AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1996
FILE NO. 33-50718
FILE NO. 811-7102
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 15 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 17 /X/
THE ARBOR FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (800) 342-5734
DAVID G. LEE
C/O SEI CORPORATION
680 E. SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
RICHARD W. GRANT, ESQUIRE
Morgan, Lewis & Bockius LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PA 19103
It is proposed that this filing become effective (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/x/ on June 1, 1996 pursuant to paragraph (a) of Rule 485.
Registrant commenced operations on February 1, 1993. Registrant filed its
24f-2 Notice for the fiscal year ended January 31, 1996 on March 25,
1996.
<PAGE>
THE ARBOR FUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------------------------------
<S> <C> <C>
PART A Golden Oak Diversified Growth Portfolio, Golden Oak Growth and
Income Portfolio, Golden Oak Intermediate-Term Income Portfolio,
Golden Oak Michigan Tax Free Bond Portfolio and Golden Oak Prime
Obligation Money Market Portfolio
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Funds and the Trust; Investment
Objective and Policies; General
Information
Item 5. Management of the Fund General Information; The Adviser; The
Sub-Adviser; The Administrator; The
Shareholder Servicing Agent
Item 5A. Management's Discussion of
Fund Performance **
Item 6. Capital Stock and Other Securities General Information; Taxes
Item 7. Purchase of Securities Being Offered Purchase of Shares
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B Golden Oak Diversified Growth Portfolio, Golden Oak Growth and
Income Portfolio, Golden Oak Intermediate-Term Income Portfolio,
Golden Oak Michigan Tax Free Bond Portfolio and Golden Oak Prime
Obligation Money Market Portfolio
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Funds and The Trust
Item 13. Investment Objectives and Policies Investment Objective and Policies;
Investment Limitations; Non-Fundamental Policies
Item 14. Management of the Registrant The Funds and the Trust; Trustees and
Officers of the Trust; The Administrator;
The Adviser; The Sub-Adviser
Item 15. Control Persons and Principal Holders
of Securities Trustees and Officers of the Trust; The
Administrator
Item 16. Investment Advisory and Other Services The Adviser; The Sub-Adviser; The
Administrator; The Distributor; Experts
Item 17. Brokerage Allocation Portfolio Transactions; Trading Practices
and Brokerage
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;
Determination of Net Asset Value; Letter
of Intent
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield; Calculation of
Total Return
Item 23. Financial Statements Financial Information
PART A California Tax Exempt Portfolio and Institutional Tax Free Portfolio
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Shareholder Transaction
Expenses;
Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Portfolios and the Trust; Investment
Objective; Investment Policies; General
Investment Policies and Information;
Investment Limitations
Item 5. Management of the Fund General Information; The Adviser; The
Administrator; The Shareholder
Servicing Agent
Item 5A. Management's Discussion of
Fund Performance **
Item 6. Capital Stock and Other Securities General Information; Taxes
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 California Tax Exempt Portfolio and Institutional Tax Free Portfolio
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 Limitations; Non-Fundamental Policies
Item 14. Management of the Registrant Trustees and Officers of the Trust; The
Administrator; The Adviser; The Trust
Item 15. Control Persons and Principal Holders
of Securities Trustees and Officers of the Trust; The
Administrator
Item 16. Investment Advisory and Other Services The Adviser; The Administrator; The Distributor
Item 17. Brokerage Allocation Portfolio Transactions; Trading Practices
and Brokerage
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;
Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield; Calculation of
Total Return
Item 23. Financial Statements Financial Information
PART A OVB Capital Appreciation Portfolio, OVB Emerging Growth Portfolio, OVB
Government Securities Portfolio, OVB West Virginia Tax-Exempt Income Portfolio
and OVB Prime Obligations Portfolio
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Funds and the Trust; Investment
Objectives; Investment Policies and
Information; General Investment Policies
and Information; Risk Factors;
Investment Limitations and Fundamental
Policies; Description of Permitted
Investments
Item 5. Management of the Fund The Adviser; The Sub-Adviser; The
Administrator; Transfer Agent; General
Information
Item 5A. Management's Discussion of Fund
Performance **
Item 6. Capital Stock and Other Securities General Information; Taxes
Item 7. Purchase of Securities Being Offered How to Purchase Shares; How to
Exchange Shares
Item 8. Redemption or Repurchase How to Redeem Shares; How to
Exchange Shares
Item 9. Pending Legal Proceedings *
PART B OVB Prime Obligations Portfolio, OVB Capital Appreciation Portfolio, OVB
Emerging Growth Portfolio, OVB Government Securities Portfolio and OVB West
Virginia Tax-Exempt Income Portfolio
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Funds and the Trust
Item 13. Investment Objectives and Policies Additional Description of Permitted
Investments; Investment Limitations;
Non-Fundamental Policies
Item 14. Management of the Fund The Funds and the Trust; Trustees and
Officers of the Trust; The Adviser; The
Sub-Adviser; The Administrator
Item 15. Control Persons and Principal Holders
of Securities Trustees and Officers of the Trust; The
Administrator
Item 16. Investment Advisory and Other Services The Adviser; The Administrator; The Distributor
Item 17. Brokerage Allocation Fund Transactions; Trading Practices
and Brokerage
Item 18. Capital Stock and Other Securities Description of Shares; Shareholder
Liability
Item 19. Purchase, Redemption, and Pricing of
Securities Being Offered Purchase and Redemption of Shares;
Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield; Calculation of
Total Return
Item 23. Financial Statements Financial Information
PART A U.S. Government Securities Money Fund and Prime Obligations Fund
Item 1. Cover Page Cover Page
Item 2. Synopsis Expense Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Fund and the Trust; Investment
Objective and Policies; Investment
Limitations and Fundamental Policies;
Description of Permitted Investments
and Risk Factors; General Information
Item 5. Management of the Fund The Adviser; The Administrator and
Distributor; The Transfer Agent and
Custodian; General Information
Item 5A. Management's Discussion of Fund
Performance **
Item 6. Capital Stock and Other Securities General Information; Taxes
Item 7. Purchase of Securities Being Offered How to Purchase Shares
Item 8. Redemption or Repurchase How to Redeem Shares
Item 9. Pending Legal Proceedings *
PART B U.S. Government Securities Money Fund and Prime Obligations Fund
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Fund and The Trust
Item 13. Investment Objectives and Policies Additional Description of Permitted
Investments; Investment Limitations;
Non-Fundamental Policies
Item 14. Management of the Fund The Fund and the Trust; Trustees and
Officers of the Trust; The Adviser; The
Administrator; The Distributor
Item 15. Control Persons and Principal Holders Trustees and Officers of the
of Securities Trust; The Administrator
Item 16. Investment Advisory and Other Services The Adviser; The Administrator; The Distributor
Item 17. Brokerage Allocation Fund Transactions; Trading Practices
and Brokerage
Item 18. Capital Stock and Other Securities Description of Shares; Shareholder
Liability
Item 19. Purchase, Redemption, and Pricing of
Securities Being Offered Purchase and Redemption of Shares;
Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Computation of Yield
Item 23. Financial Statements *
</TABLE>
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
** Information required by Item 5A is included in the 1996 Annual Report to
Shareholders
<PAGE>
The Prospectus of the Golden Oak Diversified Growth, Golden Oak Growth and
Income, Golden Oak Intermediate-Term Income, Golden Oak Michigan Tax Free Bond
and Golden Oak Prime Obligation Money Market Portfolios, included as part of
Post-Effective Amendment No. 14 to the Registrant's Registration Statement on
form N-1A (File Nos. 33-50718 and 811-7102), filed with the Securities and
Exchange Commission on March 29, 1996 pursuant to Rule 485(a) under the
Securities Act of 1933, as amended (the "1933 Act"), is incorporated by
reference as if set forth in full herein.
The Statement of Additional Information of the Golden Oak Diversified Growth,
Golden Oak Growth and Income, Golden Oak Intermediate-Term Income, Golden Oak
Michigan Tax Free Bond and Golden Oak Prime Obligation Money Market Portfolios,
included as part of Post-Effective Amendment No. 14 to the Registrant's
Registration Statement on form N-1A (File Nos. 33-50718 and 811-7102), filed
with the Securities and Exchange Commission on March 29, 1996 pursuant to Rule
485(a) under the 1933 Act, is incorporated by reference as if set forth in full
herein.
The Prospectus of the California Tax Exempt and Institutional Tax Free
Portfolios, included as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on form N-1A (File Nos. 33-50718 and
811-7102), filed with the Securities and Exchange Commission on March 29, 1996
pursuant to Rule 485(a) under the 1933 Act, is incorporated by reference as if
set forth in full herein.
The Statement of Additional Information of the California Tax Exempt and
Institutional Tax Free Portfolios, included as part of Post-Effective Amendment
No. 14 to the Registrant's Registration Statement on form N-1A (File Nos.
33-50718 and 811-7102), filed with the Securities and Exchange Commission on
March 29, 1996 pursuant to Rule 485(a) under the 1933 Act, is incorporated by
reference as if set forth in full herein.
The Prospectus of the OVB Capital Appreciation, OVB Emerging Growth, OVB
Government Securities OVB West Virginia Tax-Exempt Income and OVB Prime
Obligations Portfolios, included as part of Post-Effective Amendment No. 14 to
the Registrant's Registration Statement on form N-1A (File Nos. 33-50718 and
811-7102), filed with the Securities and Exchange Commission on March 29, 1996
pursuant to Rule 485(a) under the Securities Act of 1933, is incorporated by
reference as if set forth in full herein.
The Statement of Additional Information of the OVB Capital Appreciation, OVB
Emerging Growth, OVB Government Securities OVB West Virginia Tax-Exempt Income
and OVB Prime Obligations Portfolios, included as part of Post-Effective
Amendment No. 14 to the Registrant's Registration Statement on form N-1A (File
Nos. 33-50718 and 811-7102), filed with the Securities and Exchange Commission
on March 29, 1996 pursuant to Rule 485(a) under the 1933 Act, is incorporated by
reference as if set forth in full herein.
The Prospectus of the U.S. Government Securities Money Fund and Prime
Obligations Fund included as part of Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on Form N-1A (File Nos. 33-50718 and
811-7102), filed with the Securities and Exchange Commission on March 29, 1996
pursuant to Rule 485(a) under the 1933 Act, is incorporated by reference as if
set forth in full herein.
The Statement of Additional Information of the U.S. Government Securities Money
Fund and Prime Obligations Fund included as part of Post-Effective Amendment No.
14 to the Registrant's Registration Statement on Form N-1A (File Nos. 33-50718
and 811-7102), filed with the Securities and Exchange Commission on March 29,
1996 pursuant to Rule 485(a) under the 1933 Act, is incorporated by reference as
if set forth in full herein.
<PAGE>
THE OVB FAMILY OF FUNDS
Investment Adviser:
ONE VALLEY BANK, NATIONAL ASSOCIATION
OVB Equity Income Portfolio
THE OVB FAMILY OF FUNDS IS A GROUP OF PROFESSIONALLY MANAGED MUTUAL FUNDS THAT
OFFERS A CONVENIENT AND ECONOMICAL MEANS OF INVESTING IN ONE OR MORE PORTFOLIOS
OF SECURITIES. THIS PROSPECTUS OFFERS CLASS A AND CLASS B SHARES OF THE OVB
EQUITY INCOME PORTFOLIO (THE "PORTFOLIO").
The Portfolio offers its Class A shares to institutional investors, including
One Valley Bank, National Association ("One Valley"), its affiliates and
correspondents, for the investment of their own funds or funds for which they
act in a fiduciary, agency or custodial capacity. The Portfolio offers its
Class B shares to individuals and institutional accounts, including accounts
for which One Valley, its affiliates and correspondents, act in an agency or
custodial capacity.
THE SHARES OFFERED HEREBY ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, INCLUDING ONE VALLEY OR ANY OF ITS AFFILIATES OR
CORRESPONDENTS. THE 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 RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL.
This Prospectus sets forth concisely the information about the Portfolio that a
prospective investor should know before investing. The Portfolio is a separate
series of The Arbor Fund. Investors are advised to read this Prospectus and
retain it for future reference. A Statement of Additional Information dated
June 1, 1996 has been filed with the Securities and Exchange Commission and
is available without charge by calling 1-800-545-6331. 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.
June 1, 1996
<PAGE>
SUMMARY
THE OVB FAMILY OF FUNDS IS A GROUP OF OPEN-END MANAGEMENT INVESTMENT COMPANIES
PROVIDING A CONVENIENT WAY TO INVEST IN PROFESSIONALLY MANAGED PORTFOLIOS OF
SECURITIES. THE FOLLOWING SUMMARY PROVIDES BASIC INFORMATION ABOUT THE CLASS A
AND CLASS B SHARES OF THE OVB EQUITY INCOME PORTFOLIO (THE "PORTFOLIO"). THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF
ADDITIONAL INFORMATION.
What is the Investment Objective? The EQUITY INCOME PORTFOLIO seeks current
income, with the secondary goal of moderate capital appreciation. There can be
no assurance that the Portfolio will achieve its investment objective. See
"Investment Objective."
What are the Permitted Investments? The EQUITY INCOME PORTFOLIO invests
primarily in dividend-paying common stocks, preferred stocks and preferred
stocks and debt securities convertible into common stocks of large- and medium-
sized U.S. and foreign companies that, provide a level of income which is
greater than the average income provided by the Standard & Poor's 500 Composite
Index. See "Investment Objective," "Investment Policies and Information,"
"General Investment Policies and Risk Factors" and "Description of Permitted
Investments."
Who is the Adviser? One Valley Bank, National Association (the "Adviser"),
serves as the investment adviser for the Portfolio. See "Expense Summary" and
"The Adviser."
Who is the Administrator? SEI Financial Management Corporation serves as the
administrator and shareholder servicing agent for the Portfolio. See "Expense
Summary" and "The Administrator."
Who is the Transfer Agent? DST Systems, Inc. serves as the transfer agent and
dividend disbursing agent for the Portfolio. See "The Transfer Agent."
Who is the Distributor? SEI Financial Services Company serves as distributor
of the Portfolio's shares. See "The Distributor."
2
<PAGE>
Is There a Sales Charge? No. Shares of the Portfolio are offered on a no-
load basis.
How do I Purchase and Redeem Shares? The Portfolio offers two classes of
shares, Class A and Class B. The minimum initial investment in Class A shares
is $100,000. The minimum initial investment in Class B shares is $1,000, and
subsequent investments must be at least $50; minimum investment requirements
are lower for accounts established under tax-deferred programs (such as IRAs).
Purchases and redemptions of either class may be made through representatives
of the Adviser or directly through the Transfer Agent on days when the New York
Stock Exchange and Federal Reserve wire system are open for business ("Business
Days"). Class B shares may be purchased through a systematic investment plan.
The purchase price and redemption price for Class A and Class B shares is their
net asset value determined as of the end of the day the purchase or redemption
order is effective. See "How to Purchase Shares" and "How to Redeem Shares."
How are Distributions Paid? Substantially all of the net investment income
(exclusive of capital gain) for the Portfolio is distributed in the form of
periodic dividends. Any realized net capital gain is distributed at least
annually. Distributions are paid in additional shares unless the shareholder
elects to take the payment in cash. See "General Information--Dividends."
3
<PAGE>
EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION FEES EQUITY INCOME
<S> <C> <C>
CLASS A CLASS B
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Maximum Sales Charge Imposed on Purchases None None
Sales Charge Imposed on Reinvested Dividends None None
Deferred Sales Charge None None
Redemption Fees None None(1)
Exchange Fee None None
- ----------------------------------------------------------------
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</TABLE>
(1) There is a $10 fee for wiring Class B redemption proceeds.
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES: CLASS A SHARES
(as a percentage of Equity
average net assets) Income
- -----------------------------------
<S> <C>
Advisory Fees (after fee
waiver)(2) .66%
12b-1 Fees none
Other Expenses(3) .54%
- -----------------------------------
Total Operating Expenses
(after fee waiver)(4) 1.20%
- -----------------------------------
- -----------------------------------
</TABLE>
(2) The Adviser has agreed to waive, on a voluntary basis, a portion of its fee,
and the advisory fee shown reflects this voluntary waiver. The Adviser
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, advisory fees for the Portfolio would be
.74%.
(3) The administration fee is based on a minimum annual fee of $100,000.
Administration fees as a percentage of average daily net assets will decline
to .20% at net asset levels of $50 million and above. "Other Expenses" is
based on estimated amounts for the current fiscal year.
(4) Absent the Adviser's voluntary fee waiver, total operating expenses for
Class A shares of the Portfolio would be 1.28% of average daily net assets
on an annualized basis.
4
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES: CLASS B SHARES
(as a percentage of Equity
average net assets) Income
- -----------------------------------
<S> <C>
Advisory Fees (after fee
waiver)(5) .66%
12b-1 Fees .25%
Other Expenses(6) .54%
- -----------------------------------
Total Operating Expenses
(after fee waiver)(7) 1.45%
- -----------------------------------
- -----------------------------------
</TABLE>
(5) The Adviser has agreed to waive, on a voluntary basis, a portion of its fee,
and the advisory fee shown reflects this voluntary waiver. The Adviser
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, advisory fees for the Portfolio would be
.74%.
(6) The administration fee is based on a minimum annual fee of $100,000.
Administration fees as a percentage of average daily net assets will decline
to .20% at net asset levels of $50 million and above. "Other Expenses" is
based on estimated amounts for the current fiscal year.
(7) Absent the Adviser's voluntary fee waiver, total operating expenses for
Class B shares of the Portfolio would be 1.53% of average daily net assets
on an annualized basis.
<TABLE>
<S> <C> <C> <C> <C> <C>
EXAMPLE
- --------------------------------------------------------------------
You 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:
<CAPTION>
1 YR. 3 YRS.
- --------------------------------------------------------
<S> <C> <C> <C>
Equity Income Portfolio Class A $ 12 $ 38
Class B $ 15 $ 46
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- --------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of the expense table and example is to assist investors in
understanding the various costs and expenses that may be directly or
indirectly borne by shareholders of the Portfolio. An investor who purchases
shares through a financial institution may be charged separate fees by that
institution.
Long-term Class B shareholders may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
5
<PAGE>
THE FUNDS AND THE TRUST
The OVB Family of Funds (the "OVB Family") is a group of open-end management
investment companies that are offered together to provide investors with a
number of investment alternatives. Each of the portfolios is a separate series
("portfolios") of shares of The Arbor Fund (the "Trust"), an open-end
management investment company. Shareholders may purchase units of beneficial
interest ("shares") in a portfolio through two separate classes, Class A and
Class B, which provide for variations in distribution costs, related voting
rights and dividends. Except for these differences between classes, each share
of each Portfolio represents an undivided, proportionate interest in that
Portfolio. This Prospectus offers only the Class A and Class B shares of the OVB
Equity Income Portfolio (the "Portfolio"). The Portfolio is a diversified
portfolio.
INVESTMENT OBJECTIVE
THE EQUITY INCOME PORTFOLIO--
The investment objective of the EQUITY INCOME PORTFOLIO is current income, with
the secondary goal of moderate capital appreciation. There can be no assurance
that the Portfolio will be able to achieve its investment objective.
INVESTMENT POLICIES AND INFORMATION
OVB EQUITY INCOME PORTFOLIO
The EQUITY INCOME PORTFOLIO will, under normal market conditions, invest at
least 65% of its total assets in dividend-paying common stocks, preferred
stocks, and preferred stocks and debt securities convertible into common stock
of U.S. and foreign issuers. These equity securities may include American
Depository Receipts ("ADRs") and warrants and rights to purchase common stocks.
