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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1995
File No. 33-37687
File No. 811-6192
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 13 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 15 /X/
STEPSTONE FUNDS
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(formerly Union Investors Funds)
(Exact Name of Registrant as Specified in Charter)
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2 Oliver Street
Boston, Massachusetts 02109
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(Address of Principal Executive Offices) (Zip Code)
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Registrant's Telephone Number, including Area Code: (800) 342-5734
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Mr. David G. Lee
C/O SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
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(Name and Address of Agent for Service)
Copies to:
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Jonathan A. Wright Richard W. Grant, Esquire John H. Grady, Jr. Esquire
Senior Counsel Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
Union Bank 2000 One Logan Square 1800 M Street, N.W.
445 South Figueroa Street Philadelphia, PA 19103 Washington, D.C. 20036
Los Angeles, CA 90017
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It is proposed that this filing will become effective (check appropriate box)
Immediately upon filing pursuant to paragraph (b), or
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On [date] pursuant to paragraph (b), or
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X 60 days after filing pursuant to paragraph (a), or
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On [date] pursuant to paragraph (a) of Rule 485, or
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75 days after filing pursuant to paragraph (a) of Rule 485.
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DECLARATION PURSUANT TO RULE 24f-2: Pursuant to Rule 24f-2 under the
Investment Company Act of 1940 the Registrant has elected to register an
indefinite amount of securities. Registrant filed a Rule 24f-2 Notice on March
27, 1995 for the Registrant's fiscal year ending January 31, 1995.
<PAGE> 2
STEPSTONE FUNDS
POST-EFFECTIVE AMENDMENT NO. 13
CROSS REFERENCE SHEET
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N-1A ITEM NO. LOCATION
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PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objective(s); Investment Policies; General Investment
Policies; Risk Factors; Investment Limitations; Fundamental Policies;
Description of Permitted Investments
Item 5. Management of the Fund The Advisor; The Sub-Advisor; The Administrator; The Shareholder Servicing
Agent; The Distributor; General Information - Trustees of the Trust
Item 6. Capital Stock and Other Securities Voting Rights; The Advisor; Taxes; General Information - Information -
Dividends; Shareholder Inquiries
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Investment Objective and Policies; Investment Limitations; Securities Lending
Item 14. Management of the Registrant Trustees and Officers of the Trust (Prospectus); The Administrator; The
Shareholder Servicing Agent
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N-1A ITEM NO. LOCATION
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Item 15. Control Persons and Principal
Holders of Securities Trustees and Officers of the Trust (Prospectus)
Item 16. Investment Advisory and Other
Services The Advisor; The Administrator; The Shareholder Servicing Agent; The
Distributor; Counsel and Independent Public Accountants
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing of
Securities Being Offered Purchase and Redemption of Shares (Prospectus); Determination of Net Asset
Value
Item 20. Tax Status Tax (Prospectus); Tax
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield and Calculation of Total Return
Item 23. Financial Statements Financial Statements
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PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
* Not Applicable
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<PAGE> 4
The Prospectuses for the Institutional and Investment Shares of the Money
Market Fund, Treasury Money Market Fund, California Tax-Free Money Market Fund,
California Tax Free Bond Fund, Growth Equity Fund, Value Momentum Fund,
Balanced Fund, Emerging Growth Fund, Blue Chip Growth Fund, Convertible
Securities Fund, Government Securities Fund, Intermediate-Term Bond Fund,
Limited Maturity Government Fund and International Equity Fund and the
Statement of Additional Information included as part of Post-Effective
Amendment No. 12 to the Registrant's Registration Statement on Form N-1A (File
No. 33-37687) filed with the Securities and Exchange Commission on May 31, 1995
are hereby incorporated by reference as if set forth in full herein.
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STEPSTONE FUNDS
A Family of Mutual Funds
STEPSTONE FUNDS (the "Trust") is a mutual fund that offers a convenient means of
investing in one or more professionally managed portfolios of securities. This
Prospectus relates to the Trust's:
-- MONEY MARKET FUND
-- TREASURY MONEY MARKET FUND
CASH SWEEP CLASS
The Trust's Cash Sweep Class is offered to business customers of UNION BANK and
THE BANK OF TOKYO TRUST COMPANY, their affiliates and correspondents for the
automated investment of designated cash balances. Such business customers
include corporations, partnerships, sole proprietorships, non-profit
organizations and government agencies.
AN INVESTMENT IN A FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT A FUND WILL BE ABLE TO MAINTAIN A STABLE
NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus sets forth concisely the information about the Trust and the
Funds that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated the same date as this Prospectus has been filed
with the Securities and Exchange Commission and is available without charge
through the Distributor, SEI Financial Services Company, 680 East Swedesford
Road, Wayne, PA 19087-1658 or by calling 1-(800) 862-6243. The Statement of
Additional Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, INCLUDING UNION BANK, THE BANK OF TOKYO TRUST COMPANY OR ANY OF
THEIR AFFILIATES OR CORRESPONDENTS. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISKS INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
CASH SWEEP CLASS
<PAGE> 6
2
SUMMARY
STEPSTONE FUNDS (the "Trust") is a diversified open-end investment company which
provides a convenient way to invest in professionally managed portfolios of
securities. The following provides basic information about the Money Market,
Treasury Money Market Funds, Cash Sweep Class (each a "Fund"). This summary is
qualified in its entirety by reference to the more detailed information provided
elsewhere in this Prospectus and in the Statement of Additional Information.
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES? THE MONEY MARKET FUND seeks to
preserve principal value and maintain a high degree of liquidity while providing
current income. THE TREASURY MONEY MARKET FUND seeks to preserve principal value
and maintain a high degree of liquidity while providing current income. See
"Investment Objectives."
WHAT ARE THE FUNDS' PERMITTED INVESTMENTS? THE MONEY MARKET FUND invests in
obligations denominated in U.S. dollars, including commercial paper, bank
obligations, thrift and savings and loan obligations, short-term corporate
obligations, general U.S. Government obligations and repurchase agreements
involving such obligations, receipts evidencing ownership of component parts of
U.S. Treasury obligations and securities issued or guaranteed by foreign
branches of foreign banks and foreign commercial paper. THE TREASURY MONEY
MARKET FUND invests exclusively in direct obligations issued by the U.S.
Treasury, separately traded component parts of such obligations transferable
through the Federal book-entry system, and repurchase agreements involving such
obligations. See "Investment Policies."
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUNDS? Each Fund seeks to
maintain a net asset value of $1.00 per share. There can be no assurance that a
Fund will be able to maintain a net asset value of $1.00 per share on a
continuous basis. See "Risk Factors."
ARE MY INVESTMENTS INSURED? Any guarantee by the U.S. Government, its agencies
or instrumentalities of the securities in which any Fund invests guarantees only
the payment of principal and interest on the guaranteed security and does not
guarantee the yield or value of the security or yield or value of shares of that
Fund. The Trust's shares are not federally insured by the FDIC or any other
government agency.
WHO IS THE ADVISOR? Union Capital Advisors, a division of Union Bank, serves as
the Advisor of the Trust.
WHO IS THE ADMINISTRATOR? SEI Financial Management serves as the Administrator
of the Trust. See "The Administrator."
WHO IS THE SHAREHOLDER SERVICING AGENT? SEI Financial Management Corporation
serves as transfer agent, dividend disbursing agent, and shareholder servicing
agent for the Trust. See "Shareholder Servicing Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company acts as Distributor of
the Trust's shares. See "The Distributor."
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions will be effected
pursuant to the terms and conditions of Cash Sweep accounts entered into by
shareholders with Union Bank and its affiliates and correspondents. Orders may
be placed on days on which both the New York Stock Exchange and the Federal
Reserve wire system are open for business ("Business Days"). The minimum
investment is $1,000. Shareholders must place orders to purchase prior to 9:00
A.M. Pacific time or orders to redeem prior to 9:00 A.M. Pacific time for the
Money Market and Treasury Money Market Fund on any Business Day. Otherwise the
order will be effective the next Business Day. In addition, effectiveness of a
purchase is contingent on the Custodian's receipt of Federal funds before 11:00
A.M. Pacific time. See "Purchase and Redemption of Shares."
HOW ARE DIVIDENDS PAID? The net investment income (exclusive of short-term
capital gains) of the Funds is determined and declared on each Business Day as a
dividend for Shareholders of record as of the close of business on that day.
Dividends are paid monthly in additional shares unless the Shareholder elects to
take the payment in cash. See "Dividends."
<PAGE> 7
3
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ANNUAL OPERATING EXPENSES
(As a percentage of average net assets) CASH SWEEP CLASS
MONEY TREASURY
MARKET MONEY MARKET
FUND FUND
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Advisory Fees (After Fee Waivers)(1)......................................... .30% .25%
12b-1 Fees (After Fee Waivers)(2)............................................ .35% .35%
Other Expenses............................................................... .20% .20%
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Total Operating Expenses (After Fee Waivers)(3).............................. .85% .80%
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(1) The Advisor has voluntarily agreed to waive fees to the extent necessary in
order to limit Total Operating Expenses of the Treasury Money Market Fund.
The Advisor reserves the right to terminate its waiver at any time in its
sole discretion. Absent this fee waiver, the Advisory Fees would be .30% for
the Fund.
(2) The Cash Sweep Class Plan provides that the Cash Sweep Class shares will
bear the costs of distribution expenses and, in addition, the Trust may pay
the Distributor a fee of up to .50% of the Cash Sweep Class shares' average
daily net assets, which may be used to compensate broker/dealers and service
providers. See "The Distributor" for further information. The Distributor
has agreed to waive fees so that such fees payable under the Cash Sweep Plan
are limited to .35%.
(3) Absent fee waivers, "Total Operating Expenses" would be 1.00% and 1.00% for
the Money Market Fund and Treasury Money Market Fund, respectively.
EXAMPLE:
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1 YR. 3 YRS. 5 YRS. 10 YRS.
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An investor would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period.
Money Market Fund................................................... $ 9 $ 27 $ 47 $ 105
Treasury Money Market Fund.......................................... $ 8 $ 26 $ 44 $ 99
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THE EXAMPLE IS BASED UPON THE TOTAL OPERATING EXPENSES OF A FUND AND SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is to assist the
investor in understanding the various costs and expenses that may be directly or
indirectly borne by investors in the Funds. The information set forth in the
foregoing table and example relates only to Cash Sweep Class shares. The Trust
also offers Institutional and Investment Class shares of the Funds which are
subject to the same expenses except there are no distribution expenses.
Additional information may be found under "The Administrator" and "The Advisor."
<PAGE> 8
4
THE TRUST
STEPSTONE FUNDS (formerly Union Investors Funds) (the "Trust") is a diversified
open-end management investment company that offers units of beneficial interest
("shares") in fourteen separate investment funds. Shareholders may purchase
shares of 12 of the funds through two separate classes of shares (Institutional
Class and Investment Class) and three separate classes of the Money Market Fund
and Treasury Money Market Fund (Institutional Class, Investment Class, and Cash
Sweep Class) which provide for variations in distribution costs, voting rights
and dividends. Except for these differences between the classes, each share of
each fund represents an equal proportionate interest in that fund. This
Prospectus relates to the Cash Sweep Class shares of the Trust's Money Market
and Treasury Money Market Funds (each a "Fund"). Information regarding the
Trust's other funds is contained in separate prospectuses that may be obtained
from the Trust's Distributor, SEI Financial Services Company, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658.
INVESTMENT OBJECTIVES
THE MONEY MARKET FUND seeks to preserve principal value and maintain a high
degree of liquidity while providing current income.
