

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holder has held the shares, and will not qualify for the dividends-received
deductions.

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

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

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

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

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

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GENERAL INFORMATION

BANKING LAW MATTERS

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

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

HOW SHARE VALUE
IS DETERMINED

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

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market quotations (or when, in the view of the investment adviser, available
market quotations do not accurately reflect a security's fair value), securities
are valued at their fair value as determined by the Trust's Board of Trustees or
Company's Board of Directors. Prices used for valuations of securities are
provided by independent pricing services. Debt obligations with remaining
maturities of 60 days or less generally are valued at amortized cost. The
amortized cost method involves valuing a security at its cost and amortizing any
discount or premium over the period until maturity, regardless of the impact of
fluctuating interest rates on the market value of the security.

The net asset value per share of the Tax-Exempt Money Market Fund and the
Government Money Market Fund is determined at 12:00 Noon, Eastern time. The net
asset value per share of the Money Market Fund is determined at 2:30 p.m.,
Eastern time. In order to maintain a stable net asset value of $1.00 per share,
each of the Money Market Funds uses the amortized cost method to value its
portfolio securities.

HOW PERFORMANCE
IS REPORTED

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

Total return refers to the amount an investment in a Fund would have earned,
including any increase or decrease in net asset value, over a specified period
of time and assumes the reinvestment of all dividends and distributions. The
total return of each Fund shows what an investment in Class A Shares of the Fund
would have earned over a specified period of time (such as one, five or ten
years, or the period of time since commencement of operations, if shorter)
assuming that all distributions and dividends by the Fund were reinvested on
their reinvestment dates during the period less all recurring fees.

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

The effective yield is calculated similarly but, when annualized, the income
earned by an investment in

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

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

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

MORE INFORMATION ABOUT THE TRUST AND THE COMPANY

The Trust is an open-end management investment company which was organized on
December 6, 1995 as a business trust under the laws of the Commonwealth of
Massachusetts. The Trust offers shares of beneficial interest, $.001 par value,
for sale to the public. Currently, the Trust has 13 portfolios in operation. The
Board has authorized each Fund of the Trust to issue two classes of shares,
Class A Shares and Institutional Shares.

The Company, which was incorporated in Maryland on September 16, 1987, is an
open-end management investment company. The authorized capital stock of the
Company consists of 10,000,000,000 shares having a par value of $.001 per share.
Currently, the Company has five portfolios in operation. The Company's Board of
Directors has authorized each Fund of the Company to issue two classes of
shares, Class A Shares and Institutional Shares.

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

As of April 1, 1998, Harris Trust owned of record all or substantially all of
the Institutional Shares of the Funds and, for purposes of the 1940 Act, may be
have been deemed to control the Funds. Harris Trust has indicated that it holds
its shares on behalf of various client accounts and not as beneficial owner.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

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

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

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

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APPENDIX A: PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS, EUROPEAN DEPOSITARY RECEIPTS AND GLOBAL DEPOSITARY
RECEIPTS. The Emerging Markets Fund and the International Fund may purchase
sponsored and unsponsored American Depositary Receipts ("ADRs"), European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and similar
securities ("Depositary Receipts"). Each of the Equity Funds also may invest in
ADRs and EDRs. Depositary Receipts are typically issued by a financial
institution ("depository") and evidence ownership interests in a security or a
pool of securities ("underlying securities") that have been deposited with the
depository. For ADRs, the depository is typically a U.S. financial institution
and the underlying securities are issued by a foreign issuer. For other
Depositary Receipts, the depository may be a foreign or a U.S. entity, and the
underlying securities may have a foreign or a U.S. issuer. Depositary Receipts
will not necessarily be denominated in the same currency as their underlying
securities. Depositary Receipts may be issued pursuant to sponsored or
unsponsored programs. In sponsored programs, an issuer has made arrangements to
have its securities traded in the form of Depositary Receipts. In unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the Depositary Receipts. For purposes of a Fund's investment policies,
investments in Depositary Receipts will be deemed to be investments in the
underlying securities. Thus, a Depositary Receipt representing ownership of
common stock will be treated as common stock.

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contracts, leases of various types of real and personal property and receivables
from revolving credit (credit card) agreements. In accordance with guidelines
established by the Boards of Trustees and Directors, asset-backed securities may
be considered illiquid securities and, therefore, may be subject to a Fund's 15%
(10% with respect to the Equity Fund, the Short/Intermediate Bond Fund and the
Money Market Funds) limitation on such investments. Asset-backed securities,
including adjustable rate asset-backed securities, have yield characteristics
similar to those of mortgage-backed securities and, accordingly, are subject to
many of the same risks, including prepayment risk.

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

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

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

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

BRADY BONDS. The Emerging Markets Fund may invest a portion of its assets in
certain sovereign debt obligations known as "Brady Bonds." Brady Bonds are
issued under the framework of the Brady Plan, an initiative announced by former
U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor
nations to restructure their outstanding external indebtedness. The Brady Plan
contemplates, among other things, the debtor nation's adoption of certain
economic reforms and the exchange of commercial bank debt for newly issued
bonds. In restructuring its external debt under the Brady Plan framework, a
debtor nation negotiates with its existing bank lenders as well as the World
Bank or the International Monetary Fund (the "IMF"). The World Bank or IMF
supports the restructuring by providing funds pursuant to loan agreements or
other arrangements that enable the debtor nation to collateralize the new Brady
Bonds or to replenish reserves used to reduce outstanding bank debt. Under these
loan agreements or other arrangements with the World Bank or IMF, debtor nations
have been required to agree to implement certain domestic monetary and fiscal
reforms. The Brady Plan sets forth only general guiding principles for economic
reform and debt reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors.

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mercial bank debt for bonds issued at 100% of face value of such debt, bonds
issued at a discount of face value of such debt, and bonds bearing an interest
rate that increases over time and the advancement of the new money for bonds.
The principal of certain Brady Bonds has been collateralized by U.S. Treasury
zero coupon bonds with a maturity equal to the final maturity of the Brady
Bonds. Collateral purchases are financed by the IMF, World Bank and the debtor
nations' reserves. Interest payments may also be collateralized in part in
various ways.

Brady Bonds are often viewed as having collateralized and uncollateralized
components. In light of the residual risk associated with the uncollateralized
components and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries issuing Brady
Bonds, investments in Brady Bonds can be viewed as speculative.

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

CONVERTIBLE SECURITIES. The Equity Funds, the Convertible Securities Fund and
the Bond Fund may invest in convertible preferred stock and bonds, which are
fixed income securities that are convert-

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ible into common stock at a specified price or conversion ratio. Because these
securities have the characteristics of both fixed income and equity securities,
they sometimes are called "hybrid" securities. In general, the value of a
convertible security is the higher of its investment value (its value as a fixed
income security) and its conversion value (the value of the underlying shares of
common stock if the security is converted). As a fixed income security, the
value of a convertible security generally increases when interest rates decline
and generally decreases when interest rates rise. The value of convertible
securities, however, is also influenced by the value of the underlying common
stock. Thus, convertible securities ordinarily will provide opportunities for
producing both current income and longer-term capital appreciation. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinate to any nonconvertible fixed income securities.

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

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

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

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interest rates or changes in the issuer's creditworthiness.

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

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

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

Each of the Equity Funds may enter into forward foreign currency exchange
contracts for the purchase or sale of a fixed quantity of a foreign currency at
a future date ("Forward Contracts"). A Fund may enter into Forward Contracts for
"hedging" purposes--either to "lock in" the U.S. dollar price of the securities
denominated in a foreign currency or the U.S. dollar value of interest and
dividends to be paid on such securities, or to hedge against the possibility
that the currency of a foreign country in which a Fund has investments may
suffer a decline against the U.S. dollar--or for non-hedging purposes. By
entering into Forward Contracts, a Fund may be required to forego the benefits
of advantageous changes in exchange rates and, in the case of Forward Contracts
entered into for non-hedging purposes, the Fund may sustain losses which will
reduce its gross income. A Fund also may enter into a Forward Contract on one
currency in order to hedge against risk of loss arising from fluctuations in the
value of a second currency (referred to as a "cross hedge") if, in the judgment
of the investment adviser, 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

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transactions in futures contracts or options traded on exchanges.

For the Emerging Markets Fund, only a limited market, if any, currently exists
for hedging transactions relating to currencies in many emerging market
countries. This may limit the Emerging Market Fund's ability to effectively
hedge its investments in those emerging markets.

The Emerging Markets Fund and the International Fund may purchase put and call
options and write covered put and call options on foreign currencies for the
purpose of protecting against declines in the U.S. dollar value of foreign
currency denominated portfolio securities and against increases in the U.S.
dollar cost of such securities to be acquired. As in the case of other kinds of
options, however, the writing of an option on a foreign currency constitutes
only a partial hedge (up to the amount of the premium received) and the Fund
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an option on a foreign
currency may constitute an effective hedge against fluctuations in exchange
rates although, in the event of rate movements adverse to the Fund's position,
it may forfeit the entire amount of the premium plus related transaction costs.
Options on foreign currencies to be written or purchased by the Fund are traded
on U.S. and foreign exchanges or over-the-counter.

FOREIGN SECURITIES. Each of the Emerging Markets Fund and the International Fund
may invest up to 100% of its total assets in dollar-denominated and
non-dollar-denominated foreign equity and debt securities. Each of the other
Equity Funds may invest up to 10% of its total assets in dollar-denominated
foreign equity and debt securities. The Short/Intermediate Bond Fund and the
Bond Fund (each with respect to 20% of its total assets) as well as the Money
Market Fund may invest in non-convertible (and convertible in the case of the
Bond Fund) debt of foreign banks, foreign 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 that are described in
the Prospectus.

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

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

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

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

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

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

Repurchase agreements and time deposits that do not provide for payment to the
Fund within seven days after notice or which have a term greater than seven days
are deemed illiquid securities for this purpose unless such securities are
variable amount master demand notes with maturities of nine months or less or
unless the investment adviser has determined that an adequate trading market
exists for such securities or that market quotations are readily available.

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

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which an institutional market has developed. Institutional investors depend on
an efficient institutional market in which the unregistered security can be
readily resold or on the issuer's ability to honor a demand for repayment of the
unregistered security. A security's contractual or legal restrictions on resale
to the general public or to certain institutions may not be indicative of the
liquidity of the security. These securities may be determined to be liquid in
accordance with guidelines established by the Trust's Board of Trustees (or the
Company's Board of Directors). These guidelines take into account trading
activity in the securities and the availability of reliable pricing information,
among other factors. The Board of Trustees or Directors monitors implementation
of these guidelines on a periodic basis.

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

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

Some emerging countries have laws and regulations that preclude direct foreign
investment in the securities of companies located there. However, indirect
foreign investment in the securities of companies listed and traded on the stock
exchanges in these countries is permitted by certain emerging countries through
specifically authorized investment funds. The Emerging Markets Fund and the
International Fund may invest in these investment funds.

Letters of Credit. Debt obligations, including municipal obligations,

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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 investment adviser, are of investment quality
comparable to other permitted investments of a Fund, may be used for letter of
credit-backed investments.

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

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

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<PAGE> 94
securities may not be an effective means of locking in a particular interest
rate. In addition, any premium paid for a mortgage-backed security may be lost
if the security is prepaid. When interest rates rise, mortgage-backed securities
experience lower rates of prepayment. This has the effect of lengthening the
expected maturity of a mortgage-backed security. As a result, prices of
mortgage-backed securities may decrease more than prices of other debt
obligations when interest rates rise.

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

The two principal classifications of municipal obligations are "general
obligation" securities and "revenue" securities. General obligation securities
are secured by the issuer's pledge of its full faith, credit and taxing power
for the payment of principal and interest. Revenue securities are payable only
from the revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or from other specific
revenue sources such as the user of the facility being financed. Revenue
securities include private activity bonds (also known as industrial revenue
bonds), which may be purchased only by the Tax-Exempt Bond Fund and the
Intermediate Tax-Exempt Bond Fund and which are not payable from the
unrestricted revenues of the issuer. Consequently, the credit quality of private
activity bonds is usually directly related to the credit standing of the
corporate user of the facility involved.

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<PAGE> 95
notes in which the Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond
Fund may invest include tax anticipation notes, bond anticipation notes, and
revenue anticipation notes (which generally are issued in anticipation of
various seasonal revenues).

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

Real Estate Investment Trusts. The Emerging Markets Fund and the International
Fund may invest in REITs. REITs are pooled investment vehicles that invest
primarily in income producing real estate or real estate related loans or
interests. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. REITs
may be affected by changes in the value of the underlying property owned by the
REITs or the quality of loans held by the REIT. REITs are dependent upon
management skills, are not diversified, and are subject to the risks of
financing projects.

REITs are also subject to interest rate risks. When interest rates decline, the
value of a REIT's investment in fixed rate obligations can be expected to rise.
Conversely, when interest rates rise, the value of a REIT's investment in fixed
rate obligations can be expected to decline.

Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume and may be subject to more abrupt
or erratic price movements than larger company securities.

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

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<PAGE> 96
price, which includes an amount representing interest on the purchase price. A
Fund may enter into repurchase agreements collateralized only by obligations
that could otherwise be purchased by the Fund (except with respect to maturity).
The seller will be required to maintain in a segregated account for the Fund
cash or cash equivalent collateral equal to at least 102% of the repurchase
price (including accrued interest). Default or bankruptcy of the seller would
expose a Fund to possible loss because of adverse market action, delays in
connection with the disposition of the underlying obligations or expenses of
enforcing its rights.

The Equity Funds and the Fixed Income Funds may borrow funds for temporary
purposes by selling portfolio securities to financial institutions such as banks
and broker-dealers and agreeing to repurchase them at a mutually specified date
and price ("reverse repurchase agreements"). Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price. A Fund would pay interest on amounts
obtained pursuant to a reverse repurchase agreement.

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

Securities with Puts. In order to maintain liquidity, the Equity Funds, the
Tax-Exempt Bond Fund, the Bond Fund, the Intermediate Tax-Exempt Bond Fund, the
Short/Intermediate Bond Fund, the Intermediate Government Bond Fund, and the
Money Market Funds may enter into puts with respect to portfolio securities with
banks or broker-dealers that, in the opinion of the investment 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.

Short Sales. The Emerging Markets Fund may from time to time sell

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securities short without limitation, although initially it has no intention to
sell securities short. In a short sale, the Fund sells securities it does not
own (but has borrowed) in anticipation of a decline in the securities' market
price. All short sales by the Fund will be fully collateralized. Short sales
involve certain risks and special considerations; possible losses from short
sales may be unlimited, whereas losses from purchases of securities are limited
to the total amount invested. The Fund may also sell short "against the box,"
that is, sell a security that the Fund owns or has the right to acquire, for
delivery at a specified date in the future.

Sovereign Debt. The Emerging Markets Fund and the International Fund may invest
in "sovereign debt," which is issued or guaranteed by emerging market
governments (including countries, provinces and municipalities) or their
agencies and instrumentalities. Sovereign debt may trade at a substantial
discount from face value. The Fund may hold and trade sovereign debt of emerging
market countries in appropriate circumstances and to participate in debt
conversion programs. Emerging country sovereign debt involves a high degree of
risk, is generally lower-quality debt, and is considered speculative in nature.
The issuer or governmental authorities that control sovereign debt repayment
("sovereign debtors") may be unable or unwilling to repay principal or interest
when due in accordance with the terms of the debt. A sovereign debtor's
willingness or ability to repay principal and interest due in a timely manner
may be affected by, among other factors, its cash flow situation, the extent of
its foreign reserves, the availability of sufficient foreign exchange on the
date a payment is due, the relative size of the debt service burden to the
economy as a whole, the sovereign debtor's policy towards the IMF and the
political constraints to which the sovereign debtor may be subject. Sovereign
debtors may also be dependent on expected disbursements from foreign
governments, multilateral agencies and others abroad to reduce principal and
interest arrearage on their debt. The commitment of these third parties to make
such disbursements may be conditioned on the sovereign debtor's implementation
of economic reforms or economic performance and the timely service of the
debtor's obligations. The sovereign debtor's failure to meet these conditions
may cause these third parties to cancel their commitments to provide funds to
the sovereign debtor, which may further impair the debtor's ability or
willingness to timely service its debts. In certain instances, the Fund may
invest in sovereign debt that is in default as to payments of principal or
interest. In the event that the Fund holds non-performing sovereign debt, the
Fund may incur additional expenses in connection with any restructuring of the
issuer's obliga-

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tions or in otherwise enforcing its rights thereunder.

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

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

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

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<PAGE> 99
Warrants. The Equity Funds and the Convertible Securities Fund may invest in
warrants, which are options to purchase an equity security at a specified price
(usually representing a premium over the applicable market value of the
underlying equity security at the time of the warrant's issuance) and usually
during a specified period of time. Unlike convertible securities and preferred
stocks, warrants do not pay a fixed dividend. Investments in warrants involve
certain risks, including the possible lack of a liquid market for the resale of
the warrants, potential price fluctuations as a result of speculation or other
factors and failure of the price of the underlying security to reach a level at
which the warrant can be prudently exercised (in which case the warrant may
expire without being exercised, resulting in the loss of the Fund's entire
investment therein).

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

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

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<PAGE> 100
representing undivided interests in these instruments. These instruments are
generally held by a bank in a custodial or trust account on behalf of the owners
of the securities and are known by various names, including Treasury Receipts
("TRs"), Treasury Investment Growth Receipts ("TIGRs") and Certificates of
Accrual on Treasury Securities ("CATS"). Stripped securities also may be issued
by corporations and municipalities. Stripped securities will normally be
considered illiquid investments and will be acquired subject to the limitations
on illiquid investments.

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

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<PAGE> 101
Investment Adviser, Administrator,
Transfer Agent and Dividend Disbursing Agent
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60603

Portfolio Management Agent
Harris Investment Management, Inc.
190 South LaSalle Street
Chicago, Illinois 60603

Investment Sub-Adviser
Hansberger Global Investors, Inc.
515 East Las Olas Boulevard, Suite 1300
Fort Lauderdale, Florida 33301

Sub-Administrator and Accounting
Services Agent, Sub-Transfer Agent
and Dividend Disbursing Agent
PFPC Inc.
103 Bellevue Parkway
Wilmington, Delaware 19809

Sub-Administrator and Distributor
Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, Massachusetts 02109

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

Independent Accountants
Price Waterhouse LLP
30 South 17th Street
Philadelphia, Pennsylvania 19103

Legal Counsel
Bell, Boyd & Lloyd
Three First National Plaza
Chicago, Illinois 60602

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<PAGE> 102

Investment Adviser:
Harris Trust and Savings Bank

Portfolio Management Agent:
Harris Investment Management, Inc.

Distributor:
Funds Distributor, Inc.

RPROS5/98

<PAGE> 103

HARRIS
INSIGHT(R) FUNDS

MAY 1, 1998 PROSPECTUS

Prospectus begins on page 1.

INSTITUTIONAL SHARES

Harris Insight Equity Funds

Harris Insight Fixed Income Funds

Harris Insight Money Market Funds

[HARRIS LOGO]

HARRIS
INSIGHT FUNDS

Powerful Insight. Solid Investments.(SM)
<PAGE> 104

HARRIS INSIGHT(R) FUNDS
60 State Street, Suite 1300 * Boston, Massachusetts 02109 * 800.982.8782

INSTITUTIONAL SHARES

Harris Insight Emerging Markets Fund

Harris Insight International Fund

Harris Insight Small-Cap Opportunity Fund

Harris Insight Small-Cap Value Fund

Harris Insight Growth Fund

Harris Insight Equity Fund

Harris Insight Equity Income Fund

Harris Insight Index Fund

Harris Insight Balanced Fund

Harris Insight Convertible Securities Fund

Harris Insight Tax-Exempt Bond Fund

Harris Insight Bond Fund

Harris Insight Intermediate Tax-Exempt Bond Fund

Harris Insight Short/Intermediate Bond Fund

Harris Insight Intermediate Government Bond Fund

Harris Insight Tax-Exempt Money Market Fund

Harris Insight Money Market Fund

Harris Insight Government Money Market Fund
<PAGE> 105

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

To learn more about the Funds and their investments, you may obtain a copy of
the Harris Insight Funds' most recent financial report and portfolio listing or
Statement of Additional Information dated May 1, 1998 (the "SAI") simply by
calling 800.982.8782. The SAI has been filed with the Securities and Exchange
Commission (the "SEC") and (as supplemented from time to time) is incorporated
by reference into this Prospectus. The SEC maintains a Web site
(http://www.sec.gov) that contains the SAI and other information regarding the
Funds.

May 1, 1998

1
<PAGE> 106
TABLE OF CONTENTS

FUND SUMMARY PAGE 3

EXPENSE SUMMARY PAGE 6

FINANCIAL HIGHLIGHTS PAGE 8

INVESTMENT OBJECTIVES AND POLICIES PAGE 14
Equity Funds PAGE 14
Fixed Income Funds PAGE 18
Money Market Funds PAGE 21

ADDITIONAL INVESTMENT INFORMATION PAGE 23
Additional Investment Policies PAGE 23
Risk Considerations PAGE 26

MANAGEMENT PAGE 30

HOW TO BUY SHARES PAGE 35

HOW TO SELL SHARES PAGE 37

SHAREHOLDER SERVICES AND POLICIES PAGE 39

HOW THE FUNDS MAKE DISTRIBUTIONS PAGE 41
TO SHAREHOLDERS; TAX INFORMATION

GENERAL INFORMATION PAGE 43
Banking Law Matters PAGE 43
How Share Value Is Determined PAGE 43
How Performance Is Reported PAGE 43
More Information About the Trust and the Company PAGE 44

APPENDIX A: PERMITTED INVESTMENTS PAGE 46

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE
MORE DETAILED INFORMATION CONTAINED IN THIS PROSPECTUS.

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

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

EQUITY FUNDS

EMERGING MARKETS FUND seeks to provide capital appreciation by investing in
equity securities of companies in emerging markets that the investment
adviser believes to be undervalued.

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

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

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

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

FIXED INCOME FUNDS

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.

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.

SHORT/INTERMEDIATE BOND FUND seeks to provide a high level of total return,
including a competitive level of

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<PAGE> 108
current income, by investing primarily in investment grade debt securities with
a short/intermediate-term average maturity.

MONEY MARKET FUNDS

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

WHO MANAGES EACH FUND'S INVESTMENTS?

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

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

4
<PAGE> 109
WHAT ADVANTAGES DO THE FUNDS OFFER?

WHEN ARE DIVIDENDS PAID?

HOW ARE SHARES BOUGHT AND SOLD?

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

WHAT RISKS ARE ASSOCIATED WITH THE FUNDS?

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

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

5
<PAGE> 110
EXPENSE SUMMARY

The following table illustrates information concerning annual fund operating
expenses for Institutional Shares of the Funds. There are no transaction charges
in connection with purchases, redemptions or exchanges of Fund Shares. None of
the Funds has adopted a Rule 12b-1 Plan with respect to the Institutional Shares
and accordingly, no Fund incurs distribution expenses with respect to the
Institutional Shares.

Annual Operating Expenses
(as a percentage of average net assets after applicable fee waivers and expense
reimbursements)*

<TABLE>
<CAPTION>
INVESTMENT RULE 12B-1 OTHER TOTAL
ADVISORY FEES EXPENSES OPERATING
FEES EXPENSES
<S> <C> <C> <C> <C>

EQUITY FUNDS
Emerging Markets Fund 0.91% None 0.84% 1.75%
International Fund 1.03 None 0.37 1.40
Small-Cap Opportunity Fund 0.99 None 0.21 1.20
Small-Cap Value Fund 0.73 None 0.26 0.99
Growth Fund 0.89 None 0.21 1.10
Equity Fund 0.70 None 0.18 0.88
Equity Income Fund 0.67 None 0.26 0.93
Index Fund 0.23 None 0.22 0.45
Balanced Fund 0.56 None 0.32 0.88

FIXED-INCOME FUNDS
Convertible Securities Fund 0.66 None 0.26 0.92
Tax-Exempt Bond Fund 0.60 None 0.20 0.80
Bond Fund 0.36 None 0.24 0.60
Intermediate Tax-Exempt Bond Fund 0.60 None 0.19 0.79
Short/Intermediate Bond Fund 0.41 None 0.19 0.60
Intermediate Government Bond Fund 0.24 None 0.26 0.50

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 0.11 None 0.14 0.25
Money Market Fund 0.10 None 0.11 0.21
Government Money Market Fund 0.11 None 0.12 0.23
</TABLE>

*The amounts for expenses are based on amounts incurred during the Funds' most
recent fiscal period. Without fee waivers or expense reimbursements, investment
advisory fees and total operating expenses would be 1.25% and 2.09% for the
Emerging Markets Fund, 1.05% and 1.42% for the International Fund, 1.00% and
1.21% for the Small-Cap Opportunity Fund, 0.80% and 1.06% for the Small-Cap
Value Fund, 0.90% and 1.11% for the Growth Fund, 0.70% and 0.96% for the Equity
Income Fund, 0.25% and 0.47% for the Index Fund, 0.60% and 0.92% for the
Balanced Fund, 0.70% and 0.96% for the Convertible Securities Fund, 0.65% and
0.89% for the Bond Fund, 0.70% and 0.89% for the Short/Intermediate Bond Fund
and 0.65% and 0.91% for the Intermediate Government Bond Fund; and other
expenses and total operating expenses would be 0.15% and 0.26% for the
Tax-Exempt Money Market Fund, 0.16% and 0.26% for the Money Market Fund and
0.17% and 0.28% for the Government Money Market Fund.