Any remaining assets may be invested in the following securities, but only if,
at the time of purchase, the security either has the requisite rating from a
nationally recognized statistical rating organization ("NRSRO") or is of
comparable quality as determined by the Adviser: (i) U.S. Government securities,
(ii) mortgage-backed securities rated in one of the four highest rating
categories, (iii) asset-backed securities rated in one of the four highest
rating categories, (iv) corporate bonds and notes and bank obligations rated in
one of the four highest rating categories, (v) Money Market Instruments (as
defined under "General Investment Policies and Risk Factors") and (vi) to the
extent permitted by applicable law, shares of other investment companies. Under
applicable law, the Portfolio may not invest more than 10% of its total assets
in shares of other investment companies in the aggregate, and investment in such
shares may result in layering of expenses. Debt rated in the fourth highest
category by an NRSRO lacks outstanding investment characteristics and in fact
has speculative characteristics as well.
In addition, the Portfolio may purchase such securities that do not pay current
dividends but which offer prospects for growth of capital and future income. The
Portfolio is not subject to any maturity restrictions on its investment in
non-Money Market Instruments.
The Adviser will generally select for the Portfolio securities of companies with
market capitalizations in excess of $1 billion that provide a level of income
which is greater than the average income provided by the Standard & Poor's 500
Composite Index ("S&P 500 Index"). The Portfolio will purchase fixed income
securities only if they are rated investment grade (i.e. in one of the four
----
highest rating categories) by an NRSRO or are of comparable quality as
determined by the Adviser. The Adviser also intends to maintain for the
Portfolio an aggregate beta (a measure of a stock's volatility in relation to
the S&P 500 Index) and price/earnings ratio less than the S&P 500 Index average.
The Adviser believes that under normal circumstances the average portfolio
turnover rate for the Portfolio will be less than 50% annually.
All of the equity securities in which the Portfolio invests (including foreign
securities) are traded in the United States or Canada either on registered
exchanges or actively in the over-the-counter market.
6
<PAGE>
GENERAL INVESTMENT POLICIES AND RISK FACTORS
The Portfolio may purchase mortgage-backed securities ("MBSs"). In addition to
MBSs that are U.S. Government securities, the Portfolio may purchase privately
issued collateralized mortgage obligations ("CMOs"), a type of MBS, and real
estate mortgage investment conduits ("REMICs"), a type of CMO, that are rated by
an NRSRO in one of the four highest rating categories. The principal
governmental issuers or guarantors of MBSs are the Government National
7
<PAGE>
Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"),
and Federal Home Loan Mortgage Corporation ("FHLMC"). Obligations of GNMA are
backed by the full faith and credit of the United States Government while
obligations of FNMA or FHLMC are supported by their respective issuer only. The
Portfolio may purchase MBSs that are backed or collateralized by fixed,
adjustable or floating rate mortgages. For a further description of MBSs and
the risks associated with investing in them, see "Description of Permitted
Investments" in this Prospectus and "Description of Permitted Investments" in
the Statement of Additional Information.
The Portfolio may invest in variable and floating rate obligations, engage in
forward commitments or purchase securities on a when-issued basis. In addition,
the Portfolio may engage in options and futures transactions (including options
on futures), in either case for hedging purposes. The aggregate value of option
positions may not exceed 10% of the Portfolio's net assets as of the time the
Portfolio enters into such options. The Portfolio also may use short sales
"against the box" for hedging purposes.
The Portfolio reserves the right to engage in securities lending, although it
does not currently intend to do so.
The Portfolio may invest a portion of its assets in the following money market
instruments ("Money Market Instruments"): short-term U.S. Government securities;
receipts evidencing separately traded interest and principal component parts of
U.S. Government obligations ("Receipts"); time deposits, certificates of deposit
and bankers' acceptances issued by U.S. commercial banks or savings and loan
institutions having assets of at least $500 million as shown on their most
recently available audited financial statements; commercial paper that, at the
time of purchase, is either rated in one of the two highest rating categories by
an NRSRO or of comparable quality as determined by the Adviser; and repurchase
agreements involving the foregoing securities. In addition, the Portfolio may,
to the extent permitted by applicable law, invest in shares of other investment
companies. Under applicable law, the Portfolio may not invest more than 10% of
its total assets in shares of other investment companies, and investments in
such shares may result in layering of expenses. Further discussion of the
Portfolio's ability to invest in such shares is set out in the Statement of
Additional Information. In addition, for temporary defensive purposes when the
Adviser determines that market conditions warrant, the Portfolio may invest up
to 100% of its assets in Money Market Instruments and cash. To the extent a
Portfolio is investing for temporary defensive purposes, the Portfolio will not
be pursuing its investment objective.
For a further description of these types of obligations or transactions, see
"Description of Permitted Investments" in this Prospectus and "Description of
Permitted Investments" in the Statement of Additional Information.
In the event that a security owned by the Portfolio is downgraded below the
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rating categories discussed above, the Adviser will review the circumstances and
take action it deems appropriate with respect to such security.
RISK FACTORS
EQUITY SECURITIES--Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
convertible equity securities is also affected by prevailing interest rates, the
credit quality of the issuer and any call provision. Fluctuations in the value
of equity securities in which the Portfolio invests will cause the net asset
value of the Portfolio to fluctuate. An investment in the Portfolio may be more
suitable for long-term investors who can bear the risk of short-term principal
fluctuations.
FIXED INCOME SECURITIES--The market value of the fixed income investments in
which the Portfolio invests will change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal also affect the value of these
investments. Changes in the value of these securities will not necessarily
affect cash income derived from these securities but will affect a Portfolio's
net asset value. The Portfolio may invest in securities rated in the fourth
highest category by an NRSRO; such securities, while still investment grade, are
considered to have speculative characteristics. See "Description of Ratings" in
the Statement of Additional Information.
SECURITIES OF FOREIGN ISSUERS--Investments in the securities of foreign issuers
may subject the Portfolio to investment risks that differ in some respects from
those related to investments in securities of U.S. issuers. Such risks include
future adverse political and economic developments, possible imposition of
withholding taxes on income, possible seizure, nationalization or expropriation
of foreign deposits, possible establishment of exchange controls or taxation at
the source or greater fluctuation in value due to changes in exchange rates.
Foreign issuers of securities often engage in business practices different from
those of domestic issuers of similar securities, and there may be less
information publicly available about foreign issuers. In addition, foreign
issuers are, generally speaking, subject to less government supervision and
regulation and different accounting treatment than are those in the United
States. American Depositary Receipts, typically issued by a U.S. financial
institution, evidence ownership of underlying securities of a foreign issuer.
MORTGAGE-BACKED SECURITIES--The MBSs in which the Portfolio may invest are
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subject to prepayment of the underlying mortgages. During periods of declining
interest rates, prepayment of mortgages underlying MBSs can be expected to
accelerate. When the MBSs held by the Portfolio are prepaid, the Portfolio must
reinvest the proceeds in securities the yield of which reflects prevailing
interest rates, which may be lower than the yield on the prepaid MBS.
GOVERNMENT SECURITIES--Any guaranty by the U.S. Government, its agencies or
instrumentalities of the securities in which the Portfolio invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Portfolio.
INVESTMENT LIMITATIONS AND FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of the Portfolio.
In addition, the Portfolio's investment objective is a fundamental policy.
Fundamental policies of the Portfolio cannot be changed without the consent of
the holders of a majority of the Portfolio's outstanding shares.
The Portfolio may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if, as a result, more than 5% of the total
assets of the Portfolio would be invested in the securities of such issuer or
the Portfolio would own more than 10% of the outstanding voting securities of
such issuer. This restriction applies to 75% of the Portfolio's assets
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For purposes of this limitation, a security is considered to be issued by the
government entity (or entities) whose assets and revenues back the security;
with respect to a private activity bond that is backed only by the assets and
revenues of a non-governmental user, a security is considered to be issued by
such non-governmental user. For purposes of this limitation, all debt securities
of an issuer are each considered as one class.
2. Purchase any securities that would cause more than 25% of the total assets of
the Portfolio 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 obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities, repurchase
agreements involving such securities, and obligations issued by domestic
branches of U.S. banks or U.S. branches of foreign banks subject to the same
regulations as U.S. banks. For purposes of this limitation, (a) utility
companies will be classified according to their services, for example, gas, gas
transmission, electric and telephone will each be considered a separate
industry; (b) financial service companies will be classified according to the
end users of their services, for example, automobile finance, bank finance and
diversified finance will each be considered a separate industry; (c)
supranational entities will be considered to be a separate industry; and (d)
asset-backed securities secured by distinct types of assets, such as truck and
auto loan leases, credit card receivables and home equity loans, will each be
considered a separate industry.
3. Make loans, except that the Portfolio 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.
THE ADVISER
One Valley Bank, National Association ("One Valley" or the "Adviser"), serves
as investment adviser to the Portfolio pursuant to an investment advisory
agreement (the "Advisory Agreement") with the Trust. Under the Advisory
Agreement, the Adviser is responsible for the investment decisions for the
Portfolio, and the Adviser continuously reviews, supervises and administers
the Portfolio's investment program. The Adviser is independent of SEI
Financial Management Corporation (the "Administrator") and discharges its
responsibilities subject to the supervision of, and policies established by,
the Trustees of the Trust.
One Valley, a national banking association, is the successor to Kanawha Valley
Bank, N.A., organized in 1867. One Valley has its principal offices at One
Valley Square, Charleston, West Virginia 25301. One Valley is a wholly-owned
subsidiary of One Valley Bancorp of West Virginia, Inc., a multi-bank holding
company. One Valley is the largest single bank headquartered in West Virginia,
and provides a wide variety of financial services in multiple locations
throughout the state. The Adviser has provided investment advisory services to
investment companies since 1993.
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One Valley, together with its predecessor institutions, has provided trust and
asset management services since the early 1920s and has managed common and
collective investment funds since 1968. One Valley's portfolio managers serve
bank common funds, employee benefit funds and personal trust accounts, managing
assets in money market, equity, and fixed income portfolios. As of December 31,
1994, One Valley's Investment Asset Management Group had assets under management
of approximately $1.2 billion, and currently manages $344.7 million of assets in
common trust and mutual funds with diverse investment objectives ranging from
stability of capital to aggressive growth.
John E. Bennett, Jr. has been the portfolio manager for the Portfolio since its
inception. Mr. Bennett joined the Adviser in June, 1986 and has managed various
equity and fixed income portfolios and an equity common trust fund. Prior to
joining the Adviser, Mr. Bennett was a financial analyst with the West Virginia
Healthcare Cost Review Authority.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .74% of the Portfolio's average daily net
assets. The Adviser has voluntarily agreed to waive a portion of its fees in
order to limit the total operating expenses of Class A and Class B shares of the
Portfolio (exclusive of distribution expenses charged to Class B shares) to not
more than 1.20% of the Portfolio's average daily net assets on an annualized
basis. The Adviser reserves the right, in its sole discretion, to terminate its
voluntary fee waiver and reimbursement at any time.
The Glass-Steagall Act restricts the securities activities of banks such as the
Adviser, 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.
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THE ADMINISTRATOR
SEI Financial Management Corporation, 680 East Swedesford Road, Wayne,
Pennsylvania 19087, a wholly-owned subsidiary of SEI Corporation ("SEI"),
provides the Portfolio with administrative services, other than investment
advisory services, including all regulatory reporting, necessary office space,
equipment, personnel, and facilities pursuant to an administration agreement
with the Trust (the "Administration Agreement"). The Administrator also serves
as the shareholder servicing agent of the Trust under the terms of the
Administration Agreement.
For its services, the Administrator is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .20% of the average daily net
assets of the Portfolio. There is a minimum annual fee of $100,000 payable to
the Administrator by the Portfolio.
THE TRANSFER AGENT
DST Systems, Inc., P.O. Box 419947, Kansas City, Missouri 64141-6947 (the
"Transfer Agent") serves as the transfer agent and dividend disbursing agent
for the Portfolio under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary
of SEI, serves as the distributor of the Portfolio's shares pursuant to a
distribution agreement with the Trust (the "Distribution Agreement"), which
applies to Class A and Class B shares of the Portfolio.
The Class B shares of the Portfolio have a distribution plan (the "Class B
Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"). As provided in the Distribution Agreement and the
Class B Plan, the Trust will pay a fee, at an annual rate of .25% of each Class
B Portfolio's average daily net assets to the Distributor as compensation for
its services. From this amount the Distributor may make payments to financial
institutions and intermediaries such as banks (including One Valley), savings
and loan associations, insurance companies, investment counselors, broker-
dealers and the Distributor's affiliates and subsidiaries as compensation for
services, reimbursement of expenses incurred in
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connection with distribution assistance or provision of shareholder services.
The Class B Plan is characterized as a compensation plan since the distribution
fee will be paid to the Distributor without regard to the distribution or
shareholder service expenses incurred by the Distributor or the amount of
payments made to financial institutions and intermediaries. The Trust intends
to operate the Class B Plan in accordance with its terms and with the rules
concerning sales charges of the National Association of Securities Dealers,
Inc.
The Portfolio may also execute brokerage or other agency transactions through
an affiliate of the Adviser or through the Distributor for which the affiliate
or the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
The Class A shares of the Portfolio are offered without distribution fees to
institutional investors, including One Valley, its affiliates and correspondent
banks, for the investment of funds for which they act in a fiduciary, agency or
custodial capacity. 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. These financial institutions may also
charge separate fees to their customers.
Certain financial institutions offering shares to their customers may be
required to register as dealers pursuant to state laws.
The Distributor may, from time to time and at its own expense, provide
promotional incentives in the form of cash or other compensation to certain
financial institutions and intermediaries whose registered representatives have
sold or are expected to sell significant amounts of the shares of the Portfolio.
Such other compensation may take the form of payments for travel expenses,
including lodging, incurred in connection with trips taken by qualifying
registered representatives to places within or outside of the United States.
HOW TO PURCHASE SHARES
You may purchase shares of the Portfolio through representatives of One Valley
and other financial institutions and through broker-dealers that have
established a dealer agreement with the Distributor. You may also purchase
shares of the Portfolio directly, by contacting the Transfer Agent. Class A
shares may be purchased only by wire transfer. Class B shares may be purchased
by mail, by wire transfer, or through an automatic investment plan. Shares of
the Portfolio are sold on a continuous basis.
BY MAIL (CLASS B SHARES ONLY)
You may purchase Class B shares of the Portfolio by completing and signing an
Account Application form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "The Arbor Fund--OVB
Equity Income Portfolio", to the Transfer Agent at 811 Main Street, P.O. Box
419947, Kansas City, Missouri 64141-6947. You may purchase additional shares at
any time by mailing a check (or other negotiable bank draft or money order) to
the Transfer Agent. Orders placed by mail will be executed on receipt of your
check or other negotiable bank draft or money order.
You may obtain Account Application forms by calling 1-800-545-6331.
BY WIRE TRANSFER (CLASS A AND CLASS B SHARES)
If your Account Application has been previously received, you may purchase
shares by wire transfer. To buy shares by wire transfer, call the Transfer
Agent toll-free at 1-800-808-4920.
The liability of the Trust or the Transfer Agent for fraudulent or unauthorized
telephone or wire instructions may be limited, as described below under
"Redemption of Shares--By Telephone."
AUTOMATIC INVESTMENT PLAN ("AIP") (CLASS B SHARES ONLY)
You may arrange for periodic additional investments in Class B shares of the
Portfolio through automatic deductions by Automated Clearing House ("ACH") from
a checking account by completing an AIP Application Form. The minimum pre-
authorized investment amount is $100 per month. An AIP Application Form may be
obtained by contacting the Transfer Agent at 1-800-808-4920. The AIP is
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available only for additional investments for an existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase shares of the Portfolio on any day the New York Stock Exchange
and the Federal Reserve wire system are open for business ("Business Days").
However, shares of the Portfolio cannot be purchased by Federal Reserve wire on
federal holidays restricting wire transfers. The minimum initial investment in
Class A shares of the Portfolio is $100,000 and the minimum initial investment
in Class B shares is $1,000 ($500 minimum for tax-deferred retirement programs
and employees of One Valley or its affiliates). Subsequent purchases of shares
must be at least $50 except for purchases through the AIP, which must be at
least $100. The Trust may waive these minimum investments at its discretion.
A purchase order for Class A or Class B shares will be effective as of the
Business Day received if the Transfer Agent receives the order and payment in
federal funds before 4:00 p.m., Eastern time. An order to purchase shares by
federal funds wire will be deemed to have been received on the Business Day of
the wire, provided that the shareholder notifies the Transfer Agent prior to
4:00 p.m., Eastern time. If the Transfer Agent does not receive notice by 4:00
p.m., Eastern time on the Business Day of the wire, the order will be executed
on the next Business Day. The purchase price of shares of the Portfolio is the
net asset value per share next computed after the order is effective. The net
asset value per share of the Portfolio is determined as of the close of business
of the New York Stock Exchange (currently, 4:00 p.m., Eastern time on any
Business Day). Pursuant to guidelines adopted and maintained by the Trustees of
the Trust, the Portfolio may use pricing services to provide market quotations
or fair market valuations. A pricing service may derive such valuations through
the use of a matrix system to value fixed income securities that considers
factors such as securities prices, yield features, ratings and developments
related to a specific security. No certificates representing shares will be
issued. Purchases will be made in full and fractional shares of the Portfolio
calculated to three decimal places. Although the methodology and procedures for
determining net asset value are identical for both classes of the Portfolio, the
net asset value per share of Class A shares may differ from that of Class B
shares because of the distribution expenses paid by Class B shares.
The Trust reserves the right to reject a purchase order for shares of the
Portfolio when the Distributor or Transfer Agent determines that it is not in
the best interest of the Trust or its shareholders to accept such order. Shares
of the Portfolio are offered only to residents of states in which the shares
are eligible for purchase.
If a check received for a purchase of Class B shares does not clear, the
purchase will be canceled and the investor could be liable for any losses or
fees incurred.
Purchases may be made by direct deposit or ACH transactions.
Shareholders of record who desire to transfer registration of their shares
should contact the Transfer Agent at 1-800-808-4920.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares of the Portfolio may also be purchased through financial institutions,
including the Adviser, that provide distribution assistance or shareholder
services to the Portfolio. Shares purchased by persons ("Customers") through
financial institutions may be held of record by the financial institution.
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Financial institutions may impose an earlier cut-off time for receipt of
purchase orders directed through them to allow for processing and transmittal
of these orders to the Transfer Agent for effectiveness the same day. Customers
should contact their financial institution for information as to that
institution's procedures for transmitting purchase, exchange or redemption
orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish such change.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. The financial institution will
provide Customers with information concerning these services and any charges.
TAX-DEFERRED RETIREMENT PROGRAMS
The Portfolio is eligible for investment by tax-deferred retirement programs
such as IRAs, KEOGHs and 401(k) plans. For accounts established under such
programs the minimum initial investment in Class B shares of these Portfolios is
$500. One Valley offers a variety of tax-deferred programs through which
investors may purchase shares of the Portfolio. Accounts established under tax-
deferred retirement programs must have all dividends reinvested in the
Portfolio.
HOW TO EXCHANGE SHARES
Once your account has been established, you may exchange your Class A or Class B
shares for the same class of shares of the other portfolios of the OVB Family.
Exchanges are made at net asset value. You must have received a current
prospectus of the portfolio into which you wish to move your investment (the
"new" fund) before the exchange will be effected. Exchanges will be made only
after the Transfer Agent receives exchange instructions in writing or by
telephone (an "Exchange Request"). If the Transfer Agent receives an Exchange
Request in good order by 4:00 p.m., Eastern time on any Business Day, the
exchange will occur on that day. The exchange privilege may be exercised only in
those states where the class or shares of the new fund may legally be sold.