THE TREASURY MONEY MARKET FUND seeks to preserve principal value and maintain a
high degree of liquidity while providing current income.
There is no assurance that a Fund's investment objective will be met.
INVESTMENT POLICIES
MONEY MARKET FUND
The Money Market Fund will invest in obligations denominated in U.S. dollars
consisting of: (i) commercial paper issued by domestic and foreign issuers rated
at least A-1 by Standard & Poor's Corporation ("S&P") or Prime-1 by Moody's
Investors Service ("Moody's") at the time of investment or, if not rated, as
determined by the Advisor to be of comparable quality; (ii) obligations
(certificates of deposit, bank notes, time deposits, and bankers' acceptances)
of thrift institutions, savings and loans, U.S. commercial banks (including
foreign branches of such banks), and U.S. and foreign branches of foreign banks,
provided that such institutions (or, in the case of a branch, the parent
institution) have total assets of $1 billion or more as shown on their last
published financial statements at the time of investment; (iii) short-term
corporate obligations with a remaining term of not more than 397 days of issuers
with commercial paper of comparable priority and security meeting the above
ratings or determined by the Advisor to be of comparable quality; (iv) general
obligations issued by the U.S. Government and backed by its full faith and
credit, and obligations issued or guaranteed as to principal and interest by the
agencies or instrumentalities of the U.S. Government (e.g. obligations issued by
Farmers Home Administration, Government National Mortgage Association, Federal
Farm Credit Bank and Federal Housing Administration); (v) receipts, including
TR's, TIGR's and CATS; (vi) repurchase agreements involving such obligations;
(vii) restricted securities which have not been registered under the Securities
Act of 1933 (Rule 144A Securities) and (viii) loan participations. The Advisor
will determine that the permitted investments present minimal credit risks in
accordance with guidelines established by the Trust's Board of Trustees.
The Fund reserves the right to concentrate its investments in certain
instruments issued by U.S. banks, U.S. branches of foreign banks and foreign
branches of U.S. banks. The Fund is permitted to reserve freedom of action with
respect to concentration in obligations issued by foreign branches of domestic
banks, but only so long as the investment risk associated with investing in such
instruments is the same as that associated with investing in instruments issued
by the U.S. parent, in that the U.S. parent would be unconditionally liable in
the event that the foreign branch failed to pay on instruments.
<PAGE> 9
5
The Fund may invest up to 5% of its total assets in such loan participations
issued by a bank in the United States with assets exceeding $1 billion where the
underlying loan is made to a borrower in whose obligations the Fund may invest
and the underlying loan has a remaining maturity of one year or less.
The Fund may invest in readily-marketable securities backed by company
receivables, truck and auto loans, leases, and credit card loans provided that
such instruments satisfy the rating requirements described above or are
determined by the Advisor to be of comparable quality.
The Fund may invest in U.S. dollar denominated securities issued or guaranteed
by foreign governments, their political subdivisions, agencies or
instrumentalities, obligations of supranational entities such as the World Bank
and the Asian Development Bank; provided that the Fund invests no more than 5%
of its assets in any such instrument and has no more than 25% of its assets in
such instruments in the aggregate.
TREASURY MONEY MARKET FUND
The Treasury Money Market Fund will invest exclusively in direct obligations
issued by the U.S. Treasury, separately traded component parts of such
obligations transferable through the Federal book-entry system ("STRIPS"), and
repurchase agreements involving such obligations.
The Fund is limited to making investments and engaging in investment
transactions that are permissible for federal credit unions.
Guarantees of the Fund's portfolio securities by the U.S. Government or its
agencies or instrumentalities guarantee only the principal and interest on the
guaranteed securities, and do not guarantee the securities' yield or value or
the yield or value of the Fund's shares.
GENERAL INVESTMENT POLICIES
Each Fund intends to comply with regulations of the Securities and Exchange
Commission ("SEC") applicable to money market funds using the amortized cost
method for calculating net asset value. These regulations impose certain
quality, maturity and diversification restraints on investments by a Fund. Under
these regulations, a Fund will invest only in U.S. dollar denominated
securities, will maintain an average maturity on a dollar-weighted basis of 90
days or less, and will acquire only "eligible securities" that present minimal
credit risks and have a maturity of 397 days or less. For a further discussion
of these rules, see the "Description of Permitted Investments."
Each Fund may enter into forward commitments, or purchase securities on a
when-issued basis. A Fund is permitted to invest in when-issued securities where
such purchases are for investment and not for leveraging purposes; however, a
Fund may sell these securities before the settlement date if it is deemed
advisable. No additional forward commitments will be made if more than 20% of a
Fund's net assets would be so committed.
Each Fund may also engage in securities lending and a Fund will limit such
practice to 33 1/3% of its total assets.
Each Fund will limit its investment in illiquid securities to 10% of its net
assets.
For a further description of each Fund's permitted investments, see "Description
of Permitted Investments."
ELIGIBILITY UNDER FEDERAL CREDIT
UNION ACT
Shares of the Treasury Money Market Fund (the Fund) are designed to qualify as
eligible investments for federally chartered credit unions pursuant to Section
107(7), 107(8) and 107(15) of the Federal Credit Union Act and Part 703 of the
National Credit Union Administration Rules and Regulations. The Fund will
continually monitor changes in the applicable laws, rules and regulations
governing eligible investments, including new investments, for federally
chartered
<PAGE> 10
6
credit unions and will take such action as may be necessary to assure that the
Fund's investments, and, therefore, shares of the Fund, continue to qualify as
eligible investments under the Federal Credit Union Act.
Sections 107(7), 107(8) and 107(15) of the Federal Credit Union Act set forth
those securities, deposits and other obligations in which federally chartered
credit unions may invest. The Fund's investments consist exclusively of assets
designed to qualify as eligible investments if owned directly by a federally
chartered credit union. Shares of the Fund may or may not qualify as eligible
investments for particular state chartered credit unions. Accordingly, the Fund
encourages, but does not require, each state chartered credit union to consult
qualified legal counsel concerning whether the Fund's shares are permissible
investments for that credit union. While the Advisor will assure that the Fund
follows investment policies set forth herein, the Fund cannot be responsible for
compliance by participating state chartered credit unions with limitations on
permissible investments to which they may be subject.
RISK FACTORS
It is a fundamental policy of each Fund to use its best efforts to maintain a
constant net asset value of $1.00 per share. There is no assurance that a Fund
will be able to maintain a stable net asset value of $1.00 per share.
Foreign investments in which the Money Market Fund may invest involve risks that
are different from investments in securities of U.S. issuers. These risks may
include future unfavorable political and economic developments, possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations or other government restrictions which might affect payment of
principal or interest. Additionally, there may be less public information
available about foreign issuers. Foreign branches of foreign banks are not
regulated by U.S. banking authorities, and foreign issuers generally are not
bound by accounting, auditing and financial reporting standards comparable to
U.S. issuers. The Money Market Fund does not limit, except as indicated above,
the amount of its assets which can be invested in any one type of instrument or
in any foreign country.
INVESTMENT LIMITATIONS
1. The Money Market Fund and the Treasury Money Market Fund may not purchase
securities of any issuer (except securities issued or guaranteed by the United
States its agencies or instrumentalities) and repurchase agreements involving
such securities if as a result more than 5% of the total assets of the Fund
would be invested in the securities of such issuer. While this restriction
applies to 75% of each Fund's assets, the Money Market Fund and the Treasury
Money Market Fund have each adopted, in accordance with Rule 2a-7, a policy
providing that the 5% limitation shall apply to 100% of the Fund's assets,
provided, however, that each Fund may invest up to 25% of its assets in the
First Tier quality securities of a single issuer for up to three days. In
addition, for purposes of this limitation, as it relates to the Money Market
Fund, loan participations are considered to be issued by both the issuing bank
and the underlying corporate borrower.
2. Each Fund may not purchase any securities which would cause more than 25% of
the total assets of the Fund to be invested in the securities of one or more
issuers conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in the obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements involving such securities, and
provided further, that utilities as a group will not be considered to be one
industry, and wholly-owned subsidiaries organized to finance the operations of
their parent companies will be considered to be in the same industry as their
parent companies. For purposes of this limitation as it relates to the Money
Market Fund, loan participations are considered to be issued
<PAGE> 11
7
by both the issuing bank and the underlying corporate borrower, supranational
entities are considered to be a separate industry, and this limitation does not
apply to investments in the banking industry.
3. Each Fund may not make loans, except that a Fund may (a) purchase or hold
debt instruments in accordance with its investment objective and policies; (b)
enter into repurchase agreements; and (c) engage in securities lending as
described in this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
FUNDAMENTAL POLICIES
The investment objective and investment limitations are fundamental policies of
the Funds. It is also a fundamental policy of each Fund to use its best efforts
to maintain a constant net asset value of $1.00 per share. Fundamental policies
cannot be changed with respect to a Fund without the consent of a majority of
the Fund's outstanding shares. The term "majority of the outstanding shares"
means the vote of (i) 67% or more of the Fund's shares present at a meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares,
whichever is less.
THE ADVISOR
The Trust and Union Capital Advisors (the "Advisor"), a division of Union Bank,
have entered into an advisory agreement (the "Advisory Agreement"). Under the
Advisory Agreement, the Advisor makes the investment decisions for the assets of
each Fund and continuously reviews, supervises and administers the Fund's
investment program. The Advisor discharges its responsibilities subject to the
supervision of, and policies established by, the Trustees of the Trust. The
Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Advisor or Union Bank and are not
guaranteed by the FDIC or any other government agency.
The Advisor is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .30% of the average daily net assets of each Fund. The Advisor
may from time to time voluntarily waive all or a portion of its fees in order to
limit the operating expenses of a Fund. Any such waiver is voluntary and may be
terminated at any time in the Advisor's sole discretion.
For the fiscal year ended January 31, 1995, the Money Market and Treasury Money
Market Funds paid a fee of .30% and .23% of that Fund's average daily net
assets, respectively.
Union Capital Advisors, 445 S. Figueroa Street, Los Angeles, California 90071,
operates as a separate division of Union Bank. In 1988, the former Union Bank
was acquired by California First Bank, and the resulting bank changed its name
to Union Bank. Each of the former banks or its predecessor bank had been in
banking since the early 1900's and each historically has had significant
Investment functions within their Trust and Investment Divisions. Union Bank is
a subsidiary of The Bank of Tokyo, Ltd. Tokyo.
At January 31, 1995, Union Capital Advisors managed $4.7 billion in individual
portfolios and collective funds. The Advisor's clients range from pension funds,
national labor union plans and foundations to personal investments and trust
portfolios.
The Glass-Steagall Act restricts the securities activities of banks such as
Union Bank, but federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds. Should this position be
challenged successfully in court or reversed by legislation, the Trust might
have to make other investment advisory arrangements.
<PAGE> 12
8
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), a wholly-owned
subsidiary of SEI Corporation ("SEI"), and the Trust are parties to an
Administration Agreement (the "Administration Agreement"). Under the terms of
the Administration Agreement, the Administrator provides the Trust with certain
management services including all necessary office space, equipment, personnel,
and facilities.
The Administrator is entitled to a fee, calculated daily and paid monthly, at an
annual rate of .15% of Trust assets up to $1 billion, .12% of assets between $1
billion and $2 billion and .10% of assets over $2 billion. The Administrator may
waive its fee or reimburse various expenses to the extent necessary to limit the
total operating expenses applicable to a Fund's Cash Sweep Class shares. Any
such waiver is voluntary and may be terminated at any time.