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

6
<PAGE> 111
EXAMPLE

THE TABLE BELOW SHOWS WHAT YOU WOULD PAY IF YOU INVESTED $1,000 OVER THE
TIME FRAMES INDICATED. THE EXAMPLE ASSUMES YOU REINVESTED ALL DIVIDENDS
AND THAT THE AVERAGE ANNUAL RETURN WAS 5%.

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
<S> <C> <C> <C> <C>

EQUITY FUNDS
Emerging Markets Fund $18 $55 $95 $206
International Fund 14 44 77 168
Small-Cap Opportunity Fund 12 38 66 145
Small-Cap Value Fund 10 32 55 121
Growth Fund 11 35 61 134
Equity Fund 9 28 49 108
Equity Income Fund 9 30 51 114
Index Fund 5 14 25 57
Balanced Fund 9 28 49 108

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

MONEY MARKET FUNDS
Tax-Exempt Money Market Fund 3 8 14 32
Money Market Fund 2 6 11 26
Government Money Market Fund 2 7 12 28
</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.

7
<PAGE> 112

FINANCIAL HIGHLIGHTS

THE FINANCIAL HIGHLIGHTS ON THE FOLLOWING PAGES REPRESENT SELECTED DATA FOR A
SINGLE INSTITUTIONAL SHARE OF EACH FUND OUTSTANDING FOR THE PERIODS SHOWN. THIS
INFORMATION HAS BEEN DERIVED FROM THE FINANCIAL STATEMENTS AUDITED BY PRICE
WATERHOUSE LLP, INDEPENDENT ACCOUNTANTS. THE FUNDS' FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1997 AND INDEPENDENT ACCOUNTANTS' REPORT THEREON ARE
INCLUDED IN THE FUNDS' ANNUAL REPORT AND ARE INCORPORATED BY REFERENCE INTO (ARE
LEGALLY A PART OF) THE FUNDS' SAI. THESE FINANCIAL HIGHLIGHTS SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS. FURTHER INFORMATION ABOUT EACH FUND'S
PERFORMANCE IS CONTAINED IN THE ANNUAL REPORT, WHICH MAY BE OBTAINED FROM THE
HARRIS INSIGHT FUNDS WITHOUT CHARGE.

<TABLE>
<CAPTION>
EMERGING SMALL-CAP SMALL-CAP
MARKETS FUND INTERNATIONAL FUND OPPORTUNITY FUND VALUE FUND
FOR THE PERIOD YEAR FOR THE PERIOD YEAR FOR THE PERIOD FOR THE PERIOD
10/21/97(5) TO ENDED 02/26/96(5) TO ENDED 02/26/96(5) TO 03/24/97(5) TO
12/31/97 12/31/97 12/31/96 12/31/97 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $15.46 $15.04 $15.52 $14.24 $28.29
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.006 0.116 0.128 0.007 0.057 0.146
Net Realized and Unrealized
Gain/(Loss) on Investments (1.456) (0.858) 0.485 3.865 1.998 7.467
------ ------ ------ ------ ------ ------
Total from Investment Operations (1.450) (0.742) 0.613 3.872 2.055 7.613
------ ------ ------ ------ ------ ------

LESS DISTRIBUTIONS:
Net Investment Income 0.000 (0.125) (0.125) (0.012) (0.057) (0.139)
Net Realized Gains 0.000 (1.263) (0.068) (1.670) (0.718) (2.744)
------ ------ ------ ------ ------ ------
Total Distributions 0.000 (1.388) (0.193) (1.682) (0.775) (2.883)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $8.55 $13.33 $15.46 $17.71 $15.52 $33.02
====== ====== ====== ====== ====== ======
TOTAL RETURN (14.50)%(3) (4.87)% 4.08%(3) 25.47% 14.49%(3) 27.11%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 18,023 172,158 109,747 274,353 150,306 99,816
Ratios of Expenses to Average
Net Assets(1) 1.75% (2) 1.40% 1.36%(2) 1.20% 1.20%(2) 0.99%(2)
Ratio of Net Investment Income to
Average Net Assets 0.43%(2) 0.82% 0.99%(2) 0.03% 0.46%(2) 0.63%(2)
Portfolio Turnover Rate 0.00% 93.33% 6.72% 39.63% 46.13% 91.66%(2)
Average Commission Rate(4) $0.003 $0.006 $0.020 $0.054 $0.058 $0.055
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the period
ended December 31, 1997 for the Emerging Markets Fund would have been 2.09%
(annualized), for the year ended December 31, 1997 and the period ended December
31, 1996 for the International Fund would have been 1.42% and 1.38%
(annualized), respectively, for the Small-Cap Opportunity Fund would have been
1.21% and 1.22% (annualized), respectively, for the period ended December 31,
1997 for the Small-Cap Value Fund would have been 1.06% (annualized), for the
year ended December 31, 1997 and the period ended December 31, 1996 for the
Growth Fund would have been 1.11% and 1.14% (annualized), respectively, for the
Equity Income Fund would have been 0.96% and 0.97% (annualized), respectively,
for the Index Fund would have been 0.47% and 0.49% (annualized), respectively,
and for the period ended December 31, 1997 for the Balanced Fund would have been
0.92% (annualized).

8
<PAGE> 113

<TABLE>
<CAPTION>
GROWTH FUND EQUITY FUND
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED 02/26/96(5) TO ENDED 02/26/96(5) TO
12/31/97 12/31/96 12/31/97 12/31/96
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 18.69 $ 17.01 $ 15.53 $ 15.30
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.048 0.062 0.234 0.189
Net Realized and Unrealized
Gain/(Loss) on Investments 6.026 2.746 5.190 1.898
------ ------ ------ ------
Total from Investment Operations 6.074 2.808 5.424 2.087
------ ------ ------ ------
LESS DISTRIBUTIONS:
Net Investment Income (0.048) (0.063) (0.235) (0.193)
Net Realized Gains (2.046) (1.065) (3.129) (1.664)
------ ------ ------ ------
Total Distributions (2.094) (1.128) (3.364) (1.857)
------ ------ ------ ------
Net Asset Value, End of Period $ 22.67 $ 18.69 $ 17.59 $ 15.53
====== ====== ====== ======
TOTAL RETURN 32.81% 16.43%(3) 35.89% 13.66%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 109,140 76,516 845,829 568,400
Ratios of Expenses to Average
Net Assets(1) 1.10% 1.10%(2) 0.88% 0.90%(2)
Ratio of Net Investment Income to
Average Net Assets 0.22% 0.42%(2) 1.33% 1.43%(2)
Portfolio Turnover Rate 37.02% 35.36% 81.48% 75.20%
Average Commission Rate(4) $ 0.058 $ 0.058 $ 0.054 $ 0.056
</TABLE>

<TABLE>
<CAPTION>
EQUITY INCOME FUND INDEX FUND BALANCED FUND
YEAR FOR THE PERIOD YEAR FOR THE PERIOD FOR THE PERIOD
ENDED 02/26/96(5) TO ENDED 02/26/96/(5) TO 03/24/97(5) TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 13.73 $ 13.34 $ 18.48 $ 16.72 $ 12.74
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.272 0.270 0.278 0.268 0.377
Net Realized and Unrealized
Gain/(Loss) on Investments 4.050 1.387 5.742 2.104 2.185
------ ------ ------ ------ ------
Total from Investment Operations 4.322 1.657 6.020 2.372 2.562
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Net Investment Income (0.268) (0.269) (0.281) (0.268) (0.372)
Net Realized Gains (1.464) (0.998) (0.709) (0.344) 0.000
------ ------ ------ ------ ------
Total Distributions (1.732) (1.267) (0.990) (0.612) (0.372)
------ ------ ------ ------ ------
Net Asset Value, End of Period $ 16.32 $ 13.73 $ 23.51 $ 18.48 $ 14.93
====== ====== ====== ====== ======

TOTAL RETURN 31.90% 12.46%(3) 32.78% 14.26%(3) 20.24%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 40,424 31,760 292,196 143,954 69,415
Ratios of Expenses to Average
Net Assets(1) 0.93% 0.93%(2) 0.45% 0.45%(2) 0.88%(2)
Ratio of Net Investment Income to
Average Net Assets 1.69% 2.36%(2) 1.39% 1.85%(2) 3.45%(2)
Portfolio Turnover Rate 29.87% 52.77% 7.10% 4.71% 108.29%(2)
Average Commission Rate(4) $ 0.058 $ 0.059 $ 0.020 $ 0.038 $ 0.058
</TABLE>

(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.
(5) Date commenced operations.

9
<PAGE> 114

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
CONVERTIBLE
SECURITIES FUND TAX-EXEMPT BOND FUND BOND FUND
FOR THE PERIOD YEAR FOR THE PERIOD YEAR FOR THE PERIOD
3/24/97(5) TO ENDED 02/26/96(5) TO ENDED 04/16/96(5) TO
12/31/97 12/31/97 12/31/96 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 29.15 $ 10.25 $ 10.56 $ 10.07 $ 10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.914 0.461 0.402 0.628 0.425
Net Realized and Unrealized
Gain/(Loss) on Investments 3.120 0.391 (0.094) 0.284 0.103
------ ------ ------ ------ ------
Total from Investment Operations 4.034 0.852 0.308 0.912 0.528
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Net Investment Income (0.897) (0.461) (0.402) (0.628) (0.425)
Net Realized Gains (3.767) (0.121) (0.216) (0.154) (0.033)
------ ------ ------ ------ ------
Total Distributions (4.664) (0.582) (0.618) (0.782) (0.458)
------ ------ ------ ------ ------
Net Asset Value, End of Period $ 28.52 $ 10.52 $ 10.25 $ 10.20 $ 10.07
====== ====== ====== ====== ======

TOTAL RETURN 14.24%(3) 8.55% 3.04%(3) 9.41% 5.40%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 59,384 179,871 165,388 140,447 43,142
Ratios of Expenses to Average
Net Assets(1) 0.92%(2) 0.80% 0.80%(2) 0.60% 0.60%(2)
Ratio of Net Investment Income to
Average Net Assets 3.76%(2) 4.47% 4.60%(2) 6.25% 6.03%(2)
Portfolio Turnover Rate 93.24%(2) 61.52% 61.60% 138.30% 116.02%
Average Commission Rate(4) $ 0.053 -- -- -- --
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the period
ended December 31, 1997 for the Convertible Securities Fund would have been
0.96% (annualized), for the year ended December 31, 1997 and the period ended
December 31, 1996 for the Tax-Exempt Bond Fund would have been 0.80% and 0.81%
(annualized), respectively, for the Bond Fund would have been 0.89% and 0.98%
(annualized), respectively, for the Intermediate Tax-Exempt Bond Fund would have
been 0.79% and 0.82% (annualized), respectively, for the Short/Intermediate Bond
Fund would have been 0.89% and 0.90% (annualized), respectively, and for the
period ended December 31, 1997 for the Intermediate Government Bond Fund would
have been 0.91% (annualized).
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period.
(5) Date commenced operations.

10
<PAGE> 115

<TABLE>
<CAPTION>
INTERMEDIATE TAX-EXEMPT INTERMEDIATE GOVERNMENT
BOND FUND SHORT/INTERMEDIATE BOND FUND BOND FUND
YEAR FOR THE PERIOD YEAR FOR THE PERIOD FOR THE PERIOD
ENDED 02/26/96(5) TO ENDED 02/26/96(5) TO 03/24/97(5) TO
12/31/97 12/31/96 12/31/97 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.58 $ 10.74 $ 10.14 $ 10.30 $ 16.12
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.442 0.381 0.633 0.517 0.793
Net Realized and Unrealized
Gain/(Loss) on Investments 0.220 (0.124) 0.070 (0.160) 0.461
------ ------ ------ ------ ------
Total from Investment Operations 0.662 0.257 0.703 0.357 1.254
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Net Investment Income (0.442) (0.381) (0.663) (0.517) (0.793)
Net Realized Gains (0.050) (0.036) 0.000 0.000 (0.041)
------ ------ ------ ------ ------
Total Distributions (0.492) (0.417) (0.633) (0.517) (0.834)
------ ------ ------ ------ ------
Net Asset Value, End of Period $ 10.75 $ 10.58 $ 10.21 $ 10.14 $ 16.54
====== ====== ====== ====== ======

TOTAL RETURN 6.41% 2.49%(3) 7.15% 3.61%(3) 7.96%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 193,009 208,690 288,886 255,573 99,359
Ratios of Expenses to Average
Net Assets(1) 0.79% 0.79%(2) 0.60% 0.60%(2) 0.50%(2)
Ratio of Net Investment Income to
Average Net Assets 4.16% 4.28%(2) 6.24% 6.06%(2) 6.31%(2)
Portfolio Turnover Rate 48.72% 57.23% 98.08% 186.02% 84.89%(2)
Average Commission Rate(4) -- -- -- -- --
</TABLE>

11
<PAGE> 116

FINANCIAL HIGHLIGHTS CONT.

<TABLE>
<CAPTION>
TAX-EXEMPT MONEY MARKET FUND MONEY MARKET FUND
YEAR YEAR YEAR FOR THE PERIOD YEAR YEAR
ENDED ENDED ENDED 01/05/94(4) TO ENDED ENDED
12/31/97 12/31/96 12/31/95 12/31/94 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.034 0.031 0.035 0.025 0.055 0.052
Realized Loss on Investments -- -- -- -- (0.001) --
----- ----- ----- ----- ----- -----
Total from Investment Operations 0.034 0.031 0.035 0.025 0.054 0.052
----- ----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
Net Investment Income (0.034) (0.031) (0.035) (0.025) (0.055) (0.052)
----- ----- ----- ----- ----- -----
Total Distributions (0.034) (0.031) (0.035) (0.025) (0.055) (0.052)
----- ----- ----- ----- ----- -----

CAPITAL CONTRIBUTION -- -- -- -- 0.001 --
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----

TOTAL RETURN 3.47% 3.19% 3.60% 2.56%(3) 5.66% 5.38%

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 497,986 388,404 212,146 237,100 1,028,091 69,417
Ratios of Expenses to Average
Net Assets(1) 0.25% 0.29% 0.29% 0.28%(2) 0.21% 0.27%
Ratio of Net Investment Income to
Average Net Assets 3.41% 3.14% 3.52% 2.99%(2) 5.54% 5.23%
</TABLE>

(1) Without the voluntary waiver of fees, the expense ratios for the years ended
December 31, 1997, 1996, 1995 and the period ended December 31, 1994 for the
Tax-Exempt Money Market Fund would have been 0.26%, 0.29%, 0.29%, and 0.30%
(annualized), respectively, for the Money Market Fund would have been 0.26%,
0.28%, 0.30% and 0.30% (annualized), respectively, and for the Government Money
Market Fund would have been 0.28%, 0.32%, 0.32% and 0.31% (annualized),
respectively.
(2) Annualized.
(3) Total returns for periods less than one year are not annualized.
(4) Date commenced operations.

12
<PAGE> 117

<TABLE>
<CAPTION>
MONEY MARKET FUND GOVERNMENT MONEY MARKET FUND
YEAR FOR THE PERIOD YEAR YEAR YEAR FOR THE PERIOD
ENDED 01/05/94(4) TO ENDED ENDED ENDED 05/16/94(4) TO
12/31/95 12/31/94 12/31/97 12/31/96 12/31/95 12/31/94
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income 0.057 0.039 0.053 0.051 0.056 0.028
Realized Loss on Investments -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Total from Investment Operations 0.057 0.039 0.053 0.051 0.056 0.028
----- ----- ----- ----- ----- -----

LESS DISTRIBUTIONS:
Net Investment Income (0.057) (0.039) (0.053) (0.051) (0.056) (0.028)
----- ----- ----- ----- ----- -----
Total Distributions (0.057) (0.039) (0.053) (0.051) (0.056) (0.028)
----- ----- ----- ----- ----- -----

CAPITAL CONTRIBUTION -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----

TOTAL RETURN 5.86% 4.08%(3) 5.48% 5.24% 5.79% 2.82%(3)

RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period ($000) 98,837 31,990 63,970 37,169 18,367 9,617
Ratios of Expenses to Average
Net Assets(1) 0.29% 0.29%(2) 0.23% 0.31% 0.31% 0.29%(2)
Ratio of Net Investment Income to
Average Net Assets 5.69% 4.79%(2) 5.36% 5.12% 5.62% 4.52%(2)
</TABLE>

13
<PAGE> 118
INVESTMENT OBJECTIVES AND POLICIES

Each of the Funds has distinct investment objectives and policies, which are set
forth below. Investments that may be made by all of the Funds are listed under
ADDITIONAL INVESTMENT INFORMATION - ADDITIONAL INVESTMENT POLICIES. For a
further description of each Fund's investments and investment techniques, see
ADDITIONAL INVESTMENT INFORMATION, Appendix A: Permitted Investments ("Appendix
A") and the SAI. There is no assurance that any Fund will achieve its investment
objective or that the Money Market Funds will be able to maintain a stable net
asset value. As used throughout this Prospectus, the term "U.S. Government
Securities" means obligations issued or guaranteed by the U.S. Government, its
agencies, instrumentalities or sponsored enterprises.

EQUITY FUNDS
EMERGING MARKETS FUND
INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

The Fund's investment approach relies heavily on a fundamental analysis of
securities with a long-term investment perspective. The Fund seeks to
maximize this approach by extending the search for value into many countries
around the world. This global search provides the Fund with more diverse
opportunities and flexibility to shift portfolio investments not only from
company to company and industry to industry, but also from country to
country, in search of undervalued securities.

Under normal circumstances, the Fund invests at least 65% of the value of its
total assets in securities of issuers located in emerging market countries.
As used in this Prospectus, the terms "emerging market country," "emerging
country" or "developing country" apply to any country that, in the investment
adviser's opinion, is generally considered to be an emerging or developing
country by the international financial community, which includes the
International Bank for Reconstruction and Development (the "World Bank") and
the International Finance Corporation. There are currently over 130 countries
that are emerging or developing countries under this standard; approximately
40 of these countries currently have stock markets. These countries generally
include every nation in the world except the U.S., Canada, Japan, Australia,
New Zealand and most nations located in Western Europe. Securities of issuers
located in emerging market countries or traded in emerging markets present
greater liquidity risks and other risks than securities of issuers located in
developed countries or traded in more established markets.

By engaging in its own research and by reviewing research obtained through
outside sources, the investment adviser seeks to identify appropriate
investments for the Fund. The investment adviser may consider a number of
factors in evaluating potential investments, including political risks, classic
macro-economic variables and equity market valuations. The investment adviser
also focuses on the quality of a company's management, growth prospects, and
financial well being. The Fund's investments generally will reflect a broad
cross-section of countries, industries, and companies in order to minimize risk.
In situations where the market for a particular security is determined by the
investment adviser to be sufficiently liquid, the Fund may engage in short
sales.

14
<PAGE> 119

SEE RISK CONSIDERATIONS - RISKS OF FIXED INCOME SECURITIES.
The Fund also may engage in securities of companies or investment trusts that
invest in, or securities backed by, mortgages, real estate or interests in real
estate, including real estate investment trusts ("REITs").

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing in equity securities of issuers outside the U.S. that the
investment adviser believes are undervalued.

The Fund's investment approach relies heavily on a fundamental analysis of
securities with a long-term investment perspective. The Fund seeks to
maximize this approach by extending the search for value into many countries
around the world. This global search provides the Fund with more diverse
opportunities and flexibility to shift portfolio investments not only from
company to company and industry to industry, but also from country to
country, in search of undervalued securities.

The Fund may invest in certain debt securities of any grade, rated or
unrated, such as convertible bonds and bonds selling at discount, when the
investment adviser believes the potential for appreciation will equal or
exceed that available from investments in common stock. These securities may
be subject to significant risk. SEE RISK CONSIDERATIONS - RISKS OF FIXED
INCOME SECURITIES. The Fund also may engage in securities of companies or
investment trusts that invest in, or securities backed by, mortgages, real
estate or interests in real estate, including real estate investment trusts
("REITs").

SMALL-CAP OPPORTUNITY FUND
INVESTMENT OBJECTIVE. The Fund seeks to provide long-term capital appreciation.

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in the securities of companies with smaller capitalization
that the investment adviser believes are attractively valued in the market.
Market capitalization refers to the total market value of a company's outstand-
ing shares of common stock. Smaller capitalization companies are those with
market capitalizations, at the time of the Fund's investment, that fall in the
lowest 15% of market capitalization of publicly traded companies in the U.S.
These securities will tend to be represented in the Russell 2000 Index.

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

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

SMALL-CAP VALUE FUND
INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

15
<PAGE> 120

to the total market value of a company's outstanding shares of common stock.
Smaller capitalization companies are those with market capitalizations, at the
time of the Fund's investment, that fall in the lowest 15% of market
capitalization of publicly traded companies listed in the U.S. These securities
will tend to be represented in the Russell 2000 Index.

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

GROWTH FUND
INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation.

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

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

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

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

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

16
<PAGE> 121
portfolio that the investment adviser believes provides attractive long-term
growth potential, while offering an attractive current yield.

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

INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing, under normal market conditions, primarily in securities of
companies that comprise the Standard & Poor's 500 Index (the "S&P 500
Index"), an unmanaged index that emphasizes large capitalization companies.
As of December 31, 1997, the index represented approximately 74% of the
market capitalization of publicly owned stocks in the U.S.

The Fund is managed through the use of a "quantitative" or "indexing" investment
discipline, which attempts to duplicate the investment composition and
performance of the S&P 500 Index through statistical procedures. As a result,
the investment adviser does not employ traditional methods of fund investment
management, such as selecting securities on the basis of economic, financial and
market analysis. The Fund seeks quarterly performance within one
percentage-point of the performance of the index (i.e., the percentage return of
the index plus or minus 1%). On at least a monthly basis, the investment adviser
compares the Fund's performance to that of the index. In the event the Fund's
performance for the preceding three-month period does not adequately track the
performance of the index, the investment adviser may adjust the Fund's holdings
accordingly.

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

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

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

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

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

FIXED INCOME FUNDS
CONVERTIBLE SECURITIES FUND
INVESTMENT OBJECTIVE. The Fund seeks to provide capital appreciation and current
income.

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

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

Under normal market conditions, the Fund will invest without limitation in
convertible securities of U.S. corporations and in Eurodollar securities
convertible into common stocks of U.S. corporations that are rated "B" or
better by Standard & Poor's ("S&P") or "B" ("b" in the case of preferred
stocks) or better by Moody's Investors Service ("Moody's") at the time of
purchase, or, if not rated, considered by the investment adviser 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. See RISK CONSIDERATIONS - RISKS OF FIXED INCOME
SECURITIES. By their nature, convertible securities may be more volatile in
price than higher-rated debt obligations.

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

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serve to increase diversification of risk; and (c) short-term money market
instruments, including U.S. Government, bank and commercial obligations with
remaining maturities of 397 days or less. During such periods, the Fund will
continue to seek current income but will put less emphasis on capital
appreciation.

During its most recent fiscal year ended December 31, 1997, the Fund had 84%
of its average assets in rated debt securities, 7% in unrated debt securities
and the remainder in cash and equity securities. During that year, the Fund
had the following percentages of its average assets invested in rated
securities: AAA-2%, AA-6%, A-8%, BBB-37%, BB-15%, B-9%, CCC or below-2%. This
information reflects the average composition of the Fund's assets for the
Fund's last fiscal year and is not necessarily representative of the Fund as
of the current fiscal year or any other time.