If your shares are held of record by a financial institution, you should
contact that institution if you wish to exchange shares. The institution will
contact the Transfer Agent and effect the exchange on your behalf.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
An exchange is considered a sale of shares and will result in a capital gain or
loss for federal income tax purposes.
HOW TO REDEEM SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a charge (currently $10) for wiring redemption proceeds of Class B
shares; this amount will be deducted from your redemption proceeds. Class A
shares may be redeemed by calling the Transfer Agent at 1-800-808-4920. Class B
shares may ordinarily be redeemed by mail, by telephone, or through a
systematic withdrawal plan. If your shares are held of record by a financial
institution, you should contact that financial institution for information on
how to redeem shares.
BY MAIL (CLASS B SHARES ONLY)
A written request for redemption must be received by the Transfer Agent in good
form in order to constitute a valid redemption request. Valid written
redemption requests will be effective on receipt. All shareholders of record
must sign the redemption request.
The Transfer Agent may require that the signatures on the written redemption
request be guaranteed. The signature guarantee requirement will be waived
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if all of the following conditions apply: (1) the redemption is for not more
than $5,000 worth of shares, (2) the redemption check is payable to the
shareholder(s) of record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust and the Transfer
Agent reserve the right to amend these requirements without notice. For
information about the proper form of redemption requests, call 1-800-808-4920.
You may have redemption proceeds mailed to a commercial bank account previously
designated on your Account Application or by written instruction to the
Transfer Agent. There is no charge for having redemption proceeds mailed to a
designated bank account.
BY TELEPHONE (CLASS A SHARES)
You may redeem your shares by telephone if you have elected that option on your
Account Application. You must place your telephone redemption order with the
Transfer Agent at 1-800-808-4920 prior to 4:00 p.m., Eastern time on any
Business Day for your order to be effective that day. You may not close your
account by telephone.
You may have the proceeds mailed to your address of record or mailed or wired
to a commercial bank account previously designated on your Account Application.
There is no charge for having redemption proceeds mailed to you or to a
designated bank account.
You may request a wire redemption for redemptions in excess of $500 by calling
the Transfer Agent at 1-800-808-4920. There is no charge for wire redemptions of
Class A shares. Shares cannot be redeemed by Federal Reserve wire on federal
holidays restricting wire transfers.
Neither the Trust nor the Transfer Agent 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 the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market conditions are
extraordinarily active, or severe weather or other emergencies exist, and you
experience difficulties placing redemption orders by telephone, you may wish to
consider placing your order by other means, such as mail or overnight delivery.
SYSTEMATIC WITHDRAWAL PLAN ("SWP") (CLASS B SHARES ONLY)
You may use this option to receive regular distributions from your account. Upon
commencement of the SWP, your account must have a current value of $10,000 or
more. You may elect to receive automatic payments (via check or ACH wire
transaction) of $50 or more on a monthly, quarterly, semi-annual or annual
basis. You may obtain a SWP Application Form by contacting the Transfer Agent at
1-800-808-4920.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could
be exhausted entirely. If the amount in your account with the Portfolio falls
below the minimum initial purchase amount, the Portfolio has the right to
redeem your shares. See "Other Information Regarding Redemptions."
You may change or cancel the SWP at any time on written notice to the Transfer
Agent.
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OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after a valid request for redemption is effective, as described
above. Net asset value per share is determined as of the close of business of
the New York Stock Exchange (currently, 4:00 p.m., Eastern time) on any
Business Day. Because shares of the Portfolio fluctuate in value, when you
redeem your shares, they may be worth more or less than the amount of your
original investment.
Payment to shareholders for shares redeemed will be made within seven days
after the Transfer Agent receives the valid redemption request. Under most
circumstances, proceeds of telephone redemptions will be transmitted on the
next Business Day following receipt of a valid request for redemption. At
various times, however, the Portfolio may be requested to redeem Class B shares
for which it has not yet received good payment. In such circumstances,
redemption proceeds will be forwarded upon collection of payment for the
shares; collection of payment may take 10 or more days.
The Portfolio intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, you may incur brokerage costs in converting such
securities to cash.
Due to the relatively high costs of handling small investments, the Portfolio
reserves the right to redeem your shares at their net asset value if, because of
redemptions, your account in the Portfolio has a value of less than the
applicable minimum initial purchase amount. Accordingly, if you purchase shares
of the Portfolio in only the minimum investment amount, you may be subject to
involuntary redemption if you redeem any shares. Before the Portfolio exercises
its right to redeem your shares, you will be given notice that the value of the
shares in your account is less than the minimum amount and will be allowed 60
days to make an additional investment in the Portfolio in an amount that will
increase the value of your account to at least the minimum amount.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
PERFORMANCE
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From time to time, the Portfolio may advertise yield and total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made concerning actual future
yields or returns. The yield of the Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified 30-day period. The
yield is calculated by assuming that the 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 the Portfolio refers to the average compounded rate of
return to a hypothetical investment for designated time periods (including but
not limited to the period from which the Portfolio commenced operations through
the specified date), assuming that the entire investment is redeemed at the end
of each period and assuming the reinvestment of all dividend and capital gain
distributions.
The performance of Class A shares of the Portfolio will normally be higher
than that of Class B shares because Class A shares are not subject to
distribution expenses charged to Class B shares.
The Portfolio may periodically compare its performance to the performance of
other mutual funds tracked by mutual fund rating services, broad groups of
comparable mutual funds, or unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs.
TAXES
The following summary of federal and state 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 the
Portfolio or its shareholders. Accordingly, shareholders are urged to consult
their tax advisers regarding specific questions as to federal, state and local
income taxes.
TAX STATUS OF THE PORTFOLIO
The Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other series. The Portfolio intends to
qualify for the special tax treatment afforded regulated investment companies as
defined under the Internal Revenue Code of 1986, as amended (the "Code"). So
long as the Portfolio qualifies for this special tax treatment, it will be
relieved of federal income tax on that part of its net investment income
(including, for this purpose, net short-term capital gain) and net capital gain
(the excess of net long-term capital gain over net short-term capital loss) that
it distributes to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Portfolio will distribute all of its net investment income (including, for
this purpose, net short-term 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. Any net capital gain will be
distributed at least annually and will be taxed to a shareholder as long-term
capital gain, regardless of how long the shareholder has held shares. The
Portfolio will make annual reports to shareholders of the federal income tax
status of all distributions.
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Dividends paid by the Portfolio to corporate shareholders are expected to
qualify for the dividends-received deduction to the extent the Portfolio's
dividends derive from dividends the Portfolio received from domestic
corporations. The full amount of these dividends, however, may be subject to the
federal alternative minimum tax. Distributions of net capital gain will not
qualify for this deduction.
Ordinarily, shareholders will include in income all dividends declared by the
Portfolio in the year those dividends are paid. However, dividends declared by
the Portfolio in October, November or December of any year and payable to
shareholders of record on a date in one of those months will be deemed to have
been paid by the Portfolio and received by the shareholders on December 31 of
that year if paid by the Portfolio any time during the following January.
Interest received on U.S. Treasury obligations is exempt from income tax at the
state level when received directly and may be exempt, depending on the state,
when received by a shareholder from the Portfolio provided certain conditions
are satisfied. Interest received on repurchase agreements collateralized by U.S.
Treasury obligations normally is not exempt from state taxation. The Portfolio
will inform shareholders annually of the percentage of income and distributions
derived from U.S. Treasury obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Portfolio is considered tax exempt in their particular states.
Certain securities the Portfolio may purchase (such as STRIPS, TRs, TIGRs and
CATS, defined under "Description of Permitted Investments") are sold with
original issue discount and do not make periodic cash interest payments. The
Portfolio will be required to include as part of its current income the accrued
discount on such obligations even though the Portfolio has not received any
interest payments on such obligations during that period. Because the
Portfolio distributes all of its net investment income to its shareholders, the
Portfolio may have to sell portfolio securities to distribute such accrued
income, which may occur at a time when the Adviser would not have chosen to
sell such securities and which may result in a taxable gain or loss.
The Portfolio intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for federal excise tax.
Income that the Portfolio derives from obligations of foreign issuers may be
subject to foreign withholding taxes. The Portfolio 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 the Portfolio's shares is a taxable event to
the shareholder.
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GENERAL INFORMATION
THE TRUST
The Trust is an open-end management investment company that has diversified and
non-diversified portfolios. The Trust is organized as a Massachusetts business
trust under a Declaration of Trust dated July 24, 1992. The Declaration of
Trust permits the Trust to offer separate portfolios of shares and different
classes of shares within each portfolio.
All consideration received by the Trust for shares of any portfolio and all
assets of such portfolio belong to that portfolio and are subject to
liabilities related thereto. The Trust reserves the right to create and issue
shares of additional portfolios.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including 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 of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each portfolio
or class will vote separately on matters relating solely to that portfolio or
class. As a Massachusetts business trust, the Trust is not required to hold
annual meetings of shareholders but shareholders' 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 written
request of shareholders owning at least 10% of the outstanding shares of the
Trust. In the event that such a meeting is requested, the Trust will provide
appropriate assistance and information to the shareholders requesting the
meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to The OVB Family of Funds, c/o
DST Systems, Inc., P.O. Box 419240, Kansas City, Missouri 64141-6240.
DIVIDENDS
The net investment income (not including capital gain) of the Portfolio is
declared quarterly and paid quarterly. Shareholders of record on the date each
dividend is declared will be entitled to receive the dividend. Currently,
capital gains of the Portfolio, if any, will be distributed at least annually.
Shares of the Portfolio are eligible to begin earning dividends that are
declared on the Business Day after the purchase order is effective and continue
to be eligible for dividends through and including the day the redemption order
is effective.
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Dividends and distributions of the Portfolio are paid on a per share basis.
The value of each share will be reduced by the amount of the payment. If you
purchase shares shortly before the record date for a dividend or distribution
of capital gain, you will pay the full price for the shares and receive some
portion of the price back as a taxable dividend or capital gain distribution.
You will automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, unless you have elected to take such payment in
cash. You may change your election by providing written notice to the Transfer
Agent at least 15 days prior to the distribution.
The amount of dividends payable on Class A shares will be more than those
payable on Class B shares because of the distribution fees paid by Class B
shares.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Price Waterhouse LLP
serves as the independent accountants of the Trust.
CUSTODIAN
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 (the "Custodian"), acts as custodian of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the 1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS
The following is a description of permitted investments for one or more of the
Portfolios:
AMERICAN DEPOSITARY RECEIPTS ("ADRs")--ADRs are securities, typically issued by
a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation
by the issuer of the receipt's underlying security. Holders of an unsponsored
depositary receipt generally bear all the costs of the unsponsored facility.
The depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
ASSET-BACKED SECURITIES--Asset-backed securities are securities secured by non-
mortgage assets such as company receivables, truck and auto loans, leases and
credit card receivables. Such securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt instruments, which
are also known as collateralized obligations and are generally issued as the
debt of a special purpose entity, such as a trust, organized solely for the
purpose of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by the United States
Government, its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the issuers
of such securities. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, there is a risk that another party could acquire an
interest in the obligations superior to that of the holders of the asset-backed
securities. There also is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on those
securities. Asset-backed securities entail prepayment risk, which may vary
depending on the type of asset, but is generally less than the prepayment risk
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associated with mortgage-backed securities. In addition, credit card receivables
are unsecured obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.
BANKERS' ACCEPTANCES--Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT--Certificates of deposit are interest-bearing
instruments with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER--Commercial paper is a term used to describe unsecured short-
term promissory notes issued by corporations and other entities. Maturities on
these issues vary from a few to 270 days.
CONVERTIBLE SECURITIES--Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed-
income and equity securities. Because of the conversion feature, the market
value of a convertible security tends to move with the market value of the
underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
FUTURES AND OPTIONS ON FUTURES--Futures contracts provide for the future sale
by one party and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price. An option on a
futures contract gives the purchaser the right, in exchange for a premium, to
assume a position in a futures contract at a specified exercise price during
the term of the option. A Portfolio may use futures contracts and related
options for bona fide hedging purposes, to offset changes in the value of
securities held or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to a particular market
or instrument. A Portfolio will minimize the risk that it will be unable to
close out a futures contract by only entering into futures contracts which are
traded on national futures exchanges.
Stock index futures are futures contracts for various stock indices that are
traded on registered securities exchanges. A stock index futures contract
obligates the seller to deliver (and the purchaser to take) an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements
in interest rates, (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Portfolio and the prices
of futures and options on futures, (3) there may not be a liquid secondary
market for a futures contract or option, (4) trading restrictions or
limitations may be imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and futures options.
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INVESTMENT COMPANIES--Because of restrictions on direct investment by U.S.
entities in certain countries, investment in other investment companies may be
the most practical or only manner in which an international and global fund can
invest in the securities markets of those countries. The Portfolio does not
intend to invest in other investment companies unless, in the judgment of its
advisers, the potential benefits of such investments exceed the associated costs
relative to the benefits and costs associated with direct investments in the
underlying securities.
Investments in closed-end investment companies may involve the payment of
substantial premiums above the net asset value of such issuer's portfolio
securities, and are subject to limitations under the 1940 Act. As a shareholder
in an investment company, the Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
The Portfolio may also incur tax liability to the extent it invests in the stock
of a foreign issuer that constitutes a "passive foreign investment company."
MORTGAGE-BACKED SECURITIES--Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed-rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.
Government Pass-Through Securities: These securities that are issued or
guaranteed by a U.S. Government agency represent an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC obligations are not backed
by the full faith and credit of the U.S. Government as GNMA certificates are,
but FNMA and FHLMC securities are supported by the instrumentalities' right to
borrow from the U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and FNMA also each
guarantees timely distributions of scheduled principal. FHLMC has in the past
guaranteed only the ultimate collection of principal of the underlying mortgage
loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold PCs)
which also guarantee timely payment of monthly principal reductions. Government
and private guarantees do not extend to the securities' value, which is likely
to vary inversely with fluctuations in interest rates.
Private Pass-Through Securities: These are mortgage-backed securities issued by
a nongovernmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduits ("REMICs") that are rated in one of the top two rating
categories. While they are generally structured with one or more types of
credit enhancement, private pass-through securities typically lack a guarantee
by an entity having the credit status of a governmental agency or
instrumentality.
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Collateralized Mortgage Obligations ("CMOs"): CMOs are debt obligations or
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans.
In a CMO, series of bonds or certificates are usually issued in multiple
classes. Principal and interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
Each class of a CMO, often referred to as a "tranche," is issued with a
specific fixed or floating coupon rate and has a stated maturity or final
distribution date. Principal payments on the underlying mortgage assets may
cause CMOs to be retired substantially earlier than their stated maturities or
final distribution dates, resulting in a loss of all or part of any premium
paid.
REMICs: A REMIC is a CMO that qualifies for special tax treatment under the
Code and invests in certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in REMICs, which are known
as "regular" interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC represent beneficial
ownership interests in a REMIC trust consisting principally of mortgage loans or
FNMA, FHLMC or GNMA-guaranteed mortgage pass-through certificates. For FHLMC
REMIC Certificates, FHLMC guarantees the timely payment of interest, and also
guarantees the payment of principal as payments are required to be made on the
underlying mortgage participation certificates. FNMA REMIC Certificates are
issued and guaranteed as to timely distribution of principal and interest by
FNMA.
Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and REMICs are structured
to provide payments of principal on each payment date to more than one class.
These simultaneous payments are taken into account in calculating the stated
maturity date or final distribution date of each class, which must be retired
by its stated maturity date or final distribution date, but may be retired
earlier. Planned Amortization Class CMOs ("PAC Bonds") generally require
payments of a specified amount of principal on each payment date. PAC Bonds are
always parallel pay CMOs with the required principal payment on such securities
having the highest priority after interest has been paid to all classes.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-only class ("IO"),
while the other class may receive all of the principal payments and is thus
termed the principal-only class ("PO"). The value of IOs tends to increase as
rates rise and decrease as rates fall; the opposite is true of POs. SMBs are
extremely sensitive to changes in interest rates because of the impact thereon
of prepayment of principal on the underlying mortgage securities can experience
wide swings in value in response to changes in interest rates and associated
mortgage prepayment rates. During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a consistent basis.
The market for SMBs is not as fully developed as other markets; SMBs therefore
may be illiquid.
Risk Factors: Due to the possibility of prepayments of the underlying mortgage
instruments, mortgage-backed securities generally do not have a known maturity.
In the absence of a known maturity, market participants generally refer to an
estimated average life. An average life estimate is a function of an assumption
regarding anticipated prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other factors. The
assumption is necessarily subjective, and thus different market participants
can produce different average life estimates with regard to the same security.
There can be no assurance that estimated average life will be a security's
actual average life.
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OPTIONS--A put option gives the purchaser of the option the right to sell, and
the writer the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an "opening transaction."
In order to close out an option position, a Portfolio may enter into a "closing
transaction"-- the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
The Portfolio may purchase put and call options to protect against a decline in
the market value of the securities in its portfolio or to anticipate an increase
in the market value of securities that the Portfolio may seek to purchase in the
future. A Portfolio purchasing put and call options pays a premium therefor. If
price movements in the underlying securities are such that exercise of the
options would not be profitable for the Portfolio, loss of the premium paid may
be offset by an increase in the value of the Portfolio's securities or by a
decrease in the cost of acquisition of securities by the Portfolio.
The Portfolio may write covered call options as a means of increasing the yield
on its portfolio and as a means of providing limited protection against
decreases in its market value. When a Portfolio sells an option, if the
underlying securities do not increase or decrease to a price level that would
make the exercise of the option profitable to the holder thereof, the option
generally will expire without being exercised and the Portfolio will realize as
profit the premium received for such option. When a call option of which a
Portfolio is the writer is exercised, the Portfolio will be required to sell the
underlying securities to the option holder at the strike price, and will not
participate in any increase in the price of such securities above the strike
price. When a put option of which a Portfolio is the writer is exercised, the
Portfolio will be required to purchase the underlying securities at the strike
price, which may be in excess of the market value of such securities.
The Portfolio may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices
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than are available for exchange-traded options. Because OTC options are not
traded on an exchange, pricing is done normally by reference to information
from a market maker. It is the position of the Securities and Exchange
Commission that OTC options are generally illiquid.
The Portfolio may purchase and write put and call options on foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage
its exposure to exchange rates. Call options on foreign currency written by a
Portfolio will be "covered," which means that the Portfolio will own an equal
amount of the underlying foreign currency. With respect to put options on
foreign currency written by a Portfolio, the Portfolio will establish a
segregated account with its custodian bank consisting of cash or liquid, high
grade debt securities in an amount equal to the amount the Portfolio would be
required to pay upon exercise of the put.
The Portfolio may purchase and write put and call options on indices and enter
into related closing transactions. Put and call options on indices are similar
to options on securities except that options on an index give the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of the underlying index is greater than (or less than, in the case of
puts) the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
option, expressed in dollars multiplied by a specified number. Thus, unlike
options on individual securities, all settlements are in cash, and gain or loss
depends on price movements in the particular market represented by the index
generally, rather than the price movements in individual securities. A
Portfolio may choose to terminate an option position by entering into a closing
transaction. The ability of a Portfolio to enter into closing transactions
depends upon the existence of a liquid secondary market for such transactions.
All options written on indices must be covered. When a Portfolio writes an
option on an index, it will establish a segregated account containing cash or
liquid high grade debt securities with its Custodian in an amount at least
equal to the market value of the option and will maintain the account while the
option is open or will otherwise cover the transaction.
RISK FACTORS--Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Portfolio will receive a
premium when it writes covered call options, it may not participate fully in a
rise in the market value of the underlying security.