THE SHAREHOLDER SERVICING AGENT
SEI Financial Management Corporation serves as the transfer agent, dividend
disbursing agent, and shareholder servicing agent for the Trust. Compensation
for these services is paid under the Administration Agreement.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI Corporation (SEI), and the Trust are parties to a distribution agreement
("Distribution Agreement"). The Distribution Agreement is renewable annually and
may be terminated by the Distributor, by a majority vote of the Disinterested
Trustees or by a majority vote of the outstanding securities of the Trust upon
not more than 60 days written notice by either party, or upon assignment by the
Distributor.
The Cash Sweep Class has a distribution plan ("Cash Sweep Class Plan"). The Cash
Sweep Class Plan provides that the Cash Sweep Class shares of a Fund will
reimburse the Distributor for the following expenses: (1) the cost of
prospectuses, reports to Shareholders, sales literature and other materials for
potential investors and (2) expenses incurred in connection with the promotion
and sale of the Trust's shares including expenses for travel, communication, and
compensation and benefits for sales personnel.
In addition, the Trust pays the Distributor a fee of up to .50% of a Fund's Cash
Sweep Class shares average daily net assets, which can be used by the
Distributor to compensate broker/dealers and service providers. The Distributor
has agreed to waive any fees payable pursuant to the Plan other than .35%. The
Distributor reserves the right to terminate its waiver at any time in its sole
discretion.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of shares of the Funds may be made on days on which
both the New York Stock Exchange and the Federal Reserve wire system are open
for business ("Business Days"). Such orders will generally be effected pursuant
to the terms and conditions of Cash Sweep accounts entered into by shareholders
of the Funds with Union Bank and its affiliates and correspondents. The minimum
initial investment is $1,000.
Purchase orders will be effective on the Business Day made if the Distributor
receives an order before 9:00 A.M., Pacific time on such Business Day.
Otherwise, the purchase order will be effective the next Business Day.
Effectiveness of a purchase order on any Business Day is contingent on the
Custodian's receipt of Federal funds before 11:00 A.M. Pacific time on such day.
The purchase price is the net asset value per share, which is expected to remain
constant at $1.00. The net asset value per share is calculated as of 9:00 A.M.,
Pacific time, each Business Day based on the amortized cost method. The Trust
reserves the right to reject a purchase order when the Distributor determines
that it is not in the best interest of the Trust and/or Shareholder(s).
Shares of the Funds are offered only to residents of states in which the shares
are eligible for purchase.
<PAGE> 13
9
The Trust is required to redeem for cash all full and fractional shares of the
Trust. The redemption price is the net asset value per share of a Fund (normally
$1.00 per share).
Redemption orders may be made any time before 9:00 A.M. Pacific time for the
Money Market and Treasury Money Market Fund in order to receive that day's
redemption price (i.e. the next determined net asset value per share). For
redemption orders received before 9:00 A.M. Pacific time, payment will be made
the same day by transfer of federal funds. Otherwise, payment will be made on
the next Business Day. Redeemed shares are entitled to dividends declared the
day the redemption order is effective.
Neither the Trust's transfer agent nor the Trust will be responsible for any
loss, liability, cost or expense for acting upon wire instructions or upon
telephone instructions that it reasonably believes are genuine. The Trust and
its transfer agent will each employ reasonable procedures to confirm that
telephone instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone instructions if it does not employ these
procedures. Such procedures may include taping of telephone conversations. If
market conditions are extraordinarily active or extraordinary circumstances
exist, and you experience difficulties placing redemption order by telephone,
you may wish to consider placing your order by other means.
COMPUTATION OF YIELD
From time to time a Fund advertises its "current yield" and "effective compound
yield." Both yield figures are based on historical earnings and are not intended
to indicate future performance. The "current yield" of the Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment.
The performance of Institutional Class shares will normally be higher than for
Investment Class and Cash Sweep Class shares because the Institutional Class is
generally not subject to distribution expenses generally charged to Investment
Class and Cash Sweep Class shares.
The yield of each Fund will fluctuate, and the annualization of a week's
dividend is not a representation by the Trust as to what an investment in the
Fund will actually yield in the future.
Each Fund may periodically compare its performance to the performance of: other
mutual funds tracked by mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; broad groups of comparable
mutual funds; unmanaged indices which may assume investment of dividends but
generally do not reflect deductions for administrative and management costs; or
other investment alternatives. The Funds may quote Morningstar, Inc., a service
that ranks mutual funds on the basis of risk-adjusted performance. The Funds may
quote Ibbotson Associates of Chicago, Illinois, which provides historical
returns of the capital markets in the U.S. The Funds may use long term
performance of these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a hypothetical investment
in any of the capital markets. The Funds may also quote financial and business
publications and periodicals as they relate to fund management, investment
philosophy, and investment techniques.
The Funds may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of
<PAGE> 14
10
benchmark correlation indicate how valid a comparative benchmark might be.
Measures of volatility and correlation are calculated using averages of
historical data and cannot be calculated precisely.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state, or local income tax treatment of a Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state and local income
taxes. Additional information concerning taxes is set forth in the Statement of
Additional Information.
TAX STATUS OF THE FUNDS:
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other Funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies under the Internal
Revenue Code of 1986, as amended, so that it will be relieved of federal income
tax on that part of its net investment income and net capital gain (the excess
of net long-term capital gain over net short-term capital loss) which is
distributed to Shareholders.
TAX STATUS OF DISTRIBUTIONS:
Each Fund will distribute all of its net investment income (including net
short-term capital gain) and net capital gain to Shareholders. Dividends from
net investment income will be taxable to Shareholders as ordinary income whether
received in cash or in additional shares and will not qualify for the corporate
dividends-received deduction. Distributions of net capital gain also will not
qualify for the dividends-received deduction and will be taxable to Shareholders
as long-term capital gain regardless of how long the Shareholders have held
their shares and regardless of whether the distributions are received in cash or
in additional shares. Each Fund will make annual reports to Shareholders of the
federal income tax status of all distributions.
With respect to investments in STRIPS, TR's, TIGR's and CATS which are sold at
original issue discount and thus do not make periodic cash interest payments, a
Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because each Fund distributes
all of its net investment income to its shareholders, a Fund may have to sell
fund securities to distribute such imputed income which may occur at a time when
the Advisor would not have chosen to sell such securities and which may result
in a taxable gain or loss.
The Funds intend to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by a Fund and may be exempt, depending on the state, when
received by a Shareholder as income dividends from a Fund provided certain
state-specific conditions are satisfied. A Fund will inform Shareholders
annually of the percentage of income and distributions derived from direct U.S.
Treasury obligations. Shareholders should consult their tax advisors to
determine whether any portion of the income dividends received from a Fund is
considered tax exempt in their particular state.
Income derived by a Fund from obligations of foreign issuers may be subject to
foreign withholding taxes. The Fund will not be able to elect to treat
Shareholders as having paid their proportionate share of such foreign taxes.
A sale, exchange or redemption of Fund shares is a taxable event to the
Shareholder.
Dividends declared by a Fund in October, November or December of any year and
payable to
<PAGE> 15
11
Shareholders of record on a date in that month will be deemed to have been paid
by the Fund and received by the Shareholders on the last day of that month, if
paid by the Fund any time during the following January.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated October 16, 1990. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different classes of each fund. In
addition to the Money Market and Treasury Money Market Funds, the Trust consists
of the following funds: Growth Equity Fund, Value Momentum Fund, Intermediate-
Term Bond Fund, Limited Maturity Government Fund, Balanced Fund, Blue Chip
Growth Fund, Emerging Growth Fund, Convertible Securities Fund, Government
Securities Fund, California Tax-Free Bond Fund, California Tax-Free Money Market
Fund and International Equity Fund. All consideration received by the Trust for
shares of any fund and all assets of such fund belong to that fund and would be
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional funds.
The Trust pays its expenses, including audit and legal expenses, expenses of
preparing and printing prospectuses, proxy solicitation material and reports to
Shareholders, costs of custodial services and registering the shares under
federal and state securities laws, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management, administrative and shareholder services
to the Trust.
VOTING RIGHTS
Each share held entitles the Shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to such fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings but approval will be sought for certain changes in the operation of the
Trust and for the election of Trustees under certain circumstances. In addition,
a Trustee may be removed by the remaining Trustees or by Shareholders at a
special meeting called upon the written request of Shareholders owning at least
10% of the outstanding shares of the Trust. Shareholders will be provided with
Shareholder communication assistance in connection with such matters.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, PA 19087-1658.
DIVIDENDS
The net investment income (exclusive of net short-term capital gain) of each
Fund is determined and declared on each business day as a dividend for
Shareholders of record as of the close of business on that day. Dividends are
paid by the Fund in additional shares, unless the Shareholder has elected to
take such payment in cash, on the first business day of each month. Shareholders
may change their election by providing written notice to the Administrator at
least 15 days prior to the change.
The dividends payable on the Cash Sweep Class shares will be less than the
dividends payable on the Institutional Class shares because of the distribution
expenses charged to Cash Sweep Class shares. The dividends payable on the Cash
Sweep Class will also be less than the dividends payable on the Investment Class
shares because
<PAGE> 16
12
of the higher distribution expenses charged to Cash Sweep Class shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
CoreStates Bank NA., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia, PA
19101 (the "Custodian") acts as Custodian of the assets of the Fund. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940, as amended.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of the permitted investments for the Funds:
ASSET-BACKED SECURITIES (NON-MORTGAGE)--The Money Market Fund may invest in
asset-backed securities, which are instruments secured by company receivables,
truck and auto loans, leases, and credit card receivables. Such securities are
generally issued as pass-through certificates, which represent undivided
fractional ownership interests in the underlying pools of assets. Such
securities also may be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for purpose of owning such assets and issuing
such debt. The purchase of non-mortgage asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities.
The development of non-mortgage asset-backed securities is at an early stage
compared to mortgage backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for non-mortgage
asset-backed securities is not as well developed as that for mortgage backed
securities guaranteed by government agencies or instrumentalities. Asset-backed
securities entail prepayment risk, which may vary depending on the type of
asset.
BANKERS' ACCEPTANCE--A bill of exchange or time draft drawn on and accepted by a
commercial bank. It is used by corporations to finance the shipment and storage
of goods and to furnish dollar exchange. Maturities are generally six months or
less.
CERTIFICATE OF DEPOSIT--A negotiable interest-bearing instrument with a specific
maturity. Certificates of deposit are issued by banks and savings and loan
institutions in exchange for the deposit of funds and normally can be traded in
the secondary market, prior to maturity.
COMMERCIAL PAPER--Unsecured short-term promissory notes issued by corporations
and other entities. Maturities on these issues vary from a few days to nine
months. Purchase of such instruments involves a risk of default by the issuer.
DERIVATIVES--Derivatives are securities whose value is derived from an
underlying contract, index or security, or any combination thereof. This
includes: futures, options (e.g., puts and calls), options on futures, swap
agreements, and some mortgage-backed securities (CMOs, REMICs, IOs and POs). See
elsewhere in this "Description of Permitted Investments" for discussions of
these various instruments, and see "Investment Objectives and Policies" for more
information about any investment policies and limitations applicable to their
use.