TAX-EXEMPT BOND FUND

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

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

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

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

INTERMEDIATE TAX-EXEMPT BOND FUND

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

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The investment adviser believes that this income will generally be higher than
that provided by shorter term municipal funds, although the Fund will reflect
greater share price volatility during periods of changing interest rates than
comparable shorter-term funds. Individual portfolio securities will have varying
maturities.

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

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

INVESTMENT POLICIES. The Fund seeks to provide income and share price volatility
of a 2- to 5-year average maturity taxable bond portfolio. Thus, it is
anticipated that when interest rates rise, share price of the Fund will tend to
fall less than longer-term bond funds and appreciate less when interest rates
fall.

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

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

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

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

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INVESTMENT POLICIES. The Fund seeks to achieve its investment objective by
investing primarily in U.S. Government Securities, including mortgage-backed
securities, having an intermediate-term average maturity. Under normal
circumstances, at least 65% of the Fund's total assets will be invested in
U.S. Government Securities and in repurchase agreements collateralized by
U.S. Government Securities. The average portfolio maturity (or average life
with respect to mortgage-backed securities) generally will be between 3 and
10 years.

MONEY MARKET FUNDS
TAX-EXEMPT MONEY MARKET FUND

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

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

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

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

Under ordinary market conditions, the Fund will maintain as a fundamental
policy at least 80% of the value of its total assets in obligations that are
exempt from Federal income tax and not subject to the alternative minimum
tax. The Fund may, pending the investment of proceeds of sales of its shares
or proceeds from the sale of portfolio securities, in anticipation of
redemptions, or to maintain a "defensive" posture when, in the opinion of the
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 securities whose interest income is subject to
taxation.

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

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

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

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

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

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

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

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ADDITIONAL INVESTMENT INFORMATION

UNLESS OTHERWISE NOTED, EACH FUND'S INVESTMENT OBJECTIVE AND POLICIES ARE NOT
FUNDAMENTAL AND MAY BE CHANGED BY THE BOARD OF TRUSTEES OF THE TRUST (OR BOARD
OF DIRECTORS OF THE COMPANY) WITHOUT APPROVAL BY THE FUND'S SHAREHOLDERS.
INVESTMENT POLICIES THAT ARE DESIGNATED AS FUNDAMENTAL MAY BE CHANGED ONLY WITH
APPROVAL OF THE HOLDERS OF A MAJORITY OF THE FUND'S OUTSTANDING VOTING
SECURITIES. A MAJORITY OF OUTSTANDING VOTING SECURITIES MEANS THE LESSER OF 67%
OF THE SHARES PRESENT OR REPRESENTED AT A SHAREHOLDERS MEETING AT WHICH THE
HOLDERS OF MORE THAN 50% OF THE OUTSTANDING SHARES ARE PRESENT OR REPRESENTED,
OR MORE THAN 50% OF THE OUTSTANDING SHARES.

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

ADDITIONAL INVESTMENT POLICIES

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

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

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

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

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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.

ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% with respect to the
Equity Fund, the Short/Intermediate Bond Fund and the Money Market Funds) of
its net assets in securities that are considered illiquid. Illiquid securities
are securities that cannot be disposed of within seven days in the ordinary
course of business at approximately the amount at which the Fund has valued the
securities and include, among other things, repurchase agreements not entitling
the holder to payment within seven days and restricted securities (other than
those determined to be liquid pursuant to guidelines established by the Trust's
Board of Trustees [and the Company's Board of Directors]). See Appendix A.

BORROWING. As a matter of fundamental policy, no Fund may borrow from banks,
except that a Fund may borrow up to 10% of the current value of its net
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 any
aggregate borrowings in excess of 5% exist).

SECURITIES LENDING. 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 total assets. However, such loans
may be made only if secured by cash or cash equivalent collateral. 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. As with
any extension of credit, there are risks of incurring a loss should the
borrower of the securities fail financially. However, the Funds will lend
securities to firms deemed creditworthy by the investment adviser. 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.

RATING MATTERS. Each of the Equity Funds and the Fixed Income Funds may invest
in securities convertible into or exchangeable for common stocks or preferred
stocks, as well as U.S. Government Securities and debt obligations of domestic
corporations rated "BBB" or better by Standard & Poor's ("S&P") or "Baa" or
better by Moody's Investors Service ("Moody's"), or that have an equivalent
rating by another nationally recognized statistical rating organization
("NRSRO") at the time of purchase or, if not rated, are considered by the
investment adviser to be of comparable quality. Debt securities rated BBB by S&P
or Baa by Moody's (the fourth and lowest category of investment grade) and
securities of comparable quality 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. Debt securities rated in the fifth highest category (BB
by S&P or Ba by Moody's) and securities of comparable quality (commonly referred
to as "junk bonds") are not considered to be investment grade and have
speculative or predominantly speculative characteristics. The Emerging Markets
Fund may invest in debt securities of any grade and the Convertible Securities
Fund may invest in debt securities that are less than investment grade. SEE RISK
CONSIDERATIONS - RISKS OF FIXED INCOME SECURITIES.

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

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investment objectives and policies of that Fund. The ratings of Moody's and S&P
are more fully described in the Appendix to the SAI. A Money Market Fund may be
required to sell a security downgraded below the minimum required for purchase,
absent a specific finding by the Company's Board of Directors that a sale is not
in the best interests of the Fund.

TEMPORARY DEFENSIVE POSITION. When business or financial conditions warrant,
each of the Emerging Markets Fund and the International Fund may assume a
temporary defensive position by investing in money market investments. These
money market investments include obligations of the U.S. Government and its
agencies and instrumentalities, obligations of foreign sovereignties, other
debt securities, commercial paper including bank obligations, certificates of
deposit (including Eurodollar certificates of deposit) and repurchase
agreements.

For temporary defensive purposes, during periods in which the investment adviser
believes changes in economic, financial or political conditions make it
advisable, these Funds may reduce their holdings in equity and other securities
and may invest up to 100% of their assets in certain short-term (less than
twelve months to maturity) and medium-term (not greater than five years to
maturity) debt securities and in cash (U.S. dollars, foreign currencies, or
multicurrency units). These short-term and medium-term debt securities consist
of (a) obligations of governments, agencies or instrumentalities of any member
state of the Organization for Economic Cooperation and Development ("OECD"); (b)
bank deposits and bank obligations (including certificates of deposit, time
deposits and bankers' acceptances) of banks organized under the laws of any
member state of the OECD, denominated in any currency; (c) floating rate
securities and other instruments denominated in any currency issued by
international development agencies; (d) finance company and corporate commercial
paper and other short-term corporate debt obligations of corporations organized
under the laws of any member state of the OECD meeting the Fund's credit quality
standards; and (e) repurchase agreements with banks and broker-dealers covering
any of the foregoing securities. The short-term and medium-term debt securities
in which the Fund may invest for temporary defensive purposes will be those that
the investment adviser believes to be of high quality, i.e., subject to
relatively low risk of loss of interest or principal (there is currently no
rating system for debt securities in most emerging countries). If rated, these
securities will be rated in one of the three highest rating categories by rating
services such as Moody's or S&P (i.e., rated at least A).

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

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

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

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

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

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

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

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

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

LOW-RATED FIXED INCOME 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.

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An economic recession in the U.S. or another country would likely disrupt the
market in that country 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.

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

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

With respect to the Emerging Markets Fund, investments in the securities of
issuers located in countries with smaller, emerging capital markets may
involve additional risks.

Certain emerging market countries may restrict investment by foreign
entities. For example, a country may limit the level of foreign investment in
certain issuers, require prior approval of foreign investment by the government,
impose additional tax on foreign investors or limit holdings by foreign
investors to specific classes of securities of an issuer that have less
advantageous rights (with regard to convertibility, for example) than classes
available to domiciliaries of the country.

Substantial limitations may also exist in certain countries with respect to a
foreign investor's ability to repatriate investment income, capital or the
proceeds of sales of securities. The Emerging Markets Fund could be adversely
affected by delays in, or refusals to grant, any required governmental approvals
for repatriation of capital. Securities that are subject to material legal
restrictions on repatriation may be considered illiquid securities and,
therefore, may be subject to the Emerging Markets Fund's 15% limitation on such
investments.

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be subject to uniform accounting, auditing and financial reporting standards or
to requirements or practices comparable to those applicable to U.S. companies.

REGULATION AND LIQUIDITY OF MARKETS. Government supervision and regulation of
exchanges and brokers in emerging market countries is frequently less
extensive than in the U.S. These markets may have different clearance and
settlement procedures. In certain cases, settlements have not kept pace with
the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could adversely affect or interrupt the
Emerging Markets Fund's intended investment program or result in investment
losses due to intervening declines in security values.

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

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

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method of gaining exposure to a particular securities market without investing
directly in those securities.

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

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

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

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

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

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

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

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MANAGEMENT

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

C. GARY GERST
Chairman of the Board of Directors and Board of Trustees; and Chairman
Emeritus, LaSalle Partners, Ltd. (real estate investment management and
consulting).

EDGAR R. FIEDLER
Senior Fellow and Economic Counsellor, The Conference Board; Director, The
Stanley Works, Scudder Institutional Funds, AARP Income Trust, Brazil Fund,
Emerging Mexico Fund, and Scudder Pathway Series.

JOHN W. MCCARTER, JR.
President and Chief Executive Officer, The Field Museum of Natural History
(Chicago); Director, LaSalle Partners Funds, Inc.; Former Senior Vice
President and Director, Booz-Allen & Hamilton, Inc. (consulting firm);
Director, W.W. Grainger, Inc. and A.M. Castle, Inc.

ERNEST M. ROTH
Consultant; Director, La Rabida Children's Hospital; Chairman, La Rabida
Children's Foundation; Retired Senior Vice President and Chief Financial
Officer, Commonwealth Edison Company.

INVESTMENT ADVISER

As of December 31, 1997, Harris Trust managed more than $12.8 billion in
discretionary personal trust assets, and administered more than $17 billion
in non-discretionary trust assets.

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

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

Emerging Markets Fund 1.25%
International Fund 1.05%
Small-Cap Opportunity Fund 1.00%
Small-Cap Value Fund 0.80%
Growth Fund 0.90%
Equity Fund 0.70%
Equity Income Fund 0.70%
Index Fund 0.25%
Balanced Fund 0.60%
Convertible Securities Fund 0.70%
Tax-Exempt Bond Fund 0.60%
Bond Fund 0.65%
Intermediate Tax-Exempt Bond Fund 0.60%
Short/Intermediate Bond Fund 0.70%
Intermediate Government Bond Fund 0.65%

Tax-Exempt Money Market Fund
Money Market Fund
Government Money Market Fund

0.14% of each Fund's first $100 million of net assets plus 0.10% of the Fund's
remaining net assets

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PORTFOLIO MANAGEMENT AGENT
Harris Trust has entered into Portfolio Management Contracts with Harris
Investment Management, under which HIM undertakes to furnish investment
guidance and policy direction in connection with the daily portfolio
management of all of the Funds except for the Tax-Exempt Money Market Fund.
For the services provided by HIM, Harris Trust pays HIM the advisory fees it
receives from the Funds. As of December 31, 1997, HIM managed an estimated
$10.7 billion in assets.

INVESTMENT SUB-ADVISER

To assist HIM in carrying out its obligations under the Portfolio Management
Contract, HIM has entered into Investment Sub-advisory Contracts with Hansberger
on behalf of the Emerging Markets Fund and the International Fund. Hansberger is
an investment adviser registered under the Investment Advisers Act of 1940, as
amended, and provides a broad range of portfolio management services to clients
in the U.S. and abroad. Hansberger, 515 East Las Olas Blvd., Suite 1300, Fort
Lauderdale, Florida 33301, is majority controlled by Mr. Thomas L. Hansberger,
who founded the firm in 1994. As of December 31, 1997, Hansberger managed assets
with a value of approximately $1.39 billion.

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

EMERGING MARKETS FUND - Thomas L. Hansberger, Francisco Alzuru, Ajit Dayal,
Aureole L.W. Foong, Robert Mazuelos and Vladimir Tyurenkov. Mr. Hansberger,
Chairman and Chief Executive Officer of Hansberger, is the Fund's leader. Before
forming Hansberger in 1994, Mr. Hansberger had served as Chairman, President and
Chief Executive Officer of Templeton Worldwide, Inc., the parent holding
company of the Templeton group of companies. While at Templeton, Mr. Hansberger
served as director of research and was an officer, director or primary portfolio
manager for several Templeton mutual funds. Mr. Alzuru joined Hansberger in 1994
as a Managing Director, portfolio manager and research analyst, specializing in
Latin America. Prior to joining Hansberger, he worked at Vestcorp Partners as
their Latin American analyst. Mr. Dayal is Managing Director of India Research.
Prior to joining Hansberger, he was employed by Ashok Biria and S.G. Warburg. He
also was the director on all Jardine Fleming companies in India. Mr. Dayal was
responsible for setting up the research and fund management operations with a
focus on identifying key Indian personnel for brokering and investment banking.
Mr. Dayal has 13 years of investment management experience. He received his
Bachelor of Arts in Economics from Bombay University and his MBA from the
University of North Carolina at Chapel Hill. Mr. Foong is Director of Asian
Research. He is responsible for overseeing the Asian research effort as well as
covering the global cellular and European telecom industries. Prior to joining
Hansberger, Mr. Foong was a Director of Peregrine Asset Management where he was
a portfolio manager responsible for several mutual funds and private accounts
investing in regional Asian markets. Prior to Peregrine, Mr. Foong was with
Unifund, a private investment firm headquartered in Geneva. Mr. Foong was based
in Bangkok and Hong Kong where he was a portfolio manager responsible for the
Asian markets. Prior to that, Mr. Foong was with Morgan Stanley Inc. in New
York, Los Angeles and Hong Kong where he worked in the Private Client Services
department responsible for high net worth individual accounts. Mr. Foong holds
an MBA and a

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<PAGE> 136

Bachelors of Science in Computer Science from the University of Southern
California in Los Angeles. Mr. Mazuelos joined Hansberger in 1995 as a research
analyst. Prior to joining Hansberger, he was a performance analyst at Templeton
Investment Counsel, Inc., where he was responsible for return analysis on
separate accounts and mutual funds. Mr. Tyurenkov joined Hansberger in 1995 as
Managing Director of Eastern Europe and Russia, portfolio manager and research
analyst. Prior to joining Hansberger, he spent several years working for the
Russian government and worked extensively on the Pepperdine University Russian
Conversion and Privatization Program.

INTERNATIONAL FUND - James Chaney, John Carl Fenley, Victoria Gretzky and
John Hock. Mr. Chaney, who joined Hansberger in 1996 as Chief Investment
Officer, is the Fund's leader. Prior to joining Hansberger, he was Executive
Vice President for Templeton Worldwide and a senior member of its Portfolio
Management/Strategy Committee. While at Templeton, Mr. Chaney managed
numerous accounts, including the Foreign Equity Series of Templeton
Institutional Funds Inc. Mr. Fenley is responsible for research coverage of
global equities. Prior to joining Hansberger, he developed and managed the
Institutional Investment Department for SunTrust Bank, South Florida, where
his client base included local and national foundations, endowments,
corporations and municipalities. Mr. Fenley formerly served as portfolio
manager and equity analyst covering the capital goods and transportation
sectors for Fifth Third Bank. Mr. Fenley received his Bachelor of Arts degree
in Economics from Vanderbilt University. He is a Chartered Financial Analyst
and a member of the Association for Investment Management and Research
(AIMR). Ms. Gretzky joined Hansberger in 1995 as a research analyst. Prior
to joining Hansberger, she was a research analyst for Optimum Consulting, a
Russian-based firm which specialized in restructuring Russian companies
during privatization. Mr. Hock joined Hansberger in 1996 as a research
analyst. Prior to joining Hansberger, he was a senior analyst in the global
securities research and economics group at Merrill Lynch.

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

GROWTH FUND - James E. Depies, CFA. Mr. Depies joined Harris Trust in 1981
and serves as Senior Partner and Portfolio Manager. He has served as
portfolio manager of the Fund since the Fund commenced operations in February
1996 and has 37 years of investment experience.

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

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

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

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

BOND FUND - Laura Alter and Maureen Svagera. Ms. Alter joined HIM in 1994 and
serves as Senior Partner and Portfolio Manager. She has served as portfolio
manager of the Fund since the Fund commenced operations in April 1996 and has 13
years of experience in the fixed -income investment area. Prior to joining HIM,
she served as portfolio manager for a major mutual fund investment management
firm. Ms. Svagera joined HIM in 1994 and serves as Senior Partner and Portfolio
Manager. She has served as portfolio manager of the Fund since the Fund
commenced operations and has 15 years of experience in the fixed-income markets.
Prior to joining HIM, she spent five years at an investment management firm as
principal/vice president focusing on the mortgage and asset-backed markets.

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

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

TAX-EXEMPT MONEY MARKET FUND - Kathleen A. Bramlage. Ms. Bramlage has served as
portfolio manager of the Fund since August 1993. For a description of Ms.
Bramlage, see Tax-Exempt Bond Fund above.

MONEY MARKET FUND - Randall T. Royther. Mr. Royther joined Harris Trust in
1990 and serves as Partner and Portfolio Manager. Mr. Royther has served as
portfolio manager of the Fund since June 1995 and has nine years of
investment experience.

GOVERNMENT MONEY MARKET FUND - Randall T. Royther. Mr. Royther has served as
portfolio manager of the Fund since June 1995. For a description of Mr.
Royther, see Money Market Fund above.

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

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

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

DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") has entered into Distribution
Agreements with the Trust and the Company pursuant to which it has the
responsibility for distributing shares of the Funds. Fees for services rendered
by the Distributor are paid by the Administrator. The Distributor bears the
cost of printing and mailing prospectuses to potential investors and any
advertising expenses incurred by it in connection with the distribution of
shares.

EXPENSES

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

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HOW TO BUY SHARES

INSTITUTIONAL SHARES ARE SOLD TO FIDUCIARY AND DISCRETIONARY ACCOUNTS OF
INSTITUTIONS, "INSTITUTIONAL INVESTORS," DIRECTORS, TRUSTEES, OFFICERS AND
EMPLOYEES OF THE COMPANY, THE TRUST, THE ADVISER, THE PORTFOLIO MANAGEMENT
AGENT, AND THE DISTRIBUTOR AND THE ADVISER'S INVESTMENT ADVISORY CLIENTS.
"INSTITUTIONAL INVESTORS" MAY INCLUDE FINANCIAL INSTITUTIONS (SUCH AS BANKS,
SAVINGS INSTITUTIONS AND CREDIT UNIONS); PENSION AND PROFIT SHARING AND EMPLOYEE
BENEFIT PLANS AND TRUSTS; INSURANCE COMPANIES; INVESTMENT COMPANIES; INVESTMENT
ADVISERS; AND BROKER/DEALERS ACTING FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS
OF SUCH INSTITUTIONAL INVESTORS.

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

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

BUYING SHARES. Neither the Company nor the Trust imposes any minimum on
initial or subsequent investments. Shares may be purchased by any of the
following three methods:

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

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

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

PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3

For Credit To:

Harris Insight Funds
85-5093-2950
Re: [Name of Fund] - Institutional Shares
Account No.:
Account Name:

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

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

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

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GENERAL PURCHASE INFORMATION

The Funds are open for business each day that both of the New York Stock
Exchange (the "Exchange") and the Federal Reserve Bank of Philadelphia are open
for business (i.e., each weekday other than New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day) ("Fund
Business Day"). Except for the Money Market Funds, each Fund normally calculates
its net asset value ("NAV") at the close of business of the Exchange, which is
normally 4:00 p.m., Eastern time. Each of the Tax-Exempt Money Market Fund and
the Government Money Market Fund normally calculates its NAV on or before 12:00
Noon, Eastern time. The Money Market Fund normally calculates its NAV on or
before 2:30 p.m., Eastern time. Shares are purchased at the next share price
calculated after your investment is received and accepted.

<PAGE> 141

HOW TO SELL SHARES

SHARES MAY BE SOLD (REDEEMED) AT THEIR NEXT DETERMINED NET ASSET VALUE AFTER
RECEIPT OF A PROPER REQUEST BY THE FUNDS DIRECTLY OR THROUGH ANY INSTITUTION.

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

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

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

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

GENERAL REDEMPTION INFORMATION

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

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

The minimum amount that may be wired is $1,000. Otherwise, a check is mailed to
the shareholder's address of record. The Funds reserve the right to

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<PAGE> 142
change this minimum or to terminate the privilege. Redemption proceeds normally
are transmitted by wire on the business day after a redemption request is made.
For each of the Tax-Exempt Money Market Fund and the Government Money Market
Fund, if a request is received by the Transfer Agent by 12:00 Noon, Eastern time
on a day the Funds and the Transfer Agent are open for business, the redemption
proceeds will be transmitted to the shareholder's bank that same day. For the
Money Market Fund, if a request is received by the Transfer Agent by 2:30 p.m.,
Eastern time on a day the Fund and the Transfer Agent are open for business, the
redemption proceeds will be transmitted to the shareholder's bank that same day.

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SHAREHOLDER SERVICES AND POLICIES

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

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

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

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

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

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

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

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

SHARE CERTIFICATES. Share certificates are not issued.

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

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

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HOW THE FUNDS MAKE DISTRIBUTIONS TO SHAREHOLDERS; TAX INFORMATION

DIVIDENDS OF NET INVESTMENT INCOME CURRENTLY ARE DECLARED AND PAID AT LEAST
ANNUALLY BY EACH FUND IN ACCORDANCE WITH THE FUND'S DIVIDEND POLICY.
DIVIDENDS FROM EACH OF THE EMERGING MARKETS FUND, THE INTERNATIONAL
FUND, THE SMALL-CAP OPPORTUNITY FUND AND THE SMALL-CAP VALUE FUND
ARE DECLARED AND PAID ANNUALLY. DIVIDENDS FROM THE GROWTH FUND ARE
DECLARED AND PAID SEMI-ANNUALLY. DIVIDENDS FROM EACH OF THE EQUITY
INCOME FUND, THE EQUITY FUND, THE INDEX FUND, THE BALANCED FUND AND
THE CONVERTIBLE SECURITIES FUND ARE DECLARED AND PAID QUARTERLY.
DIVIDENDS FROM THE TAX-EXEMPT BOND FUND, THE BOND FUND, THE INTERMEDIATE
TAX-EXEMPT BOND FUND, THE SHORT/INTERMEDIATE BOND FUND AND THE
INTERMEDIATE GOVERNMENT BOND FUND ARE DECLARED DAILY AND PAID MONTHLY.
DIVIDENDS FROM EACH OF THE MONEY MARKET FUNDS ARE DECLARED DAILY
AND PAID MONTHLY. ANY NET CAPITAL GAINS WILL BE DECLARED AND PAID
AT LEAST ANNUALLY. DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS MAY BE
INVESTED IN ADDITIONAL SHARES OF THE SAME FUND AT NET ASSET VALUE AND
CREDITED TO YOUR ACCOUNT ON THE PAYMENT DATE OR PAID IN CASH. DISTRIBUTION
CHECKS AND ACCOUNT STATEMENTS WILL BE MAILED APPROXIMATELY TWO BUSINESS
DAYS AFTER THE PAYMENT DATE.

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

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

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

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

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

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GENERAL INFORMATION

BANKING LAW MATTERS

HOW SHARE VALUE IS DETERMINED

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

HOW PERFORMANCE IS REPORTED

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

Total return refers to the amount an investment in a Fund would have earned,
including any increase or decrease in net asset value, over a specified period
of time and assumes the payment of the maximum sales load and the reinvestment
of all dividends and distributions. The total return of each Fund shows what an
investment in Institutional Shares of the Fund would have earned over a
specified period of time (such as

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one, five or ten years, or the period of time since commencement of operations,
if shorter) assuming that the maximum sales load was paid and that all
distributions and dividends by the Fund were reinvested on their reinvestment
dates during the period less all recurring fees. When a Fund compares its total
return to that of other mutual funds or relevant indices, its total return also
may be computed without reflecting the sales load so long as the sales load is
stated separately in connection with the comparison.

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

MORE INFORMATION ABOUT THE TRUST AND THE COMPANY

The Trust is an open-end management investment company which was organized on
December 6, 1995, as a business trust under the laws of the Commonwealth of
Massachusetts. The Trust offers shares of beneficial interest, $.001 par value,
for sale to the public. Currently, the Trust has 13 portfolios in operation. The
Board has authorized each Fund of the Trust to issue two classes of shares,
Class A Shares and Institutional Shares.