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RECEIPTS--Receipts 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 investments.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a
Portfolio obtains a security and simultaneously commits to return the security
to the seller at an agreed upon price on an agreed upon date within a number of
days from the date of purchase. The Custodian will hold the security as
collateral for the repurchase agreement. The Portfolio bears a risk of loss in
the event the other party defaults on its obligations and the Portfolio is
delayed or prevented from its right to dispose of the collateral securities or
if the Portfolio realizes a loss on the sale of the collateral securities. The
Portfolio will enter into repurchase agreements only with financial
institutions deemed to present minimal risk of bankruptcy during the term of
the agreement based on established guidelines. Repurchase agreements are
considered loans under the 1940 Act.
SECURITIES LENDING--In order to generate additional income, a Portfolio may
lend the securities in which it owns, pursuant to agreements requiring that the
loan be continuously secured by collateral consisting of cash, securities of
the U.S. Government or its agencies equal to at least 100% of the market value
of the securities lent. A Portfolio continues to receive interest on the
securities lent while simultaneously earning interest on the investment of cash
collateral. Collateral is marked to market daily. There may be risks of delay
in recovery of the securities or even loss of rights in the collateral should
the borrower of the securities fail financially or become insolvent.
SECURITIES OF FOREIGN ISSUERS--There are certain risks connected with investing
in foreign securities. These include risks of adverse political and economic
developments (including possible governmental seizure or nationalization of
assets), the possible imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting requirements, the
possibility that there will be less information on such securities and their
issuers available to the public, the difficulty of obtaining or enforcing court
judgments abroad, restrictions on foreign investments in other jurisdictions,
difficulties in
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effecting repatriation of capital invested abroad, and difficulties in
transaction settlements and the effect of delay on shareholder equity. Foreign
securities may be subject to foreign taxes, and may be less marketable than
comparable U.S. securities. The value of a Portfolio's investments denominated
in foreign currencies will depend on the relative strengths of those currencies
and the U.S. dollar, and a Portfolio may be affected favorably or unfavorably
by changes in the exchange rates or exchange control regulations between
foreign currencies and the U.S. dollar. Changes in foreign currency exchange
rates also may affect the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment income and gains
if any, to be distributed to shareholders by a Portfolio.
SHORT SALES--Selling securities short involves selling securities the seller
does not own (but has borrowed) in anticipation of a decline in the market
price of such securities. To deliver the securities to the buyer, the seller
must arrange through a broker to borrow the securities and, in so doing, the
seller becomes obligated to replace the securities borrowed at their market
price at the time of replacement. In a short sale, the proceeds the seller
receives from the sale are retained by a broker until the seller replaces the
borrowed securities. The seller may have to pay a premium to borrow the
securities and must pay any dividends or interest payable on securities until
they are replaced.
A Portfolio may only sell securities short "against the box." A short sale is
"against the box" if, at all times during which the short position is open, the
Portfolio owns at least an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issuer as the securities that are sold short.
A Portfolio may also maintain short positions in forward currency exchange
transactions, which involve the Portfolio's agreement to exchange currency that
it does not own at that time for another currency at a future date and
specified price in anticipation of a decline in the value of the currency sold
short relative to the currency that the Portfolio has contracted to receive in
the exchange. To ensure that any short position of a Portfolio is not used to
achieve leverage, a Portfolio establishes with its custodian a segregated
account consisting of cash or liquid, high grade debt securities equal to the
fluctuating market value of the currency as to which any short position is
being maintained.
TIME DEPOSIT--Time deposits are non-negotiable receipt issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid securities.
U.S. GOVERNMENT AGENCIES--Obligations issued or guaranteed by agencies of the
U.S. Government, including, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Postal Service. Some of these securities are
supported by the full faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association), others are supported by the right of the issuer
to borrow from the Treasury (e.g., Federal Farm Credit Bank), while still
others are supported only by the credit of the instrumentality (e.g., Federal
National Mortgage Association). Guarantees of principal by agencies or
instrumentalities of the U.S. Government may be a guarantee of payment at the
maturity of the obligation so that in the event of a default prior to maturity
there might not be a market and thus no means of realizing on the obligation
prior to maturity.
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Guarantees as to the timely payment of principal and interest do not extend to
the value or yield of these securities nor to the value of a Portfolio's
shares.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of 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").
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain obligations may carry variable
or floating rates of interest, and may involve a conditional or unconditional
demand feature. Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or indices. The interest
rate on these securities may be reset daily, weekly, quarterly or by 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 actually
reflect existing market interest rates. A demand instrument with a demand
notice exceeding seven days may be considered illiquid if there is no secondary
market for such security.
WARRANTS--Warrants are instruments giving holders the right, but not the
obligation, to buy shares of a company at a given price during a specified
period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
A Portfolio will maintain with the Custodian a separate account with liquid
high grade debt securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities is fixed as of the
purchase date and no interest accrues to a Portfolio before settlement. These
securities are subject to market fluctuation due to changes in market interest
rates and it is possible that the market value at the time of settlement could
be higher or lower than the purchase price if the general level of interest
rates has changed. Although a Portfolio generally purchases securities on a
when-issued or forward commitment basis with the intention of actually
acquiring securities, a Fund may dispose of a when-issued security or forward
commitment prior to settlement if it deems appropriate.
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 4
The Funds and the Trust..................................................... 6
Investment Objective........................................................ 6
Investment Policies and Information......................................... 6
General Investment Policies and Risk Factors................................ 7
Investment Limitations and Fundamental Policies............................. 10
The Adviser................................................................. 11
The Administrator........................................................... 13
The Transfer Agent.......................................................... 13
The Distributor............................................................. 13
How to Purchase Shares...................................................... 14
How to Exchange Shares...................................................... 16
How to Redeem Shares........................................................ 16
Performance................................................................. 18
Taxes....................................................................... 19
General Information......................................................... 21
Description of Permitted Investments........................................ 22
</TABLE>
<PAGE>
Prospectus
June 1, 1996
OVB-F-___-__
Equity Income
Portfolio
<PAGE>
Trust: The Arbor Fund
Portfolio: OVB Equity Income Portfolio
Investment Adviser: One Valley Bank, National Association
Statement of Additional Information
This Statement of Additional Information is not a prospectus; it provides
information about the activities and operations of the OVB Equity Income
Portfolio (the "Portfolio"). This Statement of Additional Information should be
read in conjunction with the Portfolio's Prospectus dated June 1, 1996. A
Prospectus may be obtained by calling 1-800-545-6331.
TABLE OF CONTENTS
THE FUNDS AND THE TRUST. . . . . . . . . . . . . . . . . . . S-2
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . S-2
DESCRIPTION OF RATINGS . . . . . . . . . . . . . . . . . . . S-6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . S-10
NON-FUNDAMENTAL POLICIES . . . . . . . . . . . . . . . . . . S-11
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . S-11
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . S-12
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . S-12
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . S-13
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . S-15
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . S-16
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . S-16
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . S-17
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . S-19
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . S-19
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . S-21
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . S-21
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . S-21
5% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . S-22
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . S-22
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . S-22
June 1, 1996
OVB-F-003-[03]
<PAGE>
THE FUNDS AND THE TRUST
This Statement of Additional Information relates to the OVB Equity Income
Portfolio (the "Portfolio") of the OVB Family of Funds (the "Funds"), a group of
mutual funds. The Portfolio is a separate series of The Arbor Fund (the
"Trust"). The Trust is an open-end management investment company established
under Massachusetts law as a "Massachusetts business trust" under an Agreement
and Declaration of Trust dated as of July 24, 1992 (the "Declaration of Trust").
The Declaration of Trust permits the Trust to offer separate series of units of
beneficial interest ("shares") and different classes of shares of each series.
Each series is a separate mutual fund. Except for differences between the Class
A and Class B shares of the Portfolio pertaining to dividends, voting rights and
distribution plans, each share of the Portfolio represents an equal
proportionate interest in the Portfolio. See "Description of Shares."
Capitalized terms not defined herein are defined in the Prospectus. No
investment in shares of the Portfolio should be made without first reading the
Prospectus.
DESCRIPTION OF PERMITTED INVESTMENTS
Bank Obligations
The Portfolio is not prohibited from investing in obligations of banks that are
clients of SEI Corporation ("SEI"). However, the purchase of shares of the
Portfolio by such banks or by their customers will not be a consideration in
determining which bank obligations the Portfolio will purchase. The Portfolio
will not purchase obligations of the Adviser.
Foreign Securities
The Portfolio may invest in certain U.S. dollar denominated obligations or
securities of foreign issuers.
Foreign securities may subject the Portfolio to investment risks that differ in
some respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks.
Government National Mortgage Association ("GNMA") Certificates
The Portfolio may invest in securities issued by GNMA, a wholly-owned U.S.
Government corporation that guarantees the timely payment of principal and
interest. The market value and interest yield of these instruments can vary due
to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally insured
mortgage loans. GNMA certificates consist of underlying mortgages with a maximum
maturity of 30 years. However, due to scheduled and unscheduled principal
payments, GNMA certificates have a shorter average maturity and, therefore, less
principal volatility than a comparable 30-year bond. Since prepayment rates vary
widely, it is not possible to predict accurately the average maturity of a
particular GNMA pool. The scheduled monthly interest and principal payments
relating to mortgages in the pool will be "passed through" to investors. GNMA
securities differ from conventional bonds in that principal is paid back to the
certificate holders over the life of the loan rather than at maturity. As a
result, there will be monthly scheduled payments of principal and interest. In
addition, there may be unscheduled principal payments representing prepayments
on the underlying mortgages. Although GNMA certificates may offer yields higher
than those available from other types of U.S. Government securities, GNMA
certificates may be less effective than other types of securities as a means of
"locking in" attractive long-term rates because of the prepayment feature. For
instance, when interest rates decline, the value of a GNMA certificate likely
will not rise as much as comparable debt securities due to the prepayment
feature. In addition, these prepayments can cause the price of a GNMA
certificate originally purchased at a premium to decline in price to its par
value, which may result in a loss.
Investment Company Shares
The Portfolio may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Portfolio. The Portfolio's purchase of such investment
company securities results in the layering of expenses, such that shareholders
would indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Portfolio
expenses. Under applicable regulations, the Portfolio is prohibited from
acquiring the securities of another investment company if, as a result of such
acquisition: (1) the Portfolio owns more than 3% of the total voting stock of
the other company; (2) securities issued by any one investment company represent
more than 5% of the Portfolio's total assets; or (3) securities (other than
treasury stock) issued by all investment companies represent more than 10% of
the total assets of the Portfolio. See also "Investment Limitations."
It is the position of the staff of the Securities and Exchange Commission that
certain nongovernmental issuers of CMOs and REMICs constitute investment
companies pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"), and either (a) investments in such instruments are subject to the
limitations set forth above or (b) the issuers of such instruments have received
orders from the Securities and Exchange Commission exempting such instruments
from the definition of investment company.
Options and Futures
Options on Securities and Indices -- The Portfolio may trade put and call
options on permitted investments and related indices to a limited extent. Among
the strategies the Adviser may use for the Portfolio are: buying protective puts
on securities owned by the Portfolio, buying fiduciary calls on securities the
Portfolio is attempting to buy, and writing covered calls on securities the
Portfolio owns. The Portfolio may also buy puts and calls, and write covered
calls, on securities indices.
The Portfolio may buy protective put options. The Portfolio may benefit from
buying the protective put if the price of the security already held by the
Portfolio falls during the option period, because the Portfolio may exercise the
put and receive the higher exercise price for its security. However, if the
security rises in value, the Portfolio will have paid a premium for the put
which will expire unexercised.
The Portfolio may buy fiduciary call options on securities that the Portfolio is
trying to buy. The Portfolio may benefit from buying the fiduciary call if the
price of the underlying security rises during the option period, because the
Portfolio may exercise the call and buy the security for the lower exercise
price. If, however, the security falls in value, the Portfolio will have paid a
premium for the call which will expire worthless, but will be able to buy the
security at a lower price.
The Portfolio may write covered call options. The advantage to the Portfolio of
writing covered call options is that the Portfolio receives additional income in
the form of the premium. However, if the optioned security rises in value, the
Portfolio may not fully participate in that market appreciation. To "cover" a
call option it writes on a securities index (or indices), the Portfolio must
hold securities whose price changes are expected by the Adviser to replicate the
price changes of that index or indices.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing
transaction. A closing transaction cannot be effected with respect to an option
once the option writer has received an exercise notice for such option.
The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.
Risks of Transactions in Options on Securities and Indices -- The successful use
of the Portfolio's options strategies depends on, among other things, the
Adviser's ability to forecast interest rate and market movements correctly.
When it purchases an option, the Portfolio runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Portfolio exercises the option or enters into a closing transaction with respect
to the option during the life of the option. If the price of the underlying
security or index does not rise (in the case of a call) or fall (in the case of
a put) to an extent sufficient to cover the option premium and transaction
costs, the Portfolio will lose part or all of its investment in the option. This
risk differs from the risk involved with an investment by the Portfolio in the
underlying securities, since the Portfolio may continue to hold its investment
in those securities notwithstanding the lack of a change in price of those
securities. In addition, the Portfolio incurs the risk in writing covered calls
on indices that changes in the prices of the securities being used to "cover"
will not duplicate precisely the movements of the indices.
The effective use of options also depends on the Portfolio's ability to
terminate option positions at times when the Adviser deems it desirable to do
so. Although the Portfolio will take an option position only if the Adviser
believes a liquid secondary market exists for the option, there is no assurance
that such a market does or will continue to exist. If a secondary trading market
in options were to become unavailable, the Portfolio could no longer engage in
closing transactions; even when a liquid secondary market does generally exist,
there can be no assurance that the Portfolio will be able to effect a closing
transaction on a given option at any particular time or at an acceptable price.
Lack of investor interest might adversely affect the liquidity of the market for
particular options or series of options. A marketplace may discontinue trading
of a particular option or options generally. In addition, a market could become
temporarily unavailable if unusual events, such as volume in excess of trading
or clearing capability, were to interrupt normal market operations. A
marketplace may at times find it necessary to impose restrictions on particular
types of options transactions, which may limit the Portfolio's ability to
realize its profits or limit its losses.
Disruptions in the markets for the securities underlying options (or underlying
indices on which options are based) purchased or sold by the Portfolio could
result in losses on the options. If trading is interrupted in an underlying
security, the trading of options on that security is normally halted as well. As
a result, the Portfolio as purchaser or writer of an option will be unable to
close out its position until options trading resumes, and it may be faced with
losses if trading in the security reopens at a substantially different price. In
addition, the Options Clearing Corporation ("OCC") or other options markets may
impose exercise restrictions. If a prohibition on exercise is imposed at the
time when trading in the option has also been halted, the Portfolio as purchaser
or writer of an option will be locked into its position until one of the two
restrictions has been lifted. If a prohibition on exercise remains in effect
until an option owned by the Portfolio has expired, the Portfolio could lose the
entire value of its option.
Special risks are presented by internationally-traded options. Because of time
differences between the United States and the various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are
closed. As a result, option premiums may not reflect the current prices of the
underlying interest in the United States.
Repurchase Agreements
The Portfolio may enter into repurchase agreements with primary securities
dealers recognized by the Federal Reserve Bank of New York or with national
member banks as defined in Section 3(d)(1) of the Federal Deposit Insurance Act,
as amended. The repurchase agreement will have an agreed-upon price (including
principal and interest) and an agreed-upon repurchase date within a number of
days (usually not more than seven) from the date of purchase. The resale price
reflects the purchase price plus an agreed-upon market rate of interest which is
unrelated to the coupon rate or maturity of the underlying security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the underlying
security.
The repurchase agreements entered into by the Portfolio will provide that the
underlying security at all times shall have a value at least equal to 102% of
the resale price stated in the agreement; the Adviser monitors compliance with
this requirement. Under all repurchase agreements entered into by the Portfolio,
the Custodian or its agent must take possession of the underlying collateral.
However, if the seller defaults, the Portfolio could realize a loss on the sale
of the underlying security to the extent that the proceeds of sale including
accrued interest are less than the resale price provided in the agreement
including interest. In addition, even though the Bankruptcy Code provides
protection for proceedings, the Portfolio may incur delay and costs in selling
the underlying security or may suffer a loss of principal and interest if the
Portfolio is treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
Securities Lending
The Portfolio will normally pay lending fees to broker/dealers in connection
with securities loans, and related expenses from the interest earned on invested
collateral. Investments made with this collateral are considered to be assets of
the Portfolio and must comply with the Portfolio's investment limitations. Any
securities loan may be terminated by either party upon reasonable notice to the
other party. The Portfolios may use the Distributor or a broker/dealer affiliate
of the Adviser as a broker in these transactions.
Separately Traded Interest and Principal Securities ("STRIPS")
The Portfolio may invest in STRIPS, which are component parts of U.S. Treasury
Securities traded through the Federal Book-Entry System. The Adviser will
purchase only STRIPS that it determines are liquid or, if illiquid, do not
violate the Portfolio's investment policy concerning investments in illiquid
securities.
Variable and Floating Rate Obligations
The Portfolio may invest in variable rate obligations and floating rate
obligations (together, "adjustable interest rate obligations"). Adjustable
interest rate obligations issued by or on behalf of states (including the
District of Columbia), territories and possessions of the United States and
their respective authorities, agencies, instrumentalities and political
subdivisions constitute a form of Municipal Security. A variable rate obligation
is one whose terms provide for the adjustment of its interest rate on set dates
and which, upon such adjustment, can reasonably be expected to have a market
value that approximates its par value; the degree to which a variable rate
obligation's market value approximates its par value will depend on the
frequency of the readjustment of the obligation's interest rate and the length
of time that must elapse before the next readjustment. A floating rate
obligation is one whose terms provide for the adjustment of its interest rate
whenever a specified interest rate changes and which, at any time, can
reasonably be expected to have a market value that approximates its par value.
Although there may be no active secondary market with respect to a particular
variable or floating rate obligation purchased by the Portfolio, the Portfolio
may seek to resell the obligation at any time to a third party. The absence of
an active secondary market, however, could make it difficult for the Portfolio
to dispose of a variable or floating rate obligation in the event the issuer of
the obligation defaulted on its payment obligations, and the Portfolio could, as
a result or for other reasons, suffer a loss to the extent of the default. In
addition, a variable or floating rate demand obligation with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such securities. Variable or floating rate obligations may be secured by
bank letters of credit.
The Portfolio may invest in variable amount master demand notes, which may or
may not be backed by bank letters of credit. These variable rate obligations
permit the investment of fluctuating amounts at varying market rates of interest
pursuant to direct arrangements between the Trust, as lender, and the borrower.
Such notes provide that the interest rate on the amount outstanding varies on a
daily, weekly or monthly basis depending upon a stated short-term interest rate
index. Both the lender and the borrower have the right to reduce the amount of
outstanding indebtedness at any time. There is no secondary market for the
notes. It is not generally contemplated that such instruments will be traded.
DESCRIPTION OF RATINGS
The following descriptions are summaries of published ratings.
Description of Commercial Paper Ratings
Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1 +,1 and 2, to indicate the relative degree of safety. Issues rated
A-1+ are those with an "overwhelming degree" of credit protection. Those rated
A-1 reflect a "very strong" degree of safety regarding timely payment.
Commercial paper issues rated Prime-1 by Moody's are judged by Moody's to be of
the "highest" quality on the basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch Investors Services, Inc. ("Fitch"). Paper rated Fitch-1 is regarded as
having the strongest degree of assurance for timely payment. The rating Fitch-2
(Very Good Grade) is the second highest commercial paper rating assigned by
Fitch which reflects an assurance of timely payment only slightly less in degree
than the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff and
Phelps, Inc. ("Duff"). Paper rated Duff-1 is regarded as having very high
certainty of timely payment with excellent liquidity factors which are supported
by ample asset protection. Risk factors are minor. Paper rated Duff-2 is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors are
small.