LOAN PARTICIPATIONS--The Money Market Fund may invest in loan participations,
which are interests in loans to U.S. corporations (i.e., borrowers) which are
administered by the lending bank or agent for a syndicate of lending banks, and
sold by the lending bank or syndicate member ("intermediary bank"). In a loan
participation, the borrower of the underlying loan will be deemed to be the
issuer of the participation interest except to the extent a purchasing Fund
derives its rights from the intermediary bank. Because the intermediary bank
does not guarantee a loan participation in any way, a loan participation is
subject to the credit risks generally associated with the underlying corporate
borrower. In addition, in
<PAGE> 17
13
the event the underlying corporate borrower fails to pay principal and interest
when due, the Fund may be subject to delays, expenses and risks that are greater
than those that would have been involved if the Fund had purchased a direct
obligation (such as commercial paper) of such borrower because it may be
necessary under the terms of the loan participation for the Fund to assert its
rights against the borrower through the intermediary bank. Moreover, under the
terms of a loan participation the purchasing Fund may be regarded as a creditor
of the intermediary bank (rather than of the underlying corporate borrower),
making it subject to the risk that the issuing bank may become insolvent.
Further, in the event of the bankruptcy or insolvency of the corporate borrower,
a loan participation may be subject to certain defenses that can be asserted by
such borrower as a result of improper conduct by the issuing bank. The secondary
market, if any, for these loan participations is limited and any such
participation purchased by the Fund may be regarded as illiquid.
RULE 144A SECURITIES--The Money Market Fund may purchase Rule 144A Securities.
Rule 144A Securities are restricted securities that have not been registered
under the Securities Act of 1933 but which may be traded between certain
qualified institutional investors, including investment companies. The absence
of a secondary market may affect the value of Rule 144A Securities. The Board of
Trustees of the Trust has established guidelines and procedures to be utilized
to determine the liquidity of such securities.
REPURCHASE AGREEMENTS--Agreements by which a person obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days from the date of purchase. The Custodian or its agent will hold the
security as collateral for the repurchase agreement. Collateral must be
maintained at a value at least equal to 102% of the repurchase price. A Fund
bears a risk of loss in the event the other party defaults on its obligations
and the Fund is delayed or prevented from its rights to dispose of the
collateral securities or if a Fund realizes a loss in the sale of the collateral
securities. Repurchase agreements are considered loans under the Investment
Company Act of 1940, as amended.
SECURITIES ISSUED ON A FORWARD COMMITMENT BASIS OR WHEN-ISSUED
SECURITIES--Securities subject to settlement on a future date. The interest rate
realized on these securities is fixed as of the purchase date and no interest
accrues to a Fund before settlement. These securities are subject to market
fluctuation due to changes, real or anticipated, in market interest rates and
the public's perception of the creditworthiness of the issuer and will have the
effect of leveraging the Fund's assets. Purchasing securities on a forward
commitment or when-issued basis when a Fund is fully or almost fully invested
may result in greater potential fluctuation in the value of a Fund's net asset
value per share. The purchasing Fund will establish one or more segregated
accounts with the Custodian, and will maintain liquid assets in an amount at
least equal in value to the Fund's commitments to purchase when-issued
securities.
SECURITIES LENDING--In order to generate additional income, each Fund may lend
the securities in which it is invested pursuant to agreements requiring that the
loan be continuously secured by cash, securities of the U.S. Government or its
agencies or any combination of cash and such securities as collateral equal to
100% of the market value at all times of the securities lent. The Fund will
continue to receive interest on the securities lent while simultaneously earning
interest on the investment of cash collateral in U.S. Government securities.
Collateral is marked to market daily to provide a level of collateral at least
equal to the value of the securities lent. There may be risks of delay in
receiving additional collateral or risks of delay in recovery of the securities
or even loss of rights in
<PAGE> 18
14
the collateral should the borrower of the securities fail financially.
TIME DEPOSIT--A non-negotiable receipt issued by a U.S. or foreign bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid securities.
U.S. GOVERNMENT AGENCY SECURITIES-- Certain Federal agencies have been
established as instrumentalities of the U.S. Government to supervise and finance
certain types of activities. Issues of these agencies, while not direct
obligations of the U.S. Government, are either backed by the full faith and
credit of the United States (e.g., GNMA) or supported by the issuing agencies'
right to borrow from the Treasury. The issues of other agencies are supported
only by the credit of the instrumentality (e.g., FNMA).
U.S. TREASURY OBLIGATIONS--Bills, notes and bonds issued by the U.S. Treasury
and separately traded interest and principal component parts of such obligations
that are transferable through the Federal book-entry system, known as Separately
Traded Registered Interest and Principal Securities ("STRIPS").
RECEIPTS--The Money Market Fund may invest in Receipts, which are interests in
separately traded interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and are created by
depositing Treasury notes and Treasury bonds into a special account at a
custodian bank. The custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Receipts include "Treasury Receipts" ("TR's"),
"Treasury Investment Growth Receipts" ("TIGR's") and "Certificates of Accrual on
Treasury Securities" ("CATS").
STRIPS, TR'S, TIGR'S and CATS are sold as zero coupon securities, which means
that they are sold at a substantial discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. This
discount is accreted over the life of the security, and such accretion will
constitute the income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be subject to greater
interest rate volatility than interest paying securities. See also "Taxes."
VARIABLE AND FLOATING RATE INSTRUMENTS--Instruments that carry variable or
floating rates of interest, may involve a conditional or unconditional demand
feature and may include variable amount master demand notes. The interest rates
on these securities may be reset daily, weekly, quarterly or some other reset
period, and may have a floor or ceiling on interest rate changes. There is a
risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
period exceeding seven days may be considered illiquid if there is no secondary
market for such security.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS
Investments by the Funds are subject to limitations imposed under regulations
adopted by the SEC. These regulations generally require money market funds to
acquire only U.S. dollar obligations maturing in 397 days or less and to
maintain a dollar-weighted average portfolio maturity of 90 days or less. In
addition, the Funds may acquire only obligations that present minimal credit
risks and that are "eligible securities" which means they are (i) rated, at the
time of investment, by at least two nationally recognized security rating
organizations (one if it is the only organization rating such obligation) in the
highest short-term rating category or, if unrated, determined to be of
comparable quality (a "first tier security"), or (ii) rated according to the
foregoing criteria in the second highest short-term rating category or, if
unrated, determined to be of comparable quality ("second tier security"). A
security is not considered to be unrated if its issuer has outstanding
obligations of comparable priority and
<PAGE> 19
15
security that have a short-term-rating. In determining whether obligations are
eligible securities, the rating of the issuer's commercial paper, if any, is
used for the above tests. Investments by the Money Market Fund in second tier
securities are subject to the further constraints that (i) no more than 5% of
the Fund's assets may be invested in such securities in the aggregate, and (ii)
any investment in such securities of one issuer is limited to the greater of 1%
of the Fund's total assets or $1 million. In addition, the Fund may invest up to
25% of its total assets in the first tier securities of a single issuer for
three business days.
<PAGE> 20
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary.......................................... 2
Annual Operating Expenses........................ 3
The Trust........................................ 4
Investment Objectives............................ 4
Investment Policies.............................. 4
General Investment Policies...................... 5
Risk Factors..................................... 6
Investment Limitations........................... 6
Fundamental Policies............................. 7
The Advisor...................................... 7
The Administrator................................ 8
The Shareholder Servicing Agent.................. 8
The Distributor.................................. 8
Purchase and Redemption of Shares................ 8
Computation of Yield............................. 9
Taxes............................................ 10
General Information.............................. 11
Description of Permitted Investments............. 12
Restraints on Investments by Money Market
Funds.......................................... 14
</TABLE>
<PAGE> 21
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 22
STEPSTONE FUNDS
PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 13
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
Part A:
Financial Highlights
Part B: The following financial statements are incorporated by
reference to Post Effective Amendment No. 12.
Statement of Net Assets as of January 31, 1995
Schedule of Investments as of January 31, 1995
Statement of Assets and Liabilities as of January 31, 1995
Statement of Operations For the Period Ended as of January 31, 1995
Statement of Changes in Net Assets For the Period Ended January
31, 1995
Financial Highlights for a Share Outstanding Throughout the Period
Notes to Financial Statements as of January 31, 1995
Unaudited Statement of Net Assets as of April 30, 1995 for the
International Equity Fund
Unaudited Statement of Operations as of April 30, 1995 for the
International Equity Fund
Unaudited Statement of Changes in Net Assets as of April 30, 1995
for the International Equity Fund
Unaudited Financial Highlights as of April 30, 1995 for the
International Equity Fund
Notes to Unaudited Financial Statements as of April 30, 1995 for
the International Equity Fund
(b) Additional Exhibits
(1) Declaration of Trust, as amended May 12, 1992
(incorporated by reference to Post-Effective Amendment No.
3).
(1)(a) Amendment to Declaration of Trust, as of March 1, 1994
(incorporated by reference to Post-Effective Amendment
No. 9).
(2) By-Laws (incorporated by reference to Pre-Effective
Amendment No. 1).
C-1
<PAGE> 23
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement with Union Capital Advisors,
A Division of Union Bank (incorporated by reference to
exhibit (5)(b) to Pre-Effective Amendment No. 2).
(5)(b) Schedule C to Investment Advisory Agreement (incorporated
by reference to exhibit (5)(c) to Post-Effective Amendment
No. 6).
(5)(c) Form of Sub-Advisory Agreement between Union Capital
Advisors and Bank of Tokyo Trust Company (incorporated by
reference to exhibit (5)(d) to Post-Effective Amendment
No. 9).
(5)(d) Form of Sub-Advisory Agreement between Union Capital
Advisors and BOT Asset Management (UK) Limited,
(incorporated by reference to exhibit (5)(e) to
Post-Effective Amendment No. 11).
(6) Distribution Agreement (incorporated by reference to
Pre-Effective Amendment No. 2).
(7) Not Applicable.
(8) Custodian Agreement (incorporated by reference to
Pre-Effective Amendment No. 2).
(8)(a) Form of Foreign Custody Agreement with State Street Bank &
Trust Company (incorporated by reference to Post-Effective
Amendment No. 12)
(9) Administration Agreement, as amended March 9, 1993
(incorporated by reference to exhibit 5(a) to
Post-Effective Amendment No. 5).
(10) Opinion and Consent of Counsel (incorporated by reference
to Pre-Effective Amendment No. 2).
(11) Consent of Independent Public Accountants, filed herewith.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Distribution Plan - Investment Class (incorporated by
reference to Pre-Effective Amendment No. 2).
(15)(b) Distribution Plan - Class C, filed herewith.
(16) Performance Quotation Computation (incorporated by
reference to Pre-Effective Amendment No. 2).
(18) Rule 18f-3 Plan, as amended, filed herewith.
(24) Powers of Attorney (incorporated by reference to
Post-Effective Amendment No. 12).
Item 25. Persons Controlled by or under Common Control with Registrant
See the Prospectuses and the Statement of Additional Information regarding
the Trust's control relationships. The Administrator is a subsidiary of SEI
Corporation
C-2
<PAGE> 24
which also controls the distributor of the Registrant, SEI Financial Services
Company, and other corporations engaged in providing various financial and
record keeping services, primarily to bank trust departments, pension plan
sponsors, and investment managers.