The Company, which was incorporated in Maryland on September 16, 1987, is an
open-end management investment company. The authorized capital stock of the
Company consists of 10,000,000,000 shares having a par value of $.001 per share.
Currently the Company has five portfolios in operation. The Company's Board of
Directors has authorized the Funds of the Company to issue two classes of
shares, Class A Shares and Institutional Shares.

Class A Shares of the Funds, which are offered primarily to retail investors,
bear additional expenses. In the future, the Board of Trustees of the Trust and
the Board of Directors of the Company may authorize the issuance of shares of
additional investment portfolios and additional classes of shares of any
portfolio. Different classes of shares of a single portfolio may bear different
sales charges and other expenses (including distribution fees) which may affect
their

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relative performance. Information regarding other classes of shares may be
obtained by calling the Funds at (800) 982-8782 or from any institution that
makes available shares of the Funds. All shares of the Trust and all shares of
the Company have equal voting rights and will be voted in the aggregate, and not
by class, except where voting by class is required by law or where the matter
involved affects only one class. A more detailed statement of the voting rights
of shareholders is contained in the SAI. All shares of the Trust and all shares
of the Company, when issued, will be fully paid and non-assessable.

As of April 1, 1998, Harris Trust owned of record all or substantially all of
the Institutional Shares of the Funds and, for purposes of the 1940 Act, may
have been deemed to control the Funds. Harris Trust has indicated that it holds
its shares on behalf of various client accounts and not as beneficial owner.
From time to time, certain shareholders may own a large percentage of the shares
of a Fund. Accordingly, those shareholders may be able to greatly affect (if not
determine) the outcome of a shareholder vote.

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APPENDIX A: PERMITTED INVESTMENTS

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

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and agencies of foreign banks (Yankee dollars), and wholly-owned banking-related
subsidiaries of foreign banks.

Certificates of deposit represent an institution's obligation to repay funds
deposited with it that earn a specified interest rate over a given period.
Bankers' acceptances are negotiable obligations of a bank to pay a draft which
has been drawn by a customer and are usually backed by goods in international
trade. Time deposits are non-negotiable deposits with a banking institution that
earn a specified interest rate over a given period. Certificates of deposit and
fixed time deposits, which are payable at the stated maturity date and bear a
fixed rate of interest, generally may be withdrawn on demand but may be subject
to early withdrawal penalties which could reduce the Fund's yield. Deposits
subject to early withdrawal penalties or that mature in more than seven days are
treated as illiquid securities if there is no readily available market for the
securities. A Fund's investments in the obligations of foreign banks and their
branches, agencies or subsidiaries may be obligations of the parent, of the
issuing branch, agency or subsidiary, or both.

Brady Bonds are recent issues and do not have a long payment history. Agreements
implemented under the Brady Plan are designed to achieve debt and debt-service
reduction through specific options negotiated by a debtor nation with its
creditors. As a result, each country offers different financial packages.
Options have included the exchange of outstanding commercial bank debt for bonds
issued at 100% of face value of such debt, bonds issued at a discount of face
value of such debt, and bonds bearing an interest rate that increases over time
and the advancement of the new money for bonds. The principal of certain Brady
Bonds has been collateralized by U.S. Treasury zero coupon bonds with a maturity
equal to the final maturity of the Brady Bonds. Collateral purchases are
financed by the IMF, World Bank and the debtor nations' reserves. Interest
payments may also be collateralized in part in various ways.

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

CONVERTIBLE SECURITIES. The Equity Funds, the Convertible Securities Fund and
the Bond Fund may invest in convertible preferred stock and bonds, which are
fixed income securities that are convertible into common stock at a specified
price or conversion ratio. Because these securities have the characteristics of
both fixed income and equity securities, they sometimes are called "hybrid"
securities. In general, the value of a convertible security is the higher of its
investment value (its value as a fixed income security) and its conversion value
(the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the value of a convertible security
generally increases when interest rates decline and generally decreases when
interest rates rise. The value of convertible securities, however, is also
influenced by the value of the underlying common stock. Thus, convertible
securities ordinarily will provide opportunities for producing both current
income and longer-term capital appreciation. Convertible securities rank senior
to common stock in a corporation's capital structure but are usually subordinate
to any nonconvertible fixed income securities.

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to fixed rate debt instruments, variable and floating rate instruments are
subject to changes in value based on changes in market interest rates or changes
in the issuer's creditworthiness.

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

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

Each of the Equity Funds may enter into forward foreign currency exchange
contracts for the purchase or sale of a fixed quantity of a foreign currency at
a future date ("Forward Contracts"). A Fund may enter into Forward Contracts for
"hedging" purposes -- either to "lock in" the U.S. dollar price of the
securities denominated in a foreign currency or the U.S. dollar value of
interest and dividends to be paid on such securities, or to hedge against the
possibility that the currency of a foreign country in which a Fund has
investments may suffer a decline against the U.S. dollar -- or for non-hedging
purposes. By entering into Forward Contracts, a Fund may be required to forego
the benefits of advantageous changes in exchange rates and, in the case of
Forward Contracts entered into for non-hedging purposes, the Fund may sustain
losses which will reduce its gross income. A Fund also may enter into a Forward
Contract on one currency in order to hedge against risk of loss arising from
fluctuations in the value of a second currency (referred to as a "cross hedge")
if, in the judgment of the investment adviser, 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.

For the Emerging Markets Fund, only a limited market, if any, currently exists
for hedging transactions relating to currencies in many emerging market
countries. This may limit the Emerging Markets Fund's ability to effectively
hedge its investments in those emerging markets.

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FOREIGN SECURITIES. Each of the Emerging Markets Fund and the International Fund
may invest up to 100% of its total assets in dollar-denominated and
non-dollar-denominated foreign equity and debt securities. Each of the other
Equity Funds may invest up to 10% of its total assets in dollar-denominated
foreign equity and debt securities. The Short/Intermediate Bond Fund and the
Bond Fund (each with respect to 20% of its total assets) as well as the Money
Market Fund may invest in non-convertible (and convertible in the case of the
Bond Fund) debt of foreign banks, foreign 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 that are described in
the Prospectus.

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

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

GUARANTEED INVESTMENT CONTRACTS. The Short/Intermediate Bond Fund, the Bond
Fund and the Money Market Fund may invest in guaranteed investment contracts
("GICs") issued by U.S. and Canadian insurance companies. GICs require a Fund to
make cash contributions to a deposit fund of an insurance company's general
account. The insurance company then makes payments to the Fund based on
negotiated, floating or fixed interest rates. A GIC is a general

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obligation of the issuing insurance company and not a separate account. The
purchase price paid for a GIC becomes part of the general assets of the
insurance company, and the contract is paid from the insurance company's general
assets. Generally, GICs are not assignable or transferable without the
permission of the issuing insurance companies, and an active secondary market in
GICs does not currently exist.

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

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

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

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

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

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

MUNICIPAL OBLIGATIONS. The Balanced Fund, the Tax-Exempt Bond Fund, the Bond
Fund, the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund
and the Tax-Exempt Money Market Fund may invest in municipal obligations.
Municipal obligations include municipal bonds, municipal notes and municipal
commercial paper. These securities may be issued by or on behalf of states,
territories and possessions of the U.S., the District of Columbia, and their
respective authorities, agencies, instrumentalities and political subdivisions.
Municipal bonds generally have a maturity at the time of issuance of up to 30
years. Municipal notes are intended to fulfill the short-term capital needs of
the issuer and generally have maturities

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at the time of issuance of three years or less. Municipal commercial paper is a
debt obligation with an effective maturity or put date of 270 days or less that
is issued to finance seasonal working capital needs or as short-term financing
in anticipation of longer-term debt.

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

REAL ESTATE INVESTMENT TRUSTS. The Emerging Markets Fund and the International
Fund may invest in REITs. REITs are pooled investment vehicles that invest
primarily in income producing real estate or real estate related loans or
interests. Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. REITs
may be affected by changes in the value of the underlying property owned by the
REITs or the quality of loans held by the REITs. REITs are dependent upon
management skills, are not diversified, and are subject to the risks of
financing projects.

Investing in REITs involves risks similar to those associated with investing in
small capitalization companies. REITs may have limited financial resources, may
trade less frequently and in a limited volume may be subject to more abrupt or
erratic price movements than larger company securities.

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
collateralized only by obligations that

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could otherwise be purchased by the Fund (except with respect to maturity). The
seller will be required to maintain in a segregated account for the Fund cash or
cash equivalent collateral equal to at least 102% 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.

SECURITIES WITH PUTS. In order to maintain liquidity, the Equity Funds, the
Tax-Exempt Bond Fund, the Bond Fund, the Intermediate Tax-Exempt Bond Fund, the
Short/Intermediate Bond Fund, the Intermediate Government Bond Fund, and the
Money Market Funds may enter into puts with respect to portfolio securities with
banks or broker-dealers that, in the opinion of the investment 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.

SHORT SALES. The Emerging Markets Fund may from time to time sell securities
short without limitation, although initially it has no intention to sell
securities short. In a short sale, the Fund sells securities it does not own
(but has borrowed) in anticipation of a decline in the securities' market price.
All short sales by the Fund will be fully collateralized. Short sales involve
certain risks and special considerations; possible losses from short sales may
be unlimited, whereas losses from purchases of securities are limited to the
total amount invested. The Fund may also sell short "against the box," that is,
sell a security that the Fund owns or has the right to acquire, for delivery at
a specified date in the future.

SOVEREIGN DEBT. The Emerging Markets Fund and the International Fund may invest
in "sovereign debt," which is issued or guaranteed by emerging market
governments (including countries, provinces and municipalities) or their
agencies and instrumentalities. Sovereign debt may trade at a substantial
discount from face value. The Fund may hold and trade sovereign debt of emerging
market countries in appropriate circumstances and to participate in debt
conversion programs. Emerging country sovereign debt involves a high degree of
risk, is generally lower-quality debt, and is considered speculative in nature.
The issuer or governmental authorities that control sovereign debt repayment
("sovereign debtors") may be unable or unwilling to repay principal or interest
when due in accordance with the terms of the debt. A sovereign debtor's
willingness or ability to repay principal and interest due in a timely manner
may be affected by, among other factors, its cash flow situation, the extent of
its foreign reserves, the availability of sufficient foreign exchange on the
date a payment is due, the relative size of the debt service burden to the
economy as a whole, the sovereign debtor's policy towards the IMF and the
political constraints to which the sovereign debtor may be subject. Sovereign
debtors may

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also be dependent on expected disbursements from foreign governments,
multilateral agencies and others abroad to reduce principal and interest
arrearage on their debt. The commitment of these third parties to make such
disbursements may be conditioned on the sovereign debtor's implementation of
economic reforms or economic performance and the timely service of the debtor's
obligations. The sovereign debtor's failure to meet these conditions may cause
these third parties to cancel their commitments to provide funds to the
sovereign debtor, which may further impair the debtor's ability or willingness
to timely service its debts. In certain instances, the Fund may invest in
sovereign debt that is in default as to payments of principal or interest. In
the event that the Fund holds non-performing sovereign debt, the Fund may incur
additional expenses in connection with any restructuring of the issuer's
obligations or in otherwise enforcing its rights thereunder.

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

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

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

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

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

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

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

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

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

INVESTMENT SUB-ADVISER
Hansberger Global Investors, Inc.
515 East Las Olas Boulevard, Suite 1300
Fort Lauderdale, Florida 33301

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

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

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

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

LEGAL COUNSEL
Bell, Boyd & Lloyd
Three First National Plaza
Chicago, Illinois 60602

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INVESTMENT ADVISER:
Harris Trust and Savings Bank

PORTFOLIO MANAGEMENT AGENT:
Harris Investment Management, Inc.

DISTRIBUTOR:
Funds Distributor, Inc.

IPROS 5/98

<PAGE> 163
HARRIS INSIGHT(R) FUNDS
60 State Street, Suite 1300, Boston, Massachusetts 02109
Telephone: (800) 982-8782

STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998

The Harris Insight Funds Trust (the "Trust") is an open-end, diversified
management investment company that currently offers a selection of thirteen
investment portfolios. HT Insight Funds, Inc. d/b/a Harris Insight Funds (the
"Company") is an open-end, diversified management investment company that
currently offers a selection of five investment portfolios. The thirteen
portfolios of the Trust and the five 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 Prospectuses. See
"Investment Objectives and Policies." The Funds are as follows:

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

The Funds have two classes of shares, Class A Shares and Institutional
Shares.

This Statement of Additional Information is not a prospectus and is
authorized for distribution only when preceded or accompanied by the Funds'
related Prospectuses dated May 1, 1998 and any supplement thereto (the
"Prospectuses"). This Statement of Additional Information contains additional
information that should be read in conjunction with each of the Prospectuses,
additional copies of which may be obtained without charge from the Company's and
the Trust's distributor, Funds Distributor, Inc., by writing or calling the
Funds at the address or telephone number given above.

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TABLE OF CONTENTS

PAGE
Investment Strategies......................................................3
Ratings...................................................................21
Investment Restrictions...................................................22
Management................................................................24
Service Plans.............................................................31
Calculation of Yield and Total Return.....................................33
Determination of Net Asset Value..........................................38
Portfolio Transactions ...................................................39
Federal Income Taxes......................................................42
Capital Stock and Beneficial Interest.....................................44
Other.....................................................................45
Custodian.................................................................45
Computer Systems..........................................................45
Independent Accountants...................................................46
Experts...................................................................46
Financial Statements......................................................46
Appendix A................................................................47

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INVESTMENT STRATEGIES

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

BANK OBLIGATIONS. Bank obligations include negotiable certificates of
deposit, bankers' acceptances and fixed time deposits. The Money Market 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 Comptroller of the Currency or whose deposits
are insured by the Federal Deposit Insurance Corporation ("U.S. banks"). The
Money Market 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
Harris Investment Management, Inc. ("HIM" or the "Portfolio Management Agent")
are of an investment quality comparable to obligations of U.S. banks that may be
purchased by the Money Market Fund. Each of the Short/Intermediate Bond Fund and
the Money Market 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.

CONVERTIBLE SECURITIES. Because they have the characteristics of both
fixed-income securities and common stock, convertible securities sometimes are
called "hybrid" securities.

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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. 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

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

The floating and variable rate obligations that the Funds may purchase
include certificates of participation in such obligations purchased from banks.
A certificate of participation gives a Fund an undivided interest in the
underlying obligations in the proportion that the Fund's interest bears to 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 INVESTMENT COMPANIES. Some of the countries in which the Emerging
Markets Fund or International Fund may invest may not permit, or may place
economic restrictions on, direct investment by outside investors. Investments in
such countries may be permitted only through foreign government-approved or
authorized investment vehicles, which may include other investment companies.
The Fund may also invest in other investment companies that invest in foreign
securities. Investing through such vehicles may involve frequent or layered fees
or expenses and may also be subject to limitation under the Investment Company
Act of 1940, as amended (the "1940 Act"). Under the 1940 Act, a Fund may invest
up to 10% of its assets in shares of investment

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companies and up to 5% of its assets in any one investment company as long as
the investment does not represent more than 3% of the voting stock of the
acquired investment company.

FOREIGN SECURITIES. As discussed in the Prospectuses, 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 Emerging Markets Fund and 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.

FOREIGN CURRENCY FORWARD CONTRACTS. The Emerging Markets Fund and the
International Fund may enter into foreign currency forward contracts for the
purchase or sale of a fixed quantity of a foreign currency at a future date
("forward contracts"). Forward contracts may be entered into by the Fund for
hedging purposes as well as for non-hedging purposes. Forward contracts may also
be entered into for "cross hedging" as noted in the Prospectuses. 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. The 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
Investment Adviser or Investment Sub-Adviser believes that the value of a
particular foreign currency will increase or decrease relative to the value of
the U.S. dollar, the Fund may purchase or sell such currency, respectively,
through a forward contract. If the expected changes in the value of the currency
occur, the 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, the Fund may sustain losses which will reduce its gross income. Such
transactions, therefore, could be considered speculative.

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The Fund has 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 the Fund satisfies this requirement through segregation of assets, it will
segregate appropriate liquid securities, which will be marked to market on a
daily basis, in an amount equal to the value of its commitments under forward
contracts.

Currently, only a limited market, if any, exists for hedging transactions
relating to currencies in many emerging market countries or to securities of
issuers domiciled or principally engaged in business in emerging market
countries. This may limit the Fund's ability to effectively hedge its
investments in those emerging markets.

FOREIGN CURRENCY FUTURES. Generally, foreign currency futures provide for
the delivery of a specified amount of a given currency, on the exercise date,
for a set exercise price denominated in U.S. dollars or other currency. Foreign
currency futures contracts would be entered into for the same reason and under
the same circumstances as forward contracts. Hansberger will assess such factors
as cost spreads, liquidity and transaction costs in determining whether to
utilize futures contracts or forward contracts in its foreign currency
transactions and hedging strategy.

Purchasers and sellers of foreign currency futures contracts are subject
to the same risks that apply to the buying and selling of futures generally. In
addition, there are risks associated with foreign currency futures contracts and
their use as a hedging device similar to those associated with options on
foreign currencies described below. Further, settlement of a foreign currency
futures contract must occur within the country issuing the underlying currency.
Thus, the Fund must accept or make delivery of the underlying foreign currency
in accordance with any U.S. or foreign restrictions or regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and may be
required to pay any fees, taxes or charges associated with such delivery which
are assessed in the issuing country.

FOREIGN CURRENCY OPTIONS. The Emerging Markets Fund and the International
Fund may purchase and write options on foreign currencies for purposes similar
to those involved with investing in forward contracts. For example, in order to
protect against declines in the dollar value of portfolio securities which are
denominated in a foreign currency, the Fund may purchase put options on an
amount of such foreign currency equivalent to the current value of the portfolio
securities involved. As a result, the Fund would be able to sell the foreign
currency for a fixed amount of U.S. dollars, thereby securing the dollar value
of the portfolio securities (less the amount of the premiums paid for the
options). Conversely, the Fund may purchase call options on foreign currencies
in which securities it anticipates purchasing are denominated to secure a set
U.S. dollar price for such securities and protect against a decline in the value
of the U.S. dollar against such foreign currency. The Fund may also purchase
call and put options to close out written option positions.

The Fund may also write covered call options on foreign currency to
protect against potential declines in its portfolio securities which are
denominated in foreign currencies. If the U.S. dollar value of the portfolio
securities falls as a result of a decline in the exchange rate between the
foreign currency in which it is denominated and the U.S. dollar, then a loss to
the Fund occasioned

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by such value decline would be ameliorated by receipt of the premium on the
option sold. At the same time, however, the Fund gives up the benefit of any
rise in value of the relevant portfolio securities above the exercise price of
the option and, in fact, only receives a benefit from the writing of the option
to the extent that the value of the portfolio securities falls below the price
of the premium received. The Fund may also write options to close out long call
option positions. A covered put option on a foreign currency would be written by
the Fund for the same reason it would purchase a call option, namely, to hedge
against an increase in the U.S. dollar value of a foreign security which the
Fund anticipates purchasing. Here, the receipt of the premium would offset, to
the extent of the size of the premium, any increased cost to the Fund resulting
from an increase in the U.S. dollar value of the foreign security. However, the
Fund could not benefit from any decline in the cost of the foreign security
which is greater than the price of the premium received. The Fund may also write
options to close out long put option positions. The markets in foreign currency
options are relatively new and the Fund's ability to establish and close out
positions on such options is subject to the maintenance of a liquid secondary
market.

The value of a foreign currency option depends upon the value of the
underlying currency relative to the U.S. dollar. As a result, the price of the
option position may vary with changes in the value of either or both currencies
and have no relationship to the investment merits of a foreign security,
including foreign securities held in a "hedged" investment portfolio. Because
foreign currency transactions occurring in the interbank market involve
substantially larger amounts than those that may be involved in the use of
foreign currency options, investors may be disadvantaged by having to deal in an
odd lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable than for
round lots.

There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information available is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(i.e., less than $1 million) where rates may be less favorable. The interbank
market in foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that are not reflected in the options market.

FORWARD CONTRACTS. Forward contracts may be entered into by the Equity
Fund, the Equity Income Fund, the Growth Fund, the Small-Cap Opportunity Fund,
the Small-Cap Value Fund, the Index Fund, the Emerging Markets Fund, the
International Fund and the Balanced Fund (collectively, the "Equity Funds") for
hedging purposes as well as for non-hedging purposes. Forward contracts may also
be entered into for "cross hedging" as noted in the Prospectuses. 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

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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 segregate appropriate liquid securities, which will be marked to
market on a daily basis, in an amount equal to the value of its commitments
under forward contracts.

GOVERNMENT SECURITIES. Government securities consist of obligations issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
sponsored enterprises ("Government Securities"). Obligations of the 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
discretionary authority of the U.S. 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 U.S. Government support of agencies or instrumentalities is
discretionary, no assurance can be given that the U.S. Government will provide
financial support, since it is not lawfully obligated to do so.

INDEX FUTURES CONTRACTS AND OPTIONS ON INDEX FUTURES CONTRACTS. All Equity
Funds and Fixed Income Funds 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 or the
Sub-Adviser 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 be purchased in a more advantageous manner. The Index
Fund may maintain Standard & Poor's 500 Index futures contracts to simulate full
investment in that index while retaining a cash position for fund management
purposes, to facilitate trading or to reduce transaction costs. A Fund will sell
options on indices only to close out existing hedge positions.

A securities index assigns relative weightings to the securities in the
index, and the index generally fluctuates with changes in the market values of
these securities. A securities index futures contract is an agreement in which
one party agrees to deliver to the other an amount of cash equal to a specific
dollar amount times the difference between the value of a specific securities
index at the

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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 Standard & Poor's ("S&P") or A or higher by
Moody's Investors Service ("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.

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

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.

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

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

INTEREST RATE FUTURES CONTRACTS AND RELATED OPTIONS. All Equity Funds and
Fixed Income Funds may invest in interest rate futures contracts and options on
such contracts that are traded on a domestic exchange or board of trade. Such
investments may be made by a Fund solely for the purpose of hedging against
changes in the value of its portfolio securities due to anticipated changes in
interest rates and market conditions, and not for purposes of speculation. A
public market exists for interest rate futures contracts covering a number of
debt securities, including long-term U.S. Treasury Bonds, ten-year U.S.
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 or appropriate liquid securities equal to the notional market
value of the underlying contract will be segregated to cover the positions,
thereby insuring that the use of the contract is unleveraged.

Although a Fund will enter into futures contracts only if an active market
exists for such contracts, there can be no assurance that an active market will
exist for the contract at any particular time. Most domestic futures exchanges
and boards of trade limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading session. Once the
daily limit has been reached in a particular contract, no trades may be made
that day at a price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not limit potential
losses because the limit may prevent the liquidation of unfavorable positions.
It is possible that futures contract prices could move to the daily limit for
several consecutive trading days with little

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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 Code, applicable to a regulated investment company. See "Federal Income
Taxes" below.

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

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

There are several risks in connection with the use of interest rate
futures contracts and options on such futures contracts as hedging devices.
Successful use of these derivative securities by a Fund is subject to the
Portfolio Management Agent's or Sub-Adviser'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

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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 or Sub-Adviser anticipates an
extreme change in interest rates or market conditions.

See additional risk disclosure above 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 Sub-Adviser, or the Investment Adviser with respect to the
Tax-Exempt Money Market Fund, are of investment quality comparable to other
permitted investments of a Fund, may be used for letter of credit backed
investments.

MORTGAGE-RELATED SECURITIES. All Equity Funds, the Short/Intermediate Bond
Fund, the Bond Fund and the Intermediate Government Bond Fund may invest in
mortgage-backed securities, including collateralized mortgage obligations
("CMOs") and Government Stripped Mortgage-Backed Securities. The Intermediate
Government Bond 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 Prospectuses.

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

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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.

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

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

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MUNICIPAL LEASES. Each of the Intermediate Tax-Exempt Bond Fund and the
Tax-Exempt Bond Fund may acquire participations in lease obligations or
installment purchase contract obligations (hereinafter collectively called
"lease obligations") of municipal authorities or entities. Although lease
obligations do not constitute general obligations of the municipality for which
the municipality's taxing power is pledged, a lease obligation is ordinarily
backed by the municipality's covenant to budget for, appropriate, and make the
payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. In addition to the
"non-appropriation" risk, these securities represent a relatively new type of
financing that has not yet developed the depth of marketability associated with
more conventional bonds. In the case of a "non-appropriation" lease, a Fund's
ability to recover under the lease in the event of non-appropriation or default
will be limited solely to the repossession of the leased property in the event
foreclosure might prove difficult.