The designation A1 by IBCA Limited ("IBCA") indicates that the obligation is
supported by a very strong capacity for timely repayment. Those obligations
rated A1+ are supported by the highest capacity for timely repayment are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.
The rating TBW-1 by Thomson BankWatch ("Thomson") indicates a very high
likelihood that principal and interest will be paid on a timely basis.
Description of Corporate Bond Ratings
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. Debt rated A has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories. Debt rated BBB is regarded as having an
adequate capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. Debt
rated BB and B is regarded as having predominantly speculative characteristics
with respect to capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other speculative
grade debt. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating. Debt rate B has greater vulnerability to default but
presently has the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions would likely impair capacity
or willingness to pay interest and repay principal. The B rating category also
is used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB- rating.
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated Baa are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings several times or
many times interest requirements, with such stability of applicable earnings
that safety is beyond reasonable question whatever changes occur in conditions.
Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond
question and are readily salable, whose merits are not unlike those of the AAA
class, but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating by
the lesser financial power of the enterprise and more local type market.
Bonds rated A are considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
Bonds rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings. Bonds rated
BB are considered speculative. The obligor's ability to pay interest and repay
principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements. Bonds rated B are
considered highly speculative. While bonds in this class are currently meeting
debt service requirements, the probability of continued timely payment of
principal and interest reflects the obligor's limited margin of safety and the
need for reasonable business and economic activity throughout the life of the
issue.
Bonds rated Duff-1 are judged by Duff to be of the highest credit qualify with
negligible risk factors; only slightly more than U.S. Treasury debt. Bonds rated
Duff-2, 3 and 4 are judged by Duff to be of high credit quality with strong
protection factors. Risk is modest but may vary slightly from time to time
because of economic conditions. Bonds rated BBB+, BBB, or BBB- are considered
below average protection factors but still considered sufficient for prudent
investment. Considerable BBB variability in risk during economic cycles. Bonds
rated BB+, BB or BB- are considered below investment grade but deemed likely to
meet obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.
Bonds rated B+, B or B- are considered below investment grade and possessing
risk that obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly. Bonds rated A are obligations for which there is a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
Bonds rated BBB are obligations for which there is currently a low expectation
of investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
other categories. Bonds rated BB are obligations for which there is a
possibility of investment risk developing. Capacity for timely repayment of
principal and interest exists, but is susceptible over time to adverse changes
in business, economic or financial conditions. Bonds rated B are obligations for
which investment risk exists. Timely repayment of principal and interest is not
sufficiently protected against adverse changes in business, economic or
financial conditions.
Bonds rated AAA by Thomson BankWatch indicate that the ability to repay
principal and interest on a timely basis is very high. Bonds rated AA indicate a
superior ability to repay principal and interest on a timely basis, with limited
incremental risk compared to issues rated in the highest category. Bonds rated A
indicate the ability to repay principal and interest is strong. Issues rated A
could be more vulnerable to adverse developments (both internal and external)
than obligations with higher ratings. Bonds rated BBB indicate an acceptable
capacity to repay principal and interest. Issues rated "BBB" are, however, more
vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations. Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues. Adverse
developments could well negatively affect the payment of interest and principal
on a timely basis.
INVESTMENT LIMITATIONS
The Portfolio is subject to a number of fundamental investment restrictions that
may be changed only by a vote of a majority of the outstanding shares of the
Portfolio. A "majority of the outstanding shares" of the Trust or the Portfolio
means the affirmative vote, at a meeting of shareholders duly called, of the
lesser of (a) 67% or more of the votes of shareholders of the Trust or the
Portfolio present at a meeting at which the holders of more than 50% of the
votes attributable to shareholders of record of the Trust or the Portfolio are
represented in person or by proxy, or (b) the holders of more than 50% of the
outstanding votes of shareholders of the Trust or the Portfolio. The following
investment limitations are in addition to those set forth in the Prospectus.
Pursuant to these investment restrictions, the Portfolio will not:
1. Invest in companies for the purpose of exercising control.
2. Borrow money except for temporary or emergency purposes and then only in
an amount not exceeding one-third of the value of total assets. Any
borrowing will be done from a bank and to the extent that such borrowing
exceeds 5% of the value of the Portfolio's assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any
time fall below 300%, the Portfolio shall, within three days thereafter or
such longer period as the Securities and Exchange Commission ("SEC") may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. This borrowing provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate heavy redemption requests if
they should occur and is not for investment purposes. All borrowings will
be repaid before making additional investments and any interest paid on
such borrowings will reduce income.
3. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (2) above in aggregate amounts not to exceed 10%
of total assets taken at current value at the time of the incurrence of
such loan, except as permitted with respect to securities lending.
4. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts. However, subject to its permitted
investments, the Portfolio may invest in companies that invest in real
estate, commodities or commodities contracts.
5. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits
as necessary for the clearance of security transactions; this limitation
shall not prohibit short sales "against the box."
6. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under federal securities laws in selling a portfolio
security.
7. Purchase securities of other investment companies except as permitted by
the 1940 Act, and the rules and regulations thereunder.
8. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.
NON-FUNDAMENTAL POLICIES
The following investment limitations of the Portfolio are non-fundamental and
may be changed by the Trust's Board of Trustees without shareholder approval.
The Portfolio may not invest in illiquid securities in an amount exceeding, in
the aggregate, 15% of the Portfolio's net assets.
The Portfolio may not purchase or retain securities of an issuer if, to the
knowledge of the Trust, an officer, trustee, partner or director of the Trust or
any investment adviser of the Trust owns beneficially more than 0.5% of the
shares or securities of such issuer and all such officers, trustees, partners
and directors owning more than 0.5% of such shares or securities together own
more than 5% of such shares or securities.
The Portfolio may not invest in interests in oil, gas or other mineral
exploration or development programs and oil, gas or mineral leases.
The Portfolio may not purchase securities of any company which has (with
predecessors) a record of less than three years continuing operations if, as a
result more than 5% of total assets (taken at fair market value) of the
Portfolio would be invested in such securities, except obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or
municipal securities which are rated by at least two nationally recognized bond
rating services. This restriction shall not apply to investments the Portfolio
may make in asset-backed securities and in other investment companies, as
described in the Prospectus.
The Portfolio may purchase shares of money market mutual funds. The Portfolio
may also purchase shares of non-money market mutual funds to the extent
permitted by applicable state and federal laws and regulations.
The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess occurs or exists
immediately after and as a result of a purchase of such security.
THE ADVISER
The Trust and One Valley Bank, National Association ("One Valley" or the
"Adviser") have entered into an advisory agreement (the "Advisory Agreement").
The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Trust or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of the Portfolio (including amounts payable to the Adviser but
excluding interest, taxes, brokerage, litigation, and other extraordinary
expenses) exceeds limitations established by any jurisdiction in which shares of
the Portfolio are qualified for offer and sale, the Adviser will bear the amount
of such excess.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Portfolio by a majority of the outstanding shares of the
Portfolio, on not less than 30 days' nor more than 60 days' written notice to
the Adviser, or by the Adviser on 90 days' written notice to the Trust.
For the fiscal year ended January 31, 1996, the Portfolio had not commenced
operations and therefore did not pay an advisory fee.
THE ADMINISTRATOR
SEI Financial Management Corporation serves as administrator (the
"Administrator") to the Trust pursuant to an Administration Agreement (the
"Administration Agreement"). The Administration Agreement provides that the
Administrator shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which the
Administration Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Administrator in
the performance of its duties or from reckless disregard by it of its duties and
obligations thereunder.
The Administration Agreement shall remain in effect for five years and
thereafter shall continue in effect for successive two-year periods subject to
annual review by the Trustees.
The Administrator, a wholly owned subsidiary of SEI Corporation ("SEI"),
was organized as a Delaware corporation in 1969 and has its principal business
offices at 680 East Swedesford Road, Wayne, PA 19087-1658. Alfred P. West, Jr.,
Henry H. Greer and Carmen V. Romeo constitute the Board of Directors of the
Administrator. Mr. West is the Chairman of the Board and Chief Executive Officer
of the Administrator and of SEI. Mr. Greer is the President and Chief Operating
Officer of the Administrator and of SEI. SEI and its subsidiaries are leading
providers of funds evaluation services, trust accounting systems, and brokerage
and information services to financial institutions, institutional investors and
money managers. The Administrator also serves as administrator to the following
other mutual funds: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, Conestoga Family of Funds,
CoreFunds, Inc., CrestFunds, Inc., CUFUND, First American Funds, Inc., First
American Investment Funds, Inc., Insurance Investment Products Trust, Inventor
Funds, Inc., Marquis Funds(R), Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone
Funds, STI Classic Funds and STI Classic Variable Trust.
For the fiscal year ended January 31, 1996, the Portfolio had not commenced
operation and therefore did not pay an administration fee.
THE DISTRIBUTOR
SEI Financial Services Company serves as distributor to the Trust pursuant to a
distribution agreement (the "Distribution Agreement") which applies to both
Class A and Class B shares of the Portfolio. The Distribution Agreement shall be
reviewed and ratified at least annually (i) by the Trust's Trustees or by the
vote of a majority of the outstanding shares of the Trust, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement will terminate in
the event of any assignment, as defined in the 1940 Act, and is terminable with
respect to the Portfolio on not less than sixty days' notice by the Trust's
Trustees, by vote of a majority of the outstanding shares of the Portfolio or by
the Distributor.
The Trust has adopted a distribution plan for the Class B shares of the
Portfolio (the "Class B Plan") in accordance with the provisions of Rule 12b-1
under the 1940 Act, which regulates circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares. Continuance of the Class B Plan must be approved annually by a
majority of the Trustees of the Trust and by a majority of the Trustees who are
not "interested persons" of the Trust or SEI Financial Services, as that term is
defined in the 1940 Act ("Disinterested Trustees"). The Class B Plan requires
that quarterly written reports of amounts spent under the Plan and the purposes
of such expenditures be furnished to and reviewed by the Trustees. In accordance
with Rule 12b-1 under the 1940 Act, the Class B Plan may be terminated with
respect to the Portfolio by a vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares of the Portfolio. The Class
B Plan may be amended by vote of the Trust's Board of Trustees, including a
majority of the Disinterested Trustees, cast in person at a meeting called for
such purpose, except that any change that would effect a material increase in
any distribution fee with respect to the Portfolio requires the approval of the
Portfolio's shareholders.
The Class B Distribution Plan provides that the Class B shares of the Portfolio
will pay the Distributor a fee of .25% of the average daily net assets which the
Distributor can use to compensate/broker dealers and service providers,
including the Adviser and its affiliates which provide administrative and/or
distribution services to the Class B Shareholders or their customers who
beneficially own Class B Shares.
For the fiscal year ended January 31, 1996, the Portfolio had not commenced
operations and therefore did not pay the Distributor a distribution fee.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees and executive officers
of the Trust and their principal occupations for the last five years are set
forth below. Each may have held other positions with the named companies during
that period. Unless otherwise noted, the business address of each Trustee and
executive officer is SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, PA 19087-1658. Certain officers of the Trust also serve as Trustees
and/or officers of The Achievement Funds Trust, The Advisors' Inner Circle Fund,
The Arbor Fund, ARK Funds, Bishop Street Funds, Conestoga Family of Funds,
CoreFunds, Inc., CrestFunds, Inc., CUFUND, First American Funds, Inc., First
American Investment Funds, Inc., Insurance Investment Products Trust, Inventor
Funds, Inc., Marquis Funds(R), Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI
Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone
Funds, STI Classic Funds and STI Classic Variable Trust, each of which is an
open-end management investment company.
ROBERT A. NESHER - Trustee* - Date of Birth: 8/17/46. 8 South Street,
Kennebunkport, ME 04046. Retired since 1994. Director, Executive Vice President
of SEI Corporation (1986-1994). Director and Executive Vice President of SEI and
the Administrator and the Distributor (1981-1994).
JOHN T. COONEY - Trustee** - Date of Birth: 1/20/27. 569 N. Post Oak Lane,
Houston, TX 77024. Retired since 1992. Formerly Vice Chairman of Ameritrust
Texas N.A. (1989-1992), and MTrust Corp. (1985-1989).
WILLIAM M. DORAN - Trustee* - Date of Birth: 5/26/40. 2000 One Logan
Square, Philadelphia, PA 19103. Partner of Morgan, Lewis & Bockius LLP(law
firm). Counsel to the Trust, Administrator and Distributor (1990-present).
Director and Secretary of SEI.
FRANK E. MORRIS - Trustee** - Date of Birth: 12/30/23. 105 Walpole Street,
Dover, MA 02030. Retired since 1990. Peter Drucker Professor of Management,
Boston College since 1989. President, Federal Reserve Bank of Boston
(1968-1988).
ROBERT A. PATTERSON - Trustee** - Date of Birth: 11/5/17. 208 Old Main,
University Park, PA 16802. Pennsylvania State University, Senior Vice President,
Treasurer (Emeritus). Financial and Investment Consultant, Professor of
Transportation (1984-present). Vice President-Investments, Treasurer, Senior
Vice President (Emeritus) (1982-1984). Director, Pennsylvania Research Corp.
Member and Treasurer, Board of Trustees of Grove City College.
GENE PETERS - Trustee** - Date of Birth: 6/3/29. 943 Oblong Road,
Williamstown, MA 01267. Private investor from 1987 to present. Vice President
and Chief Financial Officer, Western Company of North America (petroleum service
company) (1980-1986). President of Gene Peters and Associates (import company)
(1978-1980). President and Chief Executive Officer of Jos. Schlitz Brewing
Company before 1978.
JAMES M. STOREY - Trustee** - Date of Birth: 4/12/31. Ten Post Office
Square South, Boston, MA 02109. Retired since 1993. Formerly Partner of Dechert
Price & Rhoads (law firm).
DAVID G. LEE - President, Chief Executive Officer - Date of Birth: 4/16/52.
Senior Vice President of the Administrator and Distributor since 1993. Vice
President of the Administrator and Distributor (1991-1993). President, GW Sierra
Trust Funds before 1991.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Date of Birth:
10/18/53. Vice President and Assistant Secretary of SEI, the Administrator and
the Distributor since 1983.
KEVIN P. ROBINS - Vice President, Assistant Secretary - Date of Birth:
4/15/61. Senior Vice President, General Counsel and Assistant Secretary of SEI,
the Administrator and the Distributor since 1994. Vice President and Assistant
Secretary of the SEI, Administrator and the Distributor (1992- 1994). Associate,
Morgan, Lewis & Bockius (law firm) prior to 1992.
JEFFREY A. COHEN, CPA - Controller, Assistant Secretary - Date of Birth:
4/22/61. Director, International and Domestic Funds Accounting, SEI Corporation
since 1991. Audit Manager, Price Waterhouse prior to 1991.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Date of Birth:
2/26/60. Vice President and Assistant Secretary of SEI, the Administrator and
the Distributor since 1994. United States Securities and Exchange Commission,
Division of Investment Management, 1990-1994. Associate, McGuire, Woods, Battle
and Boothe (law firm) before 1990.
KATHRYN L. STANTON - Vice President, Assistant Secretary - Date of Birth:
11/18/58. Vice President and Assistant Secretary of SEI, the Administrator and
the Distributor since 1994. Associate, Morgan, Lewis & Bockius (law firm)
1989-1994.
JOSEPH M. LYDON - Vice President, Assistant Secretary - Date of Birth:
9/27/59. Director of Business Administration of Fund Resources, SEI Corporation
since 1995. Vice President of Fund Group and Vice President of the Advisor,
Dreman Value Management and President of Dreman Financial Services, Inc. prior
to 1995.
TODD CIPPERMAN - Vice President, Assistant Secretary - Date of Birth:
2/14/66. Vice President and Assistant Secretary of SEI, the Administrator and
the Distributor since 1995. Associate, Dewey Ballantine (law firm)(1994-1995).
Associate, Winston & Strawn (law firm)(1991-1994).
RICHARD W. GRANT - Secretary - Date of Birth: 10/25/45. 2000 One Logan
Square, Philadelphia, PA 19103, Partner of Morgan, Lewis & Bockius LLP(law
firm), Counsel to SEI, the Trust, Administrator and the Distributor
(1990-present).
- ---------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Trust as the term is defined in the 1940 Act.
**Messrs. Cooney, Morris, Patterson, Peters and Storey serve on the Audit
Committee of the Trust's Board of Directors.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees. For the
fiscal year ended January 31, 1996, the Trust paid the unaffiliated Trustees
aggregate fees of approximately $61,924.25.
<TABLE>
<CAPTION>
Name of Person, Aggregate Pension or Retirement Estimated Annual Total Compensation
Position Compensation From Benefits Accrued as Benefits Upon From Registrant and
Registrant Part of Fund Expenses Retirement Fund Complex Paid to
Trustees for the Fiscal
Year Ended January
31, 1996(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney, $12,384.82 N/A N/A $12,384.82
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Frank E. Morris, $12,384.82 N/A N/A $12,384.82
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Patterson, $12,384.82 N/A N/A $12,384.82
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Gene Peters, Trustee $12,384.82 N/A N/A $12,384.82
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher, $0 N/A N/A $0
Trustee*
- ------------------------------------------------------------------------------------------------------------------------------------
William M. Doran, $0 N/A N/A $0
Trustee*
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Storey, $12,384.82 N/A N/A $12,384.82
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total Compensation for service on one board.
COMPUTATION OF YIELD
Equity Income Portfolio -- The Portfolio may advertise a 30-day yield. These
figures will be based on historical earnings and are not intended to indicate
future performance. The yield of the Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified 30-day period. The
yield is calculated by assuming that the income generated by the investment
during that 30-day period is generated over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2([(a-b)/(cd) + 1]/6/ - 1)
where a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the current daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the period.
CALCULATION OF TOTAL RETURN
From time to time, the Portfolio may advertise total return. The total return of
a Portfolio refers to the average compounded rate of return to a hypothetical
investment for designated time periods (including but not limited to, the period
from which the Portfolio commenced operations through the specified date),
assuming that the entire investment is redeemed at the end of each period. In
particular, total return will be calculated according to the following formula:
P (1 + T)/n/ = ERV
where P = a hypothetical initial payment of $1,000
T = average annual total
return n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of the designated time period as of the end
of such period.
Based on the foregoing, the average annual total return for the Portfolio from
inception through January 31, 1996 and for the one, five and ten year periods
ended January 31, 1996 was as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Portfolio Class Average Annual Total Return
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One Year Five Ten Since
Year Year Inception
- -------------------------------------------------------------------------------
Equity Income Class A * N/A N/A N/A
Portfolio
- -------------------------------------------------------------------------------
Class B (with * N/A N/A N/A
12b-1)
- -------------------------------------------------------------------------------
</TABLE>
* Not in operation during such period.
PURCHASE AND REDEMPTION OF SHARES
The Portfolio intends to pay cash for all shares redeemed, but under abnormal
conditions that make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.
It is currently the Trust's policy to pay for all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by the Portfolio
in lieu of cash. Shareholders may incur brokerage charges on the sale of any
such securities so received in payment of redemptions. However, a shareholder
will at all times be entitled to aggregate cash redemptions from all Portfolios
of the Trust during any 90-day period of up to the lesser of $250,000 or 1% of
the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of the Portfolio's securities is not reasonably
practicable, or for such other periods as the SEC has by order permitted. The
Trust also reserves the right to suspend sales of shares of the Portfolio for
any period during which the New York Stock Exchange, the Adviser, the
Administrator and/or the Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
Equity Income Portfolio -- The securities of the Portfolio are valued by the
Administrator pursuant to valuations provided by independent pricing services.