Item 26. Number of Holders of Securities:
As of November 8, 1995, the number of record holders of each class of
securities of Registrant was as follows:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
<S> <C>
INVESTMENT CLASS:
Treasury Money Market Fund 1
Money Market Fund 1
California Tax Free Money Market Fund 1
Growth Equity Fund 1
Value Momentum Fund 1
Balanced Fund 1
Intermediate-Term Bond Fund 1
Limited Maturity Government Fund 1
California Tax Free Bond Fund 1
Blue Chip Growth Fund 2
Convertible Securities Fund 2
Emerging Growth Fund 2
Government Securities Fund 2
International Equity Fund 1
INSTITUTIONAL CLASS:
Treasury Money Market Fund 4
Money Market Fund 4
California Tax Free Money Market Fund 2
Growth Equity Fund 4
Value Momentum Fund 5
Balanced Fund 4
Intermediate-Term Bond Fund 5
Limited Maturity Government Fund 2
California Tax Free Bond Fund 4
Blue Chip Growth Fund 3
Convertible Securities Fund 3
Emerging Growth Fund 3
Government Securities Fund 3
International Equity Fund 4
</TABLE>
C-3
<PAGE> 25
<TABLE>
<CAPTION>
CLASS C:
<S> <C>
Treasury Money Market Fund 0
Money Market Fund 0
</TABLE>
Item 27. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Advisor:
Other businesses, professions, vocations, or employment of a substantial
nature in which each director or principal officer of the Advisor is or has
been, at any time during the last two fiscal years, engaged for his or her own
account or in the capacity of director, officer, employee, partner or trustee
are as follows:
The principal business address of Union Capital Advisors is 445 S. Figueroa
Street, Los Angeles, California 90071.
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Advisor Other Company Other Company
- ----------------------- ------------- --------------
<S> <C> <C>
Alexander D. Calhoun Graham & James Of Counsel
Director, Secretary
Richard D. Farman Pacific Enterprises President, Chief
</TABLE>
C-4
<PAGE> 26
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Advisor Other Company Other Company
- ----------------------- ------------- --------------
<S> <C> <C>
Director Operating Officer,
Director
Herman E. Gallegos Independent Management --
Director Consultant
Richard C. Hartnack
Vice Chairman of the Board
Shin Nakahara The Bank of Tokyo, Ltd. Resident Managing
Director Director for the Americas
Yugi Taniguchi -- --
Executive Vice President
and Director
Harry W. Low (Hon.) Judicial Arbitration & --
Director Mediation Services, Inc.
Mary S. Metz (Dr.) University Extension Dean
Director University of
California, Berkeley
Sidney R. Petersen Getty Oil Company Chairman & CEO
Director (Retired)
Kanetaka Yoshida -- --
Director, President & CEO
Robert M. Walker -- --
Vice Chairman of
the Board
Jack L. Hancock Pacific Bell Executive Vice President
(retired)
</TABLE>
C-5
<PAGE> 27
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Advisor Other Company Other Company
- ----------------------- ------------- --------------
<S> <C> <C>
Blenda J. Wilson (Dr.) California State University, President
Director Northridge
Tamotsu Yamaguchi -- --
Chairman of the Board
Takahiro Moriguchi -- --
Vice Chairman of
the Board and Chief
Financial Officer
Kenji Yoshizawa The Bank of Tokyo, Ltd. Deputy President
Director
Clark Gates Current Income Shares Director
Senior Vice President Inc.
Richard H. Earnest Current Income Shares Inc. Director
Vice President Petroleum Land Owners Director
Land Owners Royalty Director
Carl J. Colombo -- --
Vice President
James Atkinson -- --
Vice President
Clyde N. Powers -- --
Vice President
Martin D. Standish -- --
Vice President
</TABLE>
The principal business address of The Bank of Tokyo Trust Company is 100
Broadway, New York, New York 10005.
C-6
<PAGE> 28
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment SubAdvisor Other Company Other Company
- -------------------------- ------------- --------------
<S> <C> <C>
Akira Okuhata BOT Securities, Inc. Chairman & Director Director
BOT North America President & Director
International, Inc.
BOT Information Services, Chairman & Director
Inc.
Shin Nakahara Tohlease Corporation Chairman & Director
Chairman The Bank of Tokyo Canada Director
Union Bank Director
The Bank of Tokyo, Ltd. Residing Manager Director
BOT Financial Corporation Chairman & Director
BOT North America Chairman & Director
International, Inc.
Sachio Kohjima The Bank of Tokyo Ltd. Director
President and Director Tohlease Corporation Director & President
BOTT Business Services, Director & President
Inc.
BOT Information Services, Director
Inc.
C.K.M.B. Corporation Director
NPMM Realty, Inc. Director
Port Charlotte Realty Director
Holding Corporation
JCR Florida Holding Director
Corporation
Poseidon Realty Holding Director
Corporation
Woodhall Realty Holding Director
Corporation
Grant Realty Holding Director
Cosmic Realty Holding Director
Corporation
Nova Realty Holding Director
Corporation
450 NJ Corp. Director
Merit Realty Holding Director
Corporation
Arise Realty Holding Director
</TABLE>
C-7
<PAGE> 29
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Advisor Other Company Other Company
- ----------------------- ------------- --------------
<S> <C> <C>
Corporation
Spire Apartments Realty Director
Holding Corporation
Mount Olive Realty Director
Corp.
Jeff Val Corporation Director
Lang Realty Holding Director
Corporation
Arch Street Realty Director
Holding Corporation
Sovereign Market Street Director
Realty Holding Corporation
Dutchess Turnpike Realty Director
Holding Corporation
Stonybrook "347" Realty Director
Holding Corporation
Taft 50th Street Realty Director
Holding Corporation
Aurora 59 Realty Holding Director
Corporation
St. Pete Realty Holding Director
Corporation
Gulf Realty Holding Director
Corporation
Isaac Shapiro Skadden, Arps, Slate Partner
Director Meagher & Flom
Donald Riefler Niagara Mohawk Power Director
Director Corporation
Liberty Brokerage Inc. Director
Eugene McCulloch BOT Financial Corporation President & CEO
Director
James Hindenach -- --
Director
</TABLE>
C-8
<PAGE> 30
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Advisor Other Company Other Company
- ----------------------- ------------- --------------
<S> <C> <C>
Gerald Curtis Columbia University Professor
Director East Asian Institute Director
Michael Bradfield Jones, Day, Reavis Partner
Director & Pogue
Evan Greenberg American International President & CEO
Underwriters
</TABLE>
The principal address of BOT Asset Management (UK) Limited is 12-15 Finsbury
Circus, London EC2M 7BT England. BOT Asset Management (UK) Limited is an
investment adviser registered under the Advisors Act.
<TABLE>
<S> <C> <C>
Elichi Yoshimura The Bank of Tokyo, Ltd. Senior Managing Director
Director
Tadashi Kurachi " " Resident Managing
Director Director for Europe
Tadashi Yanagisawa
Director, Managing Director
and Chief Executive Officer
Fumio Hashimoto BOT Asset Management President
Director Ltd., Tokyo
Kazuro Asano The Bank of Tokyo, General Manager
Director Ltd. London Office
</TABLE>
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing the securities of the Registrant also acts as a principal
underwriter, distributor or investment adviser.
C-9
<PAGE> 31
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Compass Capital Group March 8, 1991
FFB Lexicon Funds October 18, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
The PBHG Funds, Inc. July 16, 1993
MarquisSM Funds August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
Inventor Funds, Inc. August 1, 1994
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Classic Variable Trust August 18, 1995
</TABLE>
SFS provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting
services ("Funds Evaluation") and automated execution, clearing and
settlement of securities transactions ("MarketLink").
(b) Information with respect to each director, officer or partner of each
principal underwriter named in answer to Item 21 of Part B
(Underwriters) is as follows (unless otherwise noted, the business
address of each director or officer is 680 E. Swedesford Road, Wayne,
Pennsylvania 19087):
C-10
<PAGE> 32
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer Treasurer
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice President-Capital Resources Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President and Chief
Executive Officer
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President and
Secretary Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Vic Galef Managing Director --
Kim Kirk Managing Director --
John Krzeminski Managing Director --
Carolyn McLaurin Managing Director --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Mick Duncan Team Leader --
Vicki Malloy Team Leader --
Robert Aller Vice President --
Charles Baker Vice President --
Steve Bendinelli Vice President --
Cris Brookmyer Vice President & Controller --
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary Vice President and
Assistant Secretary
Todd B. Cipperman Vice President & Assistant Secretary --
Ed Daly Vice President --
Jeff Drennen Vice President --
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Lawrence D.
</TABLE>
C-11
<PAGE> 33
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Hutchinson Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Robert S. Ludwig Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President and
Assistant Secretary
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President and
Assistant Secretary
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are
maintained at the offices of Registrant's Custodian:
CoreStates Bank, N.A.
5th and Market Street
Philadelphia, Pennsylvania 19105
State Street Bank & Trust Company
Securities Operations/Network Administration
P.O. Box 1631
Boston, Massachusetts 02105
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required
books and records are maintained at the offices of Registrant's
Administrator:
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, Pennsylvania 19087
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and
31a-1(f), the required books and records are maintained at the
principal offices of the Registrant's Adviser:
C-12
<PAGE> 34
Union Capital Advisors, A Division of Union Bank
445 South Figueroa Street
Los Angeles, California 90071
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the
Trust, the Trustees will inform such Shareholders as to the approximate number
of Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested
in writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to Shareholder
communications.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to Shareholders,
upon request and without charge.
C-13
<PAGE> 35
NOTICE
A copy of the Agreement and Declaration of Trust for Stepstone Funds
is on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Registration Statement has been executed on
behalf of the Trust by an officer of the Trust as an officer and by its
Trustees as trustees and not individually and the obligations of or arising out
of this Registration Statement are not binding upon any of the Trustees,
officers, or Shareholders individually but are binding only upon the assets and
property of the Trust.
C-14
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 (the
"Securities Act") and the Investment Company Act of 1940, the Registrant has
duly caused this Amendment No. 13 to Registration Statement No. 33-37687 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wayne, Commonwealth of Pennsylvania on the 15th day of November, 1995.
<TABLE>
<S> <C>
STEPSTONE FUNDS
By: /s/ David G. Lee
---------------------------------------------------------------
David G. Lee, President and
Chief Executive Officer
ATTEST:
/s/ Jeffrey A. Cohen
- --------------------------------------------------
Jeffrey A. Cohen, Controller
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by the following persons in the capacity on the
dates indicated.
<TABLE>
<S> <C> <C>
* Trustee November 15, 1995
- ------------------------------------------
Robert A. Nesher
* Trustee November 15, 1995
- ------------------------------------------
William R. Howell
* Trustee November 15, 1995
- ------------------------------------------
Michael L. Noel
* Trustee November 15, 1995
- ------------------------------------------
Paul L. Smith
* Trustee November 15, 1995
- ------------------------------------------
Steven K. Joiner
/s/ Jeffrey A. Cohen Controller November 15, 1995
- -----------------------------------
Jeffrey A. Cohen
/s/ David G. Lee President and Chief November 15, 1995
- ------------------------------------ Executive Officer
David G. Lee
*By: /s/ David G. Lee
-----------------------------
David G. Lee
Attorney-in-Fact
</TABLE>
C-15
<PAGE> 37
EXHIBIT INDEX
Exhibit Page
EX-99.B1 Declaration of Trust, as amended May 12, 1992
(incorporated by reference to Post-Effective Amendment
No. 3).
EX-99.B1(a) Amendment to Declaration of Trust dated March 1, 1994
(incorporated by reference to Post-Effective Amendment
No. 9).
EX-99.B2 By-Laws (incorporated by reference to Pre-Effective
Amendment No. 1).
EX-99.B3 Not Applicable.
EX-99.B4 Not Applicable.
EX-99.B5(a) Investment Advisory Agreement with Union Capital
Advisors, A Division of Union Bank (incorporated by
reference to exhibit (5)(b) to Pre-Effective Amendment
No. 2).