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

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

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

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

RANs. A decline in the receipt of certain revenues, such as anticipated
revenues from another level of government, could adversely affect an
issuer's ability to meet its obligations on

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outstanding RANs. In addition, the possibility that the revenues would,
when received, be used to meet other obligations could affect the ability
of the issuer to pay the principal of, and interest on, RANs.

The Short/Intermediate Bond Fund, the Balanced Fund, the Bond Fund, the
Intermediate Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund may also invest
in: (1) municipal bonds having a maturity at the time of issuance of up to 40
years that are rated at the date of purchase "Baa" or better by Moody's or "BBB"
or better by 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 and Fixed Income Funds may invest
in covered put and covered call options and write covered put and covered call
options on securities in which they may invest directly and that are traded on
registered domestic securities exchanges. The writer of a call option, who
receives a premium, has the obligation, upon exercise of the option, to deliver
the underlying security against payment of the exercise price during the option
period. The writer of a put, who receives a premium, has the obligation to buy
the underlying security, upon exercise, at the exercise price during the option
period.

These Funds each may write put and call options on securities only if they
are "covered," and such options must remain "covered" as long as the Fund is
obligated as a writer. A call option is "covered" if a Fund owns the underlying
security or its equivalent covered by the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or for
additional cash consideration if such cash is segregated) 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 appropriate liquid assets
representing the difference are segregated by the Fund. A put option is
"covered" if a Fund maintains appropriate liquid securities with a value equal
to the exercise price, 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

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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.

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 collateralized only by obligations
that could otherwise be purchased by the Fund (except with respect to maturity).
The seller will be required to maintain in a segregated account for the Fund
cash or cash equivalents equal to at least 102% of the repurchase price
(including accrued interest). Default or bankruptcy of the seller would expose a
Fund to possible loss because of adverse market action, delays in connection
with the disposition of the underlying obligations or expenses of enforcing its
rights.

A Fund may not enter into a repurchase agreement if, as a result, more
than 15% (10% with respect to the Equity Fund, the Short/Intermediate 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 Board of Trustees, as the
case may be.

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

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SECURITIES LENDING. 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 total 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 or the
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 of
longer than one year. Any securities that a Fund may receive as collateral will
not become part of the Fund's portfolio at the time of the loan and, in the
event of a default by the borrower, the Fund will, if permitted by law, dispose
of such collateral except for such part thereof that is a security in which the
Fund is permitted to invest. During the time securities are on loan, the
borrower will pay the Fund any accrued income on those securities, and the Fund
may invest the cash collateral and earn additional income or receive an agreed
upon fee from a borrower that has delivered cash equivalent collateral. Loans of
securities by a Fund will be subject to termination at the Fund's or the
borrower's option. Each Fund may pay reasonable administrative and custodial
fees in connection with a securities loan and may pay a negotiated fee to the
borrower or the placing broker. Borrowers and placing brokers may not be
affiliated, directly or indirectly, with the Company, the Trust, the Investment
Adviser, the Portfolio Management Agent, the Sub-Adviser or the Distributor.

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

SHORT SALES. With respect to Emerging Markets Fund, when the Fund sells
short, it borrows the securities that it needs to deliver to the buyer. The Fund
must arrange through a broker to borrow these securities and will become
obligated to replace the borrowed securities at whatever

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<PAGE> 182

their market price may be at the time of replacement. The Fund may have to pay a
premium to borrow the securities and must pay any dividends or interest payable
on the securities until they are replaced.

The Fund's obligation to replace the securities borrowed in connection
with a short sale will be secured. The proceeds the Fund receives from the short
sale will be held on behalf of the broker until the Fund replaces the borrowed
securities, and the Fund will deposit collateral with the broker; this
collateral will consist of cash or liquid, high grade debt obligations. In
addition, the Fund will deposit collateral in a segregated account with the
Fund's custodian; this collateral will consist of cash or liquid, high grade
debt obligations equal to any difference between the market value of (1) the
securities sold at the time they were sold short and (2) any collateral
deposited with the broker in connection with the short sale (not including the
proceeds of the short sale).

The Emerging Markets Fund may sell securities short against the box to
hedge unrealized gains on portfolio securities. If the Fund sells securities
short against the box, it may protect unrealized gains, but will lose the
opportunity to profit on such securities if the price rises.

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

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

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

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.

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<PAGE> 183

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

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

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 or the Sub-Adviser will reassess

21
<PAGE> 184

promptly whether the security presents minimal credit risks and determine
whether continuing to hold the security is in the best interests of the Fund. A
Money Market Fund may be required to sell a security downgraded below the
minimum required for purchase, absent a specific finding by the Company's Board
of Directors that a sale is not in the best interests of the Fund. To the extent
the ratings given by any nationally recognized statistical rating organization
may change as a result of changes in such organizations or in their rating
systems, the Funds will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in the
Prospectuses and in this Statement of Additional Information.

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

INVESTMENT RESTRICTIONS

NO FUND MAY:

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

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

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

(4) if such Fund is the Equity Fund, the Short/Intermediate Bond Fund or a
Money Market Fund, invest an amount in excess of 10% (and 15% for the Emerging
Markets Fund) 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)

22
<PAGE> 185

with respect to the Short/Intermediate Bond Fund, the Equity Fund and the Money
Market Funds, stock index futures and options on stock indices, (ii) with
respect to the International Fund, futures, options, options on futures and
forward contracts, and (iii) with respect to the remaining Funds, futures,
options and options on futures);

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

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

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

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

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

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

In addition, the SHORT/INTERMEDIATE 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 and Beneficial Interest."

Whenever any investment restriction states a maximum percentage of a
Fund's assets, it is intended that if the percentage limitation is met at the
time the action is taken, subsequent

23
<PAGE> 186

percentage changes resulting from fluctuating asset values will not be
considered a violation of such restrictions, except that at no time may the
value of the illiquid securities held by a Money Market Fund exceed 10% of the
Fund's total assets.

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

MANAGEMENT

TRUSTEES, DIRECTORS AND OFFICERS

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

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

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

JOHN W. McCARTER, JR., TRUSTEE AND DIRECTOR - Roosevelt Road at Lakeshore Drive,
Chicago, Illinois 60605. Age 59. President and Chief Executive Officer, The
Field Museum of Natural History since October 1, 1996. Former Senior Vice
President and Director of Booz-Allen & Hamilton, Inc. (consulting firm) from
April 1987 to April 1997; Director of W.W. Grainger, Inc. and A.M. Castle, Inc.

ERNEST M. ROTH, TRUSTEE AND DIRECTOR - 205 Abingdon Avenue, Kenilworth, Illinois
60043. Age 70. Consultant since 1992. Formerly, Senior Vice President and Chief
Financial Officer,

24
<PAGE> 187
'
Commonwealth Edison Company. Director of LaRabida Children's Hospital and
Chairman of LaRabida Children's Foundation.

RICHARD W. INGRAM, President, Treasurer and Chief Financial Officer. Age 42.
Executive Vice President and Director of Client Services and Treasury
Administration of Funds Distributor, Inc. Senior Vice President of Premier
Mutual Fund Services, Inc., an affiliate of Funds Distributor ("Premier
Mutual"), and an officer of certain investment companies advised or administered
by J.P. Morgan, Dreyfus Corporation, Waterhouse Asset Management, Inc. and RCM
Capital Management L.L.C. or their respective affiliates. From March 1994 to
November 1995, Mr. Ingram was Vice President and Division Manager of First Data
Investor Services Group, Inc. From 1989 to 1994, Mr. Ingram was Vice President,
Assistant Treasurer and Tax Director - Mutual Funds of The Boston Company, Inc.

CHRISTOPHER J. KELLEY, Vice President and Secretary. Vice President and Senior
Associate General Counsel of Funds Distributor and Premier Mutual, and an
officer of certain investment companies distributed by Funds Distributor. From
April 1994 to July 1996, Mr. Kelley was Assistant Counsel at Forum Financial
Group. From October 1992 to March 1994, Mr. Kelley was employed by Putnam
Investments in legal and compliance capacities. He is 33 years old.

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

The following table summarizes the compensation paid by the Company to the
Directors of the Company and paid by the Trust to the Trustees of the Trust for
the fiscal year ended December 31, 1997:

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

C. Gary Gerst, $10,946 $26,054 None None $37,000
Chairman, Director and Trustee

Edgar R. Fiedler, $8,727(1) $20,773(1) None None $29,500
Director and Trustee

John W. McCarter, Jr. $8,727 $20,773 None None $29,500
Director and Trustee

Ernest M. Roth, $8,727 $20,773 None None $29,500
Director and Trustee
</TABLE>

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

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

(1) For the period June 1988 through December 31, 1997, the total amount of
compensation (including interest) payable or accrued for Mr. Fiedler was
$198,328 pursuant to the Company's Deferred Compensation Plan for its
independent Directors.

As of April 1, 1998, the principal holders of the Institutional and Class
A Shares of each Fund of the Company and the Trust were as follows:

25
<PAGE> 188

The principal holder of Institutional Shares of the Emerging Markets Fund
was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of record
2,563,793.322 shares equal to 99.77% of the outstanding Institutional Shares of
the Fund. The principal holders of Class A Shares were Carlos and Louis Garin,
Bosque De Las Lomas, Mexico; National Financial Services Corp., New York, New
York 10008; and Donald Coxe, Chicago, Illinois 60611, which held of record
5,194.871; 6,567.176 and 3,889.675 shares, respectively, equal to 31.55%;
39.88%; and 23.62%, respectively of the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the International Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of record
12,751,459.160 shares, equal to 97.80% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were the Karen Toole
Verbica Trust, San Jose, California 95150, and Carlos and Louis Garin, Bosque
De Las Lomas, Mexico, which held of record 8,070.822 and 8,025.134 shares,
respectively, equal to 7.42% and 7.38%, respectively, of the outstanding Class
A Shares of the Fund.

The principal holder of Institutional Shares of the Small-Cap Opportunity
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of
record 15,767,380.083 shares, equal to 97.58% of the outstanding Institutional
Shares of the Fund. The principal holders of Class A Shares were Bank of America
and George N. and Laverne N. Gaynor Trust, Los Angeles, California 90051; Fred
A. Fischer, Jr. Trust, Kenosha, Wisconsin 53142; and Northern Trust, Chicago,
Illinois 60675, which held of record 26,137.804; 8,456.720; and 8,178.502
shares, respectively, equal to 16.11%; 5.21%; and 5.04%, respectively, of the
outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Small-Cap Value Fund
was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of record
2,746,021.393 Shares, equal to 93.23% of the outstanding Institutional Shares of
the Fund. The principal holders of Class A Shares were John A. Sivright,
Winnetka, Illinois 60093; Anne S. Lyman, Winnetka, Illinois 60093; Lynn A. and
Louis J. San, II, Chicago, Illinois 60637; and Steven Ruthbloum, Chicago,
Illinois 60006, which held of record 3,790.267; 1,025.747; 845.547; and 615.953
shares, respectively, equal to 32.68%; 8.84%; 7.29% and 5.31%, respectively, of
the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Growth Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which held of record
4,866,406.827 shares, equal to 95.87% of the outstanding Institutional Shares of
the Fund. The principal holders of Class A Shares were Merbank Company,
Vicksburg, Mississippi 39181 and National Financial Services Corp., New York,
New York 10008, which held of record 8,952.719 and 7,085.377 shares,
respectively, equal to 6.72% and 5.32%, respectively, of the outstanding Class A
Shares of the Fund.

<PAGE> 189

The principal holder of Institutional Shares of the Equity Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which held of record
45,320,015.551 shares, equal to 94.38% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were National Financial
Services Corp., New York, New York 10008; Eastern Illinois University
Foundation, Weehaukin, New York 07087; and Norwest Bank Arizona, Minneapolis,
Minnesota 55480, which held of record 507,515.826; 253,251.711; and 157,569.655
shares, respectively, equal to 40.29%; 20.11% and 12.51%, respectively, of the
outstanding Class A Shares of the Fund.

The principal holders of Institutional Shares of the Equity Income Fund
were Harris Trust and Savings Bank, Chicago, Illinois 60690 and SEI Trust
Company, which held of record 2,445,389.143 and 181,100.643 shares,
respectively, equal to 92.96% and 6.88%, respectively, of the outstanding
Institutional Shares of the Fund. The principal holders of Class A Shares were
Jerome Weinstein, Chicago, Illinois 60625 and National Financial Services Corp.,
New York, New York 10008, which held of record 7,761.113 and 4,743.303 shares,
respectively, equal to 8.31% and 5.08%, respectively, of the outstanding Class A
Shares of the Fund.

The principal holder of Institutional Shares of the Index Fund was Harris
Trust and Savings Bank, Chicago, Illinois 60690, which held of record
10,134,130.922 shares equal to 82.65% of the outstanding Institutional Shares of
the Fund. The principal holders of Class A Shares were Spiro Besbekos, Western
Springs, Illinois 60558; National Financial Services Corp., New York, New York
10008; and Richard T. Hansen, Prospect Heights, Illinois 60070, which held of
record 36,249.412; 20,258.814; and 18,591.236 shares, respectively, equal to
11.21%; 6.27%; and 5.75, respectively, of the outstanding Class A Shares of the
Fund.

The principal holder of Institutional Shares of the Balanced Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of record
4,367,480.017 shares, equal to 99.99% of the outstanding Institutional Shares of
the Fund. The principal holders of Class A Shares were David P. Sanes, Skokie,
Illinois 60077; National Financial Services Corp., New York, New York 10008;
Edward R. Doe, Sr., Redgranite, Wisconsin 54970; Kathy Richland Photography,
Chicago, Illinois 60614; and Sheldon Berman, Glenview, Illinois 60025, which
held of record 23,462.633; 9,144.435; 8,328.429; 7,607.341; and 4,988.079
shares, respectively, equal to 27.31%; 10.64%; 9.69%; 8.85%; and 5.81%,
respectively, of the outstanding Class A Shares of the Fund.

The principal holders of Institutional Shares of the Convertible Securities
Fund were Harris Trust and Savings Bank, Chicago, Illinois 60690 and Pipe
Fitters Retirement Fund, Tampa, Florida 33607, which held of record
1,600,003.668 and 243,326.879 shares, respectively, equal to 86.59% and 13.17%,
respectively, of the outstanding Institutional Shares of the Fund. The principal
holders of Class A Shares were National Financial Services Corp., New York, New
York 10008; Judith W. and John W. McCarter, Jr. for the John W. McCarter, Jr.
Trust, Northfield, Illinois 60093; and Billie J. Darling, Sarasota, Florida
34239, which

<PAGE> 190

held of record 4,222.672; 727.139; and 390.531 shares, respectively, equal to
62.67%; 10.79% and 5.80%, respectively, of the outstanding Class A Shares of the
Fund.

The principal holder of Institutional Shares of the Tax-Exempt Bond Fund
was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of record
16,462,567.301 shares, equal to 96.40% of the outstanding Institutional Shares
of the Fund. The principal holders of Class A Shares were National Financial
Services Corp., New York, New York 10008; Harris Trust and Savings Bank,
Chicago, Illinois 60690; David Markle, Michigan City, Indiana 46360; Bank of
America and George N. and Laverne N. Gaynor Trust, Los Angeles, California
90051; William D. Markle, Chicago, Illinois 60614; and Merbank Company,
Vicksburg, Mississippi 39181, which held of record 21,517.265; 12,457.513;
5,409.799; 5,362.000; 5,232.823; and 4,986.952 shares, respectively, equal to
31.68%; 18.34%; 7.96%; 7.89%; 7.70%; and 7.34%, respectively, of the outstanding
Class A Shares of the Fund.

The principal holders of Institutional Shares of the Bond Fund were Harris
Trust and Savings Bank, Chicago, Illinois 60690 and SEI Trust Company, Oaks,
Pennsylvania 19456, which held of record 13,898,373.845 and 1,003,133.690
shares, respectively, equal to 88.77% and 6.60%, respectively, of the
outstanding Institutional Shares of the Fund. The principal holders of Class A
Shares were National Financial Services Corp., New York, New York 10008; Harris
Trust and Savings Bank, Chicago, Illinois 60690; and Carlos and Louise Garin,
Bosque De Las Lomas, Mexico, which held of record 17,015.126; 14,707.215 and
8,573.729 shares, respectively, equal to 15.59%; 13.48% and 7.86%, respectively,
of the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Intermediate Tax-Exempt
Bond Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held
of record 17,900,272.967 shares, equal to 97.26% of the outstanding
Institutional Shares of the Fund. The principal holders of Class A Shares were
National Financial Services Corp. New York, New York 10008; Fred A. Fischer, Jr.
Trust, Kenosha, Wisconsin 53142; Curtis Templeton, Lake Wales, Florida; Lynn T.
Vines, Polk City, Florida 33868; Bank of America and George N. and Laverne N.
Gaynor Trust, Los Angeles, California 90051; and Charles A. Carey, Jr.,
Northbrook, Illinois 60062, which held of record 20,636.998; 12,850.000;
11,549.020; 11,202.542; 7,160.000; and 4,597.622 shares, respectively, equal to
24.14%; 15.03%; 13.51%; 13.10%; 8.38%; and 5.38%, of the outstanding Class A
Shares of the Fund.

The principal holder of Institutional Shares of the Short/Intermediate Bond
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of
record 29,011,935.673 shares equal to 94.30% of the outstanding Institutional
Shares of the Fund. The principal holders of Class A Shares were Eastern
Illinois University Foundation, Weehaukin, NY 07087 and National Financial
Services Corp., New York, New York 10008, which held of record 340,502.675 and
133,924.438 shares, respectively, equal to 55.04% and 21.65%, respectively, of
the outstanding Class A Shares of the Fund.

<PAGE> 191

The principal holders of Institutional Shares of the Intermediate
Government Bond Fund were Harris Trust and Savings Bank, Chicago, Illinois
60690; Wheeling Pittsburgh Steel Corp., Milwaukee, Wisconsin 53202; Hospital for
Joint Diseases, New York, New York 10006, which held of record 5,344,475.407;
451,461.886; and 417,236.342 shares, respectively, equal to 82.77%; 6.99%; and
6.46%, respectively, of the outstanding Institutional Shares of the Fund. The
principal holders of Class A Shares were George C. Slezak, Western Springs,
Illinois 60558; Shirlee R. Hollander, Chicago, Illinois 60646; David P. Sanes,
Skokie, Illinois 60077; Ned E. Mitchell, Chicago, Illinois 60610; William R.
Brown, St. Charles, Illinois 60175; and Mariflor S. Jamora, Severna Park,
Maryland 21146, which held of record 10,713.253; 9,245.061; 8,458.924;
4,097.382; 3,624.905; and 3,544.376 shares, respectively, equal to 20.75%;
17.91%; 16.38%; 7.94%; 7.02%; and 6.87%, respectively, of the outstanding Class
A Shares of the Fund.

The principal holder of Institutional Shares of the Tax-Exempt Money Market
Fund was Harris Trust and Savings Bank, Chicago, Illinois 60690, which held of
record 567,046, 934.970 shares equal to 97.62% of the outstanding Institutional
Shares of the Fund. The principal holders of Class A Shares were Harris Trust
and Savings Bank, Chicago, Illinois 60690 and National Financial Services Corp.,
New York, New York 10008, which held of record 184,281,155.600 and
18,339,295.780 shares, respectively, equal to 79.14% and 7.88%, respectively, of
the outstanding Class A Shares of the Fund.

The principal holder of Institutional Shares of the Money Market Fund was
Harris Trust and Savings Bank, Chicago, Illinois 60690 which held of record
836,826,992.450 shares equal to 79.06% of the outstanding Institutional Shares
of the Fund. The principal holder of Class A Shares was Harris Trust and Savings
Bank, Chicago, Illinois 60690, which held of record 506,295,941.280 shares equal
to 74.00% of the outstanding Class A Shares of the Fund.

The principal holders of Institutional Shares of the Government Money
Market Fund were Harris Trust and Savings Bank, Chicago, Illinois 60690 and
Gordon K. and Donald A. Nelson, Homewood, Illinois 60430, which held of record
73,928,077.310 and 8,936,648.080 shares, respectively, equal to 85.10% and
10.29%, respectively, of the outstanding Institutional Shares of the Fund. The
principal holder of Class A Shares was Harris Trust and Savings Bank, Chicago,
Illinois 60690, which held of record 240,965,803.0600 shares equal to 82.87% of
the outstanding Class A Shares of the Fund.

<PAGE> 192

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

As of April 1, 1998, Directors and officers of the Company as a group
beneficially owned less than 1% of the outstanding shares of each of the
Company's Funds.

As of April 1, 1998, 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, PORTFOLIO MANAGEMENT AGENT AND INVESTMENT SUB-ADVISER.
Each of the Funds is advised by Harris Trust. With respect to the Tax-Exempt
Money Market Fund, the Advisory Contract with Harris Trust provides that Harris
Trust is responsible for all Fund purchase and sale transactions and that Harris
Trust shall furnish to the Fund investment guidance and policy direction in
connection with the daily portfolio management of the Fund. With respect to
Funds other than the Tax-Exempt Money Market Fund, Harris Trust has entered into
Portfolio Management Contracts with HIM under which HIM is responsible for all
Fund purchase and sale transactions and for providing all such daily portfolio
management services to such Funds. Under the Portfolio Management Contracts,
Harris Trust remains responsible for the supervision and oversight of HIM's
performance.

HIM has entered into Investment Sub-Advisory Agreements (the "Sub-Advisory
Contracts") with Hansberger. Under the Sub-Advisory Contracts, Hansberger
manages the investment of assets of the Emerging Markets Fund and the
International Fund. In carrying out its obligations under the Sub-Advisory
Contracts, Hansberger (i) obtains and evaluates pertinent economic, statistical,
financial and other information affecting the economic regions and individual
national economies generally, together with information specific to individual
companies or industries, the securities of which are included in the Funds'
investment portfolio or may be under consideration for inclusion therein; and
(ii) formulates, recommends, and executes an ongoing program of investment for
the Funds consistent with the Funds' investment objectives, policies, strategy,
and restrictions. Under the Sub-Advisory Contracts, HIM remains responsible for
the supervision and oversight of Hansberger's performance.

Harris Trust, HIM or Hansberger 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 and Hansberger analyze
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 Contracts with respect to the Funds other than the Emerging
Markets Fund and the International Fund will continue in effect from year to
year, provided that such continuance

26
<PAGE> 193

is specifically approved annually (i) by the holders of a majority of the
outstanding voting securities of the Funds or by the Board of Directors or the
Board of Trustees, as the case may be, and (ii) by a majority of the Directors
of the Company or the Trustees of the Trust, as the case may be, who are not
parties to the Advisory Contracts or "interested persons" (as defined in the
1940 Act) of any such party.

The Portfolio Management Contracts with respect to the remaining Funds
other than the Emerging Markets Fund, the International Fund and the Tax-Exempt
Money Market Fund will continue in effect from year to year, provided that such
continuance is specifically approved as described in the immediately preceding
paragraph.

The Advisory Contracts, the Portfolio Management Contracts and the
Sub-Advisory Contracts with respect to the Emerging Markets Fund and the
International Fund will continue in effect until February 23, 1999, and
thereafter from year to year provided the continuance is approved annually (i)
by the holders of a majority of the outstanding voting securities of the
Emerging Markets Fund and the International Fund or by the Board of Trustees and
(ii) by a majority of the Trustees of the Trust who are not parties to the
Sub-Advisory Contracts or "interested persons" (as defined in the 1940 Act) of
any such party. Such Sub-Advisory Contracts may be terminated on 60 days'
written notice by either party and will terminate automatically if assigned.

Harris Trust may from time to time offer programs under which it may make
contributions to certain organizations based on shares of the Funds held by
members of the organizations and in an amount up to 0.10% of the value of those
shares. These contributions are expenses of Harris Trust and are not Fund
expenses, and thus will not affect Fund performance.

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

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

- - Active management is a key component of superior performance.

- - A systematic investment process may increase both consistency and levels of
relative performance.