The pricing services rely primarily on prices of actual market transactions as
well as trader quotations. However, a service may also use a matrix system to
determine valuations of fixed income securities, which system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of a pricing service and its valuations are reviewed by the officers
of the Trust under the general supervision of the Trustees.
TAXES
The information set forth in the Prospectus and the following is only a summary
of certain tax considerations generally affecting the Portfolio and its
shareholders, and is not intended as a substitute for careful tax planning. No
attempt has been made to present a detailed explanation of the income tax
treatment of the Portfolio or its shareholders. Shareholders and potential
purchasers of shares are urged to consult their tax advisors with specific
reference to their own tax situations, including their state and local tax
liabilities.
The following discussion of federal income tax consequences is based on the
Internal Revenue of 1986, as amended (the "Code") and the regulations issued
thereunder as in effect on the date of this Statement of Additional Information.
New legislation, certain administrative changes or court decisions may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.
Shareholders will be advised annually as to certain federal income tax
consequences of distributions made during the year.
It is the policy of each of the Trust's Portfolios to qualify for the favorable
tax treatment accorded regulated investment companies under Subchapter M of the
Code. By following such policy, each of the Trust's Portfolios expects to
eliminate or reduce to a nominal amount the federal taxes to which such
Portfolio may be subject.
In order to qualify as a regulated investment company the Portfolio must, among
other things, (1) derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock, securities or foreign currencies; or
other income (including gains from options, futures or forward contracts)
derived with respect to its business of investing in stock, securities or
currencies; (2) derive less than 30% of its gross income each taxable year from
the sale or other disposition of certain assets held for less than three months
(the "Short-Short Limitation"), including stock and securities; options, futures
or forward contracts (other than on foreign currencies); or foreign currencies
(including options, futures or forward contracts) if not directly related to the
Portfolio's principal business of investing in stocks and securities; and (3)
diversify its holdings so that at the end of each quarter of each taxable year
(i) at least 50% of the market value of the Portfolio's total assets is
represented by cash or cash items, United States Government securities,
securities of other regulated investment companies, and other securities
limited, in respect of any one issuer, to a value not greater than 5% of the
value of the Portfolio's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than United States
Government securities or securities of any other regulated investment company)
or of two or more issuers that the Portfolio controls and that are engaged in
the same, similar, or related trades or businesses. These requirements may
restrict the degree to which the Portfolios may engage in short-term trading and
in certain hedging transactions and may limit the range of the Portfolio's
investments. If a Portfolio qualifies as a regulated investment company, it will
not be subject to federal income tax on the part of its net investment income
and net realized capital gains, if any, which it distributes each year to
shareholders, provided the Portfolio distributes at least (a) 90% of its
"investment company taxable income" (generally, net investment income plus net
short-term capital gain) and (b) 90% of its net interest exempt income (the
excess of (i) its tax-exempt interest income over (ii) certain deductions
attributable to that income).
If for any taxable year, the Portfolio does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate income tax rates without any deduction for distributions to
shareholders, and all such distributions generally will be taxable to
shareholders as ordinary dividends to the extent of the the Portfolio's current
and accumulated earnings and profits. Such distributions will be eligible for
the corporate dividends received deduction.
The Portfolio will be subject to a nondeductible 4% federal excise tax to the
extent that it fails to distribute in a calendar year at least the sum of 98% of
its ordinary income for the year and 98% of its capital gain net income (the
excess of short and long term capital gain over short and long term capital
losses) for the one-year period ending October 31 of the year (and any retained
amount from the prior calendar year).
Distributions declared in October, November, or December to shareholders of
record during those months and paid during the following January are treated as
if they were received by each shareholder on December 31 of the prior year for
tax purposes.
Generally, gain or loss on the sale or exchange of shares will be long-term
capital gain if the shares have been held for more than one year and otherwise
will be short-term. However, if a shareholder realizes a loss on the sale,
exchange or redemption of shares held for six months or less and has previously
received a capital gains distribution with respect to the shares (or any
undistributed net capital gains of the Portfolio with respect to such shares are
included in the determining the shareholder's long-term capital gains), the
shareholder must treat the loss as a long-term capital loss to the extent of the
amount of the prior capital gains distributions (or any undistributed net
capital gains of the Portfolio which have been included in determining such
shareholder's long-term capital gains).
In certain cases, the Portfolio will be required to withhold and remit to
the U.S. Treasury 31% of any taxable dividends, capital gain distributions and
redemption proceeds paid to an individual or certain other non-corporate
shareholder (1) who has failed to provide a correct taxpayer identification
number, (2) who is subject to backup withholding by the Internal Revenue
Service, or (3) who has not certified to the Portfolio that such shareholder is
not subject to backup withholding. This backup withholding is not an additional
tax, and any amounts withheld may be credited against the shareholder's ultimate
U.S. tax liability.
The Portfolio's transactions in certain futures contracts, options, forward
contracts, foreign currencies, foreign debt securities, and certain other
investment and hedging activities will be subject to special tax rules. In a
given case, these rules may accelerate income to the Portfolio, defer losses to
the Portfolio, cause adjustments in the holding periods of the Portfolio's
assets, convert short-term capital losses into long-term capital losses, or
otherwise affect the character of the Portfolio's income. These rules could
therefore affect the amount, timing, and character of distributions to
shareholders. Each Portfolio will endeavor to make any available elections
pertaining to such transactions in a manner believed to be in the best interests
of the Portfolio.
Income from the disposition of options and futures contracts will be subject to
the Short-Short Limitation if they are held for less than three months. If the
Portfolio satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Portfolio satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. To the
extent this treatment is not available, the Portfolio may be forced to defer the
closing out of certain options and futures contracts beyond the time when it
otherwise would be advantageous to do so.
Additional Information for the Portfolio Concerning State Taxes
The Portfolio is not liable for any income or franchise tax in Massachusetts if
it qualifies as a regulated investment company for federal income tax purposes.
Distributions by the Portfolio to shareholders and the ownership of shares may
be subject to state and local taxes. Therefore, shareholders are urged to
consult with their tax advisors concerning the application of state and local
taxes to investments in the Portfolio, which may differ from the federal income
tax consequences. For example, under certain specified circumstances, state
income tax laws may exempt from taxation distributions of a regulated investment
company to the extent that such distributions are derived from interest on
federal obligations. Shareholders are urged to consult with their tax advisors
regarding whether, and under what conditions such exemption is available.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing the orders
to execute transactions for the Portfolio. In placing orders, it is the policy
of the Trust to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), the size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available.
The money market securities in which the Portfolio invests are traded primarily
in the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.
TRADING PRACTICES AND BROKERAGE
The Adviser selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price), which is the equivalent
of a commission.
The Trust may allocate, out of all commission business generated by all of the
funds and accounts under management by the Adviser, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include: advice, either directly or through publications or writings,
as to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Adviser in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.
As provided in the Securities Exchange Act of 1934, as amended (the "1934 Act"),
higher commissions may be paid to broker/dealers who provide brokerage and
research services than to broker/dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed to
broker/dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker/dealers are not, in general,
higher than commissions that would be paid to broker/dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker/dealers who provide daily portfolio pricing services to the Trust.
Subject to best price and execution, commissions used for pricing may or may not
be generated by the funds receiving the pricing service. During the fiscal year
ended January 31, 1994, no Portfolio directed transactions to broker-dealers for
research services for which commissions were paid.
The Adviser may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in a
manner deemed equitable to each account or fund. It is believed that the ability
of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or trust may obtain, it is the opinion
of the Adviser and the Trust's Board of Trustees that the advantages of combined
orders outweigh the possible disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Portfolio may place orders with broker/dealers which have agreed to defray
certain Trust expenses such as custodian fees, and may, at the request of the
Distributor, give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute Trust portfolio transactions.
It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or a registered broker/dealer affiliate of the Adviser
for a commission in conformity with the 1940 Act, the 1934 Act and rules
promulgated by the SEC. Under these provisions, the Distributor or an affiliate
of the Adviser is permitted to receive and retain compensation for effecting
portfolio transactions for the Trust on an exchange if a written contract is in
effect between the Distributor and the Trust expressly permitting the
Distributor or an affiliate of the Adviser to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor or affiliate of the Adviser by the Trust for exchange transactions
not exceed "usual and customary" brokerage commissions. The rules define "usual
and customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." In addition, the Trust may direct commission business to one or
more designated broker/dealers in connection with such broker/dealer's provision
of services to the Trust or payment of certain Trust expenses (e.g., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.
For the fiscal year ended January 31, 1996, the Portfolio had not commenced
operations and therefore did not pay any brokerage commissions to the
Distributor.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of shares of the Portfolio, and to divide or redivide any unissued shares
of the Trust into one or more additional series.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's shares will be fully paid and
non-assessable, subject only to the possibility of shareholder liability
described in the following section. All consideration received by the Trust for
shares of any additional series and all assets in which such consideration is
invested would belong to that series and would be subject to the liabilities
related thereto. In the event of a liquidation or dissolution of the Trust,
shareholders of the Portfolio are entitled to receive the assets available for
distribution belonging to the Portfolio, and a proportionate distribution, based
upon the relative asset values of the Portfolio, of any general assets not
belonging to the Portfolio which are available for distribution. Certificates
representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his or
her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
5% SHAREHOLDERS
For the fiscal year ended, January 31, 1996, the Portfolio had not commenced
operations and therefore does not have any 5% shareholders.
EXPERTS
The financial statements in this Statement of Additional Information have been
examined by Price Waterhouse LLP, independent accountants, as indicated in their
report, with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
FINANCIAL STATEMENTS
For the fiscal year ended, January 31, 1996, the Portfolio had not commenced
operations and therefore does not have financial statements.
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
(1) Audited Financial Statements for the Golden Oak Diversified Growth
Portfolio, Golden Oak Intermediate-Term Income Portfolio and
Golden Oak Prime Obligation Money Market Portfolio of the
Registrant for the fiscal period ended January 31, 1996, included
in the Statement of Additional Information, filed as part of
Post-Effective Amendment No. 14 to the Registrant's Registration
Statement on Form N-1A (No. 33-50718) as filed with the Securities
and Exchange Commission on March 29, 1996 are incorporated
by reference.
(2) Audited Financial Statements for the California Tax Exempt
Portfolio and Institutional Tax Free Portfolio (the "PIMC
Portfolios") for the fiscal period ended January 31, 1996,
included in the Statement of Additional Information, filed as part
of Post-Effective Amendment No. 14 to the Registrant's
Registration Statement on Form N-1A (No. 33-50718) as filed with
the Securities and Exchange Commission on March 29, 1996 are
incorporated by reference.
(3) Audited Financial Statements for the OVB Prime Obligations
Portfolio, OVB Capital Appreciation Portfolio, OVB Emerging Growth
Portfolio, OVB Government Securities Portfolio and OVB West
Virginia Tax-Exempt Income Portfolio (the "OVB Portfolios") for
the fiscal period ended January 31, 1996, included in the
Statement of Additional Information, filed as part of
Post-Effective Amendment No. 14 to the Registrant's Registration
Statement on Form N-1A (No. 33-50718) as filed with the Securities
and Exchange Commission on March 29, 1996 are incorporated
by reference.
(4) Audited Financial Statements for the U.S. Government Securities
Money Fund and the Prime Obligations Fund for the fiscal period
ended January 31, 1996, included in the Statement of Additional
Information, filed as part of Post-Effective Amendment No. 14 to
the Registrant's Registration Statement on Form N-1A (No.
33-50718) as filed with the Securities and Exchange Commission on
March 29, 1996 are incorporated by reference.
(b) Additional Exhibits
(1) Registrant's Agreement and Declaration of Trust.1
(2) Registrant's By-Laws.1
(3) Not Applicable
(4) Not Applicable
(5) (a) Administration Agreement between Registrant and SEI
Financial Management Corporation with Schedule dated
January 28, 1993 for the Golden Oak Portfolios and
forms of Schedule for the California Tax Exempt
Portfolio and Institutional Tax Free Portfolio.4
(5) (b) Investment Advisory Agreement between the
Registrant and Citizens Commercial and Savings Bank
with respect to the Golden Oak Diversified Growth
Portfolio, the Golden Oak Intermediate-Term Income
Portfolio, Golden Oak Michigan Tax Free Bond Portfolio
and Golden Oak Prime Obligation Money Market
Portfolio.3
(5) (c) Investment Sub-Advisory Agreement by and among
Registrant, Citizens Commercial and Savings Bank and
Wellington Management Company with respect
to the Golden Oak Prime Obligation Money Market
Portfolio.3
(5) (f) Form of Investment Advisory Agreement between
Registrant and Prudential Investment Corporation with
respect to the California Tax Exempt Portfolio and the
Institutional Tax Free Portfolio.4
(5) (g) Form of Schedule, relating to the OVB Prime
Obligations, OVB Capital Appreciation, OVB Emerging
Growth, OVB Government Securities and OVB West Virginia
Tax-Exempt Income Portfolios (the "OVB Portfolios"), to
Administration Agreement by and between the Registrant
and SEI Financial Management Corporation dated as of
January 28, 1993.5
(5) (h) Form of Investment Advisory Agreement between the
Registrant and One Valley Bank, National Association
with respect to the OVB Portfolios.5
(5) (i) Form of Investment Sub-Advisory Agreement by and among
the Registrant, One Valley Bank, National Association,
and Wellington Management Company with
respect to the OVB Prime Obligations Portfolio.5
(5) (j) Form of Investment Advisory Agreement between the
Registrant and Capitoline Investment Services,
Incorporated with respect to the U.S. Government
Securities Money Fund.7
(5) (k) Form of Schedule relating to U.S. Government
Securities Money Fund, to Administration Agreement by
and between Registrant and SEI Financial
Management Corporation.7
(5) (l) Form of Schedule B to Investment Advisory Agreement
between the Registrant and Citizens Commercial &
Savings Bank with respect to Golden Oak Growth and
Income Portfolio.8
(5) (m) Form of Investment Sub-Advisory Agreement by and
between Scudder, Stevens & Clark, Inc. with respect to
Golden Oak Growth and Income Portfolio.8
(5) (n) Form of Schedule, relating to Golden Oak Growth and
Income Portfolio, to Administration Agreement by and
between Registrant and SEI Financial Management
Corporation.8
(5) (o) Administration Agreement between Registrant and SEI
Financial Corporation with Schedule dated January 28,
1993 as amended and restated on May 17, 1994 for Golden
Oak Portfolios, the Prudential Portfolios and the OVB
Portfolios.9
(5) (p) Administration Agreement between Registrant and SEI
Financial Management Corporation with Schedule dated
August 1, 1994.9
(5) (q) Form of Schedule to the Investment Advisory Agreement
between Registrant and Capitoline Investment Services
Incorporated with respect to the Prime Obligations
Fund.10
(5) (r) Form of Schedule relating to the Prime Obligations
Fund, to Administration Agreement filed under (5)(p) by
and between Registrant and SEI Financial Management
Corporation.10
(5) (s) Form of Investment Advisory Agreement between the
Registrant and PNC Institutional Management Corporation
with respect to the California Tax-Exempt
Portfolio.11
(5) (t) Form of Investment Advisory Agreement between the
Registrant and PNC Institutional Management Corporation
with respect to the Institutional Tax Free
Portfolio.11
(5) (u) Investment Sub-Advisory Agreement by and among the
Registrant and Citizens Bank and Nicholas-Applegate
Capital Management with respect to the Golden Oak
Diversified Growth Portfolio.11
(5) (v) Form of Schedule to the Investment Advisory Agreement
between Registrant and One Valley Bank, N.A. with
respect to the OVB Equity Income Portfolio.*
(6) (a) Distribution Agreement between Registrant and SEI
Financial Services Company.2
(6) (b) Transfer Agent Agreement between Registrant and SEI
Financial Management
Corporation.3
(6) (c) Transfer Agent Agreement between Registrant and Crestar
Bank.9
(6) (d) Transfer Agent Agreement between Registrant and
Supervised Service Company.9
(7) Not Applicable
(8) (a) Custodian Agreement between Registrant and CoreStates
Bank N.A.2
(8) (b) Form of Custodian Agreement between Registrant and
Crestar Bank.7
(9) Not Applicable
(10) Opinion and Consent of Counsel.3
(11) Consent of Independent Accountants.*
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) (a) Registrant's Distribution Plan with respect to the
Class B shares of the Golden Oak Portfolios (except
Golden Oak Growth and Income Portfolio).2
(15) (b) Registrant's Distribution Plan with respect to the
Class B shares of the OVB Portfolios.5
(15) (c) Form of Registrant's Distribution Plan with respect
to the Class B Shares of the Golden Oak Growth and
Income Portfolio.8
(15) (d) Rule 18f-3 Multi-Class Plan.9
(16) Performance Quotation Computation with respect to the
Golden Oak Portfolios.3
(24) Powers of Attorney.6
- ------------------------------
* filed herewith
1 Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A (No. 33-50718) filed with the Securities
and Exchange Commission on August 11, 1992.
2 Incorporated herein by reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on October 14,
1992.
3 Incorporated herein by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on January 13,
1993.
4 Incorporated herein by reference to Post-Effective Amendment No. 4
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on July 29,
1993.
5 Incorporated herein by reference to Post-Effective Amendment No. 6
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on September 23,
1993.
6 Incorporated herein by reference to Post-Effective Amendment No. 8
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on May 31, 1994.
7 Incorporated herein by reference to Post-Effective Amendment No. 9
to Registrant's Registration Statement on Form N-1A (No. 33-50718)
filed with the Securities and Exchange Commission on June 2, 1994.
8 Incorporated herein by reference to Post-Effective Amendment No.
10 to Registrant's Registration Statement on Form N-1A (No.
33-50718) filed with the Securities and Exchange Commission on
September 30, 1994.
9 Incorporated herein by reference to Post-Effective Amendment No.
12 to Registrant's Registration Statement on Form N-1A (No.
33-50718) filed with the Securities and Exchange Commission on May
31, 1995.
10 Incorporated herein by reference to Post-Effective Amendment No.
13 to Registrant's Registration Statement on Form N-1A (No.
33-50718) filed with the Securities and Exchange Commission on
August 11, 1995.
11 Incorporated herein by reference to Post-Effective Amendment No.
14 to Registrant's Registration Statement on Form N-1A (No.
33-50718) filed with the Securities and Exchange Commission on
March 29, 1996.