EX-99.B5(b) Schedule C to Investment Advisory Agreement
(incorporated by reference to exhibit (5)(c) to
Post-Effective Amendment No. 6).
EX-99.B5(c) Form of Sub-Advisory Agreement between Union Capital
Advisors and Bank of Tokyo Trust Company (incorporated
by reference to exhibit (5)(d) to Post-Effective
Amendment No. 9).
EX-99.B5(d) Form of Sub-Advisory Agreement between Union Capital
Advisors and BOT Asset Management (UK), (incorporated
by reference to exhibit (5)(e) to Post-Effective
Amendment No. 11).
EX-99.B6 Distribution Agreement (incorporated by reference to
Pre-Effective Amendment No. 2).
EX-99.B7 Not Applicable.
EX-99.B8 Custodian Agreement (incorporated by reference to
Pre-Effective Amendment No. 2).
EX-99.B8(a) Form of Foreign Custody Agreement with State Street
Bank & Trust Company (incorporated by reference to
Post-Effective Amendment No. 12).
EX-99.B9 Administration Agreement, as amended March 9, 1993
(incorporated by reference to exhibit (5)(a) to
Post-Effective Amendment No. 5).
<PAGE> 38
EX-99.B10 Opinion and Consent of Counsel (incorporated by
reference to Pre-Effective Amendment No. 2).
EX-99.B11 Consent of Independent Public Accountants, filed
herewith.
EX-99.B12 Not Applicable.
EX-99.B13 Not Applicable.
EX-99.B14 Not Applicable.
EX-99.B15 Distribution Plan - Investment Class (incorporated by
reference to Pre Effective Amendment No. 2).
EX-99.B15(b) Distribution Plan - Class C, filed herewith.
EX-99.B16 Performance Quotation Computation (incorporated by
reference to Pre-Effective Amendment No. 2).
EX-99.B18 Rule 18f-3 Plan, as amended, filed herewith.
EX-99.B24 Powers of Attorney (incorporated by reference to
Post-Effective Amendment No. 12).
<PAGE> 1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 15, 1995
included in the Post Effective Amendment No. 12 to the Registration Statement
on Form N-1A of the Stepstone Funds (No. 33-37687), and to all references to
our firm included in or made part of Registration Statement File No. 33-37687.
/s/ Arthur Andersen LLP
Philadelphia, Pa.
November 15, 1995
<PAGE> 1
DISTRIBUTION PLAN
CLASS C
STEPSTONE FUNDS
WHEREAS, Stepstone Funds (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have created a class of interests
of each separate series (each a "Fund") of the Trust, such class to be called
"Class C"; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Trust and the owners of Class C Shares ("Shareholders") in the Trust;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust is adopting this Class C Distribution Plan
("Plan") to enable the Trust to directly or indirectly bear expenses relating
to the distribution of the Class C Shares of each Fund of the Trust.
SECTION 2. The Trust may reimburse the Distributor for its
expenditures regarding distribution as set forth in Section 3 of this Plan. If
there should be more than one Fund offering Class C Shares, expenses relating
to the Class C Shares of one Fund shall be allocated to that Fund; where
otherwise, expenses incurred pursuant to this Plan shall be allocated among the
several Funds of the Trust on the basis of their relative net asset values
(unless otherwise determined by a majority of the Qualified Trustees).
In addition, the Trust will pay the Distributor a fee of .50% of the Class C
Portfolios' average daily net assets as compensation for the Distributor's
services. Compensation of broker/dealers and service providers which provide
certain of these specified services shall be made by the Distributor from such
fees. The actual fee paid to such broker/dealers and service providers will be
negotiated by the Distributor based on the extent and quality of services
provided.
SECTION 3. Expenses permitted to be expended by the Distributor and
reimbursed pursuant to this Plan shall include, and be limited to, the
following:
(a) The incremental printing costs incurred in producing for and
distributing to persons other than current Shareholders of
Class C Shares of the Trust the reports, prospectuses, notices
and similar materials that are prepared by the Trust for
current Shareholders;
<PAGE> 2
(b) advertising;
(c) the costs of preparing, printing and distributing any
literature used in connection with the offering of the Trust's
Class C Shares and not covered by Section 3(a) of this Plan;
and
(d) expenses incurred in connection with the promotion and sale of
the Trust's Shares including, without limitation, travel and
communication expenses and expenses for the compensation of
and benefits for sales personnel.
SECTION 4. This Plan shall not take effect until it has been approved
(a) by a vote of at least a majority of the outstanding voting securities of
the Trust; and (b) together with any related agreements, by votes of the
majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees,
cast in person at a Board of Trustees meeting called for the purpose of voting
on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more
than one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable or expenses reimbursed by the Trust pursuant to this Plan or
any related agreement shall provide to the Trustees of the Trust, at least
quarterly, a written report of the amounts so expended (or reimbursed) and the
purposes for which such expenditures (or reimbursements) were made.
SECTION 7. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the Trust's
outstanding voting securities.
SECTION 8. All agreements with any person relating to implementation
of this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of Shareholders holding a majority of the Trust's outstanding voting
securities, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 2 hereof without
the approval of Shareholders holding a majority of the outstanding voting
securities of the Class C Shares of each Fund of the Trust offering such Class
of Shares, and all material amendments to this Plan shall be approved in the
manner provided in Part (b) of Section 4 herein for the approval of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or
2
<PAGE> 3
indirect financial interest in the operation of this Plan or any agreements
related to it, and (b) the terms "assignment" and "interested person" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
SECTION 11. While this Plan is in effect, the selection and
nomination of those Trustees who are not interested persons of the Trust within
the meaning of Section 2(a) (19) of the 1940 Act shall be committed to the
discretion of the Trustees then in office who are not interested persons of the
Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party
to enter into an agreement with any particular person.
January ______, 1996
3
<PAGE> 1
EXHIBIT 18
STEPSTONE FUNDS
RULE 18f-3
MULTIPLE CLASS PLAN
MAY 11, 1995
The Stepstone Funds (the "Trust"), a registered investment
company that currently consists of fourteen separately-managed portfolios and
which may consist of additional portfolios in the future to the extent listed
on Schedule A hereto. (each a "Fund" and, collectively, the "Fund"), have
elected to rely on Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act") in offering multiple classes of units of beneficial
interest ("shares") in each Fund. The Plan sets forth the differences among
classes, including shareholder services, distribution arrangements, expense
allocations, and conversion or exchange options.
A. ATTRIBUTES OF SHARE CLASSES
The rights of each existing class of the Funds (i.e.,
Institutional Class and Investment Class) shall be as set forth in the
resolutions and related materials of the Trust's Board adopted pursuant to the
order dated September 9, 1993, obtained by SEI Liquid Asset Trust, at al. (Inv.
Co. Act Release No, IC-19698), and attached hereto as Exhibits A - C.
With respect to any class of shares of a Fund created after the
date hereof, each share of a Fund will represent an equal pro rata interest in
the Fund and will have identical terms and conditions, except that: (i) each
new class will have a different class name (or other designation) that
identifies the class as separate from any other class; (ii) each class will
separately bear any distribution expenses ("distribution fees") in connection
with a plan adopted pursuant to Rule 12b-1 under the 1940 Act (a "Rule 12b-1
Plan"), and will separately bear any non-Rule 12b-1 Plan service payments
("service fees") that are made under any servicing agreement entered into with
respect to that class; (iii) each class may bear, consistent with rulings and
other published statements of position by the Internal Revenue Service, the
expenses of the Fund's operations which are directly attributable to such class
("Class Expenses"); and (iv) shareholders of the class will have exclusive
voting rights regarding the Rule 12b-1 Plan and the servicing agreements
relating to such class, and will have separate voting rights on any matter
submitted to shareholders in which the interests of that class differ from the
interests of any other class. The rights of each class created after the date
hereof shall be as set forth on a separate appendix hereto.
<PAGE> 2
B. EXPENSE ALLOCATIONS
Expenses of each existing class and of each class created after
the date hereof shall be allocated as follows: (i) distribution and shareholder
servicing payments associated with any Rule 12b-1 Plan or servicing agreement
relating to each class of shares are (or will be) borne exclusively by that
class; (ii) any incremental transfer agency fees relating to a particular class
are (or will be) borne exclusively by that class; and (iii) Class Expenses
relating to a particular class are (or will be) borne exclusively by that
class.
Until and unless changed by the Board, the methodology and
procedures for calculating the net asset value of the various classes of shares
and the proper allocation of income and expenses among the various classes of
shares shall be as set forth in the "Report" rendered by Arthur Andersen, LLP.
C. AMENDMENT OF PLAN; PERIODIC REVIEW
This Plan must be amended to properly describe (through
additional exhibits hereto or otherwise) each new class of shares approved by
the Board after the date hereof.
The Board of the Trust, including a majority of the independent
Directors, must periodically review this Plan for its continued
appropriateness, and must approve any material amendment of the Plan as it
relates to any class of any Portfolio covered by the Plan.
<PAGE> 3
Schedule A
Treasury Money Market Fund
Money Market Fund
California Tax Free Money Market Fund
Growth Equity Fund
Value Momentum Fund
Balanced Fund
Intermediate-Term Bond Fund
Limited Maturity Government Fund
California Tax Free Bond Fund
Blue Chip Growth Fund
Convertible Securities Fund
Emerging Growth Fund
Government Securities Fund
International Equity Fund
<PAGE> 4
AMENDMENT #1
THE STEPSTONE FUNDS
CERTIFICATE OF CLASS DESIGNATION
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
CLASS C SHARES
1. Class-Specific Distribution Arrangements; Other Expenses.
Class C Shares are sold without a sales charge, but are subject to a
12b-1 fee. In addition to reimbursement of certain expenses, a fee will be
paid to the Distributor at an annual rate of .50% of each Fund's average daily
net assets attributable to Class C Shares as compensation for its
distribution-related services. The Distributor may retain all or some of this
payment and may pay financial institutions and intermediaries such as banks,
savings and loan associations, insurance companies, investment counselors and
broker-dealers, and which may include the Distributor's affiliates and
subsidiaries, as compensation for services in connection with distribution
assistance or provision of shareholder services.
2. Exchange Privileges.
No exchange privileges exist.
3. Voting Rights.
Each Class C shareholder will have one vote for each full Class C
Share held and a fractional vote for each fractional Class C Share held. Class
C Shareholders will be entitled to vote on issues relating to Class C
distribution expenses (including any Rule 12b-1 Plan), and on other matters
submitted to shareholders in which the interests of Class C differ from the
interests on any other class.
4. Conversion Rights.
Class C Shares do not have a conversion feature.
<PAGE> 5
EXHIBIT A TO EXHIBIT 18
beneficial interest of the Trust under the terms and conditions set
forth in the Distribution Agreement presented to this meeting.
VOTED: That the form of Distribution Agreement presented to this
meeting be, and it hereby is, approved, and that the President and
Secretary hereby are authorized to execute and deliver said Agreement
on behalf of the Trust.
VOTED: That the form of Distribution Plan presented to this meeting be, and
it hereby is, approved in accordance with Rule 12b-1 under the
Investment Company Act of 1940; provided, however, that such approval
shall not be effective unless said Plan shall have been approved by a
majority of the outstanding units of beneficial interest of the Trust
following the initial issuance of the shares of the Trust.