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

27
<PAGE> 194

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

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

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

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

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

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

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Advisory Fee Advisory Fee Voluntarily Waived Net Advisory Fee
($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1996 1997 1995 1996 1997 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Government Money
Market Fund 335,725 292,088 343,287 -- -- -- 335,725 292,088 343,287

Money Market Fund 675,821 825,619 1,285,919 -- -- -- 675,821 825,619 1,285,919

Tax-Exempt Money
Market Fund 454,684 667,922 676,850 -- -- -- 454,684 667,922 676,850

Intermediate Government
Bond Fund -- -- 453,478 -- -- 283,923 -- -- 169,555

Short/Intermediate
Bond Fund 327,473 1,594,951 1,950,205 166,376 684,243 812,087 161,097 910,708 1,138,118

Intermediate Tax-Exempt
Bond Fund -- 1,120,322 1,195,229 -- 32,722 2,062 -- 1,087,600 1,193,167

Bond Fund -- 148,028 617,981 -- 88,847 277,603 -- 59,181 340,378

Tax-Exempt Bond Fund -- 829,656 1,034,844 -- 26,205 564 -- 803,451 1,034,280
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

28
<PAGE> 195

Convertible Securities
Fund -- -- 325,654 -- -- 20,552 -- -- 305,102

Balanced Fund -- -- 297,432 -- -- 18,183 -- -- 279,249

Index Fund -- 280,516 581,658 -- 41,424 40,100 -- 239,092 541,558

Equity Income Fund -- 182,866 265,358 -- 9,997 10,661 -- 172,869 254,697

Equity Fund 365,839 3,549,319 5,497,774 -- -- -- 365,839 3,549,319 5,497,774

Growth Fund -- 529,786 875,635 -- 20,952 13,517 -- 508,834 862,118

Small-Cap Value Fund -- -- 447,182 -- -- 38,615 -- -- 408,567

Small-Cap Opportunity
Fund -- 1,137,914 2,218,918 -- 23,743 17,029 -- 1,114,171 2,201,889

International Fund -- 934,699 1,796,685 -- 17,146 32,097 -- 917,553 1,764,588

Emerging Markets Fund -- -- 37,994 -- -- 10,336 -- -- 27,658
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

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

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Administration Fee ($) Reduction by Administrator ($) Net Administration Fee ($)
----------------------------- ------------------------------ -----------------------------
1995 1996 1997 1995 1996 1997 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Government Money Market Fund 387,112 289,773 264,347 23,691 23,295 114,341 363,421 266,478 150,006

Money Market Fund 830,325 878,336 1,058,621 51,396 73,647 476,735 778,929 804,689 581,886

Tax-Exempt Money Market Fund 542,065 717,310 554,506 34,194 -- -- 507,871 717,310 554,506

Intermediate Government Bond Fund -- -- 96,088 -- -- -- -- -- 96,088

Short/Intermediate Bond Fund 56,091 260,768 385,023 3,707 15,143 -- 52,384 245,625 385,023

Intermediate Tax-Exempt Bond Fund -- 201,598 273,834 -- 12,277 -- -- 189,321 273,834

Bond Fund -- 24,268 129,517 -- 1,523 -- -- 22,745 129,517
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

29
<PAGE> 196

Tax-Exempt Bond Fund -- 155,225 238,688 -- 8,902 -- -- 146,323 238,688

Convertible Securities Fund -- -- 63,999 -- -- -- -- -- 63,999

Balanced Fund -- -- 68,073 -- -- -- -- -- 68,073

Index Fund -- 125,126 318,288 -- -- -- -- 125,126 318,288

Equity Income Fund -- 28,389 52,398 -- -- -- -- 28,389 52,398

Equity Fund 63,669 573,867 1,078,273 3,826 -- -- 59,843 573,867 1,078,273

Growth Fund -- 64,717 134,450 -- -- -- -- 64,717 134,450

Small-Cap Value Fund -- -- 77,285 -- -- -- -- -- 77,285

Small-Cap Opportunity Fund -- 126,884 304,109 -- -- -- -- 126,884 304,109

International Fund -- 109,741 248,075 -- -- -- -- 109,741 248,075

Emerging Markets Fund -- -- 4,309 -- -- -- -- -- 4,309
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

DISTRIBUTOR. Funds Distributor, Inc. (the "Distributor") has entered into
a Distribution Agreement with the Company and with the Trust, as the case may
be, pursuant to which it has the responsibility of distributing shares of the
Funds. For the period ended December 31, 1997, fees for services rendered by the
Distributor were paid by the Co-Administrators and the Administrator.

The following table shows the dollar amount of sales charges payable to
the Distributor with respect to sales of Class A Shares of each Fund and the
amount of sales charges retained by the Distributor and not reallowed to other
persons. The data is for the past three fiscal years or shorter period if the
Fund has been in operation for a shorter period. There were no sales charges
payable to the Distributor with respect to the Funds not mentioned below.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Aggregate Underwriting Amount Retained by Funds
Commissions ($) Distributor, Inc. ($) Amount Reallowed ($)
-------------------------- ------------------------ --------------------------
1995 1996 1997 1995 1996 1997 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Short/Intermediate Bond Fund 272 4,365 1,473 17 280 81 255 4,085 1,392

Equity Fund 3,489 12,647 7,153 188 728 392 3,301 11,919 6,761

Equity Income Fund -- -- 85 -- -- 5 -- -- 80

Growth Fund -- 452 1,908 -- 27 108 -- 425 1,800

Small-Cap Opportunity Fund -- 1,402 2,380 -- 84 134 -- 1,318 2,246

Index Fund -- 247 728 -- 13 40 -- 234 688

International Fund -- 225 2,712 -- 13 147 -- 212 2,565
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>

OTHER INFORMATION PERTAINING TO DISTRIBUTION, ADMINISTRATION,
SUB-ADMINISTRATION, CUSTODIAN, TRANSFER AGENCY AND SUB-TRANSFER AGENCY
AGREEMENTS. Harris Trust serves as the transfer agent and dividend disbursing
agent ("Transfer Agent") of the Funds pursuant to Transfer

30
<PAGE> 197
Agency Services Agreements with the Company and the Trust. The Transfer Agent
has entered into Sub-Transfer Agency Services Agreements with PFPC (the
"Sub-Transfer Agent") on behalf of the Company and the Trust. PFPC is an
affiliate of PNC Bank, N.A., the Custodian for the Company and the Trust. PFPC
and PNC Bank, N.A. are not affiliates of Funds Distributor, Harris Trust, HIM or
Hansberger.

SERVICE PLANS

The Funds have adopted a complex-wide Service Plan for Class A Shares of
the Funds that provides for service fees of up to 0.25% (on an annualized basis)
of the average daily net assets attributable to Class A Shares. This Service
Plan does not authorize payments under the Plan to be made for distribution
purposes and was not adopted under Section 12(b) of the 1940 Act and Rule 12b-1
promulgated thereunder ("Rule 12b-1"). Additionally, the Money Market Funds have
adopted a Service Plan relating to Class A Shares pursuant to Rule 12b-1. This
Service Plan provides for distribution fees of up to 0.10% (on an annualized
basis) of the average daily net assets attributable to the Money Market Funds'
Class A Shares. Each Service Plan has been adopted by the Board of Trustees or
Board of Directors, as the case may be, including a majority of the Trustees or
Directors who were not "interested persons" (as defined by the 1940 Act) of the
Trust or the Company, and who had no direct or indirect financial interest in
the operation of the Service Plan or in any agreement related to the Plan (the
"Qualified Trustees" or "Qualified Directors", as the case may be). Each Service
Plan will continue in effect from year to year if such continuance is approved
by a majority vote of both the Trustees of the Trust or the Directors of the
Company, as the case may be, and the Qualified Trustees or Directors. Agreements
related to the Service Plans must also be approved by such vote of the Trustees
or Directors and the Qualified Directors or Qualified Trustees. The Service
Plans will terminate automatically if assigned, and may be terminated at any
time, without payment of any penalty, by a vote of a majority of the outstanding
voting securities of the proper Fund. No Service Plan may be amended to increase
materially the amounts payable to Service Organizations 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 - ALL FUNDS. Each Fund has entered into an agreement with
each institution ("Service Organization") which purchases Class A Shares on
behalf of its customers ("Customers"). In the case of Class A Shares, the
Service Organization is required to provide shareholder support services to its
Customers who beneficially own such Shares in consideration of the payment of up
to 0.25% (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)

31
<PAGE> 198

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, a Service Organization, at its option, may also provide to
its holders of Class A (a) a service that invests the assets of their other
accounts with the Service Organization in the Money Market Fund's shares (sweep
program); (b) sub-accounting with respect to shares owned beneficially or the
information necessary for sub-accounting; and (c) checkwriting services.

SERVICE PLAN - MONEY MARKET FUNDS. Under the Service Plan that relates
only to the Money Market Funds, each Money Market Fund may make additional
payments to Service Organizations for shareholder services described above and
also may (i) bear the costs and expenses in connection with advertising and
marketing the Fund's Class A Shares and (ii) make payments to Service
Organizations for 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, at a
rate of up to 0.10% per annum of the value of the Fund's average daily net
assets with respect to its Class A Shares.

There is no Service Plan in existence with respect to the Institutional
Shares of the Funds.

The following table shows Service Organization fees paid to Harris Trust
with respect to each Fund for the period ended December 31, 1997.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Shareholder Shareholder Rule 12b-1 Fees
Servicing Plan Fees Servicing Plan Rule 12b-1 Fees Waived
Paid ($) Fees Waived ($) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Government Money Market Fund 55,385 -- 820,868 138,885

Money Market Fund 139,215 -- 1,769,965 294,105

Tax-Exempt Money Market Fund 49,248 -- 628,467 122,166

Short/Intermediate Bond Fund 1,254 -- 11,317 --

Bond Fund 177 -- 975 --

Intermediate Government Bond Fund 85 -- 45 --

Intermediate Tax-Exempt Bond Fund 136 -- 298 --

Tax-Exempt Bond Fund 118 -- 420 --

Convertible Securities Fund 22 -- 41 --

Equity Fund 3,500 -- 24,355 --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

32
<PAGE> 199

Equity Income Fund 253 -- 1,195 --

Growth Fund 472 -- 2,319 --

Small-Cap Opportunity Fund 436 -- 2,211 --

Small-Cap Value Fund 51 -- 32 --

Index Fund 1,115 -- 3,307 --

International Fund 279 -- 2,063 --

Balanced Fund 132 -- 84 --

Emerging Markets Fund 20 -- 24 --
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

CALCULATION OF YIELD AND TOTAL RETURN

The Company makes available various yield quotations with respect to
shares of each class of shares of the Money Market Funds. Each of these amounts
was calculated based on the 7-day period ended December 31, 1997, 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 the Institutional and Class A Shares of each of the
following Money Market Funds for the 7-day period ended December 31, 1997:

Current Yield Effective Yield
----------------------- -----------------------
Institutional Class A Institutional Class A
------------- ------- ------------- -------

Government Money Market Fund 5.54% 5.29% 5.69% 5.43%
Money Market Fund 5.65% 5.40% 5.81% 5.54%
Tax-Exempt Money Market Fund 3.71% 3.46% 3.77% 3.52%

33
<PAGE> 200

Class A Shares of the Money Market Funds bear the expenses of fees paid to
Service Organizations. As a result, at any given time, the net yield of Class A
Shares could be up to 0.35% lower than the net yield of Institutional Shares of
the Money Market Funds.

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

The yields of Class A Shares and Institutional Shares of each of the
following Money Market Funds for the 30-day period ended December 31, 1997:

30-day Yield
--------------------------
Institutional Class A
------------- -------

Government Money Market Fund 5.48% 5.23%
Money Market Fund 5.64% 5.39%
Tax-Exempt Money Market Fund 3.65% 3.40%

A standardized "tax-equivalent yield" may be quoted for the Tax-Exempt
Money Market Fund, the Tax-Exempt Bond Fund and the Intermediate Tax-Exempt Bond
Fund, which is computed by: (a) dividing the portion of the Fund's yield (as
calculated above) that is exempt from Federal income tax by one minus a stated
Federal income rate; and (b) adding the figure resulting from (a) above to that
portion, if any, of the yield that is not exempt from federal income tax. For
the 7-day period ended December 31, 1997, the effective tax equivalent yield of
the Class A Shares and Institutional Shares of the Tax-Exempt Money Market Fund
was 4.89% and 5.24%, respectively. For the 30-day period ended December 31,
1997, the 30-day tax equivalent yield for the Class A Shares and Institutional
Shares of the Tax-Exempt Bond Fund and the Class A and Institutional Shares of
the Intermediate Tax-Exempt Bond Fund were 5.64% and 5.99%, and 5.24% and 5.58%,
respectively, based on a stated tax rate of 28%.

The Trust or the Company, as the case may be, makes available 30-day yield
quotations with respect to Class A Shares and Institutional Shares of the
Non-Money Market Funds. As required by regulations of the Commission, the 30-day
yield is computed by dividing a Fund's net investment income per share earned
during the period by the net asset value on the last day of the period. The
average daily number of shares outstanding during the period that are eligible
to receive dividends is used in determining the net investment income per share.
Income is computed by totaling the interest earned on all debt obligations
during the period and subtracting from that amount the total of all recurring
expenses incurred during the period. The 30-day yield is then annualized
assuming semi-annual reinvestment and compounding of net investment income.

The following table shows 30-day yields for the period ended December 31,
1997, for Class A Shares and Institutional Shares of the Non-Money Market Funds:

30-day Yield
--------------------------
Institutional Class A
------------- -------

Intermediate Government Bond Fund 5.45% 5.20%
Short/Intermediate Bond Fund 6.14% 5.89%
Intermediate Tax-Exempt Bond Fund 4.02% 3.77%

34
<PAGE> 201

Bond Fund 6.05% 5.80%
Tax-Exempt Bond Fund 4.31% 4.06%
Convertible Securities Fund 2.88% 2.63%
Balanced Fund 3.10% 2.85%
Index Fund 1.31% 1.06%
Equity Income Fund 1.74% 1.49%
Equity Fund 0.95% 0.70%
Growth Fund 0.15% (0.10)%
Small-Cap Value Fund 0.46% 0.21%
Small-Cap Opportunity Fund (0.04)% (0.29)%

The Trust or the Company, as the case may be, also makes available total
return quotations for Class A and Institutional Shares of each of the Non-Money
Market Funds.

The following table shows average annual total return for the one year,
five year, ten year and since inception periods (or shorter period if the Fund
has been in operation for a shorter period) ended December 31, 1997 for Class A
Shares and Institutional Shares of the Non-Money Market Funds. The actual date
of the commencement of each Fund's operations, or the commencement of the
offering of each Class' Shares, is listed in the Funds' financial statements.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1 Year 5 Year 10 Year Inception to 12/31/97
----------------------------------------------------------------------------------------------------
Institutional Class A Institutional Class A Institutional Class A Institutional Class A
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(%) (%) (%) (%) (%) (%) (%) (%)

Intermediate Government Bond
Fund 7.82 7.56 6.27 6.02 7.96 7.69 8.64 8.38

Short/Intermediate Bond Fund 7.15 6.89 -- 6.45 -- -- 5.79 7.18

Intermediate Tax-Exempt Bond
Fund 6.41 6.14 5.20 4.94 6.26 6.00 5.96 5.70

Bond Fund 9.41 9.14 -- -- -- -- 8.68 8.48

Tax-Exempt Bond Fund 8.55 8.28 6.18 5.90 7.73 7.45 8.28 8.01

Convertible Securities Fund 18.68 18.32 13.56 13.27 11.30 11.01 12.12 11.84

Balanced Fund -- -- -- -- -- -- 20.24 21.72

Index Fund 32.78 32.51 19.75 19.48 -- -- 18.53 18.25

Equity Income Fund 31.90 31.53 -- -- -- -- 20.65 20.33

Equity Fund 35.89 35.45 -- 21.55 -- -- 26.37 16.91

Growth Fund 32.81 32.54 19.92 19.64 -- -- 19.01 18.74

Small-Cap Value Fund 29.58 29.09 16.10 15.78 14.95 14.64 15.53 15.23

Small-Cap Opportunity Fund 25.47 25.14 15.86 15.57 16.79 16.50 15.80 15.51

International Fund -4.87 -5.21 6.25 5.98 3.75 3.48 4.35 4.09

Emerging Markets Fund -- -- -- -- -- -- -14.50 -14.60
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*Aggregate total returns are given for those classes of shares that have not
been operational for a full year.

35
<PAGE> 202

Each of these amounts is computed by assuming a hypothetical initial
investment of $10,000. 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 following
table shows aggregate total return for the one year, five year, ten year and
since inception (if less than ten years) periods ended December 31, 1997 for
Class A Shares and Institutional Shares of the Non-Money Market Funds:

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<PAGE> 203

Intermediate Government Bond
Fund 7.82 7.56 35.54 33.93 115.12 109.79 193.97 184.76

Short/Intermediate Bond Fund 7.15 6.89 -- 36.70 -- -- 11.02 59.79

Intermediate Tax-Exempt Bond
Fund 6.41 6.14 28.83 27.24 83.61 79.08 100.50 94.66

Bond Fund 9.41 9.14 -- -- -- -- 15.32 14.89

Tax-Exempt Bond Fund 8.55 8.28 34.95 33.20 110.50 105.19 181.48 172.35

Convertible Securities Fund 18.68 18.32 88.88 86.45 191.60 184.21 342.82 328.70

Balanced Fund -- -- -- -- -- -- 20.24 21.72

Index Fund 32.78 32.51 146.29 143.45 -- -- 164.27 160.77

Equity Income Fund 31.90 31.53 -- -- -- -- 111.98 109.78

Equity Fund 35.89 35.45 -- 165.36 -- -- 54.45 366.45

Growth Fund 32.81 32.54 147.97 145.17 -- -- 170.52 167.06

Small-Cap Value Fund 29.58 29.09 110.90 108.05 302.68 292.20 553.80 532.23

Small-Cap Opportunity Fund 25.47 25.14 108.81 106.14 372.24 360.47 570.29 548.83

International Fund -4.87 -5.21 35.39 33.70 44.55 40.85 59.23 55.02

Emerging Markets Fund -- -- -- -- -- -- -14.50 -14.60
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

*Aggregate total returns are given for those classes of shares that have not
been operational for a full year.

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.

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<PAGE> 204

In addition, investors should recognize that changes in the net asset
value of shares of the Non-Money Market Funds will affect the yield of such
Funds for any specified period, and such changes should be considered together
with each such Fund's yield in ascertaining the Fund's total return to
shareholders for the period. Yield information for all of the Funds may be
useful in reviewing the performance of the Fund and for providing a basis for
comparison with investment alternatives. The yield of a Fund, however, may not
be comparable to other investment alternatives because of differences in the
foregoing variables and differences in the methods used to value portfolio
securities, compute expenses and calculate yield.

PERFORMANCE OF COMMON AND COLLECTIVE TRUST FUNDS. The Convertible
Securities Fund, Intermediate Government Bond Fund, Small-Cap Value Fund
Tax-Exempt Bond Fund, Intermediate Tax-Exempt Bond Fund, Index Fund, Small-Cap
Opportunity Fund, Equity Income Fund, Growth Fund and International Fund
commenced operations upon the investment of a substantial amount of assets
invested from collective and common trust funds operated by Harris Trust. If a
Fund's predecessor fund was operated with investment policies substantially
similar to those of the Fund, the Fund may include in quotations of its
performance the performance history of the predecessor fund in accordance with
interpretations of the Commission and as appropriate. Because collective and
common trust funds usually have an effective expense ratio of zero, in order not
to overstate performance, a predecessor fund's performance included in any
quotation of the Fund's performance will be calculated as if the predecessor
fund had operated with an expense ratio equal to the Fund's estimated expense
ratio for its first year of operations.

DETERMINATION OF NET ASSET VALUE

As described under "Determination of Net Asset Value" in the Prospectuses,
net asset value per share is determined at least as often as each day that the
Federal Reserve Board of Philadelphia and the New York Stock Exchange are open,
i.e., each weekday other than New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day , Good Friday, Memorial Day , Independence Day, Labor Day,
Columbus Day, Veteran's Day, Thanksgiving Day and Christmas Day (each, a
"Holiday").

As also indicated under "Determination of Net Asset Value" in the
Prospectuses, each of the Money Market Funds uses the amortized cost method to
determine the value of its portfolio securities pursuant to Rule 2a-7 under the
1940 Act ("Rule 2a-7"). The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which the value, as determined by amortized cost, is higher or
lower than the price that a Fund would receive if the security were sold. During
these periods the yield to a shareholder may differ somewhat from that which
could be obtained from a similar fund that uses a method of valuation based upon
market prices. Thus, during periods of declining interest rates, if the use of
the amortized cost method resulted in a lower value of a Fund's portfolio on a
particular day, a prospective investor in that Fund would be able to obtain a
somewhat higher yield than would result from investments in a fund using solely
market values, and existing Fund shareholders would receive correspondingly less
income. The converse would apply during periods of rising interest rates.

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<PAGE> 205

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 397 days or
less and invest only in securities determined by the Board of Directors to meet
the quality and minimal credit risk requirements of Rule 2a-7. The maturity of
an instrument is generally deemed to be the period remaining until the date when
the principal amount thereof is due or the date on which the instrument is to be
redeemed. Rule 2a-7, however, provides that the maturity of an instrument may be
deemed shorter in the case of certain instruments, including certain variable
and floating rate instruments subject to demand features. Pursuant to Rule 2a-7,
the Board is required to establish procedures designed to stabilize, to the
extent reasonably possible, the price per share of each of the Money Market
Funds as computed for the purpose of sales and redemptions at $1.00. Such
procedures include review of the portfolio holdings of each of the Money Market
Funds by the Board of Directors, at such intervals as it may deem appropriate,
to determine whether a Fund's net asset value calculated by using available
market quotations deviates from $1.00 per share based on amortized cost. The
extent of any deviation will be examined by the Board of Directors. If such
deviation exceeds 1/2 of 1%, the Board will promptly consider what action, if
any, will be initiated. In the event the Board determines that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders, the Board will take such corrective action as it
regards as necessary and appropriate, including the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity, withholding dividends or establishing a net asset
value per share by using available market quotations.

PORTFOLIO TRANSACTIONS

The Trust or the Company, as the case may be, has no obligation to deal
with any dealer or group of dealers in the execution of transactions in
portfolio securities. Subject to policies established by the Trust's Board of
Trustees and the Company's Board of Directors, as the case may be, Harris Trust,
with respect to the Tax-Exempt Money Market Fund, and HIM or Hansberger, 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 Trust or the Company, as the case may be, 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, HIM or Hansberger
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 Tax-Exempt Bond Fund, the Bond
Fund, the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund,
the Intermediate Government Bond Fund and the Convertible Securities Fund (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

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<PAGE> 206

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, HIM or Hansberger 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, HIM
and/or Hansberger 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, Portfolio Management and Sub-Advisory 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, HIM or Hansberger
effect securities transactions for a Fund may be used by Harris Trust, HIM or
Hansberger in servicing its other accounts, and not all of these services may be
used by Harris Trust, HIM or Hansberger in connection with advising the Funds.

The following table shows total brokerage commissions and the total dollar
amount of transactions on which commissions were paid. This information is for
the past three fiscal years (or shorter if the Fund has been in operation for a
shorter period).

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Total Brokerage Commissions ($) Total Dollar Amount of Transactions ($)
--------------------------------- --------------------------------------------
1995 1996 1997 1995 1996 1997
--------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Equity Fund 118,896 990,841 1,490,680 80,699,744 810,758,972 1,226,623,062

Equity Income Fund -- 38,375 20,970 -- 31,623,167 20,785,343

Growth Fund -- 66,607 80,371 -- 48,648,396 64,254,236

Small-Cap Opportunity Fund -- 271,499 269,136 -- 124,656,326 156,483,678

Index Fund -- 16,300 43,400 -- 20,433,355 116,419,664

International Fund -- 33,329 358,558 -- 13,237,746 289,865,829

Emerging Markets Fund -- -- 66,505 -- -- 11,195,946

Balanced Fund -- -- 51,841 -- -- 36,694,360

Small-Cap Value Fund -- -- 240,854 -- -- 129,913,628

Convertible Securities Fund -- -- 15,915 -- -- 12,667,478
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

With respect to transactions directed to brokers because of research
services provided, the following table shows total brokerage commissions and the
total dollar amount of transactions on which commissions were paid for the
fiscal year ended December 31, 1997.