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 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 March 3, 1996:
Number of
Title of Class Record Holders
-------------- --------------
Units of beneficial interest, without par value-
Golden Oak Diversified Growth Portfolio
Class A 6
Class B 29
Golden Oak Intermediate-Term Income Portfolio
Class A 6
Class B 20
Golden Oak Michigan Tax Free Bond Portfolio
Class A N/A
Class B N/A
Golden Oak Prime Obligation Money Market Portfolio
Class A 6
Class B 101
Golden Oak Growth and Income
Class A N/A
Class B N/A
California Tax Exempt Portfolio 9
Institutional Tax Free Portfolio 7
OVB Prime Obligations Portfolio
Class A 5
Class B 96
OVB Capital Appreciation Portfolio
Class A 5
Class B 280
OVB Emerging Growth Portfolio
Class A 5
Class B 266
OVB Government Securities Portfolio
Class A 5
Class B 124
OVB West Virginia Tax-Exempt Income Portfolio
Class A 5
Class B 163
US Government Securities Money Fund 2
Prime Obligations Fund 2
Item 27. Indemnification:
Article VIII of the Agreement and 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, as
amended, 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 Adviser:
Other business, profession, vocation or employment of a substantial nature
in which each director or principal officer of the Adviser 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:
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Adviser Other Company Other Company
- ----------------------- ------------- -------------
<S> <C> <C>
Citizens Bank (as of 3/28/96):
Victor E. George Victor George Oldsmobile, Inc. Chairman
Chairman Citizens Banking Corporation Director
Charles R. Weeks Citizens Banking Corporation Chairman
Vice Chairman Second National Bank of Saginaw Director
Wolohan Lumber Co. Director
David A. Thomas, Jr. Citizens Banking Corporation Vice Chairman
Director, President, CEO National Bank of Royal Oak Director
Edward P. Abbot Abbott's Meat, Inc. President and Chief Executive Officer
Director Citizens Banking Corporation Director
John W. Ennest Citizens Banking Corporation Vice Chairman, CFO and Treasurer
Director Second National Bank of Saginaw Director
Commercial National Chairman
Bank of Berwyn
George H. Kossaras Spring's Drug Store, Inc. President
Director Citizens Banking Corporation Director
Gerald Schreiber Royalite Co. Vice President
Director
William C. Shedd Winegarden, Shedd, Haley, Attorney & Partner
Director Lindholm & Robertson
Citizens Banking Corporation Director
Joseph G. Shomsky Massachusetts Mutual Insurance Insurance
Director Company
James E. Truesdell J. Austin Oil Company
of Flint, Inc. President-Secretary
Director Citizens Banking Corporation Director
Robert J. Vitito Citizens Banking Corporation President, CEO and CAO
Director Second National Bank of Saginaw Chairman
State Bank of Standish Director
Second National Bank of Bay City Director
Grayling State Bank Director
Kendall B. Williams Gault Davison, P.C. Attorney & Vice President
Director Citizens Banking Corporation Director
Ada C. Washington
Director
Gary P. Drainville Citizens Banking Corporation Executive Vice President
Citizens Bank Ypsilanti Director
Executive Vice President Region Board
Wayne G. Schaeffer Commercial National Director
Senior Executive Bank of Berwyn
Vice President, Citizens Banking Corporation Executive Vice President
Chief Financial
Officer and Director
Chief Operating Officer
Gordon F. Strayer Citizens Bank Fenton Director
Executive Vice President
David H. Buick
Senior Vice President
Dana A. Czmer
Senior Vice President and
Trust Officer
Thomas W. Gallagher Citizens Banking Corporation Senior Vice President,
Senior Vice President, General Counsel & Secretary
General Counsel, Secretary
Gary O. Clark Citizens Bank-Sturgis Director
Citizens Banking Corporation Executive Vice President
Commercial National Bank President, CEO, Director
of Berwyn
Edward P. Majask
Senior Vice President
and Senior Investment Officer
Richard J. Mitsdarfer Citizens Banking Corporation Senior Vice President & General Auditor
Senior Vice President
and General Auditor
Edward H. Newman Citizens Banking Corporation Vice President & Assistant Secretary
Senior Vice President,
Cashier & Secretary
Thomas C. Shafer
Senior Vice President
Lawrence G. Southwell
Senior Vice President
Richard T. Albee
Senior Vice President
Stephen I. Swett
Executive Vice President
and Senior Trust Officer
Marilyn K. Allar
Senior Vice President
Daniel E. Bekemeier
Senior Vice President & Controller
Dennis R. Johnston
Senior Vice President
Vicent V. Maysura
Senior Vice President
Leslie V. Starr
Senior Vice President
Steven C. Futrell Citizens Bank - East Lansing
Community President & Director
Richard L. Collier Citizens Bank - East Lansing
Director- Retired Surgeon
Marcia G. Jensen Citizens Bank - East Lansing
Director Moore-Jensen Associates Realtor
William E. Madigan Citizens Bank- East Lansing
Director Michigan State Medical Society Executive Director
Joseph C. Overbeck Citizens Bank - East Lansing
Director Motor Wheel Corporation Retired President
Richard R. Simonds Citizens Bank - East Lansing
Director Michigan State University Chairman, Department of
Finance & Insurance
James M. VanTiflin Citizens Bank - East Lansing
Director Second National Bank of Saginaw President, Chief Executive
Officer & Director
Robert L. Critchfield Citizens Bank- Fenton
Community President & Director
Richard L. Adams Citizens Bank- Fenton
Director Freeway Sports Center, Inc. President & Chief Executive
Officer
Donald K. Bell Citizens Bank- Fenton
Director Dupuis & Ryden CPA
Penny J. Fausey Citizens Bank - Fenton
Director Penny J. Fausey, CPA PC - President
E. Doran Kasper Citizens Bank- Fenton
Director Optometrist
William L. Kershaw Citizens Bank - Fenton
Director Kersaw Realty Realtor
Henry H. Phillips Citizens Bank - Fenton
Director Optometrist
Nicholas A. Popa Citizens Bank - Fenton
Director Epic Machine, Inc. Chairman
Louis L. Schaedig Citizens Bank - Fenton
Director Kundinger Fluid Power Executive Vice President
Jeri L. Stileo Citizens Bank - Fenton Owner
Director Stiles Insurance Agency
Joseph F. Smith Citizens Bank - Sturgis
Community President & Director
Dennis O. Baker Citizens Bank - Sturgis
Director Owens Products, Inc. President & Chief Executive
Officer
John E. Brand Citizens Bank - Sturgis
Director Sturgis Ml Retired City Manager
Paul L. Brothers Citizens Bank - Sturgis Surgeon
Director
Lawrence A. Franks Citizens Bank - Sturgis
Director Burr Oak Tool & Gauge President
Alice M. Happel Citizens Bank - Sturgis
Director Burr Oak Township Farmer
Lawrence G. Hopkins Citizens Bank - Sturgis Retired Bank President
Director
John W. Kirsch Citizens Bank - Sturgis Retired Manufacturer
Director
Lawrence Rosenberg Citizens Bank - Sturgis
Director Rosenberg-Schipper Funeral Home President
Melvin G. Scheske Citizens Bank - Sturgis CPA
Director
Richard J. DeVries Citizens Bank - Ypsilanti
Community President & Director
Sandra J. French Citizens Bank - Ypsilanti
Director Cady's Grill Owner
Jerry F. Gooding Citizens Bank - Ypsilanti Retired Business Owner
Director
Benjamin P. Koerber Citizens Bank - Ypsilanti Retired Bank President
Director
Gary M. Owen Citizens Bank - Ypsilanti
Director Governmental Consulting Services Partner
Information
Edwin L. Pear Citizens Bank - Ypsilanti
Director Pear, Sperling, Eggan & Muskovitz Attorney & Partner
Richard K. Robb Citizens Bank - Ypsilanti Dentist
Director
Richard K. Roberts Citizens Bank - Ypsilanti
Director Roberts & Freatman Attorney & Partner
John C. Shelton Citizens Bank - Ypsilanti Retired Physician
Director
Scudder, Stevens & Clark, Inc.:
Stephen R. Beckwith
Director
Lynn S. Birdsong The Latin America Income and Supervisory Director
Director Appreciation Fund N.V.
The Venezuela High Income Supervisory Director
Fund N.V.
Scudder Mortgage Fund Supervisory Director
Scudder Floating Rate Funds for Supervisory Director
Fannie Mae Mortgage
Securities I & II
Scudder, Stevens & Clark Director
(Luxembourg) S.A.
Scudder Funds Trust Trustee
The Latin America Dollar President & Director
Income Fund, Inc.
Scudder World Income President & Director
OpportunitiesFund, Inc.
Nicholas Bratt
Director
Scudder New Europe Fund, Inc. President & Director
The Brazil Fund, Inc. President & Director
The First Iberian Fund, Inc. President & Director
Scudder International Fund, Inc. President & Director
Scudder Global Fund, Inc. Director
The Korea Fund, Inc. President & Director
Scudder New Asia Fund, Inc. President & Director
The Argentina Fund, Inc. President
Scudder, Stevens & Clark Vice President
Corporation
Scudder, Stevens & Clark Vice President
Japan, Inc.
Scudder, Stevens & Vice President
Ltd., Toronto, Ontario, Canada
Linda C. Coughlin Scudder Investor Services, Inc. Director
Director AARP Cash Investment Funds President & Trustee
AARP Growth Trust President & Trustee
AARP Income Trust President & Trustee
AARP Tax Free Income Trust President & Trustee
SFA, Inc. Director
Margaret D. Hadzina
Director
Jerard K. Hartman Scudder California Tax Free Vice President
Director Scudder Equity Trust Vice President
Scudder Cash Investment Trust Vice President
Scudder Fund, Inc. Vice President
Scudder Global Fund, Inc. Vice President
Scudder GNMA Fund Vice President
Scudder Institutional Fund, Inc. Vice President
Scudder Portfolio Trust Vice President
Scudder International Fund, Inc. Vice President
Scudder Investment Trust Vice President
Scudder Municipal Trust Vice President
Scudder Mutual Funds, Inc. Vice President
Scudder New Asia Fund, Inc. Vice President
Scudder New Europe Fund, Inc. Vice President
Scudder Securities Trust Vice President
Scudder State Tax Free Trust Vice President
Scudder Funds Trust Vice President
Scudder Tax Free Money Fund Vice President
Scudder Tax Free Trust Vice President
Scudder U.S. Treasury Money Fund Vice President
Scudder Variable Life Investment Vice President
Fund
Scudder World Income Opportunities Vice President
Fund, Inc.
Scudder Treasurers Trust Vice President
The Brazil Fund, Inc. Vice President
The Korea Fund, Inc. Vice President
The Argentina Fund, Inc. Vice President
Scudder, Stevens & Clark Vice President and
of Canada, Ltd., Toronto, Director
Ontario, Canada
The First Iberian Fund, Inc. Vice President
The Latin America Dollar Income Vice President
Fund, Inc.
Richard A. Holt Scudder Variable Life Vice President
Director Investment Fund
Dudley H. Ladd Scudder Investor Services, Inc. Director
Director Scudder Cash Investment Trust Vice President & Trustee
Scudder Investment Trust Trustee
Scudder Portfolio Trust Trustee
Scudder Municipal Trust Trustee
Scudder State Tax Free Trust Trustee
Scudder U.S. Treasury Money Fund Vice President
SFA, Inc. Vice President & Treasurer
Douglas M. Loudon Scudder Equity Trust Vice President & Trustee
Director Scudder Global Fund, Inc. Vice President
Scudder Investment Trust Vice President
Scudder Mutual Funds, Inc. Vice President & Director
Scudder Securities Trust Vice President & Trustee
AARP Cash Investment Funds Vice President
AARP Growth Trust Vice President
AARP Income Trust Vice President
AARP Tax Free Income Trust Vice President
Scudder, Stevens & Clark Vice President
Corporation
Scudder Investor Services, Inc. Senior Vice President
Scudder, Stevens & Clark of Canada Vice President Ltd.,
Toronto, Ontario, Canada
World Capital Fund Luxembourg Chairman
NKK - Scudder Capital Asset Managing Director
Management Corporation
Scudder, Stevens & Clark
Japan, Inc. Chairman & Director
The Japan Fund, Inc. President
Scudder, Stevens & Clark Trustee
Supplemental Retirement Income Plan
Scudder, Stevens & Clark Profit Trustee
Sharing Plan
Scudder, Stevens & Clark, S.A., Chairman
Luxembourg
Berkshire Farm & Services
for Youth Director
Investment Counsel Association of Board of Governors
America
Canadian High Income Fund Chairman
Hot Growth Companies Fund Chairman
John T. Packard Montgomery Street Income President
Director Securities, Inc.
Scudder Realty Advisors, Inc. Director
PSI Star Corporation Director
Juris Padegs The Brazil Fund, Inc. Chairman of the Board &
Secretary and Director Director
Scudder Equity Trust Trustee & Vice President
The First Iberian Fund, Inc. Chairman of the Board &
Director
Scudder Funds Trust Trustee
Scudder Global Fund, Inc. Vice President & Assistant
Secretary
Scudder Investment Trust Trustee
Scudder International Fund, Inc. Vice President, Assistant
Secretary & Director
The Latin America Dollar Income Vice President
Fund, Inc.
Scudder Municipal Trust Trustee
Scudder Mutual Funds, Inc. Vice President & Assistant
Secretary
Scudder New Europe Fund, Inc. Vice President & Director
Scudder Securities Trust Trustee
Scudder State Tax Free Trust Trustee
Scudder New Asia Fund, Inc. Vice President, Assistant
Secretary & Director
Scudder Tax Free Money Fund Vice President & Trustee
Scudder Tax Free Trust Trustee
The Korea Fund, Inc. Chairman of the Board and
Director
The Argentina Fund, Inc. Vice President & Director
Scudder, Stevens & Clark of Secretary
Canada Ltd., Toronto, Ontario,
Canada
Scudder Realty Advisors, Inc. Vice President
SFA, Inc. Assistant Secretary
Scudder Investor Services, Inc. Vice President & Director
NKK-Scudder Capital Asset Assistant Treasurer
Management
Scudder, Stevens & Clark Japan, Director and Chairman of the
Inc. Board
Scudder, Stevens & Clark President & Director
Corporation
Sovereign High Yield Investment Supervisory Director
Company N.V.
President Investment Trust Director
Corporation
Daniel Pierce Scudder New Europe Fund, Inc. Chairman of the Board and
Chairman of the Board, Director
Director & Assistant California Tax Free Trust Trustee
Treasurer Scudder Equity Trust President & Trustee
The First Iberian Fund, Inc. Director
Scudder GNMA Fund President & Trustee
Scudder Portfolio Trust President & Trustee
Scudder Funds Trust President & Trustee
Scudder Institutional Fund, Inc. President & Director
Scudder Fund, Inc. President & Director
Scudder International Fund, Inc. Director
Scudder Investment Trust President & Trustee
Scudder Municipal Trust Vice President & Trustee
Scudder Mutual Funds, Inc. President & Director
Scudder New Asia Fund, Inc. Director
Scudder Securities Trust President & Trustee
Scudder State Tax Free Trust Trustee
Scudder Treasurers Trust President & Trustee
Scudder Variable Life Investment Vice President & Trustee
Fund
The Brazil Fund, Inc. Director
Montgomery Street Income Vice President & Assistant
Securities, Inc. Treasurer
Scudder Global Fund, Inc. Vice President and Director
Scudder Investor Services, Inc. Vice President, Director &
Assistant Treasurer
Scudder Service Corporation Vice President & Director
Scudder, Stevens & Clark of Chairman of the Board &
Canada, Ltd., Toronto, Ontario, President
Canada
Scudder, Stevens & Clark, Ltd. Director
Brigham and Women's Hospital Trustee
(hospital) Boston, MA
Fiduciary Trust Company Director
Fiduciary Company Incorporated, Director
Boston, MA
Cornelia M. Small AARP Cash investment Funds Vice President
Director AARP Growth Trust Vice President
AARP Income Trust Vice President
AARP Tax Free Income Trust Vice President
Edmond D. Villani Scudder Global Fund, Inc. Chairman of the Board &
President & Director Director
Scudder International Fund, Inc. Chairman of the Board &
Director
Scudder New Asia Fund, Inc. Chairman of the Board &
Director
Scudder Securities Trust Trustee
The Argentina Fund, Inc. Chairman of the Board &
Director
Scudder Realty Advisors, Inc. Director
Scudder Mortgage Fund Supervisory Director
The Latin America Dollar Income Chairman of the Board &
Fund, Inc. Director
Scudder, Stevens & Clark Japan, Director
Inc.
Scudder World Income Opportunities Chairman of the Board &
Fund, Inc. Director
One Valley Bank, National Association:
J. Holmes Morrison One Valley Bancorp President & Chief
Chairman of the Board Executive Officer
Phyllis H. Arnold One Valley Bancorp Director
Director, President & Chief One Valley Bank, N.A. President & CEO
Executive Officer
Frederick H. Belden, Jr. One Valley Bancorp Senior Vice President and
Executive Vice President Assistant Corporate Secretary
Charles M. Avampato Clay Foundation, Inc. President
Director One Valley Bancorp Director
Robert F. Baronner One Valley Bancorp Chairman of the Board
Director of Directors
Herald R. Baughman One Valley Bank, N.A.
Senior Vice President
Gary L. Brown Parkerburg Region
Region President
James K. Brown Jackson & Kelly Attorney, Partner
Director One Valley Bancorp Director
Lloyd P. Calvert One Valley Bank, N.A.
Senior Vice President
John T. Chambers Ravenswood Land Co. and President
Director Mt. Alpha Development Co.
One Valley Bancorp Director
Nelle Ratrie Chilton Dickinson Fuel Co. Director
Director Terra Co., Inc. Director
Terra Care, Inc. Director
Terra Salis, Inc. Director
TerraSod, Inc. Director
One Valley Bancorp Director
Anthony N. Ciliberti One Valley Bank, N.A.
General Auditor
Bernice J. Deem One Valley Bank, N.A.
Senior Vice President
Ray Marshall Evans, Jr. Dickinson Co. and President
Director Quincy Coal Co.
One Valley Bancorp Director
Jane Fleming One Valley Bank, N.A.
Senior Vice President
Brian Fox One Valley Bank, N.A.
Senior Vice President
Robert F. Goldsmith Cascades Coal Sales, Inc. President
Director Sentry Resource Executive Vice President
Associates, Inc.
Phillip H. Goodwin CAMCARE and Charleston President
Director Area Medical Center
One Valley Bancorp Director
O. Nelson Jones Madison Coal & Supply President
Director Company
Amherst Industries, Inc. Vice President
William M. Kidd One Valley Bank, N.A.
Senior Vice President
Carl E. Little One Valley Bank Vice Chairman (retired)
Director
Edward H. Maier General Corporation President
Director One Valley Bancorp Director
Roger D. Mooney
Senior Vice President
John F. Mork Eastern American Energy President
Director Corp.
Harold E. Neely One Valley Bank, N.A.
Senior Vice President
Robert O. Orders, Sr. Orders Construction Company Chief Executive Officer
Director One Valley Bancorp Director
John L. D. Payne Payne-Gallatin Mining Co. President
Director One Valley Bancorp Director
Angus E. Peyton Brown & Peyton Attorney & Partner
Director American Electric Power Director
Co., Inc.
One Valley Bancorp Director
Brent D. Robinson One Valley Bank Huntington President
K. Richard C. Sinclair Jefferds Corporation President
Director
James C. Smith O.V. Smith & Sons of Big President
Director Chimney, Inc.
O.V. Smith & Sons, Inc. Vice President
Michael W. Stajduhar One Valley Bank, N.A.
Senior Vice President
James R. Thomas II Carbon Industries, Inc. Chairman (retired)
Director
J. Randy Valentine One Valley Bank, N.A.
Senior Vice President
Dr. Edwin H. Welch University of Charleston President
Director One Valley Bank, N.A.
John Henry Wick III Dickinson Fuel Co., Inc.
Director Harrison & Bates Commercial Realtor (retired)
Thomas D. Wilkerson Northwestern Mutual Life General Agent
Director Insurance Company Director
James D. Williams
Director
James A. Winter One Valley Bank, N.A.
Senior Vice President
Jack B. Young One Valley Bank, N.A.
Senior Vice President
Craig L. Zander One Valley Bank, N.A.
Senior Vice President
John F. Ziebold One Valley Bank, N.A.
Senior Vice President
Capitoline Investment Services Incorporated:
Thomas Dean Hogan Crestar Bank Group Executive Vice
Chairman and Director President - Trust
Linda Flory Rigsby Crestar Financial Corporation Senior Vice President
Secretary and its subsidiary Crestar Bank and Deputy General Counsel
James M. Wells, III Crestar Financial Corporation President
Director and its subsidiary Crestar Bank
</TABLE>
The list required by this Item 28. of officers and partners of Wellington
Management Company, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and partners during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by Wellington Management Company pursuant
to the Investment Advisers Act of 1940 (SEC File No. 801-15908).