Mr. Howell then asked Mr. Grant to lead a discussion of certain
organizational matters relating to the Trust. Mr Grant did so, referring to
materials provided to the Trustees before the meeting. Mr. Grant began by
discussing the Trust's ability under Massachusetts law to create separate
portfolios of securities. Whereupon, upon motion duly made and seconded, it
was unanimously
VOTED: That there are hereby established the following seven initial
portfolios of the units of beneficial interest:
The Treasury Money Market Portfolio
The Money Market Portfolio
The California Tax Free Money Market Portfolio
The Growth Equity Portfolio
The Value Momentum Portfolio
The Balanced Portfolio
The Intermediate-Term Bond Portfolio
VOTED: That there are hereby established two classes of the units of
beneficial interests, Class A and Class B, of each portfolio except
the Balanced Portfolio.
Mr. Grant then described the proposed Custodian Agreement with
CoreStates Bank, N.A., noting in particular that the Custodian operated on a
delivery versus payment basis and accepted instructions only from certain
authorized persons. Mr.
-4-
<PAGE> 6
EXHIBIT B TO EXHIBIT 18
DISTRIBUTION PLAN
INVESTOR CLASS
UNION INVESTORS PORTFOLIOS
WHEREAS, Union Investors Portfolios (the "Trust") is engaged in
business as an open-end investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Trust and the owners of units of beneficial interest ("Shareholders") in the
Trust;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Investor Class Distribution
Plan ("Plan") to enable the Trust to directly or indirectly bear expenses
relating to the distribution of Investor Class securities of which the Trust
is the issuer.
SECTION 2. The Trust may incur expenses for the items stipulated in
Section 3 of this Plan. All expenditures pursuant to this Plan shall be made
only pursuant to authorization by the President, any Vice President or the
Treasurer of the Trust. If there should be more than one series of Trust shares,
expenses incurred pursuant to this Plan shall be allocated among the several
series of the Trust on the basis of their relative net asset values, unless
otherwise determined by a majority of the Qualified Trustees.
In addition, the Trust will pay the Distributor a fee of .40% of the Investor
Class Portfolios' average daily net assets. Compensation of broker/dealers and
service providers which provide specified services shall be made by the
Distributor from such fees. The actual fee paid will be negotiated based on the
extent and quality of services provided.
SECTION 3. Expenses permitted pursuant to this Plan shall include,
and be limited to, the following:
(a) The incremental printing costs incurred in producing for and
distributing to persons other than current Shareholders of the
Trust the reports, prospectuses, notices and similar materials
that are prepared by the Trust for current Shareholders;
1
<PAGE> 7
(b) advertising;
(c) the costs of preparing, printing and distributing any
literature used in connection with the offering of the Trust's
Shares and not covered by Section 3(a) of this Plan; and
(d) expenses incurred in connection with the promotion and sale of
the Trust's Shares including, without limitation, travel and
communication expenses and expenses for the compensation of
and benefits for sales personnel.
SECTION 4. This Plan shall not take effect until it has been approved
(a) by a vote of at least a majority of the outstanding voting securities of
the Trust; and (b) together with any related agreements, by votes of the
majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees,
cast in person at a Board of Trustees meeting called for the purpose of voting
on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more
than one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made.
SECTION 7. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the Trust's
outstanding voting securities.
SECTION 8. All agreements with any person relating to implementation
of this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of Shareholders holding a majority of the Trust's outstanding voting
securities, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 2 hereof without
the approval of Shareholders holding a majority of the outstanding voting
securities of the Trust, and all material amendments to this Plan shall be
approved in the
2
<PAGE> 8
manner provided in Part (b) of Section 4 herein for the approval of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the 1940
Act and the rules and regulations thereunder, subject to such exemptions as may
be granted by the Securities and Exchange Commission.
SECTION 11. While this Plan is in effect, the selection and
nomination of those Trustees who are not interested persons of the Trust within
the meaning of Section 2(a) (19) of the 1940 Act shall be committed to the
discretion of the Trustees then in office who are not interested persons of the
Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party
to enter into an agreement with any particular person.
3
<PAGE> 9
DISTRIBUTION PLAN
CLASS C
STEPSTONE FUNDS
WHEREAS, Stepstone Funds (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of
1940, as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have created a class of interests
of each separate series (each a "Fund") of the Trust, such class to be called
"Class C"; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Trust and the owners of Class C Shares ("Shareholders") in the Trust;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust is adopting this Class C Distribution Plan
("Plan") to enable the Trust to directly or indirectly bear expenses relating
to the distribution of the Class C Shares of each Fund of the Trust.
SECTION 2. The Trust may reimburse the Distributor for its
expenditures regarding distribution as set forth in Section 3 of this Plan. If
there should be more than one Fund offering Class C Shares, expenses relating
to the Class C Shares of one Fund shall be allocated to that Fund; where
otherwise, expenses incurred pursuant to this Plan shall be allocated among the
several Funds of the Trust on the basis of their relative net asset values
(unless otherwise determined by a majority of the Qualified Trustees).
In addition, the Trust will pay the Distributor a fee of .50% of the Class C
Portfolios' average daily net assets as compensation for the Distributor's
services. Compensation of broker/dealers and service providers which provide
certain of these specified services shall be made by the Distributor from such
fees. The actual fee paid to such broker/dealers and service providers will be
negotiated by the Distributor based on the extent and quality of services
provided.
SECTION 3. Expenses permitted to be expended by the Distributor and
reimbursed pursuant to this Plan shall include, and be limited to, the
following:
(a) The incremental printing costs incurred in producing for and
distributing to persons other than current Shareholders of
Class C Shares of the Trust the reports, prospectuses, notices
and similar materials that are prepared by the Trust for
current Shareholders;
<PAGE> 10
(b) advertising;
(c) the costs of preparing, printing and distributing any
literature used in connection with the offering of the Trust's
Class C Shares and not covered by Section 3(a) of this Plan;
and
(d) expenses incurred in connection with the promotion and sale of
the Trust's Shares including, without limitation, travel and
communication expenses and expenses for the compensation of
and benefits for sales personnel.
SECTION 4. This Plan shall not take effect until it has been approved
(a) by a vote of at least a majority of the outstanding voting securities of
the Trust; and (b) together with any related agreements, by votes of the
majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees,
cast in person at a Board of Trustees meeting called for the purpose of voting
on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more
than one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies
paid or payable or expenses reimbursed by the Trust pursuant to this Plan or
any related agreement shall provide to the Trustees of the Trust, at least
quarterly, a written report of the amounts so expended (or reimbursed) and the
purposes for which such expenditures (or reimbursements) were made.
SECTION 7. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the Trust's
outstanding voting securities.
SECTION 8. All agreements with any person relating to implementation
of this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of Shareholders holding a majority of the Trust's outstanding voting
securities, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 2 hereof without
the approval of Shareholders holding a majority of the outstanding voting
securities of the Class C Shares of each Fund of the Trust offering such Class
of Shares, and all material amendments to this Plan shall be approved in the
manner provided in Part (b) of Section 4 herein for the approval of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or
2
<PAGE> 11
indirect financial interest in the operation of this Plan or any agreements
related to it, and (b) the terms "assignment" and "interested person" shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
SECTION 11. While this Plan is in effect, the selection and
nomination of those Trustees who are not interested persons of the Trust within
the meaning of Section 2(a) (19) of the 1940 Act shall be committed to the
discretion of the Trustees then in office who are not interested persons of the
Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party
to enter into an agreement with any particular person.
January ______, 1996
3
<PAGE> 12
EXHIBIT C TO EXHIBIT 18
STEPSTONE FUNDS
A Family of Mutual Funds
STEPSTONE FUNDS (the "Trust") is a mutual fund that offers a convenient means of
investing in professionally managed portfolios of securities. This Prospectus
relates to the Trust's:
-- BALANCED FUND
-- VALUE MOMENTUM FUND
-- BLUE CHIP GROWTH FUND
-- GROWTH EQUITY FUND
-- EMERGING GROWTH FUND
INSTITUTIONAL CLASS
The Trust's Institutional Class Shares are offered to institutional investors,
including UNION BANK and THE BANK OF TOKYO TRUST COMPANY, their affiliates and
correspondents for the investment of their own funds or funds for which they act
in a fiduciary, agency or custodial capacity.
This Prospectus sets forth concisely the information about the Trust and the
Funds that a prospective investor should know before investing. Investors are
advised to read this Prospectus and retain it for future reference. A Statement
of Additional Information dated the same date as this Prospectus has been filed
with the Securities and Exchange Commission and is available without charge
through the Distributor, SEI Financial Services Company, 680 East Swedesford
Road, Wayne, PA 19087-1658 or by calling 1-(800) 862-6243. The Statement of
Additional Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, INCLUDING UNION BANK, THE BANK OF TOKYO TRUST COMPANY OR ANY OF
THEIR AFFILIATES OR CORRESPONDENTS. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISKS INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
JUNE 1, 1995
INSTITUTIONAL CLASS
<PAGE> 13
3
ANNUAL OPERATING EXPENSES INSTITUTIONAL CLASS
(As a percentage of offering price)
<TABLE>
<CAPTION>
VALUE BLUE CHIP GROWTH EMERGING
BALANCED MOMENTUM GROWTH EQUITY GROWTH
FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees............................. .60% .60% .60% .60% .80%
Other Expenses............................ .20% .20% .25% .20% .25%
- --------------------------------------------------------------------------------------------------------------
Total Operating Expenses(1)............... .80% .80% .85% .80% 1.05%
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) "Total Operating Expenses" for the Value Momentum and Growth Equity Funds
have been restated to reflect current expenses. "Total Operating Expenses"
would be .81% for the Value Momentum Fund and .78% for the Growth Equity
Fund.
EXAMPLE:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
1 YR. 3 YRS. 5 YRS. 10 YRS.
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000
investment, assuming (1) 5% return and (2) redemption at the
end of each time period.
Balanced Fund.................................................... $ 8 $ 26 $ 44 $ 99
Value Momentum Fund.............................................. $ 8 $ 26 $ 44 $ 99
Blue Chip Growth Fund............................................ $ 9 $ 27 $ 47 $ 105
Growth Equity Fund............................................... $ 8 $ 26 $ 44 $ 99
Emerging Growth Fund............................................. $11 $ 33 $ 58 $ 128
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE IS BASED UPON THE TOTAL OPERATING EXPENSES OF A FUND AND SHOULD NOT
BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is to assist the
investor in understanding the various costs and expenses that may be directly or
indirectly borne by investors in the Funds. Financial institutions that are the
record owner of shares for the account of their customers may impose separate
fees for account services to their customers. The information set forth in the
foregoing table and example relates only to Institutional Class shares. The
Trust also offers Investment Class shares of the Funds which are subject to the
same expenses, except that Investment Class shares are subject to sales charges
and distribution expenses.
Additional information may be found under "The Administrator", "The Advisor" and
"The SubAdvisor."
<PAGE> 14
5
THE TRUST
STEPSTONE FUNDS (formerly Union Investors Funds) (the "Trust") is a diversified
open-end management investment company that offers units of beneficial interest
("shares") in fourteen separate investment funds. Shareholders may purchase
shares in a fund through two separate classes of shares (Institutional Class and
Investment Class) which provide for variations in distribution costs, voting
rights and dividends. Except for these differences between Institutional Class
and Investment Class shares, each share of each fund represents an equal
proportionate
interest in that fund. This Prospectus relates to the Institutional Class shares
of the Trust's Growth Equity, Value Momentum, Blue Chip Growth, Emerging Growth
and Balanced Funds (each a "Fund") Information regarding the Trust's other funds
is contained in separate prospectuses that may be obtained from the Trust's
Distributor, SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658.
INVESTMENT OBJECTIVES
THE BALANCED FUND seeks to provide both capital appreciation and income.