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<PAGE> 207

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Total Brokerage Commissions Total Dollar Amount of Transactions on which
(Research-related) ($) Commissions were paid (Research-related) ($)
----------------------------------------------------------------------------
<S> <C> <C>

Equity Fund 293,617 235,483,234

Equity Income Fund 2,580 3,131,831

Growth Fund 15,046 11,632,046

Small-Cap Opportunity Fund 8,574 19,079,369

Small-Cap Value Fund 16,566 9,409,206

Balanced Fund 22,769 19,129,653
- ------------------------------------------------------------------------------------------------------------
</TABLE>

Purchases and sales of securities on a securities exchange are effected
through brokers who charge a negotiated commission for their services. Orders
may be directed to any broker including, to the extent and in the manner
permitted by applicable law, Harris Investors Direct, Inc. ("HID"). 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 or Hansberger
is required to give primary consideration to obtaining the most favorable price
and efficient execution. This means that HIM or Hansberger 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 or Hansberger will generally seek reasonably competitive spreads or
commissions, the Funds will not necessarily be paying the lowest spread or
commission available. Commission rates are established pursuant to negotiations
with the broker based on the quality and quantity of execution services provided
by the broker in the light of generally prevailing rates. The allocation of
orders among brokers and the commission rates paid are reviewed periodically by
the Board of Trustees and Board of Directors.

Subject to the above considerations, HID may act as a main broker for the
Funds. For it to effect any portfolio transactions for the Funds, the
commissions, fees or other remuneration received by it must be reasonable and
fair compared to the commissions, fees or other remuneration paid to other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time. This standard would allow HID to receive no more than the remuneration
that would be expected to be received by an unaffiliated broker on a
commensurate arm's-length transaction. Furthermore, the Trustees of the Trust
and the Directors of the Company, including a majority who are not "interested"
Trustees or Directors, as the case may be, have adopted procedures that are
reasonably designed to provide that any commissions, fees or other remuneration
paid to either one are consistent with the foregoing standard. Brokerage
transactions with either one are also subject to such fiduciary standards as may
be imposed upon each of them by applicable law.

FEDERAL INCOME TAXES

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<PAGE> 208

The Prospectuses describe generally the tax treatment of distributions by
the Trust and the Company, as the case may be. This section of the Statement of
Additional Information includes additional information concerning federal taxes.

Each Fund is treated as a separate entity for Federal income tax purposes
and thus the provisions of the Code generally are applied to each Fund
separately, rather than to the Trust or the Company as a whole.

Qualification as a regulated investment company under the 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 and (b) the Fund
diversifies its holdings so that, at the end of each quarter of the taxable
year, (i) at least 50% of the market value of the Fund's assets is represented
by cash, government securities and other securities, with such other securities
limited in respect of any one issuer to an amount not greater than 5% of each
Fund's assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government securities). As a regulated
investment company, each Fund will not be subject to federal income tax on its
net investment income and net capital gains distributed to its shareholders,
provided that it distributes to its shareholders at least 90% of its net
investment income (including net short-term capital gains) earned in each year
and, in the case of the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund, that it distributes to its
shareholders at least 90% of its net tax-exempt income (including net short-term
capital gains). In addition, the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Bond Fund and the Tax-Exempt Bond Fund intend that at least 50% of
the value of its total assets at the close of each quarter of its taxable year
will consist of obligations the interest on which is exempt from federal income
tax, so that such Funds will qualify under the Code to pay "exempt-interest
dividends."

As described in the relevant Prospectus, certain of the Funds may invest
in municipal bond index futures contracts and options on interest rate futures
contracts. The Funds do not anticipate that these investment activities will
prevent the Funds from qualifying as regulated investment companies. As a
general rule, these investment activities will increase or decrease the amount
of long-term and short-term capital gains or losses realized by a Fund and,
accordingly, will affect the amount of capital gains distributed to the Fund's
shareholders.

For Federal income tax purposes, gain or loss on the futures contracts and
options described above (collectively referred to as "section 1256 contracts")
is taxed pursuant to a special "mark-to-market" system. Under the mark-to-market
system, a Fund may be treated as realizing a greater or lesser amount of gains
or losses than actually realized. As a general rule, gain or loss on section
1256 contracts is treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss, and, accordingly, the mark-to-market system
will generally affect the amount of capital gains or losses taxable to a Fund
and the amount of distributions taxable to a shareholder. Moreover, if a Fund
invests in both section 1256 contracts and offsetting positions in such
contracts, then the Fund might not be able to receive the benefit of certain
recognized losses for an indeterminate period of

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<PAGE> 209

time. Each Fund expects that its activities with respect to section 1256
contracts and offsetting positions in such contracts (a) will not cause it or
its shareholders to be treated as receiving a materially greater amount of
capital gains or distributions than actually realized or received and (b) will
permit it to use substantially all of the losses of the Fund for the fiscal
years in which the losses actually occur.

Each Fund (except the Tax-Exempt Money Market Fund, the Intermediate
Tax-Exempt Bond Fund and the Tax-Exempt Bond 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.

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 Opportunity
Fund, the Small-Cap Value Fund, the Equity Income Fund, the Index Fund, the
Emerging Markets Fund, the International Fund, the Balanced Fund, the
Convertible Securities Fund, the Bond Fund, the Intermediate Government Bond
Fund, the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund
and the Tax-Exempt Bond 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 Opportunity
Fund, the Small-Cap Value Fund, the Equity Income Fund, the Index Fund, the
Emerging Markets Fund, the International Fund, the Balanced Fund, the
Convertible Securities Fund, the Bond Fund, the Intermediate Government Bond
Fund, the Intermediate Tax-Exempt Bond Fund, the Short/Intermediate Bond Fund
and the Tax-Exempt Bond 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

43
<PAGE> 210

income from gains from the sale of securities held for less than three months
may limit a Fund's ability to write options.

If, in the opinion of the Trust or the Company, as the case may be,
ownership of its shares has or may become concentrated to an extent that could
cause the Trust or the Company to be deemed a personal holding company within
the meaning of the Code, the Trust or the Company may require the redemption of
shares or reject any order for the purchase of shares in an effort to prevent
such concentration.

CAPITAL STOCK AND BENEFICIAL INTEREST

The authorized capital stock of the Company consists of an aggregate of
10,000,000,000 shares ("Shares"), par value of $.001 per share currently
classified as follows: "Government Money Market Fund - Class A," consisting of
1,000,000,000 Shares, "Government Money Market Fund - Institutional Shares,"
consisting of 500,000,000 Shares, "Money Market Fund - Class A," consisting of
1,300,000,000 Shares, "Money Market Fund - Institutional Shares," consisting of
2,250,000,000 Shares, "Tax-Exempt Money Market Fund - Class A," consisting of
500,000,000 Shares, "Tax-Exempt Money Market Fund - Institutional Shares,"
consisting of 1,000,000,000 Shares, "Class D," referred to as the Harris Insight
Convertible Fund, consisting of 100,000,000 Shares, "Equity Fund - Class A,"
consisting of 100,000,000 Shares, "Equity Fund - Institutional Shares"
consisting of 100,000,000 Shares, "Short/Intermediate Bond Fund - Class A,"
consisting of 100,000,000 Shares, "Short/Intermediate Bond Fund - Institutional
Shares," consisting of 100,000,000 Shares, "Class G," referred to as the Harris
Insight Intermediate Municipal Income Fund, consisting of 50,000,000 Shares,
"Prime Reserve Fund - Class A," consisting of 200,000,000 Shares, "Prime Reserve
Fund - Class B," consisting of 700,000,000 Shares, "Prime Reserve Fund -
Institutional Shares," consisting of 300,000,000 Shares, "Hemisphere Free Trade
Fund - Class A," consisting of 50,000,000 Shares and "Hemisphere Free Trade Fund
- - Institutional Shares, consisting of 50,000,000 Shares.

The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of full and fractional shares of beneficial interest, $.001 par
value, and to create one or more classes of these shares. Pursuant thereto, the
Trustees have authorized the issuance of two classes of shares, Class A Shares
and Institutional Shares, for each of the thirteen Funds of the Trust.

Generally, all shares of the Trust and all shares of the Company have
equal voting rights with other shares of the Trust or the Company, respectively,
and will be voted in the aggregate, and not by class, except where voting by
class is required by law or where the matter involved affects only one class. As
used in the Prospectuses and in this Statement of Additional Information, the
term "majority," when referring to the approvals to be obtained from
shareholders in connection with general matters affecting the Funds (e.g.,
election of Trustees or Directors and ratification of independent accountants),
means the vote of the lesser of (i) 67% of the Trust's or the Company's shares
represented at a meeting if the holders of more than 50% of the outstanding
shares are present in person or by proxy, or (ii) more than 50% of the Trust's
or the Company's outstanding shares. The term "majority," when referring to the
approvals to be obtained from shareholders in connection with matters affecting
a single Fund or any other single Fund (e.g., annual approval of advisory
contracts), means the vote of the lesser of (i) 67% of the shares of the Fund
represented at a

44
<PAGE> 211

meeting if the holders of more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (ii) more than 50% of the outstanding
shares of the Fund. Shareholders are entitled to one vote for each full share
held and fractional votes for fractional shares held.

Each share of a Fund represents an equal proportionate interest in that
Fund with each other share of the same Fund and is entitled to such dividends
and distributions out of the income earned on the assets belonging to that Fund
as are declared in the discretion of the Trust's Board of Trustees or the
Company's Board of Directors, as the case may be. Notwithstanding the foregoing,
each class of shares of each Fund bears exclusively the expense of fees paid to
Service Organizations with respect to that class of shares. In the event of the
liquidation or dissolution of the Trust or the Company (or a Fund), shareholders
of each Fund (or the Fund being dissolved) are entitled to receive the assets
attributable to that Fund that are available for distribution, and a
distribution of any general assets not attributable to a particular Fund that
are available for distribution in such manner and on such basis as the Trustees
or the Directors, as the case may be, in their sole discretion may determine.

Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Trust or the Company, as
the case may be.

OTHER

The Registration Statement, including the Prospectuses, the Statement of
Additional Information and the exhibits filed therewith, may be examined at the
office of the Commission in Washington, D.C. Statements contained in the
Prospectuses or this Statement of Additional Information as to the contents of
any contract or other document referred to herein or in the Prospectuses are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.

CUSTODIAN

As the Funds' Custodian, PNC Bank, N.A., among other things, maintains a
custody account or accounts in the name of each Fund, receives and delivers all
assets for each Fund upon purchase and upon sale or maturity, collects and
receives all income and other payments and distributions on account of the
assets of each Fund, and pays all expenses of each Fund.

COMPUTER SYSTEMS

The services provided by the Company's Investment Advisers,
Sub-Administrators, Distributor, Transfer Agent and Custodian (the "Service
Providers"), depend on the smooth functioning of their computer systems. Many
computer software systems in use today cannot recognize the year 2000, but
revert to 1900 or 1980, due to the manner in which dates were encoded and
calculated. That failure could have a negative impact on the handling of
securities trades, pricing and account services. Each of the Service Providers
has advised the Company that it has been actively working on necessary changes
to its own computer systems to deal with the year 2000, and expect that its
systems will be adapted before that date. However, there can be no

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<PAGE> 212

assurance that they will be successful or that interaction with other
noncomplying computer systems will not impair their services at that time.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP has been selected as the independent accountants for
both the Trust and the Company. Price Waterhouse's address is 30 South 17th
Street, Philadelphia, Pennsylvania 19103.

EXPERTS

The financial statements incorporated by reference into the Prospectuses
and Statement of Additional Information have been incorporated by reference in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of that firm as experts in auditing and accounting.

FINANCIAL STATEMENTS

The Financial Statements for the year ended December 31, 1997 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, 1997.

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<PAGE> 213

APPENDIX A

DESCRIPTION OF BOND RATINGS (INCLUDING CONVERTIBLE BONDS)

The following summarizes the highest four ratings used by Standard &
Poor's ("S&P") for corporate and municipal debt:

AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.

AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from AAA issues only in a small degree.

A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for those in
higher rated categories.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

The following summarizes the highest four ratings used by Moody's
Investors Service ("Moody's") for corporate and municipal long-term debt.

Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.

47
<PAGE> 214

A - Bonds that are rated A possess many favorable investment attributes
and are to be considered upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.

Baa - Bonds that are rated Baa are considered medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.

Moody's applies numerical modifiers (1, 2 and 3) with respect to corporate
bonds rated Aa, A and Baa. The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the bond ranks in the
lower end of its generic rating category. With regard to municipal bonds, those
bonds in the Aa, A and Baa groups which Moody's believes possess the strongest
investment attributes are designated by the symbols Aa1, A1 or Baa1,
respectively.

The following summarizes the highest four ratings used by Duff & Phelps
Credit Rating Co. ("D&P") for bonds:

AAA - Debt rated AAA is of the highest credit quality. The risk factors
are considered to be negligible, being only slightly more than for
risk-free U.S. Treasury debt.

AA - Debt rated AA is of high credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because
of economic conditions.

A - Bonds that are rated A have protection factors which are average but
adequate. However risk factors are more variable and greater in periods
of economic stress.

BBB - Bonds that are rated BBB have below average protection factors but
are still considered sufficient for prudent investment. Considerable
variability in risk during economic cycles.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major categories.

The following summarizes the ratings used by IBCA Limited and IBCA Inc.
("IBCA") for bonds:

Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is
substantial, such that

48
<PAGE> 215

adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly.

IBCA also assigns a rating to certain international and U.S. banks. An
IBCA bank rating represents IBCA's current assessment of the strength of
the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual
rating system comprised of Legal Ratings and Individual Ratings. In
addition, IBCA assigns banks Long and Short-Term Ratings as used in the
corporate ratings discussed above. Legal Ratings, which range in
gradation from 1 through 5, address the question of whether the bank
would receive support provided by central banks or shareholders if it
experienced difficulties, and such ratings are considered by IBCA to be
a prime factor in its assessment of credit risk. Individual Ratings,
which range in gradations from A through E, represent IBCA's assessment
of a bank's economic merits and address the question of how the bank
would be viewed if it were entirely independent and could not rely on
support from state authorities or its owners.

DESCRIPTION OF MUNICIPAL NOTES RATINGS

The following summarizes the two highest ratings used by Moody's for
short-term notes and variable rate demand obligations:

MIG-1/VMIG-1. Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

MIG-2/VMIG-2. Obligations bearing these designations are of high quality
with margins of protection ample although not as large as in the
preceding group.

The following summarizes the two highest ratings by Standard & Poor's for
short-term municipal notes:

SP-1 - Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
are given a "plus" (+) designation.

SP-2 - Satisfactory capacity to pay principal and interest.

The three highest rating categories of D&P for short-term debt are Duff 1,
Duff 2, and Duff 3. D&P employs three designations, Duff 1+, Duff 1 and Duff 1-,
within the highest rating category. Duff 1+ indicates highest certainty of
timely payment. Short-term liquidity, including internal 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.

49
<PAGE> 216

Risk factors are very small. Duff 2 indicates good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small. Duff 3 indicates satisfactory liquidity and other
protection factors qualify issue as to investment grade. Risk factors are larger
and subject to more variation. Nevertheless, timely payment is expected.

D&P uses the fixed-income ratings described above under "Description of
Bond Ratings" for tax-exempt notes and other short-term obligations.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted in A-1+. Capacity for timely payment
on commercial paper rated A-2 is satisfactory but the relative degree of safety
is not as high as for issues designated A-1.

The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 (or related supporting institutions) are
considered to have strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

The highest rating of D&P for commercial paper is Duff 1. D&P employs
three designations, Duff 1 plus, Duff 1 and Duff 1 minus, within the highest
rating category.

Duff 1 plus indicates highest certainty of timely payment. Short-term
liquidity, including internal operating factors and/or ready access to
alternative sources of funds, is judged to be "outstanding, and safety is just
below risk-free U.S. Treasury short-term obligations" Duff 1 indicates very high
certainty of timely payment. Liquidity factors are excellent and supported by
strong fundamental protection factors. Risk factors are considered to be minor.
Duff 1 minus indicates high certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors are
very small.

The following summarizes the highest ratings used by Fitch for short-term
obligations:

F-1+ securities possess exceptionally strong credit quality. Issues
assigned this rating are regarded as having the strongest degree of assurance
for timely payment.

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+.

50
<PAGE> 217

Commercial paper rated A-1 by Standard & Poor's indicates that the degree
of safety regarding timely payment is strong. Those issued determined to possess
extremely strong safety characteristics are denoted A-1+.

D&P uses the short-term ratings described above for commercial paper.

Fitch uses the short-term ratings described above for commercial paper.

Thomson BankWatch, Inc. (TBW") ratings are based upon a qualitative and
quantitative analysis of all segments of the organization including, where
applicable, holding company and operating subsidiaries.

BankWatch Ratings do not constitute a recommendation to buy or sell
securities of any of these companies. Further, BankWatch does not suggest
specific investment criteria for individual clients.

The TBW Short-Term Ratings apply to commercial paper, other senior
short-term obligations and deposit obligations of the entities to which the
rating has been assigned. The TBW Short-Term Ratings specifically assess the
likelihood of an untimely payment of principal or interest.

TBW-1 The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.

TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".

TBW-3 The lowest investment grade category; indicates that while more
susceptible to adverse developments (both internal and external)
than obligations with higher ratings, capacity to service
principal and interest in a timely fashion is considered adequate.

TBW-4 The lowest rating category; this rating is regarded as
non-investment grade and therefore speculative.

51
<PAGE> 218

PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS

Included in Part A of this Registration Statement:
Financial Highlights for Class A Shares and Institutional
Shares of each Fund from commencement of operations through
December 31, 1997

Included in Part B of this Registration Statement*:
Statements of Net Assets, December 31, 1997
Statements of Operations, for the period ended
December 31, 1997
Statements of Changes in Net Assets, for the period ended
December 31, 1997
Statements of Changes - Capital Stock Activity, for the period
ended December 31, 1997
Financial Highlights, for the period ended December 31, 1997
Notes to Financial Statements
Report of Independent Accountants

* Audited Financial Statements for each Fund of the Company
and the auditors' report thereon for the fiscal period ended
December 31, 1997 (with respect to each Fund, part of the
Company's Annual Report filed with the Securities and Exchange
Commission on March 9, 1998 pursuant to Rule 30b2-1 under the
Investment Company Act of 1940, as amended, accession number
0000935069-98-000046) have been incorporated by reference
thereto in the Statement of Additional Information.

(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. All
references to a Post-Effective Amendment ("PEA") or
Pre-Effective Amendment ("PreEA") are to Post-Effective
Amendments and Pre-Effective Amendments to the Registration
Statement.

(1) (a) Articles of Incorporation (incorporated by reference to
Exhibit No. 1 to the Registration Statement filed on
October 15, 1987).

(b) Articles Supplementary to the Articles of Incorporation
dated September 21, 1990 (incorporated by reference to
Exhibit No.1(b) to PEA No. 5 filed on September 5, 1990).

(c) Articles Supplementary to the Articles of Incorporation
dated November 4, 1992 (incorporated by reference to Exhibit
No. 1(c) to PEA No. 13 filed on April 19, 1993).

(d) Articles Supplementary to the Articles of Incorporation
dated August 6, 1993 (incorporated by reference to Exhibit
No. 1(d) to PEA No. 14 filed on August 20, 1993).

(e) Articles Supplementary to the Articles of Incorporation
dated May 27, 1994 (incorporated by reference to Exhibit
No. 1(e) to PEA No. 16 filed on June 1, 1994).

(f) Articles Supplementary to the Articles of Incorporation
dated July 19, 1994 (incorporated by reference to Exhibit
No. 1(f) to PEA No. 18 filed on July 29, 1994).

<PAGE> 219

(g) Articles Supplementary to the Articles of Incorporation
dated January 9, 1995 (incorporated by reference to Exhibit
No. 1(g) to PEA No. 20 filed on January 23, 1995).

(h) Articles Supplementary to the Articles of Incorporation
dated February 21, 1996 (incorporated by reference to
Exhibit No. 1(h) to PEA No. 26 filed on September 10, 1996).

(i) Articles Supplementary to the Articles of Incorporation
dated July 18, 1996 (incorporated by reference to Exhibit
No. 1(i) to PEA No. 26 filed on September 10, 1996).

(j) Articles Supplementary to the Articles of Incorporation
dated April 29, 1997 (incorporated by reference to Exhibit
No. 1(j) to PEA No. 29 filed on February 27, 1998).

(k) Articles Supplementary to the Articles of Incorporation
dated January 5, 1998 (filed herewith).

(2) (a) By-Laws (incorporated by reference to Exhibit No. 2 to the
Registration Statement filed on October 15, 1987).

(b) Addendum to By-Laws dated July 21, 1988 (incorporated by
reference to Exhibit No. 2(b) to PEA No. 12 filed on
November 30, 1992).

(c) Addendum to By-Laws dated July 21, 1989 (incorporated by
reference to Exhibit No. 2(c) to PEA No. 12 filed on
November 30, 1992).

(d) Addendum to By-Laws dated October 31, 1995 (incorporated by
reference to Exhibit No. 2(d) to PEA No. 29 filed on
February 27, 1998).

(e) Addendum to By-Laws dated January 23, 1996 (incorporated by
reference to Exhibit No. 2(e) to PEA No. 29 filed on
February 27, 1998).

(3) Not applicable.

(4) Forms of Stock Certificate (incorporated by reference to
Exhibit No. 4 to PreEA No. 2 to the Registration Statement
filed on January 29, 1988).

(5) (a)(i) Advisory Contract on behalf of Harris Insight Equity
Fund (formerly named HT Insight Equity Fund) dated May 1,
1990 between Registrant and Harris Trust (incorporated by
reference to Exhibit No. 5(i) to PEA No. 7 filed on April 1,
1991).

(a)(ii) Advisory Contract on behalf of Harris Insight
Short/Intermediate Bond Fund (formerly named HT Insight
Managed Fixed Income Fund) dated April 1, 1991 between
Registrant and Harris Trust (incorporated by reference to
Exhibit No. 5(j) to PEA No. 8 filed on October 1, 1991).

(a)(iii) Advisory Contract on behalf of Harris Insight Government Money
Market Fund (formerly named Harris Insight Government Assets
Fund) dated October 20, 1993 between Registrant and Harris
Trust (incorporated by reference to Exhibit No. 5(l) to PEA
No. 15 filed on May 2, 1994).

(a)(iv) Advisory Contract on behalf of Harris Insight Money Market
Fund (formerly named Harris Insight Cash Management Fund)
dated October 20, 1993 between Registrant and Harris Trust
(incorporated by reference to Exhibit No. 5(m) to PEA No. 15
filed on May 2, 1994).

(a)(v) Advisory Contract on behalf of Harris Insight Tax-Exempt Money
Market Fund (formerly named Harris Insight Tax-Free Money
Market Fund) dated October 20, 1993 between Registrant and
Harris Trust (incorporated by reference to Exhibit No. 5(n) to
PEA No. 15 filed on May 2, 1994).

<PAGE> 220

(b)(i) Portfolio Management Contract on behalf of Harris Insight
Equity Fund (formerly named HT Insight Equity Fund) dated May
1, 1990 between Harris Trust and HIM (incorporated by
reference to Exhibit No. 5(n) to PEA No. 7 filed on April 1,
1991).

(b)(ii) Portfolio Management Contract on behalf of Harris Insight
Short/Intermediate Bond Fund (formerly named HT Insight
Managed Fixed Income Fund) dated April 1, 1991 between Harris
Trust and HIM (incorporated by reference to Exhibit No. 5(o)
to PEA No. 8 filed on October 1, 1991).

(b)(iii) Portfolio Management Contract on behalf of Harris Insight
Government Money Market Fund (formerly named Harris Insight
Government Assets Fund) dated October 20, 1993 between Harris
Trust and HIM (incorporated by reference to Exhibit No. 5(u)
to PEA No. 15 filed on May 2, 1994).

(b)(iv) Portfolio Management Contract on behalf of Harris Insight
Money Market Fund (formerly named Harris Insight Cash
Management Fund) dated October 20, 1993 between Harris Trust
and HIM (incorporated by reference to Exhibit No. 5(v) to PEA
No. 15 filed on May 2, 1994).

(6) (a)(i) Distribution Agreement between Registrant and Funds
Distributor, Inc. dated April 13, 1994 (incorporated by
reference to Exhibit No. 6(k) to PEA No. 16 filed on June 1,
1994).

(7) Not applicable.

(8) (a)(i) Custodian Agreement between Registrant and Provident
National Bank dated December 1, 1989 (incorporated by
reference to Exhibit No. 8(b) to PEA No. 4 filed on March 2,
1990).

(a)(ii) Supplement dated July 24, 1990 to Custodian Agreement relating
to Harris Insight Short/Intermediate Bond Fund (formerly named
HT Insight Diversified Income Fund) (incorporated by reference
to Exhibit No. 8(c) to PEA No. 6 filed on November 2, 1990).

(a)(iii) Form of Foreign Custody Manager Delegation Amendment (filed
herewith).