The list required by this Item 28. of officers and partners of
Nicholas-Applegate Capital Management, together with information as to any other
business, profession, vocation or employment of a substantial nature engaged in
by such officers and partners during the past two years, is incorporated by
reference to Schedules A and D of Form ADV, filed by Nicholas-Applegate Capital
Management pursuant to the Investment Advisers Act of 1940 (SEC File No.
801-21442).
PNC Institutional Management Corporation ("PIMC") performs investment
advisory services for the Registrant and certain other investment companies and
accounts. PNC Bank, N.A. ("PNC"), the parent of PIMC, and its predecessors have
been in the business of managing the investments of fiduciary and other accounts
in the Philadelphia area since 1847. In addition to its trust business, PNC
provides commercial banking services.
To the Registrant's knowledge, none of the directors or officers of PIMC,
except as set forth in the filings referred to below, is, or has been at any
time during the Registrant's past two fiscal years, engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain directors and officers and certain executives of PIMC also hold
various positions with, and engage in business for, PNC Bank Corp., which
indirectly owns all the outstanding stock of PIMC, or other subsidiaries of PNC
Bank Corp. Set forth in the filings referred to below are the names and
principal businesses of the directors and certain executives of PIMC who are
engaged in any other business, profession, vocation or employment of a
substantial nature.
The information required by this Item 28 with respect to each director,
officer and partner of PIMC is incorporated by reference to Schedules A and D of
Form ADV, filed by PNC Institutional Management Corporation pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-13304).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust....................................... July 15, 1982
SEI Liquid Asset Trust....................................... November 29, 1982
SEI Tax Exempt Trust......................................... December 3, 1982
SEI Index Funds.............................................. July 10, 1985
SEI Institutional Managed Trust.............................. January 22, 1987
SEI International Trust...................................... August 30, 1988
Stepstone Funds.............................................. January 30, 1991
The Advisors' Inner Circle Fund ............................. November 14, 1991
The Pillar Funds............................................. February 28, 1992
CUFUND....................................................... May 1, 1992
STI Classic Funds............................................ May 29, 1992
CoreFunds, Inc............................................... October 30, 1992
First American Funds, Inc.................................... November 1, 1992
First American Investment Funds, Inc......................... November 1, 1992
The Arbor Fund............................................... January 28, 1993
1784 Funds................................................... June 1, 1993
The PBHG Funds, Inc.......................................... July 16, 1993
Marquis Funds(R)............................................. 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
ARK Funds.................................................... November 1, 1995
Monitor Funds................................................ January 11, 1996
</TABLE>
SFS provides numerous financial services to investment managers, pension plan
sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is 680 East Swedesford Road, Wayne, PA 19087.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
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 & 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 & Assistant
Secretary 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 & Vice President --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Mick Duncan Team Leader --
Robert S. Ludwig Team Leader & Vice President --
Vicki Malloy Team Leader --
Robert Aller Vice President --
Steve Bendinelli Vice President
W. Kelso Morrill Vice President
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary Vice President &
Assistant Secretary
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
Ed Daly Vice President --
Jeff Drennen Vice President --
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Larry Hutchison Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
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 &
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 Custodians:
CoreStates Bank, N.A.
Broad and Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
Crestar Bank
919 East Main Street
Richmond, VA 23219
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, PA 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 Advisers:
GOLDEN OAK PORTFOLIOS Citizens Bank
328 Saginaw Street
Flint, MI 48502
Wellington Management Company
75 State Street
Boston, MA 02109
Scudder, Stevens & Clark, Inc.
Two International Place
Boston, MA 02110
Nicholas-Applegate Capital Management
600 West Broadway
29th Floor
San Diego, CA 92101
PIMC PORTFOLIOS PNC Institutional Management Corporation
400 Bellevue Parkway
Wilmington, DE 19809
OVB PORTFOLIOS One Valley Bank, National Association
One Valley Square
Charleston, WV 25301
Wellington Management Company
75 State Street
Boston, MA 02109
U. S. GOVERNMENT Capitoline Investment Services Incorporated
SECURITIES MONEY 919 East Main Street
AND PRIME OBLIGATIONS FUNDS Richmond, VA 23219
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes to file a Post-Effective Amendment to this
Registration Statement containing reasonably current financial information
regarding the Golden Oak Growth and Income Portfolio within 4-6 months of the
later of the effective date or commencement of operations.
Registrant hereby undertakes to file a Post-Effective Amendment to this
Registration Statement containing reasonably current financial information
regarding the Golden Oak Michigan Tax Free Bond Portfolio within 4-6 months of
the later of the effective date or commencement of operations.
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 hold 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 prospective person to whom a
prospectus will be delivered with a copy of the Registrant's latest annual
report to shareholders, when such annual report is issued containing information
called for by Item 5A of Form N-1A, upon request and without charge.
NOTICE
A copy of the Agreement and Declaration of Trust for The Arbor Fund 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.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment to Registration No. 33-50718 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Wayne,
Commonwealth of Pennsylvania on the 29th day of March, 1996.
THE ARBOR FUND
By: /s/ David G. Lee
-------------------------------
David G. Lee
ATTEST: President and Chief Executive Officer
/s/ Jeffrey Cohen
- ------------------------------
Jeffrey A. Cohen
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity and on the dates indicated.
* Trustee March 29, 1996
- -----------------------
John T. Cooney
* Trustee March 29, 1996
- -----------------------
William M. Doran
* Trustee March 29, 1996
- -----------------------
Frank E. Morris
* Trustee March 29, 1996
- -----------------------
Robert A. Nesher
* Trustee March 29, 1996
- -----------------------
Robert A. Patterson
* Trustee March 29, 1996
- -----------------------
Gene B. Peters
* Trustee March 29, 1996
- -----------------------
James M. Storey
/s/ David G. Lee President & Chief Executive March 29, 1996
- ----------------------- Officer
David G. Lee
/s/ Jeffrey A. Cohen Controller & Chief Financial
Officer March 29, 1996
- -----------------------
Jeffrey A. Cohen
*By: /s/ David G. Lee
------------------
David G. Lee
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
------- ----
<S> <C> <C>
(1) Registrant's Agreement and Declaration of Trust.1
(2) Registrant's By-Laws.1
(3) Not Applicable
(4) Not Applicable
(5)(a) Administration Agreement between Registrant and SEI Financial
Management Corporation with Schedule dated January 28, 1993 for
the Golden Oak Portfolios and forms of Schedule for the
California Tax Exempt Portfolio and Institutional Tax Free
Portfolio.4
(5)(b) Investment Advisory Agreement between the Registrant and Citizens
Commercial and Savings Bank with respect to the Golden Oak
Diversified Growth Portfolio, the Golden Oak Intermediate-Term
Income Portfolio, Golden Oak Tax Free Bond Portfolio and Golden
Oak Prime Obligation Money Market Portfolio.3
(5)(c) Investment Sub-Advisory Agreement by and among Registrant, Citizens
Commercial and Savings Bank and Wellington Management Company with
respect to the Golden Oak Prime Obligation Money Market Portfolio.3
(5)(f) Form of Investment Advisory Agreement between Registrant and Prudential
Investment Corporation with respect to the California Tax Exempt
Portfolio and the Institutional Tax Free Portfolio.4
(5)(g) Form of Schedule, relating to the OVB Prime Obligations, OVB
Capital Appreciation, OVB Emerging Growth, OVB Government
Securities and OVB West Virginia Tax-Exempt Income Portfolios
(the "OVB Portfolios"), to Administration Agreement by and
between the Registrant and SEI Financial Management Corporation
dated as of January 28, 1993.5
(5)(h) Form of Investment Advisory Agreement between the Registrant and
One Valley Bank, National Association with respect to the OVB
Portfolios.5
(5)(i) Form of Investment Sub-Advisory Agreement by and among the Registrant,
One Valley Bank, National Association and Wellington Management Company
with respect to the OVB Prime Obligations Portfolio.5
(5)(j) Form of Investment Advisory Agreement between the Registrant and Capitoline
Investment Services, Incorporated with respect to the U.S. Government
Securities Money Fund.7
(5)(k) Form of Schedule, relating to U.S. Government Securities Money Fund, to
Administration Agreement by and between Registrant and SEI Financial
Management.7
(5)(l) Form of Schedule B to Investment Advisory Agreement between the Registrant
and Citizens Commercial & Savings Bank with respect to Golden Oak Growth
and Income Portfolio.8
(5)(m) Form of Investment Sub-Advisory Agreement by and between Scudder,
Stevens & Clark, Inc. with respect to Golden Oak Growth and Income
Portfolio.8
(5)(n) Form of Schedule, relating to Golden Oak Growth and
Income Portfolio, to Administration Agreement by and
between Registrant and SEI Financial Management
Corporation.8
(5)(o) Administration Agreement between Registrant and SEI Financial
Corporation with Schedule dated January 28, 1993 as amended and
restated on May 17, 1994 for Golden Oak Portfolios, the
Prudential Portfolios and the OVB Portfolios.9
(5)(p) Administration Agreement between Registrant and SEI Financial
Management Corporation with Schedule dated August 1, 1994.9
(5)(q) Form of Schedule to the Investment Advisory Agreement between Registrant
and Capitoline Investment Services Incorporated with respect to the
Prime Obligations Fund.10
(5)(r) Form of Schedule relating to the Prime Obligations Funds, to
Administration Agreement filed under (5)(p) by and between
Registrant and SEI Financial Management Corporation.10
(5)(s) Form of Investment Advisory Agreement between the Registrant and
PNC Institutional Management Corporation with respect to the
California Tax-Exempt Portfolio.11
(5)(t) Form of Investment Advisory Agreement between the Registrant and
PNC Institutional Management Corporation with respect to the
Institutional Tax Free Portfolio.11
(5)(u) Investment Sub-Advisory Agreement by and among the Registrant
and Citizens Bank and Nicholas-Applegate Capital Management
with respect to the Golden Oak Diversified Growth Portfolio.11
(5)(v) Form of Schedule to the Investment Advisory Agreement between
Registrant and One Valley Bank, N.A. with respect to the OVB
Equity Income Portfolio.*
(6)(a) Distribution Agreement between Registrant and SEI Financial Services
Company.2
(6)(b) Transfer Agent Agreement between Registrant and SEI Financial Management
Corporation.3
(6)(c) Transfer Agent Agreement between Registrant and Crestar Bank.9
(6)(d) Transfer Agent Agreement between Registrant and Supervised Service
Company.9
(7) Not Applicable
(8)(a) Custodian Agreement between Registrant
and CoreStates Bank N.A.2
(8)(b) Form of Custodian Agreement between Registrant and Crestar Bank.7
(9) Not Applicable
(10) Opinion and Consent of Counsel.3
(11) Consent of Independent Accountants.*
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15)(a) Registrant's Distribution
Plan with respect to the Class B shares of the Golden Oak Portfolios.2
(15)(b) Registrant's Distribution Plan with respect to the Class B shares of the OVB
Portfolios.5
(15)(c) Form of Registrant's Distribution Plan with respect to the Class B
Shares of the Golden Oak Growth and Income Portfolio.8
(15)(d) Rule 18f-3 Multi-Class Plan.9
(16) Performance Quotation Computation with respect to the Golden Oak Portfolios.3
(24) Powers of Attorney.6
</TABLE>
- ----------------------
<TABLE>
<S> <C>
* filed herewith
1 Incorporated herein by reference to Registrant's Registration Statement on Form N-1A (No.
33-50718) filed with the Securities and Exchange Commission on August 11, 1992.
2 Incorporated herein by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on October 14, 1992.
3 Incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on January 13, 1993.
4 Incorporated herein by reference to Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on July 29, 1993.
5 Incorporated herein by reference to Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on September 23, 1993.
6 Incorporated herein by reference to Post-Effective Amendment No. 8 to Registrant's -
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on May 31, 1994.
7 Incorporated herein by reference to Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on June 2, 1994.
8 Incorporated herein by reference to Post-Effective Amendment No. 10 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on September 30, 1994.
9 Incorporated herein by reference to Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on May 31, 1995.
10 Incorporated herein by reference to Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and Exchange
Commission on August 11, 1995.
11 Incorporated herein by reference to Post-Effective Amendment No. 13 to Registrant's
Registration Statement on Form N-1A (No. 33-50718) filed with the Securities and
Exchange Commission on March 29, 1996.
</TABLE>
Exhibit 5(v)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 22nd day of November, 1993 by and between The Arbor
Fund, a Massachusetts business trust (the "Trust"), and One Valley Bank, N.A.
(the "Adviser").
WHEREAS, the Trust is an open-end, non-diversified management
investment company registered under the Investment Company Act of 1940, as
amended, (the "Investment Company Act") consisting of several series of shares,
each having its own investment policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation
(the "Administrator") to provide administration of the Trust's operations,
subject to the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its OVB Emerging Growth, OVB Capital
Appreciation, OVB West Virginia Tax-Exempt Income, OVB Government Securities and
OVB Prime Obligations Portfolios and such other portfolios as the Trust and the
Adviser may agree upon (the "Portfolios"), and the Adviser is willing to render
such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. Duties of the Adviser. The Trust employs the Adviser to manage
the investment and reinvestment of the assets, and to
continuously review, supervise, and administer the investment
program of the Portfolios, to determine in its discretion the
securities to be purchased or sold, to provide the
Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain
and to render regular reports (except for those special
reports that the Board of Trustees may require more
frequently) to the Administrator and to the Trust's Officers
and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities
subject to the control of the Board of Trustees of the Trust
and in compliance with such policies as the Trustees may from
time to time establish, and in compliance with the objectives,
policies, and limitations for each such Portfolio set forth in
the Portfolios' prospectus and statement of additional
information as amended from time to time, and applicable laws
and regulations.
The Adviser accepts such employment and agrees, at its own
expense, to render the services and to provide the office
space, furnishings and equipment and the personnel required by
it to perform the services on the terms and for the
compensation provided herein.
2. Portfolio Transactions. The Adviser is authorized to select
the brokers or dealers that will execute the purchases and
sales of portfolio securities for the Portfolios and is
directed to use its best efforts to obtain the best net
results as described in the Portfolios' prospectuses and
statement of additional information from time to time. The
Adviser will promptly communicate to the Administrator and to
the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably
request.
It is understood that the Adviser will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the
Trust or be in breach of any obligation owing to the Trust
under this Agreement, or otherwise, solely by reason of its
having directed a securities transaction on behalf of the
Trust to a broker-dealer in compliance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934.
3. Compensation of the Adviser. For the services to be rendered
by the Adviser as provided in Sections 1 and 2 of this
Agreement, the Trust shall pay to the Adviser compensation at
the rate specified in the Schedule(s) which are attached
hereto and made a part of this Agreement. Such compensation
shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual
percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net
assets for the month involved.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the
termination of this Agreement.
4. Other Expenses. The Adviser shall pay all expenses of
preparing (including typesetting), printing and mailing
reports, prospectuses, statements of additional information,
and sales literature to prospective clients to the extent
these expenses are not borne by the Trust under a distribution
plan adopted pursuant to Rule 12b-1 of the Investment Company
Act.
5. Excess Expenses. If the expenses for any Portfolio for any
fiscal year (including fees and other amounts payable to the
Adviser, but excluding interest, taxes, brokerage costs,
litigation, and other extraordinary costs) as calculated every
business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory
authority of any jurisdiction in which Shares are qualified
for offer and sale, the Adviser shall waive its fees, or
reimburse to the Trust out of fees previously paid to the
Adviser for such year in the amount necessary to comply with
the expense limitation.
However, no waiver or reimbursement under the foregoing
paragraph shall be made which would result in the Trust's
inability to qualify as a regulated investment company under
provisions of the Internal Revenue Code of 1986, as amended.
Waivers or reimbursements pursuant to this Section 5 shall be
settled on a monthly basis (subject to fiscal year end
reconciliation) by a reduction in the fee payable to the
Adviser for such month pursuant to Section 3 and, if such
reduction shall be insufficient to offset such expenses, by
reimbursing the Trust.
6. Reports. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial
statements, and such other information with regard to their
affairs as each may reasonably request.
7. Status of the Adviser. The services of the Adviser to the
Trust are not to be deemed exclusive, and the Adviser shall be
free to render similar services to others so long as its
services to the Trust are not impaired thereby. The Adviser
shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
8. Certain Records. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the Investment Company Act which are
prepared or maintained by the Adviser on behalf of the Trust
are the property of the Trust and will be surrendered promptly
to the Trust on request.
9. Limitation of Liability of the Adviser. The duties of the
Adviser shall be confined to those expressly set forth herein,
and no implied duties are assumed by or may be asserted
against the Adviser hereunder. The Adviser shall not be liable
for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in
carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may
otherwise be provided under provisions of applicable state and
federal law which cannot be waived or modified hereby. (As
used in this Paragraph 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of
the Adviser as well as that corporation itself).
10. Permissible Interests. Trustees, agents, and shareholders of
the Trust are or may be interested in the Adviser (or any
successor thereof) as directors, partners, officers, or
shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected
through affiliates of the Adviser if approved by the Board of
Trustees, subject to the rules and regulations of the
Securities and Exchange Commission.
11. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall remain in effect until
two years from date of execution, and thereafter, for periods
of one year so long as such continuance thereafter is
specifically approved at least annually (a) by the vote of a
majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of each
Portfolio; provided, however, that if the shareholders of any
Portfolio fail to approve the Agreement as provided herein,
the Adviser may continue to serve hereunder in the manner and
to the extent permitted by the Investment Company Act and
rules and regulations thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved
at least annually" shall be construed in a manner consistent
with the Investment Company Act and the rules and regulations
thereunder.
This Agreement may be terminated as to any Portfolio at any
time, without the payment of any penalty by vote of a majority
of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio on not less
than 30 days nor more than 60 days written notice to the
Adviser, or by the Adviser at any time without the payment of
any penalty, on 90 days written notice to the Trust. This
Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed
postpaid, to the other party at any office of such party. As
used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in
the Investment Company Act and the rules and regulations
thereunder; subject to such exemptions as may be granted by
the Securities and Exchange Commission under said Act.
12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Trust, at 680 East Swedesford Road, Wayne, PA 19087 and if
to the Adviser at: One Valley Square, Charleston, WV 25326
13. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be
affected thereby.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and are not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
THE ARBOR FUND ONE VALLEY BANK, N.A.
By _________________________ By: __________________________________
Attest: ________________________ Attest: ______________________________
<PAGE>
Schedule A
to the
Investment Advisory Agreement
between
The Arbor Fund
and
One Valley Bank, N.A.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
OVB Emerging Growth .95%
OVB Capital Appreciation .95%
OVB West Virginia Tax Exempt Income .45%
OVB Government Securities .75%
OVB Prime Obligations .25%
<PAGE>
Schedule dated February , 1996
to the
Investment Advisory Agreement
dated November 22, 1993
between
The Arbor Fund
and
One Valley Bank, N.A.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee (in basis points)
OVB Equity Income .74%
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 15 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated March 8, 1996, relating to the financial
statements and financial highlights appearing in the January 31, 1996 Annual
Reports to Shareholders of the;
Golden Oak Diversified Growth, Golden Oak Intermediate-Term Income and
Golden Oak Prime Obligation Money Market Portfolios;
California Tax-Exempt and Institutional Tax Free Portfolios;
U.S. Government Money and Prime Obligations Portfolios;
OVB Capital Appreciation, OVB Emerging Growth, OVB Government Securities,
OVB West Virginia Tax-Exempt Income and OVB Prime Obligations Portfolios
of The Arbor Fund which is also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights" and "General Information" in the Prospectus and under the headings
"Experts" and "Financial Statements" in the Statement of Additional Information.
PRICE WATERHOUSE LLP
Philadelphia, PA
March 28, 1996