THE VALUE MOMENTUM FUND seeks long-term capital growth with a secondary
objective of income.
THE BLUE CHIP GROWTH FUND seeks long-term capital growth by investing in a
diversified portfolio of common stocks and other equity securities of seasoned,
large capitalization companies.
THE GROWTH EQUITY FUND seeks long-term capital growth.
THE EMERGING GROWTH FUND seeks long-term growth of capital by investing in a
diversified portfolio of equity securities of small capitalization, emerging
growth companies.
There is no assurance that a Fund's investment objective will be met.
INVESTMENT POLICIES
BALANCED FUND
The Balanced Fund will invest in a combination of equity, fixed-income, and
money market securities. Under normal conditions, the Fund will invest between
50% and 70% of its total assets in equity securities, including common stocks,
warrants, and U.S. dollar denominated securities of foreign issuers, and both
preferred stock and debt securities convertible into common stocks. The Fund may
invest in a broad spectrum of common stocks with varying characteristics. All of
the common stocks in which the Fund invests (including foreign securities) are
traded on registered exchanges or the over-the-counter market or in the form of
American Depositary Receipts ("ADRs") traded on registered exchanges or NASDAQ.
The Fund may also buy and sell options, futures contracts and options on
futures. The Fund may enter into futures contracts and options on futures only
to the extent that obligations under such contracts or transactions, together
with options on securities represent not more than 25% of the Fund's assets. The
aggregate value of options on securities (long puts and calls) will not exceed
10% of a Fund's net assets at the time such options are purchased by the Fund.
Under normal conditions a minimum of 25% of the Fund's total assets will be
invested in senior fixed income securities. Such securities consist of bonds,
debentures, and similar obligations or instruments which constitute a security
and evidence indebtedness. Corporate bonds and debentures will be rated AAA, AA,
A, or BBB by Standard & Poor's Corporation ("S&P") or Aaa, Aa, A, or Baa by
Moody's Investors Service ("Moody's") or be of comparable quality at the time of
purchase as determined by the Advisor.
The Fund may also invest in mortgage-backed securities consisting of
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top two rating categories by
Moody's or S&P.
<PAGE> 15
12
$1 billion and $2 billion and .10% of assets over $2 billion. The Administrator
may waive its fee or reimburse various expenses to the extent necessary to limit
the total operating expenses of a Fund's Institutional Class shares. Any such
waiver is voluntary and may be terminated at any time in the Administrator's
sole discretion.
THE SHAREHOLDER SERVICING AGENT
SEI Financial Management Corporation serves as the transfer agent, dividend
disbursing agent, and shareholder servicing agent for the Trust. Compensation
for these services is paid under the Administration Agreement.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary of
SEI Corporation (SEI), and the Trust are parties to a distribution agreement
("Distribution Agreement"). The Distribution Agreement is renewable annually and
may be terminated by the Distributor, by a majority vote of the Disinterested
Trustees or by a majority vote of the outstanding securities of the Trust upon
not more than 60 days written notice by either party, or upon assignment by the
Distributor. Investment Class shares of a Fund may bear the costs of their
distribution expenses and, a sales charge is imposed on the sale of Investment
Class shares of the Funds. It is possible that an institution may offer
different classes of shares to its customers and thus receive different
compensation with respect to different classes of shares.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions of shares of the Funds may be made on days on which
both the New York Stock Exchange and Federal Reserve wire system are open for
business ("Business Days"). The minimum initial investment in a Fund is $2,000;
however, the minimum investment may be waived in the Distributor's discretion.
Shareholders may place orders by telephone.
Purchase orders will be effective if the Distributor receives an order before
1:00 P.M., Pacific time, and the Custodian receives Federal funds before the
close of business on the next Business Day. The purchase price of shares of a
Fund is the net asset value next determined after a purchase order is received
and accepted by the Trust. The net asset value per share of a Fund is determined
by dividing the total market value of a Fund's investments and other assets,
less any liabilities, by the total outstanding shares of a Fund. Net asset value
per share is determined daily as of 1:00 P.M., Pacific time, on any Business
Day. Purchases will be made in full and fractional shares of the Trust
calculated to three decimal places. The Trust reserves the right to reject a
purchase order when the Distributor determines that it is not in the best
interest of the Trust and/or its Shareholders to accept such order.
Shares of the Funds are offered only to residents of states in which the shares
are eligible for purchase.
Shareholders who desire to redeem shares of the Trust must place their
redemption orders prior to 1:00 P.M., Pacific time, on any Business Day for the
order to be accepted on that Business Day. The redemption price is the net asset
value of the Fund next determined after receipt by the Distributor of the
redemption order. Payment on redemption will be made as promptly as possible
and, in any event, within seven calendar days after the redemption order is
received.
Neither the Trust's transfer agent nor the Trust will be responsible for any
loss, liability, cost or expense for acting upon wire instructions or upon
telephone instructions that it reasonably believes to be genuine. The Trust and
its transfer agent will each employ reasonable procedures to confirm that
telephone instructions are genuine, and may be liable for losses resulting from
unauthorized or fraudulent telephone instructions if it does not employ these
procedures. Such procedures may include taping of telephone conversations. If
market conditions are extraordinarily active or other extraordinary
circumstances exist, and you experience difficulties placing redemption orders
by telephone, you may wish to consider placing your order by other means.
<PAGE> 16
13
PERFORMANCE
From time to time, the Funds may advertise yield and total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. The yield of a Fund refers to the annualized income generated by an
investment in the Fund over a specified 30-day period. The yield is calculated
by assuming that the same amount of income generated by the investment during
that period is generated in each 30-day period over one year and is shown as a
percentage of the investment.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including, but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain distributions.
The total return of a Fund may also be quoted as a dollar amount or on an
aggregate basis, an actual basis, without inclusion of any sales charge, or with
a reduced sales charge in advertisements distributed to investors entitled to a
reduced sales charge.
A Fund may periodically compare its performance to the performance of: other
mutual funds tracked by mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; broad groups of comparable
mutual funds; unmanaged indices which may assume investment of dividends but
generally do not reflect deductions for administrative and management costs; or
other investment alternatives. The Fund may quote Morningstar, Inc., a service
that ranks mutual funds on the basis of risk-adjusted performance. The Fund may
quote Ibbotson Associates of Chicago, Illinois, which provides historical
returns of the capital markets in the U.S. The Fund may use long term
performance of these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a hypothetical investment
in any of the capital markets. The Fund may also quote financial and business
publications and periodicals as they relate to fund management, investment
philosophy, and investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
The performance of Institutional Class shares will normally be higher than for
Investment Class shares because the Institutional Class is generally not subject
to distribution expenses generally charged to the Investment Class shares.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state, or local income tax treatment of a Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state and local income
taxes. Additional information concerning taxes is set forth in the Statement of
Additional Information.
TAX STATUS OF THE FUNDS:
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other Funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies under the Internal
Revenue Code of 1986, as amended, so that it will be relieved of federal income
tax on net investment income and net capital gain (the excess of net long-term
capital gain over net short-term capital loss) distributed to Shareholders.
<PAGE> 17
14
TAX STATUS OF DISTRIBUTIONS:
A Fund will distribute substantially all of its net investment income (including
net short-term capital gain) and net capital gain to Shareholders. Dividends
from the Fund's net investment income will be taxable to Shareholders as
ordinary income (whether received in cash or in additional shares) to the extent
of the Fund's earnings and profits. Dividends paid by the Fund to corporate
Shareholders will qualify for the deduction for dividends received by
corporations to the extent derived from dividends received by the Fund from
domestic corporations. However, the full amount of such dividends may be subject
to the alternative minimum tax. Distributions of net capital gain do not qualify
for the dividends-received deduction and are taxable to Shareholders as
long-term capital gain, regardless of how long Shareholders have held their
shares and regardless of whether the distributions are received in cash or in
additional shares. Each Fund will make annual reports to Shareholders of the
federal income tax status of all distributions.
With respect to investments in STRIPS, TR's, TIGR's and CATS which are sold at
original issue discount and thus do not make periodic cash interest payments, a
Fund will be required to include as part of its current income the imputed
interest on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because each Fund distributes
all of its net investment income to its shareholders, a Fund may have to sell
Fund securities to distribute such imputed income which may occur at a time when
the Advisor would not have chosen to sell such securities and which may result
in a taxable gain or loss.
Income derived by the Fund from obligations of foreign issuers may be subject to
foreign withholding taxes. The Fund will not be able to elect to treat
Shareholders as having paid their proportionate share of such taxes.
Dividends declared by a Fund in October, November or December of any year and
payable to Shareholders of record on a date in that month will be deemed to have
been paid by the Fund and received by the Shareholders on the last day of
December of that year, if paid by the Fund any time during the following
January.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by a Fund and may be exempt, depending on the state, when
received by a Shareholder as income dividends from a Fund provided certain
state-specific conditions are satisfied. A Fund will inform Shareholders
annually of the percentage of income and distributions derived from direct U.S.
Treasury obligations. Shareholders should consult their tax advisors to
determine whether any portion of the income dividends received from a Fund is
considered tax exempt in their particular state.
A sale, exchange, or redemption of Fund Shares is a taxable transaction to the
Shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated October 16, 1990. The Declaration of Trust permits the Trust to
offer separate portfolios of shares and different Classes of each fund. In
addition to the Funds, the Trust consists of the following funds:
Treasury Money Market Fund, Money Market Fund, California Tax Free Money Market
Fund, Intermediate-Term Bond Fund, Limited Maturity Government Fund, California
Tax Free Bond Fund, Convertible Securities Fund, Government
Securities Fund and International Equity Fund. All consideration received by the
Trust for shares of any fund and all assets of such fund belong to that fund and
would be subject to liabilities related thereto. The Trust reserves the right to
create and issue shares of additional funds.
The Trust pays its expenses, including audit and legal expenses, expenses of
preparing and printing prospectuses, proxy solicitation material and
<PAGE> 18
15
reports to Shareholders, costs of custodial services and registering the shares
under federal and state securities laws, insurance expenses, litigation and
other extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses. Please refer to "Financial Highlights" in this prospectus
for more information regarding the Trust's expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management, administrative and shareholder services
to the Trust.
VOTING RIGHTS
Each share held entitles the Shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to such fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings but approval will be sought for certain changes in the operation of the
Trust and for the election of Trustees under certain circumstances. In addition,
a Trustee may be removed by the remaining Trustees or by Shareholders at a
special meeting called upon the written request of Shareholders owning at least
10% of the outstanding shares of the Trust. Shareholders will be provided with
Shareholder communication assistance in connection with such matters.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, PA 19087-1658.
DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of a
Fund is distributed in the form of monthly dividends to Shareholders of record.
Currently, capital gains of a Fund, if any, will be distributed at least
annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, unless the Shareholder has elected to take such
payment in cash. Shareholders may change their election by providing written
notice to the Administrator at least 15 days prior to the change.
Dividends and distributions of a Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution.
The dividends payable on Institutional Class shares will be more than the
dividends payable on the Investment Class shares because of the distribution
expenses charged to Investment Class shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
PA 19101 (the "Custodian") acts as Custodian of the assets of the Fund. The
Custodian holds cash, securities and other assets of the Trust as required by
the Investment Company Act of 1940, as amended.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of the permitted investments for the Funds:
AMERICAN DEPOSITARY RECEIPTS (ADRs)-- Each Fund may purchase ADRs. ADRs are
receipts typically issued by a U.S. financial institution (a "depositary"), that
evidence ownership interest in a security or a pool of securities issued by a
foreign issuer.