(9) (a) Transfer Agency Services Agreement dated July 1, 1996
between Registrant and Harris Trust (incorporated by
reference to Exhibit No. 9(a) to PEA No. 27 filed on
February 27, 1997).

(b) Sub-Transfer Agency Services Agreement dated July 1, 1996
between Harris Trust and PFPC Inc. (incorporated by
reference to Exhibit No. 9(b) to PEA No. 27 filed on
February 27, 1997).

(c) Administration Agreement dated July 1, 1996 between
Registrant and Harris Trust (incorporated by reference to
Exhibit No. 9(c) to PEA No. 27 filed on February 27, 1997).

(d) Sub-Administration Agreement dated July 1, 1996 between
Harris Trust and Funds Distributor, Inc. (incorporated by
reference to Exhibit No. 9(d) to PEA No. 27 filed on
February 27, 1997).

(e) Sub-Administration and Accounting Services Agreement dated
July 1, 1996 between Harris Trust and PFPC Inc.
(incorporated by reference to Exhibit No. 9(e) to PEA No. 27
filed on February 27, 1997).

(f)(i) Form of Shareholder Servicing Agreement Relating to Class A
Shares of Harris Insight Equity Fund and Harris Insight
Short/Intermediate Bond Fund (incorporated by reference to
Exhibit No. 9(f)(i) to PEA No. 29 filed on February 27,
1998).

<PAGE> 221

(f)(ii) Form of Shareholder Servicing Agreement Relating to Class A
Shares of Harris Insight Government Money Market Fund, Harris
Insight Tax-Exempt Money Market Fund and Harris Insight Money
Market Fund (incorporated by reference to Exhibit No. 9(f)(ii)
to PEA No. 29 filed on February 27, 1998).

(10) Not applicable.

(11) Consent of Independent Accountants (filed herewith).

(12) Not applicable.

(13) (a)(i) Purchase Agreement between Registrant and The Boston Company
Advisors, Inc. dated October 31, 1990 with respect to the HT
Insight Income Fund (now named "Harris Insight
Short/Intermediate Bond Fund") (incorporated by reference to
Exhibit No. 13(b) to PEA No. 7 filed on April 1, 1991).

(a)(ii) 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 No. 13(d) to PEA No. 15 filed on May 2, 1994).

(14) Not applicable.

(15) (a)(i) Service Plan dated November 18, 1997 Relating to Class
A Shares of Harris Insight Equity Fund and Harris Insight
Short/Intermediate Bond Fund (incorporated by reference to
Exhibit No. 15(a)(i) to PEA No. 29 filed on
February 27, 1998).

(a)(ii) Service Plan dated November 18, 1997 Relating to Class A
Shares of Harris Insight Government Money Market Fund, Harris
Insight Tax-Exempt Money Market Fund and Harris Insight Money
Market Fund (incorporated by reference to Exhibit No.
15(a)(ii) to PEA No. 29 filed on February 27, 1998).

(b) Form of Selling Agreement (incorporated by reference to
Exhibit No. 15(b) to PEA No. 27 filed on February 27, 1997).

(16) (a)(i) 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 No. 16(b) to PEA No. 8
filed on October 1, 1991).

(a)(ii) 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 No. 16(d)
to PEA No. 15 filed on May 2, 1994).

(17) Financial Data Schedules (filed herewith).

(18) Multi-Class Plan (incorporated by reference to Exhibit No. 18
to PEA No. 24 to the Registration Statement filed on
February 9, 1996).

Other Powers of Attorney for C. Gary Gerst, Edgar R. Fielder, John
Exhibits: W. McCarter, Jr. and Ernest M. Roth dated November 4, 1996
(incorporated by reference to PEA No. 27 filed on
February 27, 1997).

<PAGE> 222

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

Not applicable.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES.

As of February 20, 1998, the number of record holders of each class of
securities of the Registrant was as follows:

Title of Series Number of Record Holders
- --------------- ------------------------
Institutional Class A
------------- -------
<S> <C> <C>
Government Money Market Fund 12 36
Money Market Fund 50 107
Tax-Exempt Money Market Fund 12 34
Short/Intermediate Bond Fund 49 44
Equity Fund 84 192
</TABLE>

ITEM 27. INDEMNIFICATION.

Section 2-418 of the General Corporation Law of Maryland authorizes the
Registrant to indemnify its directors and officers under specified
circumstances. Article IV of the by-laws of the Registrant (Exhibit 2 to this
Registration Statement) provides in effect that the 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 by-laws 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. This description is modified in its
entirety by Article IV of the by-laws of the Registrant contained in the
Registration Statement filed on October 15, 1987 as Exhibit 2 and any addendums
thereto, and incorporated herein by reference.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") 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 Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or 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
Securities 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 the 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.

The Distribution Agreement, the Custodian Agreement, the Transfer
Agency Services Agreement and the Administration Agreement (the "Agreements"),
contained in various post-effective amendments and incorporated herein by
reference, provide for indemnification. The general effect of these provisions
is
<PAGE> 223

to indemnify entities contracting with the Company against liability and
expenses in certain circumstances. This description is modified in its entirety
by the provisions of the Agreements as contained in this Registration Statement
and incorporated herein by reference.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

(a) Harris Trust and Savings Bank ("Harris Bank"), an indirect,
wholly-owned subsidiary of the Bank of Montreal, serves as investment adviser to
the Harris Insight Equity Fund, Short/Intermediate Bond Fund, Tax-Exempt Money
Market Fund, Government Money Market Fund and Money Market Fund. Harris Bank'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 Bank 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 Bank
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 Bank also serve as directors of Harris
Bankcorp, Inc., the immediate parent of Harris Bank.

Position(s) with Harris Trust and Principal Business(es) During the
Name Savings Bank Last Two Fiscal Years
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Alan G. McNally Chairman and Chief Executive Chairman of the Board and Chief
Officer Executive Officer, Harris Trust and
Savings Bank and Harris Bankcorp,
Inc.

F. Anthony Comper Director President and Chief Operating
Officer, Bank of Montreal.

Susan T. Congalton Director Managing Director, Lupine Partners.

Wilbur H. Gantz Director Chairman of the Board, President
and Chief Executive Officer,
PathoGenesis Corporation.

James J. Glasser Director Retired Chairman, Chairman
Emeritus, President and Chief
Executive Officer, GATX
Corporation.

Dr. Leo M. Henikoff Director President and Chief Executive
Officer, Rush-Presbyterian - St.
Luke's Medical Center.

Richard M. Jaffey Director Chairman, Oil-Dri Corporation of
America.

Edward W. Lyman, Jr. Director Vice Chair, Harris Trust and
Savings Bank and Harris Bankcorp,
Inc.

</TABLE>

Pastora San Juan Cafferty Director Professor, University of Chicago
School of Social Service
Administration.

Charles H. Shaw Director Chairman, Shaw Company.

Richard E. Terry Director Chairman and Chief Executive
Officer, Peoples Energy Corporation.

James O. Webb Director President, James O. Webb and
Associates Inc.

</TABLE>

(b) Harris Investment Management, Inc. ("HIM"), an indirect subsidiary
of the Bank of Montreal, serves as the Portfolio Management Agent of the Harris
Insight Equity Fund, Short/Intermediate Bond Fund, Government Money Market Fund
and Money Market Fund pursuant to a Portfolio Management Agreement with Harris
Bank. 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.

Principal Business(es) During the Last Two
Name Position(s) with HIM Fiscal Years
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>

Donald G.M. Coxe Director, Chairman of the Board and Chairman of the Board and Chief Strategist,
Chief Harris Investment Management, Inc.;
Chairman of the Board, Jones Heward Investments,
Inc.; formerly, President and Chief Investment
Officer, Harris Investment Management, Inc.

Peter P. Capaccio Director Senior Vice President/Director, Mutual
Funds and the Investment Product Group,
Harris Trust and Savings Bank.

Terry A. Jackson Director Executive Vice President, Bank of Montreal
Asset Management Services; President, the
Trust Company of Bank of Montreal;
President, Bank of Montreal Investment
Management Limited; Deputy Chairman, Jones
Heward Investments, Inc. and Jones Heward
Investment Counsel, Inc.

William O. Leszinske Director, President, Chief President and Chief Investment Officer,
Investment Officer Harris Investment Management, Inc.;
formerly, Manager of Equities, Harris
Investment Management, Inc.

Edward W. Lyman, Jr. Director Vice Chair, Harris Trust and Savings Bank
and Harris Bankcorp, Inc.

</TABLE>

<PAGE> 225

<TABLE>

Brian J. Steck Director Director and former Chairman of the Board,
Harris Investment Management, Inc.;
Vice-Chairman of Investment and Corporate
Banking, Bank of Montreal; Chairman and
Chief Executive Officer, Nesbitt Burns, Inc.

Wayne Thomas Director Senior Vice President - Personal Investment
Management, Harris Trust and Savings Bank.

William E. Thonn Director Executive Vice President - The Private
Bank, Harris Trust and Savings Bank.

Randall J. Johnson Chief Financial Officer and Senior Partner and Chief Financial Officer,
Treasurer Harris Investment Management, Inc.;
formerly, Consultant.

Blanche Hurt Secretary Vice President and Senior Counsel,
Harris Trust and Savings Bank.

</TABLE>

ITEM 29. PRINCIPAL UNDERWRITER.

(a) In addition to the HT Insight Funds, Inc., Funds Distributor, Inc.
currently acts as principal underwriter for American Century California Tax-Free
and Municipal Funds, American Century Capital Portfolios, Inc., American Century
Government Income Trust, American Century International Bond Funds, American
Century Investment Trust, American Century Municipal Trust, American Century
Mutual Funds, Inc., American Century Premium Reserves, Inc., American Century
Quantitative Equity Funds, American Century Strategic Asset Allocations, Inc.,
American Century Target Maturities Trust, American Century Variable Portfolios,
Inc., American Century World Mutual Funds, Inc., BJB Investment Funds, The
Brinson Funds, Dresdner RCM Capital Funds, Inc., Dresdner RCM Equity Funds,
Inc., Founders Funds, Inc., Harris Insight Funds Trust, J.P. Morgan
Institutional Funds, J.P. Morgan Funds, JPM Series Trust, JPM Series Trust II,
LaSalle Partners Funds, Inc., Monetta Fund, Inc., Monetta Trust, The

Montgomery Funds, The Montgomery Funds II, The Munder Framlington Funds Trust,
The Munder Funds Trust, The Munder Funds, Inc., Orbitex Group of Funds, St.
Clair Funds, Inc., The Skyline Funds, Waterhouse Investors Family of Funds, Inc.
and WEBS Index Fund, Inc. Funds Distributor, Inc. 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, Inc. is located
at 60 State Street, Suite 1300, Boston, Massachusetts 02109. Funds Distributor,
Inc. 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 following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.

Director, President and Chief Executive
Officer - Marie E. Connolly
Executive Vice President - George A. Rio
Executive Vice President - Donald R. Roberson
Executive Vice President - William S. Nichols
Senior Vice President, General Counsel, Chief
Compliance Officer, Secretary and Clerk - Margaret W. Chambers
Senior Vice President - Michael S. Petrucelli

<PAGE> 226

Director, Senior Vice President, Treasurer and
Chief Financial Officer - Joseph F. Tower, III
Senior Vice President - Paula R. David
Senior Vice President - Allen B. Closser
Senior Vice President - Bernard A. Whalen
Chairman and Director - William J. Nutt

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, 60 State Street, Suite 1300, Boston, Massachusetts
02109; PNC Bank, N.A., Broad and Chestnut Streets, Philadelphia, Pennsylvania
19107; PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware 19809; or Harris
Trust and Savings Bank, 111 West Monroe Street, Chicago, Illinois 60603.

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 Statements 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) Not applicable.

(b) Not applicable.

(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.

<PAGE> 227

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Post-Effective
Amendment No. 30 to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective Amendment No. 30
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 30th day of April, 1998.

HT Insight Funds, Inc. d/b/a
Harris Insight Funds

By: /s/ Richard W. Ingram
---------------------------------
Richard W. Ingram, President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 30 to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated:

Signature Title Date
- --------- ----- ----
<S> <C> <C>

/s/ Richard W. Ingram President, Treasurer and April 30, 1998
Richard W. Ingram Chief Financial Officer

C. Gary Gerst* Chairman of the April 30, 1998
Board of Directors;
Director

Edgar R. Fiedler* Director April 30, 1998

John W. McCarter, Jr.* Director April 30, 1998

Ernest M. Roth* Director April 30, 1998

</TABLE>

* By: /s/ Christopher J. Kelley
---------------------------
Christopher J. Kelley

Attorney-in-Fact pursuant to powers of attorney dated November 4, 1996.

<PAGE> 228

EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit
Number Description
- ------ -----------
<S> <C>

1(k) Articles Supplementary to the Articles of Incorporation dated January 5, 1998

8(a)(iii) Form of Foreign Custody Manager Delegation Amendment

11 Consent of Independent Accountants

17 Financial Data Schedules

</TABLE>

<PAGE> 1

EXHIBIT 1(k) ARTICLES SUPPLEMENTARY DATED JANUARY 5, 1998

HT INSIGHT FUNDS, INC.

ARTICLES SUPPLEMENTARY

HT INSIGHT FUNDS, INC., a Maryland corporation, having its principal office
in Boston, Massachusetts (the "Corporation"), certifies:

FIRST: The Board of Directors of the Corporation, by unanimous written
consent on January 2, 1998 and pursuant to Section 2-208 and Section 2-105 of
the Maryland General Corporation Law, authorized the Officers of the Corporation
to take such action as necessary to classify the following shares of the
authorized and unissued capital stock of the Corporation as follows:

(1) "Money Market Fund - Institutional Shares" 1,200,000,000 shares.

SECOND: Immediately before the classification of shares set forth in
ARTICLE FIRST above, authorized shares of the Corporation were designated as
follows:

(1) "Government Money Market Fund - Class A," consisting of 1,000,000,000
shares;
(2) "Government Money Market Fund - Institutional Shares," consisting of
500,000,000 shares;
(3) "Money Market Fund - Class A," consisting of 1,300,000,000 shares;
(4) "Money Market Fund - Institutional Shares," consisting of
1,050,000,000 shares;
(5) Tax-Exempt Money Market Fund - Class A," consisting of 500,000,000
shares;
(6) Tax-Exempt Money Market Fund - Institutional Shares," consisting of
1,000,000,000 shares;
(7) "Class D," consisting of 100,000,000 shares;
(8) "Equity Fund - Class A," consisting of 100,000,000 shares;
(9) "Equity Fund - Institutional Shares," consisting of 100,000,000
shares;
(10) "Short/Intermediate Bond Fund - Class A," consisting of 100,000,000
shares;
(11) "Short/Intermediate Bond Fund - Institutional Shares," consisting of
100,000,000 shares;
(12) "Class G," consisting of 50,000,000 shares;
(13) "Prime Reserve Fund - Class A," consisting of 200,000,000 shares;
(14) "Prime Reserve Fund - Class B," consisting of 700,000,000 shares;
(15) "Prime Reserve Fund - Institutional Shares," consisting of 300,000,000
shares;

<PAGE> 2

(16) "Hemisphere Free Trade Fund - Class A," consisting of 50,000,000
shares; and
(17) "Hemisphere Free Trade Fund - Institutional Shares," consisting of
50,000,000 shares.

THIRD: Immediately before and after the classification of shares set forth
in ARTICLE FIRST above, the aggregate number of all classes of shares of common
stock which the Corporation is authorized to issue is 10,000,000,000 shares of
common stock of par value $.001 each, having an aggregate par value of
$10,000,000.

FOURTH: Immediately after the classification of shares set forth in ARTICLE
FIRST above, the Corporation is authorized to issue shares designated as
follows:

(1) "Government Money Market Fund - Class A," consisting of 1,000,000,000
shares;
(2) "Government Money Market Fund - Institutional Shares," consisting of
500,000,000 shares;
(3) "Money Market Fund - Class A," consisting of 1,300,000,000 shares;
(4) "Money Market Fund - Institutional Shares," consisting of
2,250,000,000 shares;
(5) Tax-Exempt Money Market Fund - Class A," consisting of 500,000,000
shares;
(6) Tax-Exempt Money Market Fund - Institutional Shares," consisting of
1,000,000,000 shares;
(7) "Class D," consisting of 100,000,000 shares;
(8) "Equity Fund - Class A," consisting of 100,000,000 shares;
(9) "Equity Fund - Institutional Shares," consisting of 100,000,000
shares;
(10) "Short/Intermediate Bond Fund - Class A," consisting of 100,000,000
shares;
(11) "Short/Intermediate Bond Fund - Institutional Shares," consisting of
100,000,000 shares;
(12) "Class G," consisting of 50,000,000 shares;
(13) "Hemisphere Free Trade Fund - Class A," consisting of 50,000,000
shares; and
(14) "Hemisphere Free Trade Fund - Institutional Shares," consisting of
50,000,000 shares.

FIFTH: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940, as amended.

The President of HT Insight Funds, Inc. acknowledges these Articles
Supplementary to be the corporate act of the Corporation and states that to the
best of his knowledge, information and belief the matters and facts set forth in
these Articles with respect to the authorization and approval of the amendment
of the Corporation's charter

<PAGE> 3

are true in all material respects and that this statement is made under the
penalties of perjury.

IN WITNESS WHEREOF, HT INSIGHT FUNDS, INC. has caused these Articles
Supplementary to be executed in its name and on its behalf on the 5th day of
January, 1998.

ATTEST: HT INSIGHT FUNDS, INC.

By: /s/ Christopher J. Kelley By: /s/ Richard W. Ingram
------------------------------- ----------------------------
Christopher J. Kelley Richard W. Ingram
Secretary President

<PAGE> 1

EXHIBIT 8(a)(iii) FORM OF FOREIGN CUSTODY MANAGER DELEGATION AMENDMENT

HT Insight Funds, Inc.
60 State Street, Suite 1300
Boston, MA 02109

Re: Foreign Custody Manager Delegation Amendment
--------------------------------------------

Dear Sirs:

Reference is made to the Custodian Services Agreement dated as of December 1,
1989 (the "Agreement") by and between PNC Bank, N.A. ("PNC Bank") and HT Insight
Funds, Inc. (the "Fund"). Unless otherwise defined herein, terms defined in the
Agreement are used herein with their defined meanings.

1. In addition to the duties of PNC Bank under the Agreement, with
respect to the Property in such jurisdictions as the Fund and PNC Bank shall
agree from time to time, the Fund hereby delegates to the PNC Bank, and PNC Bank
hereby accepts and assumes, the following duties of a "Foreign Custody Manager"
as permitted by and in accordance with Rule 17f-5 under the Investment Company
Act of 1940, as amended (Rule 17f-5"):

a. selecting Eligible Foreign Custodians (as defined in Rule
17f-5) and placing and maintaining Property with such
Eligible Foreign Custodians;

b. providing for written contracts with such Eligible Foreign
Custodians; and

c. monitoring the appropriateness of maintaining the Property
with each Eligible Foreign Custodian and the custody
contracts with such Eligible Foreign Custodian.

The procedures PNC Bank and the Fund will use in performing the activities under
this Amendment are set forth in the Agreement and the Client Services Guide.
Notwithstanding anything to the contrary in this Amendment or the Agreement, PNC
Bank shall not be responsible for the duties described in a., b. and c. with
respect to any Compulsory Securities Depository. A "Compulsory Securities
Depository" shall mean a securities depository or clearing agency the use of
which is mandatory (i) by law or regulation; (ii) because securities cannot be
withdrawn from the depository or clearing agency; or (iii) because maintaining
securities outside the securities depository or clearing agency is not
consistent with prevailing local custodial practices. PNC Bank, or such entity
as it may designate for this purpose, shall inform the Fund in writing of the

<PAGE> 2

name and location of each Compulsory Securities Depository and the factors used
to determine that the securities depository is a Compulsory Securities
Depository.

2. In acting as a Foreign Custody Manager, PNC Bank shall not
supervise, recommend or advise the Fund relative to the investment, purchase,
sale, retention or disposition of any Property in any particular country,
including with respect to prevailing country risks.

3. (a) The Fund represents that it (i) has the authority and power
to delegate to PNC Bank the duties set forth herein and (ii) has taken all
requisite action (corporate or otherwise) to authorize the execution and
delivery of this Amendment.

(b) PNC Bank represents that it (i) is a U.S. Bank (as defined in
Rule 17f-5) and (ii) has taken all requisite action (corporate or otherwise) to
authorize the execution and delivery of this Amendment.

4. PNC Bank's only responsibility with respect to the activities
covered by this Amendment shall be to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of fund
assets would exercise.

5. Except as expressly amended hereby, all terms and provisions of
the Agreement are and shall continue to be in full force and effect. This
Amendment shall be construed in accordance with the applicable laws of the State
of New York. This Amendment may be executed by one or both of the parties hereto
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

<PAGE> 3

If the foregoing corresponds to your understanding of our agreement, please
indicate your acceptance by the signature of your authorized representative
below.

Yours truly,

PNC BANK, N.A.

By: _______________________________
Name:

Title:

Agreed and accepted:

HT INSIGHT FUNDS, INC.

By: _______________________
Name:

Title:

Date:

<PAGE> 1

EXHIBIT 11 CONSENT OF INDEPENDENT ACCOUNTANTS

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses and
Statements of Additional Information constituting parts of this Post-Effective
Amendment No. 30 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 3, 1998, relating to the financial
statements and financial highlights appearing in the December 31, 1997 Annual
Report to Shareholders of the Harris Insight Funds, which is also incorporated
by reference in such Statements of Additional Information. We also consent to
the references to us under the headings "Independent Accountants," "Experts" and
"Financial Statements" in such Statements of Additional Information and to the
references to us under the heading "Financial Highlights" in such Prospectuses.

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, PA 19103
April 30, 1998

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<OTHER-ITEMS-LIABILITIES> (1,711,507)
<TOTAL-LIABILITIES> (1,711,507)
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<PAID-IN-CAPITAL-COMMON> 311,563,932
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<INTEREST-INCOME> 16,927,333
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<EXPENSES-NET> (1,438,743)
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<NUMBER-OF-SHARES-SOLD> 1,652,887,734
<NUMBER-OF-SHARES-REDEEMED> 1,592,044,933
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<NET-CHANGE-IN-ASSETS> 68,321,524
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<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (343,287)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,691,969
<AVERAGE-NET-ASSETS> 303,289,184
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .050
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.050)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .53
<AVG-DEBT-OUTSTANDING> 0
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<PAID-IN-CAPITAL-COMMON> 311,563,932
<SHARES-COMMON-STOCK> 311,563,932
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<OVERDISTRIBUTION-NII> 0
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<INTEREST-INCOME> 16,927,333
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<EXPENSES-NET> (1,438,743)
<NET-INVESTMENT-INCOME> 15,488,590
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<NET-CHANGE-FROM-OPS> 15,488,590
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<NUMBER-OF-SHARES-SOLD> 1,652,887,734
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<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,691,969
<AVERAGE-NET-ASSETS> 303,289,184
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .053
<PER-SHARE-GAIN-APPREC> 0
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<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .23
<AVG-DEBT-OUTSTANDING> 0
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</TABLE>

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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (8,476,016)
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,705,889,446
<SHARES-COMMON-STOCK> 1,705,889,446
<SHARES-COMMON-PRIOR> 1,095,755,777
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,817
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,705,895,263
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 71,622,201
<OTHER-INCOME> 0
<EXPENSES-NET> 4,256,966
<NET-INVESTMENT-INCOME> 67,365,235
<REALIZED-GAINS-CURRENT> (1,461,593)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 65,903,642
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (67,365,235)
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<PAID-IN-CAPITAL-COMMON> 1,705,889,446
<SHARES-COMMON-STOCK> 1,705,889,446
<SHARES-COMMON-PRIOR> 1,095,755,777
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<OVERDISTRIBUTION-NII> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 71,622,201
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<EXPENSES-NET> 4,256,966
<NET-INVESTMENT-INCOME> 67,365,235
<REALIZED-GAINS-CURRENT> (1,461,593)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 65,903,642
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<NUMBER-OF-SHARES-SOLD> 5,333,695,761
<NUMBER-OF-SHARES-REDEEMED> (4,481,600,951)
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<ACCUMULATED-NII-PRIOR> 0
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<AVERAGE-NET-ASSETS> 1,245,926,007
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<PER-SHARE-DIVIDEND> (.055)
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<PER-SHARE-NAV-END> 1.00
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</TABLE>

<ARTICLE> 6
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<SERIES>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
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<INVESTMENTS-AT-VALUE> 718,885,174
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</TABLE>